Hedge Fund News Wrap: Week Ending 5/23/14

Hedge Fund Assets Up At $2.09 Trillion

According to the Eurekahedge Report, hedge funds are up 0.78 percent year-to-date, with total global assets at a new high of $2.09 trillion.  

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Over the past twelve months, North American funds of hedge funds have been up 6.42 percent, which surpasses the Eurekahedge Hedge Fund Index by 1.85 percent.

Eurekahedge also reports that European hedge funds have recorded their seventeenth consecutive month of net inflows. Their capital allocation is at $24.3 billion year-to-date. In contrast, Japanese hedge funds were down for their fourth consecutive month, but have outperformed the Nikkei 225 Index by more than 10 percent year-to-date.

Long/short equities funds have also recorded their seventeenth consecutive month of net asset inflows, with capital allocations at $46.9 billion year-to-date. Total assets for long/short equities hedge funds is at $708.7 billion, which is close to the historical high of $756 billion from December 2007.

 

See detailed coverage from:

HedgeCo

 

Goldman Sachs Identifies 50 Stocks Loved by Hedge Funds

A quarterly analysis of hedge fund holdings by Goldman Sachs has identified the fifty most beloved stocks by hedge fund firms around the globe. The research analyzed the performance from 777 hedge funds with a total of $1.9 trillion under management.

While the industry continues to underperform the broader market, the stocks that hedge-fund managers buy and sell attract attention from retail investors.

“Performance headwinds from stock-picking were compounded by poor market timing,” said Goldman Sachs in a note to its clients. Many firms cut their holdings in media and internet stocks in early April, just when many of them were starting to pick up momentum again.

According to the analysis, Google Inc. tops the list, with 58 funds listing it as one of their top ten stock holdings. Apple Inc. trails behind in second, losing its number one spot from last quarter, with 51 funds having it as one of their top ten holdings. General Motors, Time Warner Cable, Microsoft, and Facebook also make the list.

 

See detailed coverage from:

The Wall Street Journal

Business Insider

 

 

 

Starboard Threatens to Oust Darden’s Entire Board

Last week, Starboard Value warned Darden Restaurant Group to not proceed with the sale of their restaurant chain, Red Lobster, without a shareholder vote. However, the restaurant group went ahead with the sale of Red Lobster to Golden Gate Capital for $2.1 billion.

Now, the hedge fund firm is seeking to oust the entire twelve-member Darden Board for selling the seafood chain without a shareholder vote. According to FINalternatives, Darden has insisted that it did not need the vote of shareholders to make the sale.

However, Starboard feels differently, “The board has violated a clear shareholder directive and disenfranchised shareholders. The announcement of the Red Lobster sale demonstrates that Darden’s current board does not regard upholding shareholder interests as a priority.”

Starboard owns a 5.5 percent stake in Darden. The firm has said that selling Red Lobster on its own could cost shareholders $800 million.

According to the Wall Street Journal, Darden shares have fallen ten percent this year, and five percent since Starboard’s stake was revealed.

The activist firm stated that it believes a “wholesale board change is required to reverse the years of poor performance, poor governance, and shareholder value destruction.”

 

See detailed coverage from:

FINalternatives

The Wall Street Journal

Reuters

 

 

Citadel Is First Hedge Hund to Raise Money in China

Citadel LLC has become the first international hedge fund to raise money in mainland China from wealthy Chinese individuals and local companies.

On March 26, Citadel Foreign Investment was approved by Chinese regulators for currency exchange, making it the first qualified domestic limited partner, according to a statement from Shanghai’s Information Office.

The firm, which is based in Chicago, had a US$50 million quota. The pilot program in China will have US$5 billion in quotas.

The Wall Street Journal reports that China has pledged to promote “freer movement of capital in and out of the country” and to make the exchange rate more “market-based for investment purposes.”

According to FINalternatives, Canyon Partners, Man Group, Och-Ziff Asset Management, Oaktree Capital Management, and Winton Capital Management have also been awarded licenses in China.

 

See detailed coverage from:

Bloomberg News

FINalternatives

The Wall Street Journal