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The Morning Brief: William Ackman Admits Retail is Not His Bag

Easy come, easy go. One day after its stock jumped nearly 6 percent, J.C. Penney gave up 5 percent on Wednesday after Pershing Square Capital Management’s William Ackman conceded that his investment in the beaten-down retailer was a failure. In a widely circulated second quarter report to investors, he did not say when or if he plans to unwind his big position. He also conceded in the report that he has had several screw ups in retail. This can’t be too surprising since I figure the billionaire has spent as much time trolling the aisles of J.C. Penney and Target and ordering Big Macs at McDonald’s as Eddie Lampert probably would be spending at Sears and Kmart if he were not the biggest owner of those two chains. Ackman also went on the offensive on Herbalife, indicating he has no plans of scaling back that so-far disastrous short position. Shares of the nutritional supplement maker and multi-level marketer fell 1.5 percent on Wednesday.

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One quarter of all hedge funds generated absolute losses so far this year, while fewer than 5 percent of funds have outperformed the S&P 500, according to a new quarterly report from Goldman Sachs. The report analyzes the positions of 708 hedge funds with a combined $1.5 trillion of gross assets at the beginning of the third quarter. Goldman calculates that the average hedge fund posted just a 4 percent gain through August 9. This compares with a 20 percent gain for both the S&P 500 and the average large-cap core mutual fund.

“While popular long positions have outperformed the broad market, selection of shorts has hampered returns,” the report states. It found the 50 stocks with the highest short interest as a share of market cap returned an average of 30 percent year to date. The report also finds that the average fund holds 63 percent of long assets in its top 10 positions compared with 38 percent for the average mutual fund.

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Anthony Scaramucci’s SkyBridge Capital has boosted assets in his fund-of-funds firm by 24 percent, to $8.3 billion. Scaramucci, most noted for his frequent media appearances as well as organizing the SkyBridge Alternatives Conference — known as SALT — allocated more money to Asian managers, according to a report. “In a period of great market uncertainty and post-crisis, investors are seeking an appropriate risk-return profile,” Scaramucci told Bloomberg.

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