Hedge Fund News Wrap: Week Ending 10/3/14

Ackman Raises More than $3B in Amsterdam I.P.O

Activist investor William Ackman has raised a total of $3.07 billion ahead of an initial public offering in Amsterdam, the company said on Wednesday.
The fund, Pershing Square Holdings, with prices listed at $25 a share for a market capitalization of $6.2 billion, will start trading on Euronext Amsterdam on October 13th of this year.

The fund will allow Ackman to access a permanent pool of capital, which will facilitate bigger and bolder bets after years of struggling with corporate boards in the United States, according to The New York Times.

The completion of the offering of Pershing Square Holdings is a seminal event in the history of the firm,” said Ackman in a press release on Wednesday.

The fund will be separate from Ackman’s Pershing Square Capital Management, which has $14.1 billion in assets under management.

 

See detailed coverage from:

DealBook

ValueWalk

Reuters

 

 

 

SEC Charges Two at Herbalife with Insider Trading

In a rare move, the Securities and Exchange Commission has charged two men of possessing confidential information about a hedge fund’s investment strategies. In this case, Filip Szymik and Jordan Peixoto have been accused of insider trading in Herbalife shares after one of them allegedly obtained confidential information about William Ackman’s short position on the company.

According to the SEC, Peixoto made $47,000 in illicit profits, and Syzmik faces a $47,100 civil penalty.

The New York Times calls the legal move a “twist” on the typical investigation into leaks of earnings information, future mergers, and other confidential corporate announcements. It also broadens the scope of investigation in how the SEC pursues insider trading.

According to investigators, Syzmik first learned of William Ackman’s short position from a former roommate, who at the time, was an employee of Ackman’s Pershing Square Capital. While Szymik’s roommate did not personally make Herbalife trades, nor Syzmik himself, the information was then shared with another Herbalife colleague, Peixoto, who bet against Herbalife.

Szymik and Peixoto chose to engage in illicit tipping and trading in advance of the announcement of market-moving information, and today they are behind held accountable for these offenses,” said Sanjay Wadhwa, a senior SEC enforcement official.

Syzmik’s lawyer contends that his defendant did not profit in any way from the trades.

Peixoto’s lawyer states, “This is another instance of the SEC going too far and penalizing somebody for conduct that is not a violation of the law.”

While the case does not seem like a typical insider trading action, the SEC has in the past filed insider trading cases that do not involve corporate insiders.

 

See detailed coverage from:

Bloomberg News

DealBook

Business Insider

 

 

 

Citi to Resume Hedge Fund Sales

Back in August, the Securities and Exchange Commission and Citigroup agreed on a $285 million settlement that severely limited the bank’s ability to sell investments in hedge funds and private equity.

However, it seems that the regulator has changed its mind. A five-member SEC panel unanimously voted to give Citigroup giant waivers, which now allows the bank to resume the sale of these investments to wealthy clients. The bank also retained its special status as a “WKSI,” or “well known seasoned issuer,” which allows large companies to quickly issue stocks or bonds without SEC review.

However, SEC Commissioner Kara Stein criticized the move by the commission, stating that its website “is replete with waiver after waiver for the largest financial institutions,” creating the impression that “some firms are just too big to bar.”

The August restriction came after a federal judge approved the SEC’s 2011 settlement with Citigroup over the sale of collateralized debt obligations to clients in 2006 and early 2007. CDOs were highly controversial investment packages that some contend led to the financial meltdown of 2008.

Before the restriction, Citi offered private-banking clients access to about 40 hedge funds.

 

See detailed coverage from:

The Wall Street Journal

FINalternatives

Barron’s

 

 

 

Hedge Funds Pay Attention to Facebook Messages for Pharma Bets

Social media over-share has now become a go-to source of consumer information for Wall Street traders.

According to Bloomberg News, a number of companies are now packaging conversations on Facebook, Twitter, and online patient forums to sell to drug manufacturers, insurers, and hospitals who want to understand how people manage their health in the real world.

For instance, Treato, a Tel Aviv-based data company, sends fund mangers weekly or monthly reports with analysis of online conversations that may lead to early signals about a drug’s side effects or prescription patterns.

However, not all investors are confident about patient data. According to Businessweek, some investors feel that this data would only affect a drug maker’s stock if it escalated its way up to the U.S. Food and Drug Administration and led to restrictions in a drug’s use.

Regardless of how investors feel, data mining is increasingly becoming important in an age that is dominated by technology.

 

See detailed coverage from:

Bloomberg News

Fierce Pharma

Businessweek