This content is from: Portfolio

The Morning Brief: Hedge Fund Assets Rise in August

The hedge fund industry enjoyed its largest monthly increase in net assets in August, with firms taking in $19.6 billion more than what was redeemed last month, according to industry tracker eVestment. Performance losses reduced assets under management by $20.8 billion, to $2.688 trillion. Equity strategies took in $8.6 billion net new money in August, as asset growth increased over the past three months. Meanwhile, funds with greater than $1 billion in assets accounted for nearly 70 percent of August’s net new money, or $11.3 billion. “This group currently accounts for only 8 percent of funds reporting for August, further evidence of the concentration of [assets] to the largest products, a trend being driven by increased direct investment from large institutional investors,” eVestment points out.


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Did an activist investor push testing equipment company Agilent Technologies to announce Thursday that it will split into two separate entities by the end of 2014? It is not apparent at first glance. No known activist hedge fund is among the top holders. However, it is interesting to note that Richard Perry’s Perry Corp., a New York City-based event-driven fund, took an initial stake of 1.5 million shares in the second quarter. However, the stake is only worth about $74 million, hardly big enough to rank among its top holdings. TPG-Axon Management, which sometimes takes activist stakes, owned more than 2.2 million shares as of June 30. Of course, the wild card is that we don’t know who has been buying the stock since the end of the second quarter if the buyer did not reach 5 percent of the outstanding shares.


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Capital continues to flow into the Asian hedge fund industry. Goldman Sachs Investment Partners and Cong Li, the former chief investment officer of Mirae Asset Global Investment in Hong Kong, are planning to launch separate Asian hedge funds. According to a report, Goldman has already raised $80 million for Oryza Capital, an Asia-focused long-short equity hedge fund it recently created. Cong Li is creating Zenas Capital Management in Hong Kong to invest in Greater China stocks.


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More former SAC Capital Advisors employees have been tied to the government’s widening insider trading crackdown. One-time analyst Ron Dennis was named as an uncharged co-conspirator in the case involving SAC portfolio manager Michael Steinberg, according to Bloomberg, citing a filing by prosecutors in Manhattan federal court. Steinberg is scheduled to go on trial on Nov. 18 for charges that he traded in the shares of Dell and Nvidia after being tipped off with inside information by his analyst, Jon Horvath. It seems prosecutors stated in a memo to Steinberg’s lawyers that Horvath and Dennis were among a handful of analysts who received and communicated nonpublic information about stocks of at least 10 other technology companies.


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A separate report said prosecutors named 15 other alleged co-conspirators related to Steinberg’s insider trading case. They include Lacey Higgins, who is being linked to questionable trading in Intel from 2006 to 2009, and Mark Lipacis. According to the report, Lipacis and Higgins passed confidential information on Intel to former Diamondback Capital Management analyst Jesse Tortora and former Level Global Investors analyst Spyridon “Sam” Adondakis.


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Hedge fund favorite Priceline.com Thursday passed the $1000 mark, closing at $1000.62. The stock is especially popular among the Tiger Cub crowd. At least three Tiger protégées counted it as their number one holding at the end of the second quarter: Lone Pine Capital, which is also the seventh largest holder of the stock; John Griffin’s Blue Ridge Capital; and Conatus Capital Management, founded in 2008 by David Stemerman, who previously worked at Lone Pine. The stock is also a major holding of Tiger Global, Coatue and Lee Ainslie’s Maverick Capital and to a slightly lesser degree of Viking. The stock is up more than 61 percent year-to-date.

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