Australian hedge fund manager John Hempton of Bronte Capital Management, who specializes in short selling, says he is going long Herbalife. Using colorful language, he asserts that the Federal Trade Commission has long been aware of the practices of multi-level marketing companies, and Pershing Square’s Bill Ackman can’t expect the government to bail out a billionaire hedge fund manager. Meanwhile, the stock climbed more than 1 percent again on Friday. However, a separate CNBC report says Ackman has not covered any of the shares he has shorted. I can’t wait for the company’s rebuttal on Thursday of Ackman’s Ponzi scheme thesis, which Ackman promises he will then rebut.
••• Meanwhile, Ackman is showing some signs of losing patience waiting for JCPenney’s makeover. The Pershing Square Capital Management hedge fund manager trimmed his stake in the struggling retailer, to 17.8 percent of the shares from 18.3 percent.
••• Dyal Capital Partners has made another investment. The Neuberger & Berman-run private equity firm acquired a passive stake in Scopia, an alternative asset management firm with $3.4 billion of assets in long-short equity strategies. Matt Sirovich and Jeremy Mindich will continue to lead Scopia, but following the transaction, Scopia’s equity will be owned solely by the management team and Dyal. This is Dyal’s fourth major investment. Dyal plans to purchase minority interests in a portfolio of about 12 to 15 hedge fund management companies.
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The Dow Jones Credit Suisse Core Hedge Fund Index closed up 3.38 percent for 2012. Convertible arbitrage led the way, up about 7 percent, while managed futures lost 5.51 percent. •••
The Financial Crimes Enforcement Network (FinCEN) wants hedge funds to be mandatory financial informants. The Treasury Department arm plans to introduce a rule this year that would require hedge funds to inform the government about suspicious activities such as insider trading or money laundering, either by employees or outsiders. This would no doubt raise costs, but it would also boost employment for compliance and legal professionals.
