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The Morning Brief: eVestment Shines a Light on Fund Exposures

A group of the largest hedge funds is currently bullish on medium grade (BBB/BB) U.S. corporate debt, U.S. fixed-rate asset-backed securities, global high-grade (AAA) corporate debt and U.S. equities with a bias towards large capitalization and growth characteristics. These are the findings by eVestment in a new report detailing aggregate fund exposure. The analysis is based on the 30 largest hedge funds in the eVestment database, which represent 14 percent of its estimated total industry asset base at the end of the third quarter. “Understanding the current market exposures, risks factors, and performance expectations of these funds, especially if a crisis were to occur during the following month, offers a way to gauge the positioning of the broader hedge fund industry,” eVestment states in the report.

Franklin Templeton Investments launched the Franklin K2 Alternative Strategies Fund, its first multi-manager, multi-strategy mutual fund focused on alternative investment strategies. The fund draws on the hedge fund expertise of K2 Advisors, a hedge-fund-of-funds firm, which Franklin acquired in 2012. According to an announcement, the new fund offers daily liquidity for a hedge fund portfolio that seeks lower correlations to traditional asset classes and lower volatility. It is open to retail investors. The fund draws on a wide range of hedge fund strategies, including event-driven, global macro, long short equity and relative value. The Fund’s initial set of sub-advisors includes: Basso Capital Management, LP, Chatham Asset Management LLC, Chilton Investment Company, Impala Asset Management LLC, Jennison Associates LLC, Lazard Asset Management LLC, Loomis Sayles & Company, LP, P. Schoenfeld Asset Management LLC and York Capital Management LP.

J. Kyle Bass’ Hayman Capital Management disclosed it owns 9.5 percent of NMI Holdings, the parent company of mortgage insurer National Mortgage Insurance Corp. In the boiler-plate language typical of a 13D filing, the Dallas hedge fund said it believes the stock is undervalued and reserves the right to discuss the investment with other parties or make some sort of undefined plan for the company. However, it did not provide specific proposals.

Eric Mindich’s Eton Park Capital Management disclosed it had taken a 6.21 percent passive stake in Spirit AeroSystems Holdings, a maker of aerostructures for commercial, military and business jets.

Deutsche Bank cut its price target on Wausau Paper from $14 to $13 as well as its earnings estimates following the release of the paper company’s third quarter results. Wausau is currently the target of activist hedge fund manager Jeffrey Smith of New York City-based Starboard Value LP. Smith recently fired off a 16-page letter detailing how and why he would restructure Wausau Paper, including buying back its stock and issuing a $1 dividend. On October 29, Deutsche Bank lowered its rating on the stock to Hold from Buy.

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