The Morning Brief: JCPenney Surges; Diamondback Calls It Quits

What was up with JCPenney on Thursday? The stock surged 3.50 percent, to $18.14, with volume surging in the morning, despite there being no news on the company. Remember, Bill Ackman’s Pershing Square has made a big bet on this company. And Bloomberg reports that options traders seem to be bearish on the retailer’s prospects and CEO Ron Johnson’s turnaround plan.

Diamondback Capital Management LLC is shutting down. In this case the issue wasn’t lousy performance. Rather, Richard Schimel and Lawrence Sapanski, co-founders of the Stamford, Connecticut firm, decided to call it quits after receiving about $520 million in redemption requests, which amounted to 26 percent of total assets. Amazingly, as recently as November 2010, the firm managed $5.8 billion. But assets plummeted after it was one of several firms raided that month by the Federal Bureau of Investigation. Still, Diamondback ultimately settled with the government, agreeing to pay a $9 million penalty, and was able to stay open for two years after the raid, unlike other firms raided that day. One of its former portfolio managers, Todd Newman, is now on trial stemming from the government’s insider trading investigation.

The pension fund for Transport for London, which runs the city’s various transportation systems, is boosting its commitment to hedge funds. It is preparing to give money to Och-Ziff Capital Management and Arrowgrass Capital Partners and to increase its allocation to Bridgewater Associates.

Hedge funds gained 0.69 percent in November, putting their full year return at 6 percent, according to eVestment Alliance, one of several firms that track hedge fund performance. The best performing strategies so far this year are volatility/options strategies, up 11.55 percent, and credit strategies, up 11 percent. The only losers are commodities and managed futures, both down between 1 percent and 2 percent.

London-based LNG Capital is the latest hedge fund to buy up short-dated Greek bonds with the hopes that the financially strapped country buys back some bonds at face value. The fund has bought Swiss franc-denominated Greek bonds and U.S. dollar-denominated bonds.

London alternatives giant Man Group named John Rohal executive chairman of its North American division, with the mandate to boost the firm’s business in the U.S. He will report to Emmanuel Roman, president and COO of Man. The goal is to expand Man’s business to institutions, foundations and family offices, among other targeted customers.

Here is some very sad news. Wes Swank, managing director for Kyle Bass’ Hayman Capital Management, died earlier this week in a car accident. The 31 year-old apparently ran his Mercedes off the road and hit a tree less than a mile from his Dallas condominium. He was 31. Swank spoke at the November 2011 AR Symposium.

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