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The Morning Brief: Soros Ups Stake in Penn Virginia

New York–based Soros Fund Management has gone activist on Penn Virginia. The billionaire Hungarian investor on Tuesday disclosed that he had boosted his stake in the oil and gas company, to 9.18 percent, and changed his filing to a 13D from a 13G. Soros states in a regulatory filing that the stock is undervalued and that representatives of his investment firm have had discussions with management regarding the business, assets, prospects and strategic alternatives and direction of the company.

Soros stresses that his firm believes Penn Virginia “has been very well managed,” adding that the financial incentives for its management team should be enhanced. However, it also thinks Penn Virginia should “explore strategic alternatives” to boost shareholder value and said it plans to further discuss this issue with management and perhaps the board of directors, other shareholders, other industry participants, potential acquirers and other interested parties. Soros also said it may take other steps to bring about changes to increase shareholder value as well as pursue other plans or proposals. In February, Kenneth Griffin’s Chicago-based Citadel boosted its passive stake in the company to 8.5 percent.

The trend toward bigger and bigger hedge funds seemed to accelerate last year, according to Chicago-based industry tracker Hedge Fund Research. The number of new hedge funds launched in 2013 totaled 1,060, the lowest level since 935 funds launched in 2009, according the latest HFR Market Microstructure Industry Report. There was a slight silver lining, however. The number of launches in the fourth quarter rose to 244 from 231 in the previous quarter. Even so, it was much fewer than the 284 launches in the fourth quarter of 2012. Meanwhile, the hedge fund industry suffered the highest number of liquidations since 2009. Altogether, HFR reported that total hedge fund industry capital ended the year at a record $2.62 trillion.

The average hedge fund gained 1.72 percent in February, putting hedge funds in the black by 1.42 percent for the first two months, according to industry tracker Preqin. Event-driven funds were the top performers last month, rising 2.67 percent. They also have been in the black for eight straight months. Relative value funds, the top performers in January, rose just 0.83 percent last month.

Boaz Weinstein’s New York–based Saba Capital disclosed it owns 5.36 percent of DWS High Income Trust, a closed-end mutual fund that invests mostly in high-yielding securities. Its stock trades at an 8.29 percent discount to its net asset value (NAV), according to Chicago-based mutual fund tracker Morningstar.

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