This content is from: Portfolio

The Morning Brief: D.E. Shaw’s Chief Risk Officer to Retire

Leave it to the wealthy to pay up for mediocrity. No investors expect their hedge fund to post a gain of better than 12 percent in 2013, based on interviews conducted in August by London-based alternatives data collector Preqin and reported in its latest monthly report. The pervasive pessimism is stunning, given that the overall stock market in the U.S. is already up around 20 percent so far this year. This also means that low-cost index funds and ETFs offered by Vanguard and other mutual fund firms are up around 20 percent year-to-date. However, the reality is that the average hedge fund is only up a little more than 5 percent, according to Preqin. The best performing strategy — event driven — is up 9 percent through July. As a result, 70 percent of investors are looking for 2013 returns ranging from 7 percent to 10 percent, including 37 percent who are anticipating gains of 9-10 percent, according to Preqin.


Peter Bernard, D.E. Shaw’s chief risk officer, plans to retire at the end of 2013, according to sources. The hedge fund firm is telling investors he will be replaced by treasurer Ted MacDonald, who has been with the firm since 2003. D.E. Shaw, which plans to have the treasury function report to CFO Chris Zaback, does not plan to hire a replacement for MacDonald. Bernard is not one of those original six — now five — individuals serving as a managing director and a member of the executive committee of the $30 billion firm. Bernard joined the firm in 2006 and has spent more than 30 years in his career in finance.


Third Point Reinsurance raised about $276 million in an initial public offering after the company and existing shareholders sold 22.1 million shares for $12.50 apiece. This was at the bottom of its anticipated range of $12.50 to $14.50 per share. The proceeds will be used to boost the firm’s underwriting capacity. The idea is for Daniel Loeb’s New York hedge fund firm Third Point to manage most of the reinsurance company’s investable assets. The stock closed at $13.06, up 4.5 percent on its first day of trading.


Tiger Global sold another 825,000 shares or so of TAL Education Group, reducing its stake to 18 percent.


Steve Cohen’s SAC Capital reported a 5.1 percent stake in Stemline Therapeutics, a clinical stage biopharmaceutical company.


From the latest 13F filings:

Louis Bacon’s Moore Capital Management cut its U.S. stock portfolio by about one-third, to $4.2 billion, at the end of the second quarter, down from $6.2 billion at the end of March. Keep in mind the firm runs macro funds — the Bacon-led Moore Global Investors and Remington funds — and a multi-strategy fund, Moore Macro Managers.

George Soros’ second largest holding is J.C. Penney, worth $341 million at the end of June. He also reported 500,000 calls on the stock. His number one holding was Google. Interestingly, he did not report owning any shares of Herbalife despite recent reports that he had taken a significant stake, suggesting he bought all his shares in July.

Andrew Law’s Caxton Associates has put positions on two high profile hedge fund shorts, Herbalife and Green Mountain Coffee Roasters.

Oops. Tiger Management revised its 13F filing 24 hours after filing the initial one for the June period, reducing the value of its equity portfolio at the end of the second quarter by roughly $20,000.

London-based hedge fund firm BlueCrest Capital Management dramatically boosted the value of its U.S. stock portfolio to $1.9 billion from $1.1 billion the prior quarter.

Boston-based Highfields Capital made a big bet on gold in the second quarter. The firm took an $867 million stake in the call options of the SPDR Gold Trust ETF, easily making it the largest position in its $12 billion stock portfolio. It also bought $59 million worth of shares in the ETF.

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