Tag Archives: hedge fund
Posted on 17. Apr, 2012 by Wilensky.
These Apple charts from Business Insider are getting more and more interesting.. With all the headlines touting AAPL as hedge fund’s number one holding, it’s a bit startling to see how small a slice of the company they actually control. Looks like wirehouse brokers couldn’t have found an easier story to pitch to their clients..
Posted on 09. Mar, 2012 by Wilensky.
Phil Falcone is struggling. Not in normal person terms as he’s still a billionaire, but you can strike the ‘multi’ from the front of that this year. After suffering 47% losses in 2011, Falcone was forced to lock up his client’s money in light of his failed LightSquared endeavor which was wrecked by US regulations. Many of his clients are frustrated with performance, resulting in a recent lawsuit filing against Harbinger Capital over “deceptive and misleading statements” made while raising money for the fund. It seems like Phil has some serious unwinding of investments ahead, along with some deft PR work, before he shows some serious profit.
Posted on 06. Feb, 2012 by Wilensky.
2011 was a brutal year for hedge funds, averaging a miserable -4% return for investors. Billionaire Phil Falcone was no exception as his huge bet on LightSquared dragged performance down to a whopping -47% on the year.
Most of the decline in the Harbinger Capital Partners Offshore Fund I came from Falcone’s investment in LightSquared Inc., which plans to offer high-speed data service to as many as 260 million people. The Reston, Virginia-based company is awaiting final clearance from the Federal Communications Commission as regulators weigh test results that show the service’s signals disrupt global-positional system equipment used by cars, tractors, boats and planes.
“The decline was primarily due to a conservative adjustment in the fund’s holdings of LightSquared, to be consistent with the results of work done by the fund’s third- party valuation firm,” Lew Phelps, a spokesman for the New York-based fund, said in a statement. “The valuation takes into account uncertainty about the outcome of political issues related to alleged interference with the GPS system by LightSquared transmitters,” added Phelps, who confirmed the fund’s loss.
That the fund had to cut the value of its LightSquared stake by 59 percent illustrating the precarious position Harbinger Capital is sitting in. The fund, which managed $5.7 billion at the end of last year, has put about $3 billion into LightSquared, and the investment accounted for 62 percent of the main fund at the end of May. Not a smart play according to Jonathan Atkin, an analyst with RBC, who thinks LightSquared could run out of money within six months.
Falcone’s portfolio of private- equity investments didn’t help the fund either as they tumbled about 31 percent in 2011, according to an unidentified source who asked not to be named due to the privacy that surrounds hedge fund returns. The largest holding in the portfolio, which Harbinger is currently liquidating, is a 27 percent stake in Ferrous Resources Ltd., an iron-ore producer in Brazil that canceled plans to sell shares to the public in June 2010 because of volatile market conditions.
Posted on 30. Jan, 2012 by Insider Monkey.
Guest post by: Insider Monkey
We have been urging investors to focus on high dividend stocks for the past year. The problem is, most people don’t know how to time the market. Dividend-yielding stocks are valued like any other stocks, and, like other investments, when they are undervalued is the best time to buy. We used price-to-book and price-to-earnings ratios to pick the most undervalued stocks.
Here is a list of high-dividend yielding stocks (at least 7% dividend yield) that have P/B ratios less than 1.2 and forward P/E ratios of 10 or less. Most of these stocks are foreign stocks which shouldn’t be very surprising. We think the crisis in Europe is overblown and both European banks and telecom stocks are undervalued right now. We know that most dividend investors are conservative investors but we believe this is a great time to at least initiate a small diversified position in the European stocks that nobody wants to own.
1. France Telecom (FTE) is a mobile operator which provides internet access and telecommunications services in Europe. The company has a market cap of nearly $40 billion. The stock offers a dividend yield of 13%. It’s currently trading with a forward P/E of 8.35 and a P/B ratio of 1.1. FTE lost 17% last year. France Telecom isn’t a popular stock among the 350+ hedge funds we are tracking. The only hedge fund with a position in FTE was Two Sigma Advisors.
2. Annaly Capital Management, Inc. (NLY) manages a range of real estate related investments. The company has a market cap of $16 billion, a dividend yield of 13.8%, a forward P/E of 7.22, and a P/B of 1.01. NLY returned in line with the market during 2011, returning 2.5%. Many hedge funds were buying NLY last year. Bill Miller’s Legg Mason Capital Management had more than 7 million shares of NLY during Q3. Some famous hedge fund managers also invested in NLY include D. E. Shaw and Cliff Asness.
3. Banco Santander, S.A. (STD) offers a range of financial products to European countries, Latin American countries and the United States. It has a market cap of $66 billion and a dividend yield of 11.12%. It trades with a forward P/E of 4.83 and a P/B of 0.63. The stock lost 23% in 2011. Ken Fisher was a huge fan of STD last year; he had nearly 29 million shares of STD at the end of September. Jim Simons and Bruce Berkowitz picked STD during the third quarter, each initiating a new position.
4. Telefonica, S.A. (TEF) is a $79 billion market cap company that provides telecom services in Spain, the rest of Europe and Latin America. It offers a 7.67 forward PE ratio, a P/B ratio of 1.13, and a dividend yield of 12.22%. The stock lost 17% last year. Jim Simons’ Renaissance Technologies is a fan of TEF. The fund had over $46 million in the company at the end of September after increasing its position by 373% in the third quarter.
5. Telecom Italia S.P.A. (TI): Telecom Italia S.P.A. is a company based in Italy that operates in the telecommunications sector. It lost 12% in 2011. The stock has a market cap of $18.3B, offers a dividend yield of nearly 8%, is priced at a forward P/E of 6.33, and has a P/B ratio of 0.62. Jim Simons was a fan of TI last year. Steven Cohen and Israel Englander also had very small positions in Telecom Italia.
6. VimpelCom Ltd. (VIP) VimpelCom is a group of integrated telecommunications services operators. VIP has a dividend yield of 7.68%. It also has a forward P/E ratio of 7.74 and a P/B ratio of 1.09. It has a market cap of $13.4 billion and lost 33% during the past year. D. E. Shaw had 1.37 million shares of VIP in his portfolio, according to Q3 filings. Louis Bacon Moore sold his fund’s $13 million position during the third quarter.
Posted on 27. Jul, 2011 by Maxwell Leary.
On Tuesday we learned that George Soros was returning all of the capital of outside investors to his fund, following a path laid down by legendary investors like Stanley Druckenmiller and Carl Icahn.
By closing their funds to outside investors, these managers will be able to escape attempts to regulate them. They won’t be classified as hedge funds anymore. Despite their billions of dollars under management, they’ll simply be private investors or family funds.
Today we learn that Steve Cohen, the founder of SAC Capital, is closing his flagship fund to outside investors. He hasn’t yet decided to refund their capital. For now he’s just not allowing them to contribute more. But people familiar with the company believe that this could be the first move to eliminating outside investors altogether.
This is another example of hedge fund regulation backfiring. Instead of providing more transparency, Dodd-Frank is driving hedge funds deeper into the shadows. It’s unintended consequences gone wild.
Full article available @:
Posted on 19. May, 2011 by Efalken.
The World’s First Twitter-Based Hedge Fund:
This week, Derwent Capital Markets, a London investment firm, launched a $40 million hedge fund that will use Twitter to guide its investments. The world’s first social media-based hedge fund will monitor a selection of tweets in real-time to feel out market sentiment before placing its bets…
The professors harvested tweets for key words and plugged them into an algorithm to determine the mood of the broader market. Using this mood index, the professors predicted the Dow’s daily fluctuations in 2008 with an astounding 87 percent accuracy.
I remember smart people looking at keyword algorithms to predict asset fluctuations in the 1990′s, and these projects invariably foundered. Thus, it’s not a new idea, just a new medium, in this case Twitter. I’m skeptical.
Posted on 19. May, 2011 by Efalken.
It’s well-known that there’s a backfill and survivorship bias to many Hedge Fund indices. As most indices promote their product, this is understandable. Yet just as with the equity risk premium, the hedge fund bias usually neglects the adverse timing bias: that market inflows and outflows make the raw time series returns overestimate the return to an average investor. Thus, many funds with $100MM in assets have great return their first year, of say 50%, and then get on the cover of a big magazine, get $1B, and lose %20. Is the return on such a fund the average–geometric or arithmetic–of the 50% and -20% return, or should it weight the 20% loss more, reflecting the performance of the average investor in that fund?
I remember in 2004 or so when convertible bonds got rocked, convertible bond indices simply disappeared, merged into other indices within broader Fixed Income categories. But then, after a strong rebound, they returned as if nothing happened.
We use dollar-weighted returns (a form of IRR) to assess the properties of actual investor returns on hedge funds and compare them to buy-and-hold fund returns. Our main finding is that annualized dollar-weighted returns are on the magnitude of 3 to 7 percent lower than corresponding buy-and-hold fund returns. Using factor models of risk and the estimated dollar-weighted performance gap, we find that the real alpha of hedge fund investors is close to zero. In absolute terms, dollar-weighted returns are reliably lower than the return on the S&P 500 index, and are only marginally higher than the risk-free rate as of the end of 2008. The combined impression from these results is that the return experience of hedge fund investors is much worse than previously thought.
Antti Ilmanen estimates a 3-5% survivorship bias, and a 1-3% backfill bias in Hedge Fund indices, so be sure to add to those. Here’s something simple and valuable the new Consumer Financial Protection Bureau can do: monitor and disseminate accurate asset class performance data, eliminating the bias present in most indices that tend to inflate all of them.