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The Morning Brief: Loeb Turns Up the Heat on Sony

Daniel Loeb’s New York-based firm Third Point has raised its activist stake in Sony to 6.9 percent of the total shares. Loeb turned up the pressure on the company to sell 15 percent to 20 percent of the company’s entertainment business in an initial public offering, according to a report. He thinks this would raise as much as $2 billion. Sony is holding its annual meeting on June 20.

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S&P Capital IQ is unimpressed with the New York hedge fund firm Starboard Value’s activist stake in Smithfield Foods and its case for breaking up the company into several parts. In a note Monday, the research firm said Smithfield’s most attractive piece is its packaged meats business, but it stressed that Starboard’s high-end break-up value of $55.21 is much higher than is likely to be realized from a split-up in the near future. S&P slightly raised its price target from $33 to $34, saying this primarily reflects its expectation that Shuanghui International Holding’s acquisition of the company will take place.

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The struggles at Tiger Cub Christopher Hansen’s San Francisco-based Valiant Capital Management continue. Hansen’s long-short equity fund lost another 2 percent in May and is now down 15 percent through the first five months of the year. Earlier this year, Hansen unsuccessfully tried to buy the Sacramento Kings basketball team.

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By contrast, another firm from the Tiger Managment fold — Hound Partners, founded by Jonathan Auerbach and Scott McLellan with seed money from Tiger — gained 5 percent in May. The long-short fund is now up 14 percent for the year.

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Three quarters of the growth in assets among hedge funds between 2010 and 2012 was driven by performance, according to a new report from investment bank Barclays. By comparison, in the 2001 to 2007 period, performance accounted for just 58 percent of the growth in assets and inflows accounted for 48 percent. “The industry is also seeing significantly slower overall growth of assets and fewer net new launches of hedge funds than before,” the report’s authors noted. The biggest funds are scooping up a majority of new money, according to the report, as managers with more than $5 billion of assets under management account for two-thirds of industry assets, up from 56 percent in 2008.

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