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The Morning Brief: Meister’s Corvex Takes Stake in American Realty Capital Properties

Keith Meister’s New York-based activist hedge fund firm Corvex Management has taken a 7.1 percent stake in real-estate investment trust American Realty Capital Properties Inc. Corvex said in a 13D filing on Monday that it has acquired 64.7 million shares of the REIT. The filing said Corvex is holding continued discussions with the real estate company’s board of directors and that it will look to have its own representatives on the board.

American Realty Capital Properties has taken a beating in the stock market since earlier this year, when it disclosed that it overstated financial results and intentionally concealed the error. The revelation wiped $3.5 billion off the company’s market value, according to the Wall Street Journal, which reports that the Federal Bureau of Investigation and the Securities and Exchange Commission are investigating the company.

This is not the first time Meister, formerly Carl Icahn’s right-hand man, has taken on a property-related company. Earlier this year Corvex and New York investment firm Related Companies won a battle with Commonwealth REIT when their entire slate of director nominees was elected to Commonwealth’s board at a special shareholder meeting.

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Greenlight Capital founder David Einhorn, who has famously won big sums playing poker for charity, says that while his hobby has similarities to his day job of investment management, the latter is much harder. Einhorn, who has racked up more than $5 million in winnings at various World Series of Poker tournaments, told the Thinking Poker podcast that he views both poker and investment management in terms of solving a puzzle, according to CNNMoney.com. Both involve evaluating things you know, things you can form a hypothesis about, and the range of possible outcomes, Einhorn said.

But one major difference is that investment management decisions must be made while evaluating outcomes that could happen several years down the road, he added. His performance this year seems to drive home the point: While he’s earned big gains in some of his firm’s largest holdings, some short positions have cost him. Einhorn’s three main hedge funds were up 5.5 percent to 5.8 percent through November, compared with the S&P 500’s 11.9 percent gain over the same period.

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A U.S. Federal Reserve survey of senior bank credit officers found that hedge funds made big changes to their bets on U.S. interest rates on October 15, which fueled turmoil in global markets that day, according to a Reuters report. Stock prices and bond yields both fell dramatically during the day, when concerns over Ebola and the state of the European and Chinese economies surfaced and data showing weak producer prices and retail sales in the U.S. emerged. That’s when hedge funds started buying both short and longer-term U.S. debt in a dash for safer assets, according to the survey, which polls 22 credit officials each quarter. Conditions did eventually calm, and data since then shows the economic recovery in the U.S. is mostly continuing apace, according to Reuters.

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