Hedge Fund News Wrap: Week Ending 5/9/14

Hedge Fund Performance: Hedge Funds Fall 0.73 Percent in April

According to FINalternatives, “the chill felt by hedge funds in March did not abate last month,” and the HFRX Global Hedge Fund Index showed just that for the month for April.


The HFRX Global Hedge Fund Index fell 0.73 percent last month, falling behind the broader market, as The Standard & Poor’s 500 Index rose 0.7 percent in April.

Twelve of the sixteen strategies tracked by the HFRX Index saw losses in April. Emerging markets lost as much as 2 percent, and are down 2.38 percent year-to-date. Fundamental growth funds shed 1.8 percent (up 1.73 percent YTD), equity hedge funds were down 1.42 percent (0.19 YTD), fundamental value funds fell 1.38 percent (1.17 percent YTD), and convertible arbitrage funds shed 1.38 percent (up 0.77 percent YTD).

The best performing strategies in April include master-limited partnerships (up 2.28 percent), equity market neutral funds (up 0.55 percent), and merger arbitrage funds (up 0.11 percent).


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Sotheby’s Ends Proxy Battle with Loeb, Set to Reimburse $10 Million

After a bitter proxy battle, Sotheby’s has decided to raise the white flag and end its feud with Dan Loeb’s hedge fund, Third Point.

The famous auction house announced Monday that it would give Third Point the three board seats it was originally seeking, which includes one for Dan Loeb. Last month, Sotheby’s rejected the nominees made by Third Point, stating that they would “add no relevant expertise not already represented on the board of directors.”

In addition, Sotheby’s has agreed to relax its poison pill’s impact on the hedge fund, even though it had won a court battle last Friday that would’ve prevented Third Point from delaying the company’s annual meeting in an effort to eliminate the poison pill.

The court battle cost Sotheby’s $5.7 million, and now, the company has agreed to pay $10 million to cover Third Point’s costs for the bitter battle that spanned seven months.

Third Point, which manages about $14 billion in assets, owns 9.6 percent of Sotheby’s.


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eVestment News




25 Highest Paid Hedge Fund Managers Took $21.15B Home Last Year

Regardless of the fact that hedge funds have underperformed the broader market for the past five years, managers continue to take home top dollar.

According to the annual ranking by Institutional Investor’s Alpha Magazine, the top 25 highest-earning hedge fund managers in the US raked in a combined $21.15 billion in compensation last year. This is the highest compensation amount since 2010, and is double of what hedge fund managers took home in 2012.

David A. Tepper, the founder of Appaloosa Management, took the top spot with a total compensation of $3.5 billion last year. He was followed by SAC Capital’s (now Point72 Asset Management) Steven A. Cohen, who took home $2.2 billion, and Paulson & Co.’s John Paulson, who raked in $2.3 billion.

According to The New York Times, most hedge fund clients were disappointed in 2013. The average hedge fund returned 9.1 percent, according to the HFRX Global Hedge Fund Index. In contrast, the Standard & Poor’s 500-stock index rose to an impressive 32.4 percent last year.

In the words of The New York Times, “Hedge fund managers heavily populate the so-called 1 percent in the United States. And they are getting richer.”



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Institutional Investor’s Alpha


Business Insider




Hedge Fund Manager to Serve 4 Years in Prison for Ponzi Scheme

Jason Konior, a former hedge fund manager in New York, was sentenced to four years in prison for running a Ponzi scheme that resulted in a $2.9 million loss for other hedge fund managers.

According to Reuters, Konior, who founded Absolute Fund LP in 2006, offered investors the ability to trade securities with leverage greater than they would be able to receive on their own. With the money Konior solicited from new investors, he would pay old investors who were demanding redemptions and failed to disclose the loss in between, resulting in a Ponzi Scheme.

According to prosecutors, Konior used some of the $2.9 million he stole to pay himself and cover “business” expenses.

Konior must forfeit $2.9 million, and will be on supervised release for three years.


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