This content is from: Portfolio

The Morning Brief: A Rate Hike That Reloads the Gun

Will the Federal Reserve finally raise rates for the first time in nine years today? If it does, most monetary mavens assume the hike will be involve a mere quarter percentage point. However, Morgan Creek Capital Management CEO Mark Yusko said Wednesday on CNBC that he believes the Fed should hike rates to 3 percent in one shot on Thursday. “Get back to normal,” Yusko told the audience. “Just reload the gun, 300 basis points.” The hedge fund allocator with about $4.5 billion under management further explained his reasoning, noting short-term rates historically equal the nominal gross-domestic-product growth rate, which is currently around 4 percent. “It would send a message of confidence and saying the economy is strong [and] it can handle normal interest rates,” he added. He may make sense, but it’s probably one of the few outcomes you can bet won’t happen.

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At least two hedge funds are major shareholders of Intra-Cellular Therapies, the biotech stock that soared 85 percent on Wednesday on news of positive results for clinical trials of its schizophrenia drug. The stock is up about 150 percent since late April alone. New York-based Visium Asset Management is the second-largest shareholder, with 3 percent of the shares as of June 30. Boston-based Adage Capital Partners owned 2 percent of the shares, while New York-based Millennium Management was the tenth-largest shareholder.

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Jeffrey Smith’s Starboard Value has raised at least $200 million for Starboard Leaders Select Offshore Fund, the offshore version of Starboard Leaders Select Fund, which we earlier reported (link) had raised at least $250 million. The new fund is an offshoot of the Starboard Leaders Fund, which in turn is a more concentrated version of the Starboard Value and Opportunity Fund, the firm’s flagship. Altogether, the New York activist firm runs about $5 billion.

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