Archive

Reuters blog archive

from Breakingviews:

Soros takes sub-quantum leap into activism

By Christopher Swann

The author is a Reuters Breakingviews columnist. The opinions expressed are his own.

Is George Soros turning activist? His $29 billion hedge fund has famously confronted governments. But facing off with a $1 billion U.S. oil and gas company is novel. The move gives underperforming corporate bosses another scourge to fear.

A bellicose letter from Soros Fund Management to Penn Virginia on Wednesday could easily have come from an established activist like Carl Icahn. Scott Bessent, the chief investment officer at Soros’ firm, wrote that Chief Executive Edward Cloues has presided over “investor relations disasters” and is responsible for “egregious” strategic choices.

Along with Bessent, George Soros and his son Robert seem to have chosen a fairly easy target. Penn Virginia’s modest size made it relatively cheap to accumulate a nearly 10 percent stake. And despite recent gains, Penn Virginia shares are worth no more than five years ago, against a more than 40 percent rise in Exxon Mobil stock and a doubling of the S&P 500 Index. That makes questions over strategy legitimate.

from Counterparties:

MORNING BID – Two to Tango

Wednesday's version of reading tea leaves involves Argentina's economy minister Axel Kicillof, who will be in New York to speak to the United Nations about Argentina's debt situation. In case the U.N. missed it, Argentina defaulted a while back - 12 years ago - and they've been fighting with a group of investors on paying some of their debt since. Which is a roundabout way of saying Kicillof may not just be in New York to talk to the U.N., not when NML, Aurelius and the other holders are all also in New York too, and the judge in question, and any special envoy he introduces to try to wring some kind of compromise out of this situation. There's a big coupon payment due June 30, and the country has been prohibited from doing so unless it pays the holdouts, which it has pledged not to do, giving it a 30-day grace period before being declared in default.

So the thing to watch for is something like a clandestine meeting between all parties to find a way to reach an accord, even if it's the kind of thing that comes down to the July 30 wire - when Argentina would be considered in default again (double-secret default, as Dean Wormer would have it, and really, if John Vernon were alive, he'd have solved this mess a long time ago).

from Breakingviews:

Take hedge fund exuberance with grain of SALT

By Jeff Goldfarb
The author is a Reuters Breakingviews columnist. The opinions expressed are his own.

A wave of hedge fund exuberance should be taken with a grain of SALT. At SkyBridge Capital’s so-named Las Vegas confab this week, a near-unanimous confidence emerged amid moans about conference fatigue. Long-anticipated opportunities in M&A, bargains in Europe and collapsing correlations have finally arrived all at once, if some of the world’s richest investors are to be believed. The consensus itself may, however, give reason for pause.

from Counterparties:

MORNING BID: Mo-Mo and the Hedge Fund Reckoning

Who had the mo-mo mojo and who was crushed by the steamroller becomes evident late in the day Thursday when filings from major hedge fund managers – those things known as 13-Fs – are released.

Hedge funds were hit hard by the decline in the likes of Twitter, Tesla, Netflix and a lot of other names that long/short investors had favored throughout 2013 and early 2014, but their substantial decline cut the legs out of a lot of leveraged managers looking to continue to profit on the big run-up in that sector.

from Breakingviews:

Hedge fund customers’ yachts washing further away

By Martin Hutchinson
The author is a Reuters Breakingviews columnist. The opinions expressed are his own.

Hedge fund customers’ yachts are washing further away. The flood of money – now $2.7 trillion – in hedge funds has squashed returns below public stock markets. Private equity doesn’t seem to be doing much better. Investors beware.

from Counterparties:

MORNING BID – Momentum stocks: A primer

Lots of stocks have been getting killed in the last several weeks and the declines don’t seem really like they’re set to abate headed into a week where news is again at a premium (sure, earnings, but it’s just a few names, and they’re mostly decidedly not in this category of the momentum names that fueled the rally in 2013). So the likes of Facebook, Tesla Motors, Netflix, Alexion Pharmaceuticals, and a bunch of others have seen their fortunes turn in the market. But at this time we thought it would be a good way to get into this topic again by trying to lay out just what the hell a momentum stock is in the first place, because they exhibit a number of characteristics beyond just “a stock that’s going up very high.” So here goes:

Growing Industries: Internet retail, internet security, solar, cloud computing, companies that use the cloud for providing services (think Salesforce.com), biotechnology, and anything else where the prospects for growth are big and related to a growing sector of the economy. Utilities don’t really qualify here, naturally. The reasons are two-fold: for one, in order to jump onto a rising growth story, you’d want to be in a place where the expected future returns outpace the returns you’re getting now, something you won’t get from the telephone company, someone who sells toothpaste, or the guys hooking up the electricity.

from Financial Regulatory Forum:

The JOBS Act at age two – prodigy or enfant terrible?

By Stuart Gittleman, Compliance Complete

NEW YORK, Apr. 3, 2014 (Thomson Reuters Accelus) - The financial services industry is still getting used to the two-year old JOBS Act, as funds gingerly begin to explore new general-solicitation freedoms and "crowdfunding" venues sort through the rules, speakers said at a Fordham Law School forum in New York.

As mandated by the JOBS – or Jumpstart Our Business Startups – Act enacted in April 2012, the Securities and Exchange Commission has adopted rules for general solicitations that became effective in September 2013, and is reviewing comments to a December 2013 set of proposed crowd-funding rules.

from Felix Salmon:

Trish Regan, Einhorn apologist

Ever since the story first broke, more than five weeks ago, that David Einhorn was suing Seeking Alpha, the Israeli financial website has been very, very quiet on the topic. Sometimes they have simply failed to respond at all to requests for comment (including mine); other times, as with Andrew Ross Sorkin, a spokesman will formally decline to comment.

So it was a big deal when Seeking Alpha president David Siegel appeared on Bloomberg TV today, and answered Trish Regan’s questions about the Einhorn lawsuit. Or, at least, it would have been a big deal, if Regan had actually bothered to ask him any of the obvious questions. Like, for instance, whether he’s going to fight it, or what he thinks of the merits of the case.

from Breakingviews:

Dan Loeb bids against himself at Sotheby’s

By Richard Beales
The author is a Reuters Breakingviews columnist. The opinions expressed are his own.

Dan Loeb seems to be bidding against himself at Sotheby’s. The Third Point hedge fund activist surprised the auctioneer by nominating three directors to run against the incumbents, even after the firm offered him one uncontested board seat and even acted on some of his gripes.

from Financial Regulatory Forum:

IA brief: SEC examiners give first look at hedge fund exam findings

By Jason Wallace, Compliance Complete

NEW YORK, Feb. 11 (Thomson Reuters Accelus) - Last week, representatives of the Securities and Exchange Commission gave the first of many reports concerning its "presence exam" initiative for conducting initial regulatory exams of private advisers, and reported a lower rate of deficiencies compared with regular exams. The panel highlighted exam findings and staff observations concerning investment conflicts, marketing, valuation and custody.

The Dodd-Frank Act required approximately 1,500 private advisers to register with the SEC in 2012 - resulting in a current population of approximately 4,000 registered private advisers.

  •