This content is from: Portfolio

The Morning Brief: Citadel’s Funds Post Gains for First Half

Wellington and Kensington Global Strategies, two multi-strategy funds run by Kenneth Griffin’s Chicago-based hedge fund firm Citadel, posted gains of 1.50 percent in June. As a result, they are up 6.95 percent for the first half of the year. The funds enjoyed strong performance within their equities, commodities and event driven strategies, according to a person familiar with the results. The Citadel Tactical Trading fund gained 0.75 percent in June and 8.80 percent for the year, while the Citadel Global Equities Fund rose 1.10 percent last month, pushing its gains for the year to 8.20 percent. The firm’s Global Fixed Income Fund is said to have been roughly flat in June but up 6.6 percent for the year.

William Ackman’s Pershing Square Capital Management announced its slate of six directors for the board of Allergan. The New York–based activist hedge fund firm, which is teaming up with Valeant Pharmaceuticals in a hostile bid for the Botox maker, is seeking to call a special meeting of Allergan shareholders in an attempt to change the board. Pershing Square’s nominees are Betsy Atkins, Cathleen Black, Fredric Eshelman, Steven Shulman, David Wilson and John Zillmer.

“If Allergan shareholders agree that our offer is compelling enough to warrant further discussion, they should vote to hold the special meeting where they will have an opportunity to remove incumbent directors,” Valeant commented in a statement. “As owners of the company, Allergan’s shareholders deserve the right to make such a decision.”

PetSmart, Inc. on Monday responded to Jana Partners’ regulatory filing from Friday, which called for a possible sale or some other shareholder enhancing measure for the pet products retailer. In a regulatory filing, PetSmart said it has been reviewing potential changes to its capital structure, with a “focus on” returning capital to shareholders. “The evaluation is ongoing and is consistent with the company’s commitment to driving shareholder value,” it added. “There is no assurance any new initiatives will be undertaken, and if so, the amount and timing of any such initiatives.” On Monday, Stifel Nicolaus told clients that calling on PetSmart to explore strategic options “does make sense and could open up a few possibilities.”

The investment bank, which repeated its “Hold” rating on the stock, added in a note to clients that it thinks PetSmart “may have underinvested over the years, returning excess capital to shareholders but lagging behind peers in both urban locations and the ecommerce channel.” It asserted that going private could enable the company to reinvest and reset the business “with a smaller, more omni-channel footprint.” However, Stifel Nicolaus did warn that big box retailers in general “exploring strategic opportunities” have had a “somewhat low success rate in recent years,” pointing to Best Buy, Barnes & Noble and Advance Auto Parts as examples.

Upon further review…BAE Systems is backing off on its earlier assertion that a hedge fund was a major victim of cyberhacking. CNBC initially aired the report in an interview with Paul Henninger, the global product director for BAE Systems Applied Intelligence. But BAE company spokesperson Natasha Davies now tells the network that the executive “incorrectly presented” the anecdote. Davies says the actual cyberattack Henninger described on CNBC was in reality a “scenario” used by cyber experts inside BAE Systems.

“We offer our sincere apologies,” Davies said, according to CNBC. The attack, she said, “was inaccurately presented as a client case study rather than as an illustrative example.” Why did BAE wait nearly two weeks to correct the record? Davis told the business network that BAE employees tried to get more information about the incident and “it took some time” to realize it had never happened, according to the new report. In the June 19 interview, Henninger stated: “This particular attack happened at the end of 2013. It took a couple of months before the firm itself realized that something was wrong. And then it took about a few weeks for the investigation to get to the point where we made the connection between the network anomalies and the trading anomalies. So the actual resolution of the attack was fairly rapid.”

He also said about the hedge fund: “This was not something that was a minor issue for them. This was something that was getting reviewed at the board level at this hedge fund precisely because it was having a material impact on the performance across the portfolio.”

Tiger Global Management’s venture capital arm led a $5 million fund-raising for Reviews42, described as an India-based product reviews platform, according to livemint.com. Reviews42, which is owned by Solvy Tech Solutions, gets about 60 percent of its traffic from mobile apps, according to crunchbase.com. It reportedly plans to use the money to improve its product, increase hiring, and expand its presence across India.

Renaissance Technologies founder James Simons and his wife Marilyn have given $50 million to Cold Spring Harbor Laboratory to establish the Simons Center for Quantitative Biology to support research and education programs. The Center will conduct research into cancer, autism, bipolar disorder and depression, according to an announcement from the independent biomedical research institution.

“Jim Simons used his mathematical expertise to change the way the world thinks about financial markets, and he is now profoundly changing the world of science through philanthropy,” said CSHL chairman Jamie Nicholls — who also happens to be the wife of King Street Capital co-founder O. Francis Biondi Jr. — in a statement. “Jim and Marilyn Simons’ longtime support for scientific research is empowering breakthrough discoveries at Cold Spring Harbor Laboratory and beyond.” Simons is the only hedge fund manager to qualify for Alpha’s annual Rich List in all 13 years, earning more than $20 billion over that period. In 2013, he earned $2.2 billion, ranking number four.

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