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Cheap Billionaires

Many times while speaking to service providers, hedge fund managers, and industry-insiders there is talk about how the ultra-wealthy are thrifty or cheap. Typically this talk comes from those trying to get money or fees from these families, but the topic has come up enough that I wanted to address it directly here from what I have found to be true.

Top 6 reasons Billionaires are seen as Cheap:
  1. Bigger Target: As families reach a billion dollars in net worth it is harder for them to hide because of their number of employees, and accomplishments in selling a business or owning a large operating entity.  Also, the very fact that they are worth around $1B or more and not just $20M or $100M makes every person who hears of the family likely to tell others about them, further making it harder to "fly under the radar" and avoid a constantly line of sales pitches.  As a bigger target billionaire families get pitched many times a day for by service providers, consultants, fund managers, politicians, non-profits, impact investment groups,  and their own friends and family for money.  This forces them to build walls around them, a thicker skin, and most times thinner patience for such activity.
  2. Control:  As you may have read about in my recent book "The Single Family Office," many of the world's wealthiest families became so through controlling a large stake in an operating business. This level of influence on where a company is going and being able to manage the details becomes part of who they are. I have seen that this carries over to service providers as well, the families may want to work with someone local, or not hire anyone at all as they may feel more comfortable and in control of costs and delivery by hiring some of the best talent and having them work internally on their IT, Accounting, or Investment Management work rather than outsourcing.
  3. Budget Perception: One reason I believe many see billionaire families as overly thrifty is a misconception on their budgets internally.  Just about every family I speak with talks about being resource constrained, as even if they are worth $20B as one middle east family I know relatively well, they are not a $150B asset manager or sovereign wealth fund, and they have real team and due diligence constraints.  An IT service provider for example may see that a customer service business is owned by a $1B+ net worth family and may think they want the best of the best, top of the line solution for their cloud security...yet that customer service business may only be doing $10M a year in revenue, so the billionaire family may only sign off on spending $10,000 a year on a cloud solution and not $150,000 a year as the IT consultant "knows" they should as a best practice.  The problem is IT person believes the family is going to throw money at something based on the family's net worth and not the business unit's budget.
  4. Leverage: Many investment funds and service providers would like to brag about having a billionaire families as a client, and these families know that.  For example at in our Family Office Executive Search subsidiary we landed a billionaire family and their foundations as a client last month, and we were open to charging a slightly lower fee simply because it was a great family to be serving, well-known globally, and most importantly we wanted to grow that relationship long-term for other ways to work together such as speaking at one of our Wilson Conferences or exploring our $400M AUM Platinum & Gold Storage & Investment Partnership (precious metals).
  5. Necessity:  Many families have weathered depressions and down turns in their business to get to where they are, so they know when things get tough that they need to either already be lean or know how to get down to what is critical and needed for core operations. This breeds a mindset of wasting less, and when something is not critical to raising revenue or profits, to carefully allocate resources to it. There is also a lack of blind trust in all but the top-tier most trusted service providers such as a world class attorney or CPA in believing what is being recommended to the family.  The trouble with outsourcing or relying upon outside counsel in many areas such as IT, insurance, staffing, etc. is often times the more informed person in the room, recommending how the family spends their money is also the person profiting from that spend (IT consultant, insurance broker, executive search firm, etc).
  6. Stewardship: Finally, those who have reached $100M or a $1B in wealth are in some cases superior stewards of their wealth, mostly in terms of building it, but also defending it against those who would want to take some of it from them whether it be competitors, litigators, etc. They have learned over time that everything is negotiable and many families have built their wealth by buying distressed assets, not overpaying staff, and slashing expenses after taking a company over.  These families pride themselves on running operations lean to maximize their bottom line on a business.
Are billionaires cheap?  There are examples of giving away a Ferrari to a friend and washing out Ziploc bags to re-use them on both ends of the spectrum, but the next time someone complains that a utlra-wealthy is "cheap" I believe the points above would explain a good portion of the drivers behind that perception.

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SkyBridge Capital's Seoul Office

New York Hedge Fund Firm SkyBridge Lands in Seoul, South Korea

A New York City-based hedge fund firm with approximately $13 billion in assets under management SkyBridge Capital, announced it has opened an office in Seoul, South Korea.
Michelle Cha, who has more than 10 years of industry experience including roles in sales, marketing, global investment and research from various financial institutions, has joined as a vice president and will lead the firm's Asia regional marketing effort.
SkyBridge Capital's alternative investment offerings include multi-strategy, commingled funds of hedge funds products, customized separate account portfolios and hedge fund advisory services. Due to increasing demand for these types of investment offerings throughout Asia, SkyBridge has been incrementally increasing its presence in the region over the past three years.
"We are excited to further establish and expand SkyBridge's presence in South Korea," said Ray Nolte, co-managing partner and chief investment officer at SkyBridge Capital. "Over the past three years, I and other senior members of our investment and marketing teams have spent a lot of time in the region, forging partnerships and familiarizing ourselves with the investment landscape. Michelle's role will be invaluable as we continue this effort."
The SkyBridge Capital (Korea) office is located in the heart of Seoul's financial center, at Two IFC Building in Yeoido. The firm also actively markets its products in Japan through a strategic partnership with a locally licensed broker-dealer and placement agent.
Source: PR Newswire

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Frontier Markets Mutual Fund

Driehaus Capital Forms Driehaus Frontier Emerging Markets Fund

Driehaus Frontier Emerging Markets Fund, the new mutual fund offering provides institutional investors with dedicated exposure to high growth frontier market companies, has been launched by Driehaus Capital Management.
The fund is managed by Portfolio Manager Chad Cleaver, CFA, who also serves as the lead portfolio manager of the Driehaus Emerging Markets Small Cap Growth Fund and as co-portfolio manager of the Driehaus Emerging Markets Growth Fund. These funds have held equity allocations to frontier market countries since 2008 and 1998, respectively. The fund leverages existing Driehaus emerging markets investment research while providing the emerging markets team, and the wider Driehaus research platform, with the benefits of additional market insights into the frontier markets universe.
According to Mr. Cleaver, "Frontier markets are an increasingly attractive opportunity set for investors. The investment universe is comprised of companies that are often under-owned by investors while supported by strong demographics, increasing direct investment, and growing local demand. Further, frontier markets serve as a strong diversifier as frontier market equities have a fairly low correlation to other segments of the equity market."
The diversification benefits of a frontier market allocation are evident when comparing the correlations between frontier markets to other segments of the equity universe. For the 10-year period, the highest correlation for frontier markets is 0.67 to global (ex-US) large cap equities. This is superior to even the lowest correlation between any other two segments of the equity universe.
Source: PR Newswire

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Third Point Buys Yum! Brands

Hedge Fund Manager Dan Loeb Pours into Yum! Brands

The hedge fund manager Dan Loeb and Keith Meister have taken big stakes in Yum! Brands, which owns KFC, Pizza Hut and Taco Bell, according to CNBC.
Corvex is now one of Yum's top five shareholders, purchasing shares early in the first quarter of 2015, according to sources. Meister will offer more details about his investment on Monday at the IRA Sohn Conference.
Meister bought Yum stake earlier in the first quarter, according to the sources.
Shares held their sharp gains.
Earlier, Dan Loeb's Third Point took new positions in Yum Brands and Devon Energy while adding to stakes in Japan, according to a letter sent to investors Friday.
While Loeb is bullish on the U.S., he noted that Third Point had "invested in more single name shorts this year than in all of 2014 combined," the letter said, referring to bets he made against some companies.
The letter said the firm was "constructive" on the U.S. because of improving economic data and the likelihood of continued low interest rates.
"These factors should create an environment where growth improves and monetary policy stays flexible, which is generally good for equities (higher multiples notwithstanding)," the letter said. "We may follow last year's playbook and ignore the old adage to 'sell in May and go away.'"
Source: CNBC

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Hedge Fund Crawford Lake

Crawford Lake Names Hedge Fund Industry Veteran Jeff Schachter

Crawford Lake Capital Management has appointed a hedge fund industry veteran Jeff Schachter as president and chief operating officer.
“We are thrilled to be having Jeff join us in further developing our business and strategy,” said Crawford Lake principals Isaac Markowitz and Jack Herzka. “Jeff’s experience and contacts in the industry will allow us to take our strategy to the next level.”
Founded in 2006, Crawford Lake employs a fundamental strategy that focuses on sourcing publicly traded companies with solid earnings growth and momentum and positive stories, but with strong potential upside from a technical perspective.
The firm employs a strict risk management discipline that has resulted in a nine-year track record annualizing over 15% with a volatility of just over 8% and no down years. The firm currently has just under $50 million of assets under management.
Satori Alpha in Ft. Worth, Texas is the firm’s acceleration capital partner. Satori manages $500 million invested in alternative fixed income, hedge funds and real assets.
“Isaac and Jack have a proven methodology and track record that I am personally excited to help them build upon,” said Schachter.
Source: FINalternatives

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KKR into Hedge Funds

KKR is Expanding into Hedge Funds

KKR Prisma, the $10 billion unit of KKR & Co. that allocates money to hedge funds, created the best ideas fund after concluding that the largest stock positions taken by individual managers performed better than other picks.
KKR Prisma created the strategy in January to invest in some of the highest conviction -- or largest -- holdings from 14 equity-focused hedge fund managers, according to a presentation dated April 23 to the Alaska Retirement Management Board. The pension system had $420 million with KKR Prisma as of March 15 and was scheduled to vote on whether to allocate as much as $100 million to the KKR strategy.
KKR has been expanding into hedge funds, joining competitors Blackstone Group LP and Carlyle Group LP in broadening its business beyond leveraged buyouts. Prisma has added more than $2 billion of assets since KKR agreed to acquire it in 2012.
Kristi Huller, a spokeswoman for New York-based KKR, declined to comment on the fund.
KKR Prisma’s Vishal Soni will oversee the fund’s allocation to individual managers, adjusting for risk and exposure to different industries, currencies and countries. The strategy targets returns of 8 percent to 10 percent a year.
Source: Bloomberg

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Paulson Buys Synthesis Energy

Hedge Fund Manager John Paulson Buys 10 million shares of Synthesis Energy Systems

Synthesis Energy Systems, Inc., a development stage energy and gasification technology company, has secured investment from a hedge fund manager John Paulson.
Paulson bought 10 million shares of Synthesis Energy Systems on April 14, according to GuruFocus Real Time Picks. The holding represents 11.7% of the company’s shares outstanding.
Synthesis, a Houston-based technology company with a proprietary gasification technology, announced on April 14 that it agreed to a direct placement of 12 million common shares for $12 million to “certain accredited investors.” It did not name Paulson in the release, however.
Synthesis shares cost $1.08 at Friday’s close, up 14% year to date.
For its fiscal second quarter ended Dec. 31, Synthesis reported $3.9 million in revenue, a drop from $5.9 million for the same period last year due to decreased methanol prices. It also experienced a net loss of $25.6 million, or $0.35 per share, compared to a loss of $1.4 million, or $0.02 per share, due to impaired assets. Synethesis ended the year with cash of $13.7 million.
Synethsis also announced in December that it had entered into a $105 million joint venture with three plants in China to convert coal to synthetic gas as the nation’s government seeks to reduce carbon emissions by 2025.
Source: GuruFocus.com

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U.S. Crude Prices Rise

Hedge Funds Interested in U.S. Crude Prices Rise

U.S. crude prices rise has sparked interests in hedge funds and other speculators, a sign of Wall Street confidence that the oil selloff that began 10 months ago may be nearing its end.
Data from the U.S. Commodity Futures Trading Commission (CFTC) on Friday showed the net long position in U.S. West Texas Intermediate (WTI) crude held by money managers rose by 40,994 contracts to 276,051 in the week ended April 21.
Reuters charts of CFTC data show that is the highest level in nine months for net longs, or positive wagers, on WTI held by such money managers, who include hedge fund operators and speculators.
"This data is consistent with the price rally we've been seeing in oil," said John Kilduff, partner at New York-based energy hedge fund Again Capital. "Oil is back in favor and lots of folks are anxious to get in to what they see as a bottom to the market."
After worries about a global glut drove oil markets down 50 percent from last June, crude prices seem to have found their footing in recent weeks.
WTI's front-month contract surged from a six-year low of $42.03 a barrel in March to a 2015 high of $58.41 this week. It gained 27 percent over the past six weeks, rising about 20 percent in April alone.
Source: Reuters

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Google Boosts DE Shaw

Hedge Fund Firm DE Shaw Secures Investment from Google’s Eric Schmidt

DE Shaw, the big quantitative hedge fund firm founded by billionaire David Shaw, secured investment from Google’s billionaire chairman Eric Schmidt.
Schmidt’s family office, Hillspire LLC, scooped up the stake from the estate of Lehman Brothers, which purchased the stake for some $750 million before the investment bank failed in 2008, helping to spark the financial crisis. The Lehman Brothers estate had been trying to sell the stake for a while, but the passive nature of the stake and the maturity of DE Shaw made it a bit of a tough sell. The financial terms of Schmidt’s purchase were not disclosed in the announcement of the deal.
DE Shaw, which was founded in 1988, manages $36 billion. The firm’s funds have posted blended returns of 8.4% this year through the end of March. David Shaw no longer is involved in the day-to-day operations of the firm, but does play a role in its strategic direction. He spends most of his time as chief scientist at DE Shaw Research, which conducts computational biochemistry research.
Source: Forbes

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Alibaba’s Multibillion-Dollar Family Office

Alibaba’s Executive Vice Chairman is Forming a Multibillion-Dollar Family Office

Alibaba Group Holding Ltd. executive vice chairman Joseph Tsai is setting up a multibillion-dollar family office to invest the wealth created by the Chinese e-commerce giant’s $25 billion New York initial public offering, people with knowledge the matter told Wall Street Journal.
Joseph Tsai, Alibaba’s executive vice chairman, and other early Alibaba executives are setting up the office in Hong Kong with an eye to opening this summer, according to one of the people. Mr. Tsai controls a roughly $6.5 billion stake in Alibaba, based on the company’s prospectus. With the company’s shares now publicly traded and lockups expiring, he and the other executives are looking to diversify their wealth.
The new office marks the arrival on the global investment scene of a new generation of wealthy Chinese business executives who have cashed in on the country’s Internet boom. Entrepreneurs like Alibaba’s founder Jack Ma, one of the wealthiest people in Asia, and smartphone maker Xiaomi Inc.’s Lei Jun, are bringing new ideas about how they want to use their wealth, often backing friends’ technology ventures and supporting a younger crop of investment managers. Asia’s previous generation of billionaires had typically made their fortunes in real estate or mining and focused on investments in other property companies or established global private-equity funds.
Alibaba is China’s largest e-commerce company and its IPO has been a windfall for a number of big backers including Yahoo Inc. and Japan’s SoftBank Corp. Its New York-listing in September catapulted a number of early Alibaba executives to the top ranks of wealthy Chinese.
Source: Wall Street Journal

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John Corzine's Hedge Fund

Ex-Governor and U.S. Senator John Corzine Adds New Title to His Resume — Hedge Fund Owner

Former governor and U.S. Senator John Corzine is planning to launch own hedge fund in recent months, people familiar with the matter told WSJ.
The fund would start with cash from Mr. Corzine’s personal wealth and a handful of outside investors. Mr. Corzine said he had been speaking with about a half-dozen potential investors, and projected around $150 million in assets under management, one of the people said.
The plans are tentative and could evolve or fall apart in coming months. But a launch would mark an unlikely return to high finance for Mr. Corzine, the 68-year-old former Democratic U.S. senator and New Jersey governor who has stayed out of the limelight since commodities brokerage MF Global declared bankruptcy in 2011.
Mr. Corzine most likely wouldn’t be able to launch a fund until legal proceedings against him over MF Global have been resolved. Pretrial motions are expected to go at least until February of next year. The Commodity Futures Trading Commission in June 2013 filed civil charges against him and is still collecting evidence for a possible trial.
“Jon Corzine is not managing anybody’s money and has not asked a single investor to put money into a fund,” said Andrew Levander, a lawyer for Mr. Corzine. “He is gratified that others might want to invest with him.”
Source: Wall Street Journal

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Activist Hedge Fund Returns

Activist Hedge Funds Attract $3.9 in New Net Assets during Q1 2015

Following to hedge-fund research firm HFR, activist hedge funds attracted $3.9 billion in new net assets during Q1 2015, along with investment gains that brings the aggregate activist war chest to $127.5 billion.
That’s a record aggregate total, and nearly double where the industry was at the end of 2012, when it had $65.5 billion.
That growth in the quarter shows that the asset class continues to draw attention from investors even with their coffers so full.
To put the first-quarter gain into perspective: Last year there were $14.2 billion in net asset flows, which eclipsed the net flows added in aggregate over the previous decade – which was dragged down by $16.6 billion in outflows in 2008 and 2009.
This year has started out on pace to top that. There was $3.5 billion added in the first quarter last year.
Still, 2015 would need a few more big quarters to top last year, when the second quarter saw $5.9 billion in inflows and the fourth quarter saw $4.1 billion, the two highest three-month totals in HFR’s records.
Activism remains a relatively tiny space compared to the broader hedge fund industry where there is $2.94 trillion in total assets, according to HFR.
Source: Wall Street Journal

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Hedge Fund Blackstone Earnings

Hedge Fund Blackstone Group Earnings Jump Nearly 160%

A $300 billion hedge fund Blackstone Group announced that rose nearly 160 percent during First Quarter 2015 Results and that their economic net income.
“Blackstone again broke all of our asset and earnings records in the first quarter.” Stephen Schwarzman, Chairman and Chief Executive Officer, said, “Realization activity continued to accelerate while, at the same time, we’ve been raising and investing funds at an unprecedented rate, creating the basis for future value.”
“Our limited partners entrusted us with $30 billion of new capital in the quarter and $77 billion over the last twelve months, shattering our own record for the alternative asset management industry, and driving our Total Assets Under Management to $310 billion, up 14% year over year.”
Source: HedgeCo.net

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Citadel’s New Advisor

Former Federal Reserve Chairman Ben Bernanke to Work with Citadel

The former Federal Reserve chairman Ben S. Bernanke has been appointed by Citadel, a global hedge fund firm founded by Kenneth C. Griffin, as an Adviser.
Now he has signed on to advise one of Wall Street’s biggest hedge funds.
Mr. Bernanke will become a senior adviser to Citadel, the $25 billion hedge fund founded by the billionaire Kenneth C. Griffin. He will offer his analysis of global economic and financial issues to Citadel’s investment committees. He will also meet with Citadel’s investors around the globe.
It is the latest and most prominent move by a Washington insider through the revolving door into the financial industry. Investors are increasingly looking for guidance on how to navigate an uncertain economic environment in the aftermath of the financial crisis and are willing to pay top dollar to former officials like Mr. Bernanke.
Mr. Bernanke joins a long parade of colleagues and peers to Wall Street and investment firms. After stepping down, Mr. Bernanke’s predecessor, Alan Greenspan, was recruited as a consultant for Deutsche Bank, the bond investment firm Pacific Investment Management Company and the hedge fund Paulson & Company.
Source: New York Times

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Hedge Funds Assets Under Administration

Hedge Funds Assets Under Administration Increase 16.8% in 2014 Reports eVestment

According to study released by eVestment, alternative assets under administration in 2014 totaled $6.862 trillion, up 16.8 percent from comparing with year-to-date.
Private equity and real estate fund assets under administration, which eVestment combines, outgrew assets under hedge fund administration and hedge funds-of-funds administration on a percentage basis, although hedge fund assets under administration were almost three times that of private equity and real estate, the eVestment report showed.
Private equity and real estate AUA rose 23.7% in the 12 months ended Dec. 31, to a combined $1.58 trillion, while hedge fund AUA grew 15.5% to $4.222 trillion and hedge funds-of-funds AUA grew 11.9% to $902 billion.
State Street Alternative Investment Solutions retained the top spot in hedge fund and private equity-real estate assets under administration in 2014, though the latter category saw a slight decline compared to 2013. Hedge fund AUA at State Street totaled $772.2 billion, up 9% from the previous year; while private equity-real estate AUA totaled $422.6 billion, down 0.8%.
Second behind State Street in hedge fund AUA were Citco Fund Services, at $624 billion, up 8.3%; BNY Mellon Alternative Investment Services, $547.7 billion, up 17.9%; SS&C GlobeOp, $445 billion, a 5.7% increase; and Northern Trust, $300.4 billion, up 115.9%. Much of that gain was because Northern Trust last year began replicating middle- and back-office services for $140 billion in assets of Bridgewater Associates.
Source: Pensions & Investments

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Jaimi Goodfriend

Jaimi Goodfriend Joins Cohen's Point72 Training Program

Jaimi Goodfriend, a hedge fund industry veteran, has been appointed by Steve Cohen's $11 billion firm Point72 Asset Management to head a new training program designed to pass the billionaire investor's famous stock picking skills to a new generation as he rebuilds after an insider trading scandal.
The academy has accepted 15 undergraduates out of 1,300 applicants into an eight-week summer internship. It picked 15 college graduates from several hundred applicants for a longer program that will teach financial modeling, stock research, securities laws, ethics and compliance. The paid summer internship begins in June while the longer Academy class program commences in August.
"We compete with the major banks, private equity firms and Silicon Valley for the same people," said Point72 President Douglas Hayes. "The Academy will help us get first crack at the next generation of investor talent before they might go elsewhere."
Cohen is not expected to teach any classes. Still, he will have contact with trainees from his seat at the center of the trading floor, a firm spokesman said.
The first trainees, from schools including Yale, Columbia, and Cohen's alma mater the University of Pennsylvania, will be mentored by senior analysts and portfolio managers and are likely to be promoted into Point72's fulltime ranks after completing the program.
Source: Financial Times

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Biggest Gulf Hedge Fund

Zahra Group Reports Biggest Gulf Hedge Fund Launch for Five Years

Zahra Group, a Kuwait based private shareholding company, is launching a new $100 million global equities hedge fund targeting ethical investments, the biggest Gulf launch for five years.
The fund will invest using the principles of Islamic law, although trades will not be signed off by a cleric.
"The few (Sharia compliant) funds that exist are mostly real-estate focused and returns are usually in single digits ... When investors see the prospect of double-digit returns, their eyes light up," Husain Kothari said.
Kothari said he hoped his fund, Kothari Investment Partners, would appeal to a broader investment base, including ethical investors in Europe.
"They (ethical investors in the region) feel that they leave a lot of money on the table, as there just aren't avenues available to invest," he added.
Kothari, ex-chief financial officer of Kuwait Energy, said the fund was talking to wealthy regional individuals and family offices, and was likely to pass an original target of $50 million and hit $100 million ahead of a summer launch.
While global hedge fund assets are around $3 trillion, those based in the Middle East manage just $5 billion, data from Eurekahedge showed.
Source: Reuters

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Ackman Helps 3G Capital

Bill Ackman Helps 3G Capital to Bring Back Burger King

Bill Ackman, an American hedge fund manager and the founder and CEO of Pershing Square Capital Management LP, a hedge fund management company, has helped a Brazilian multi-billion dollar global investment firm 3G Capital to bring back Burger King to the public markets in 2012.
Ackman co-founded a shell company in 2011 -- Justice Holdings -- which acquired 29% of Burger King from 3G in 2012, and subsequently became Burger King Worldwide.
Burger King Worldwide then became Restaurant Brands in December when it closed its acquisition of Canadian coffee giant Tim Hortons. That acquisition was financed, in part, by Buffett's Berkshire Hathaway, which invested in the deal through a combination of preferred shares and warrants.
3G's strategy with Restaurant Brands follows the same pattern it's used on several other consumer-facing food companies in recent years, including Anheuser-Busch InBev, Heinz, and Kraft. Each time, 3G has pushed for mergers to create enormous conglomerates -- and reaped financial rewards in the process. Buffett has participated in all of them.
Source: Motley Fool

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Giant Hedge Funds in PetSmart

PetSmart Draws Big Bets from Several Hedge Fund Giants

PetSmart Inc., the largest specialty pet retailer of services and solutions for the lifetime needs of pets, has drawn big bets from several well-known hedge funds including Fortress Investment Group LLC and Daniel Loeb’s Third Point LLC.
A hedge-fund investing strategy aimed at squeezing more money from corporate takeovers has its biggest test yet: PetSmart Inc.
The specialty retailer’s recent $8.25 billion buyout has drawn big bets from several well-known hedge funds, which bought shares on the brink of the deal’s closing in March and are laying the groundwork for a court battle over the $83-a-share buyout price, according to filings and people familiar with the matter.
The funds, including Fortress Investment Group LLC and Daniel Loeb’s Third Point LLC, plan to avail themselves of a legal remedy known as “appraisal,” in which a judge determines the fair value of the stock. Little used until about a year ago, the strategy has surged in popularity, attracting ever-larger wagers from hedge funds hungry for returns. These funds typically buy shares just before a deal closes with the intention of seeking more in court.
Source: Wall Street Journal

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Kern County Employees' CIO

Kern County’s CIO is Replacing Its Two Active Domestic Small-Cap Equity Managers

Peter Tirp, chief investment officer of Kern County Employees' Retirement Association, Bakersfield, California, announced that is planning to replace its two active domestic small-cap equity managers.
The $3.7 billion pension fund currently has its two managers, which run about $75 million each, on watch. Growth manager Columbia Management Investment Advisers is on watch for underperformance, and value manager Fisher Investments is on watch for style drift.
The pension fund's investment committee has approved due diligence visits with small-cap growth manager Geneva Capital Management and value managers AllianceBernstein (AB) and Silvercrest Asset Management, and a decision will be made within the next couple of months.
Columbia spokesman Carlos Melville and David Eckerly, Fisher group vice president, declined to comment.
Separately, the pension fund is narrowing its search for a credit-focused distressed hedge fund into which it will make an investment of about $17 million. Finalists are Centerbridge Partners, River Birch Capital and Southpaw Asset Management.
The pension fund created a target of 10% to direct hedge fund investments in July 2013 and this would be the 14th or 15th of 15 direct investments planned, depending on contract negotiations with prior managers.
Source: Pensions & Investments

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Simon Holmes

Simon Holmes Joins Chicago Hedge Fund Giant Citadel

Simon Holmes has been appointed by Citadel Securities, the market-making arm of Chicago hedge fund giant Citadel LLC, as senior swaps executive in Europe, as it looks to build its presence in off-exchange traded markets, according to the hedge fund firm announcement.
A Citadel spokesman said Simon Holmes joined Wednesday from ICAP PLC, where he was chief operating officer of the brokerage firm’s electronic interest-rate swaps trading platform in the U.S., called i-Swap.
Mr. Holmes assumes the role of chief operating officer for Citadel Securities’ fixed-income business, based in London, the spokesman said. He couldn't be reached, but his last day at ICAP was March 31.
Citadel has been plotting an entrance into the $700 trillion swaps market for years, sensing opportunity as traditional market makers at large banks are weighed down by a spate of new regulations curtailing their risk-taking.
Swaps are derivatives used to wager on a borrower’s likelihood of repaying its debts or to hedge against big swings in borrowing costs.
Source: Wall Street Journal

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Stephen Kirk's Hedge Fund

Campden Square Capital is the Newest Hedge Fund of Stephen Kirk in London

Campden Square Capital, a new hedge fund, has been launched by Stephen Kirk, a former partner at hedge fund manager Lansdowne Partners, in London.
The fund manager, who officially left Lansdowne in December, was part of a team that managed the Lansdowne Global Financials Fund. The fund has produced an annualised rate of return of 10.4 percent since launch in 2004, according to data seen by Reuters.
The launch comes following a year when hedge funds in Europe shut down at the fastest-ever pace as rising costs, weak performance and a slowdown in the pace of new investment lead some embattled founders to bail out.
Investors pulled a net $13 billion out of European hedge funds in the second half of last year, having invested a net $35 billion in the first half and $64 billion in 2013, according to data from industry tracker Eurekahedge.
The trend has meant that only the top ranking fund managers are able to launch and get investors' backing.
While plans for Kirk's launch fund are still in development, two of the sources said he may already have commitments of more than $200 million, making it one of the larger fund launches in the region for 2015.
Source: Yahoo7 News

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Hong Kong Hedge Funds’ Assets Record

SFC Says Hong Kong Hedge Funds’ AUM Reach New Record

According to the Securities and Futures Commission (SFC), Hong Kong’s hedge fund assets under management reached a record high in 2014, despite fears that political clashes, between pro-democracy youth and the pro-Beijing establishment.
The SFC report shows that as of September 30, 2014, hedge fund assets under management (AUM) in Hong Kong reached US$120.9 billion, an increase of 39% from the amount reported in the previous survey in September 2012.
The report also shows that Hong Kong hedge fund managers mainly adopted an Asia- Pacific-focused equity long/short and multi-strategy. Additionally, overseas institutional investors made up the majority of the investor base.
The main finding of the report is that Hong Kong’s hedge fund industry has continued to grow. The number of hedge funds managed by SFC-licensed hedge fund managers in Hong Kong increased from 676 in 2012 to 778 as of September 30, 2014. The number of hedge fund managers increased from 348 in September 2012 to 401 in September 2014.
The 2014 total hedge fund AUM in Hong Kong surpassed its previous peak in 2008 and represented over 13 times the US$9.1 billion AUM in 2004, the earliest year covered by SFC surveys.
Source: Forex Magnates

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Dalio's Large Philanthropic Foundation

Ray Dalio is Building a Large Philanthropic Foundation

Ray Dalio, an American hedge fund manager and founder of the investment firm Bridgewater Associates, is building a large philanthropic foundation.
According to the most recent public tax filing made by the Dalio Foundation, Dalio contributed $400 million to his foundation in 2013, pushing its total assets to $842 million. The foundation ended 2012 with $590 million in assets.
With an estimated net worth of $15.4 billion, Dalio is the second-wealthiest hedge fund manager. George Soros is the only hedge fund manager with a higher net worth.
In 2011, Dalio signed the Giving Pledge, a campaign led by Bill Gates and Warren Buffett to get the world’s richest people to give a majority of their wealth to philanthropy. “We were lucky enough to have experienced the whole range of financial circumstances, from not having any money to having a lot. Fortunately that happened in the best order,” Dalio and his wife, Barbara, wrote in their Giving Pledge letter.
Source: Forbes

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Elliott Management Buys Axis

Sweden’s Axis Secures Investment from Hedge Fund Elliott Management

7.5% stake in Swedish surveillance camera maker Axis has been acquired by hedge fund Elliott Management, potentially raising pressure on Japan's Canon to raise its bid for the firm.
The stake was disclosed in a filing with Sweden's Financial Supervisory Authority.
Canon's roughly $2.8 billion bid for Axis requires acceptance from shareholders with 90 percent of shares, meaning Elliott Management would need to team up with more owners to block the bid, or raise its stake above 10 percent.
Canon launched the bid to buy all Axis shares for 340 crowns apiece, a nearly 50 percent premium, in February.
Elliott did not immediately respond to a request for comment on its intentions.
Source: Reuters

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Northern Trust Hedge Fund

Northern Trust Hedge Fund Appoints David Burnett as Head of Services in Europe and EMEA

David Burnett has been appointed by Northern Trust as head of Northern Trust Hedge Fund Services in Europe, Middle East and Africa (EMEA), to support the continued momentum of Northern Trust’s hedge fund administration business.
Based in London, Burnett will lead Northern Trust Hedge Fund Services in EMEA, reporting to Peter Sanchez, global head of Northern Trust Hedge Fund Services.
“Managing hedge funds amidst the challenges of today’s market environment requires the right combination of expertise, automation and controls,” said Peter Sanchez, global head of Northern Trust Hedge Fund Services. “David has been instrumental in integrating Hedge Fund Services in EMEA and his invaluable experience will ensure we are best placed to continue providing outstanding client service using innovative technology.”
“Data management is critical to the success of our client’s ability to meet regulatory, investor, and operational requirements,” said Burnett. “Our technology delivers real-time, transparent and consolidated data which supports meeting the diverse range of stakeholder data requirements.”
Source: Business Wire

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