Following a disappointing year for Bill Ackman, in which his Pershing Square returned -13.5%, moments ago Ackman got some bad and some good news. The bad news is the Pershing Square was among 10 investment advisory firms who were busted by the SEC for engaging in pay-to-play schemes, or accepting pension fund fees within two years of making donations. The good news: the penalty is a whopping $75,000.
The core thread of next year's relatively downbeat "surprises" from Seabreeze Partners' Doug Kass is that the crowd is wearing Trump-colored glasses and that the single-biggest surprise is how quickly the bloom comes off the Trump flower.
Over the last several years, we have observed an accelerating trend of flows out of active funds and into passive vehicles. Price sensitivity of investors to fees, coupled with poor performance trends, have conspired against active funds, and year-to-date flows out of active have reached a post-crisis high. As of this moment, the outflows from active funds have surpassed $200 billion: an all time high.
The writing was on the wall three weeks ago when we reported that iconic hedge fund Perry Capital had lost some 60% of his AUM as LPs were rushing to withdraw their money. So it is probably not very surprising that having lost more than half his assets moments ago Bloomberg reported that Perry's flagship fund is shutting down: PERRY CAPITAL TO CLOSE FLAGSHIP FUND AFTER ALMOST THREE DECADES
The hedge fund run by Goldman alum Richard Perry, has lost more than half of its assets in less than a year after posting declines since 2014.Perry's assets slumped to $4 billion as of the end of August compared with $10 billion in September last year. The reason for the tremendous outflows is that Perry has posted losses of 18.4% from the beginning of 2014 through July of this year.
Many thought that having been squeezed between the terrible performance of his Valeant long and his Herbalife short, that Bill Ackman would quietly fade into the sunset. No such luck, and as he revealed moments ago in a 13D filing, the Pershing Square founder has just gone activist on Chipotle, revealing a 9.9% stake, announcing he is "intend to engage in discussions" with management and the board.
Today is the deadline for hedge funds to submit their Q2 13-F filings. Among the more notable changes was the previously reported 55% increase in Warren Buffett's Apple shares, offset by the cut in his Wal-Mart stake; Elliott's addition to stakes in security firms Qualys, Fortinet, CyberArk; ValueAct's new stakes in Morgan Stanley, Seagate; Tiger's exit of Netflix; Jana addition of Time Inc, and Soros' cut of his gold miner positions.
In a mostly quiet session, European and Asian stocks rose, pushed higher by financial stocks and the USDJPY which initially dipped on some hawkish comments by BOJ deputy governor Iwata, only to rebound later in the session, lifting the Nikkei 1.1%, while the Stoxx 600 rose 0.4% led higher by the banking sector. S&P futures are unchnaged after yesterday's last hour ramp. The key event is the BOE decision due in half an hour.
While we have often documented the dramatic underperformance by the hedge fund industry over the past decade, today we learn that "vanilla" asset managers were also hurt over the past year in which the S&P went nowhere. Case in point: Calpers, the largest U.S. public pension fund which as the WSJ reports posted its lowest annual gain since the last financial crisis due to heavy losses in stocks.
In the classic "pyramid" scheme, participants attempt to make money solely by recruiting new participants into the program. The hallmark of these schemes is the promise of sky-high returns in a short period of time for doing nothing other than handing over your money and getting others to do the same. But, like most news that goes out incorrectly, nobody noticed the retraction and nobody cared. Here’s what Dow Jones’ official retraction of the morning’s news looked like when it was issued later in the morning, with Herbalife stock already trading up nearly 15%
Pershing Square, one of the worst performing hedge funds of 2015 and 2016, has laid off eight lower-level employees this week, the WSJ reports. The cuts, which largely involve back-office employees in technology and investor services, amount to more than 10% of the activist hedge fund’s staff.