Once known as the corporate pirates on Wall Street, activist investors have seen their reputations – and the impediments to their success – subside in recent years as smaller investors have become equally thirsty for change. The end result is a climate ripe for large, well-capitalized activist hedge funds and those who work for them.
Hedge funds had a generally poor 2012, up just 5.63% on the year, according to an estimate by Bank of America Merrill Lynch. Investors pulled more than $20 billion from the industry in December alone as some huge names closed their doors. Activist hedge funds, on the other hand, made a killing, and are primed to be even more aggressive through the final 10 months of 2013.
Activist investor Jana Partners saw two of its funds gain over 23% in 2012, while Cevian Capital’s Cevian II fund gained roughly 25%, according to Financial News. Leon Cooperman's Omega Advisors booked a 26% gain. Daniel Loeb’s Third Point Ultra fund, which disclosed a stake in Morgan Stanley in January with the hopes of retooling the bank’s structure and pay, delivered a 33.6% gain in 2012.
The strong performances are likely to attract more capital for activist hedge funds that are already sitting on piles of cash, according to a new report from Moody’s Investors Service. The rating agency expects big things from activist hedge fund managers in coming months – in technology, industrial goods, consumer goods, basic material, pharmaceuticals and energy sectors – so if you’re looking to join a hedge fund, knock on one of their doors.
Sketchy Options Trades (WSJ)
M&A activity is back, and with it comes regulatory scrutiny over questionable options trades made days before the deals went through. And it’s more than just the Heinz bet.
Cohen Cornered? (Bloomberg)
The insider trading investigation into SAC Capital Advisors appears to be inching closer to the firm’s founder, Steven Cohen, who has yet to be charged. Investigators have subpoenaed his 2011 deposition on insider trading compliance, which paints Cohen in a poor light.
Martin Zweig, the co-founder of Zweig-DiMenna Partners who was made famous for predicting the 1987 market crash, died this week at the age of 70. He was a friend, and one of the true gentlemen on Wall Street. Rest in peace Dr. Z.
New Fund (Bloomberg)
Andrew McMillan, the ex-commodity team at Tudor Investment Corp., plans to launch a Singapore-based hedge fund later this year. His first big hire is Singapore lawyer Amy Lee, who is expected to be named CEO.
Irony (Financial News)
Rules requiring big banks to defer bonuses may be well intended, but they’re making it harder for firms to do what lawmakers demand: better manage their costs.
Bonus Cap Consequences (eFinancialCareers)
Europe appears poised to placing a hard cap on banker bonuses. The move may create more headaches than regulators can imagine.
Talk Like a Pro (Business Insider)
Want to be a Wall Street banker? You’ve got to know the lingo first.
Public Hearing (WSJ)
J.P. Morgan CEO Jamie Dimon and other top executives may be called in front of a Senate panel to discuss the "London whale" trading fiasco. The public hearings, if they occur, would likely focus on what Dimon and other execs knew of the massive derivatives bets before everything crumbled.
Buzz Around the Office
Pricey Cup of Joe (Eater.com)
The most expensive drink ever ordered at a Starbucks is called the Quadriginoctuple Frap. It costs $47.30.
List of the Day: Closed Doors
If you’ve got your own office, you might feel obliged to close the door. Here’s why you shouldn’t.
- It blinds you of the vibe of the group.
- It says “go away, I’m busy.”
- It creates an “us vs. them” atmosphere.
(Source: The Daily Muse)