Hedge Fund News Wrap: Week Ending 2/14/14

Hedge Fund Performance: Hedge Funds Drop in Early 2014


Hedge funds are off to a rocky start this year, but they managed to outperform the broader market for the first month.

The Lyxor Hedge Fund Index fell 0.4 percent in January, but hedge funds were not as hard hit as the broader market–the S&P 500 fell 3.5 percent over the same
period of time.

According to the Lyxor Hedge Fund Index, fixed-income arbitrage funds were last month’s best performers, with gains of 1.74 percent. Long-term CTAs, long-bias funds, and special situations funds were among the worst performers, falling 5.4 percent, 1.6 percent, and 0.2 percent respectively.


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Icahn Ends Apple Proxy Battle

For the past six months, activist investor Carl Icahn has been pushing Apple, Inc. to pay out more money to shareholders. Icahn’s non-binding shareholder resolution called for an increase of the current shareholder buyback plan by $50 billion.

However, Icahn has now ended the proxy battle. In a public letter on his website, the billionaire investor wrote that he was “disappointed” by a recommendation from Institutional Shareholder Services, advising apple to vote “no” on the buyback plan.

The I.S.S. wrote, “The board’s latitude should not be constricted by a shareholder resolution that would micromanage the company’s capital allocation process.”

“I do not altogether disagree with their assessment and recommendation in light of recent actions taken by the company,” wrote Icahn on his website.  “We see no reason to persist with our nonbinding proposal, especially when the company is already so close to fulfilling our requested repurchase target.”


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New York Hedge Fund Accepting Bitcoin Investments

A New York-based hedge fund, NYSO HEDGE, has announced that it is now accepting bitcoin deposits. In the week since its announcement, the fund has been able to garner $5.4 million in deposits.

In a press release, the fund wrote, “NYSO HEDGE’s own Risk management team has deemed bitcoin deposits as safe as wire transfers with careful research and considerations.”

In previously released research, the fund contended that bitcoin is “95% more secure than credit cards and 70% more secure than cash.”

For those interested in investing in the cryptocurrency, a minimum investment of $25,000 is needed, and options range from managed accounts, certified investor accounts, and margin accounts.


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Brevan Howard to Close Emerging Markets Fund

Brevan Howard, one of the largest hedge funds in the world, will be shutting down its emerging markets fund amid poor performance.

Last year, the fund fell 15 percent, and 1.6 percent so far this year. In contrast, the MSCI Emerging Markets Index was down 2.6 percent in 2013, while the S&P 500 posted gains of 32.4 percent.

ValueWalk cites that emerging markets had a rough year mostly due to the uncertainty over Fed tapering.

Brevan Howard agrees, writing in an open letter to investors, “Much of this volatility was influenced by news flow in Developed Markets (for example US Federal Reserve and Bank of Japan announcements), making overall position-taking in Emerging Markets assets difficult to time.”

Brevan Howard is best known for its $28 million Master fund, which has never had a down year. Last year, the fund gained 2.7 percent.


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