Hedge Fund News Wrap: Week Ending 5/16/14

Cloud Computing Could Save Hedge Funds Millions

A report by Greenwich Associates found that hedge funds could reduce computing costs for portfolio analysis by 50 percent by switching over to the cloud.hedge_fund_news_wrap

Regulatory changes, changing investments strategies, and structured products are boosting the demand for new trading technology, and cloud computing could reduce costs and increase efficiency for hedge fund firms.

“Given the potential savings, the contraction of Wall Street IT budgets, improved cloud offerings, and a market that requires more complex calculations to be completed in ever-shortening time frames with ever-greater accuracy, Greenwich Associates believes the financial service industry needs to embrace cloud technology on a much expanded scale,” said Kevin McPartland, Head of Research for Greenwich Associates’ market structure and technology division.

 

Click here for information on TradingScreen’s cloud solutions for the buyside.

 

See detailed coverage from:

HedgeWeek

Financial Technologies Forum

 

 

Stocks Causing Concern for Hedge Fund Managers

Hedge fund managers gathered at the SkyBridge Alternatives Conference, or SALT, to discuss views and ideas about the industry. However, some managers expressed concerns about the broader market, specifically David Tepper from Appaloosa Management.

“I’m not saying go short, just don’t be too friggin’ long,” said Tepper to a room full of investors, wealth advisers, and managers. “Listen, there are times to make money and there are times not to lose money.”

Tepper expressed that he was “nervous” about the stock market. Hedge funds have been trailing behind the broader market for the past five years. Last year, the S&P 500 rose to an impressive 32.4 percent, whereas the average hedge fund returned 9.1 percent.

According to FINalternatives, Tepper added that central banks, especially in Europe, are being too complacent.

“We have this term called coordinated complacency right now to describe the world’s central banks right now,” he said. “The market is kind of dangerous in a way.”

James Dinan, from York Capital Management, chimed in on central bank complacency, adding that interest rates will stay down “longer than people think,” and fears deflation more than inflation.

 

See detailed coverage from:

DealBook

Business Insider

FINalternatives

 

 

Starboard Warns Darden Not to Sell, But Darden Sells Anyway

Darden Restaurant Group today announced a $2.1 billion deal to sell its restaurant chain, Red Lobster, to Golden Gate Capital.

Originally, the restaurant group planned to spin-off the seafood restaurant as a separate company.

Earlier this week, Starboard Value LP had warned Darden not to sell Red Lobster before a special meeting called by shareholders to discuss the move.

Starboard, which owns a 5.5 percent stake in Darden, felt that selling the restaurant would damage up to $800 million of shareholder value.

However, the meeting has yet to be scheduled and Darden went ahead with the sale.

“By enabling us to bolster the company’s financial foundation and increase our focus on the Olive Garden brand renaissance program, we believe this agreement addresses key issues that our shareholders have raised, including the need to preserve the company’s dividend and regain momentum at Olive Garden,” said Darden’s chief executive, Clarence Otis, in a statement.

According to CNN, Darden expects the sale to generate $1.6 billion after taxes and transaction costs. The restaurant group will then use the money to pay down debt, buy back stock, and continue paying its dividends.

Starboard has not released a statement.

 

See detailed coverage from:

DealBook

CNN Money

Reuters

 

 

Russian-Focused Hedge Funds Suffer Losses

As the crisis in Ukraine continues to escalate, Russian-focused hedge funds fall sharply.

According to FINalternatives, the sanctions imposed since Russia’s occupation of Crimea have done little to abate the crisis, but they have sent the country’s stock market into a tailspin. Typically, hedge funds profit from the rising and falling of markets, but the ones bordering the Ukraine have caused steep losses for many Russian-focused funds.

Prosperity Capital, based in Moscow, is down 16.2 percent as of April 24. Firebird Management, which is based in the United States, but invests in Russia and Eastern Europe, is down 14.3 percent.

Ronit Capital LLP also had a small loss on its Russian holdings. In a letter to investors, the London-based fund said, “We did not expect the sequence of events that culminated in the annexation of Crimea.”

“A lot of investors were in some of the most attractively valued equities. If there’s a sentiment shift, then those are the ones hit the hardest as everyone wants to get out,” said Navik Patel, an investor in portfolio of hedge funds at Aberdeen Asset Management.

 

See detailed coverage from:

FINalternatives

The Wall Street Journal