News Around the Hedge Fund World (Week of July 2-6)

News Across the Hedge Fund World
Dan Loeb (Third Point) disclosed a massive increase in his position in embattled natural gas giant Chesapeake Energy (NYSE: CHK). Loeb’s $9 billion fund has not yet disclosed whether it is net long or short the position. Curiosity abounds whether the firm intends to ride the short side on a business that is being managed in a highly-questionable manner. The more likely scenario, however, is that Loeb will take an active role in the restructuring of the business, something Loeb has done many times before. Loeb joins several other high-profile activist investors, including Carl Icahn, in his position.
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Jim Chanos (Kynikos) sat down for an insightful, 13-minute video on his personal background, the mission of his fund, why it is so hard to be a short seller, and how short sellers must deal with negative reinforcement on a daily basis.
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Chuck Royce (Royce Funds) still believes in the long-term viability of stocks according to an interview he posted on his site. Among other gems of wisdom shared during the interview, the long-time successful investor had this to say, “The ability to be patient is probably the single most important quality that an investor who seeks strong long-term returns can possess. Of course, it's easy to talk about the importance of patience and discipline when returns are solid and things are going well. But at some point both will be tested, and they're being tested in this market. It has been a very difficult time.”
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David Einhorn (Greenlight) finished an impressive third at the World Series of Poker this week in Las Vegas, walking away with $4.35 million in winnings that he plans to donate to charity. Einhorn, whose other ‘passion’ is poker, was the last non-professional standing at the table.
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Howard Marks (Oaktree) spoke recently about understanding the dynamics of risk during a video interview and how the individual investor can benefit from thinking independently. Marks spoke particularly strongly about the situation in Europe. He said, “When I look at Europe, I'm the first to say, I don't know what's going to happen. I hear a lot of people tell me what they think will happen. Nobody puts a probability on it. Very few people share a variety of scenarios. So, ... what I say about Europe is I'm only sure of three things. Number one, I don't know. Number two, nobody knows, and number three, if you ask an expert and you follow his advice, you're probably making a mistake. I believe that strongly.”
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SumZero Insight of the Week
“It is time for you to step down from your role as CEO and director so that you can do what you do best: retreat to your waterfront mansion in the Hamptons, where you can play tennis and hobnob with your fellow socialites,”

-Daniel Loeb
Third Point