William Ackman is starting to throw in the towel on his Herbalife short. The founder of New York hedge fund firm Pershing Square Capital Management cut his controversial equity short position to 12 percent from 16 percent of the firm’s $10.8 billion portfolio. He reportedly replaced the short position with put options on the stock. Shares of the multi-level marketer of nutrition supplements had soared 170 percent since Ackman’s celebrated, 3.5 hour December presentation on why he feels the company is a Ponzi scheme. They fell 6.61 percent to $68.26 on Thursday. “We have not learned any facts that are inconsistent with our belief that the company is a pyramid scheme that engages in unlawful and deceptive marketing practices,” Ackman reportedly wrote in a letter to investors. “In fact, there have been a number of materially positive developments that increase the likelihood of regulatory intervention and the company’s closure.” Not surprisingly, Pershing Square, which recently unloaded its big losing long bet on J.C. Penney, fell 5 percent in the third quarter and is flat for the year.
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Citigroup Global Markets agreed to pay $30 million to settle civil charges with Massachusetts regulators stemming from allegations that one of its analysts provided confidential negative information about Apple’s iPhones sales to three prominent hedge funds before the report was provided to other investors. According to William Galvin, Secretary of the Commonwealth of Massachusetts, Citi analyst Kevin Chang provided information about Hon Hai, a Taiwanese supplier to Apple, to hedge funds SAC Capital Advisors, Citadel and GLG Partners, as well as mutual fund giant T. Rowe Price. Citigroup also was censured and must review its policies and procedures. Less than a year ago, Citigroup paid $2 million to Massachusetts to settle charges that two analysts provided confidential information about Facebook.
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Citadel tripled its holdings in Global Brass & Copper Holdings to a little more than 1.22 million shares, or 5.8 percent of the total outstanding. The investment is passive, according to the filing.
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Tiger Global Management sold more shares in TAL Education Group, the Chinese tutoring company. The New York City hedge fund firm cut its stake from 16.5 percent to 14.8 percent. It now owns 10.1 million shares, which consists of 5.05 million American Depositary Shares (ADS), which may be exchanged for Class A common shares at a 1:2 ratio.
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The Credit Suisse Liquid Alternative Beta Index, which tries to mimic the performance of the overall hedge fund industry, rose 1.39 percent in September. It was also up 4.29 percent for the year. The Event Driven strategy was the strongest performer last month, rising 2.65 percent, and is now up 6.54 percent for the year.
