News Around the Hedge Fund World (Week of July 9-13)

By: SumZero Staff | Published: July 13, 2012 | Be the First to Comment

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News Across the Hedge Fund World
Just one day after we posted the Procter & Gamble (NYSE: PG) short thesis that appears above onto the public SumZero News section, rumors began to surface that legendary activist investor Bill Ackman (Pershing Square) purchased a sizable position in the consumer goods giant. Certain details suggest that Ackman plans to take a participatory role in the company’s operations; the implication being that the business isn’t running as well as it should be. Whether you’re short or prepared to take Ackman’s side, it’s clear that the $175 billion P&G is in play.
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In his latest quarterly letter, Bill Nygren (Oakmark) discussed people’s predispositions toward irrational thinking and inefficient decision making. For example, Nygren focuses on the current pricing on bonds versus equities. He says, “In our finance courses, we all learned that bonds are less risky than stocks. Their returns, if held to maturity, are certain, whereas equity returns remain uncertain regardless of the holding period. But … we have relatively little history of bond yields being so close to zero. And when valuations are at extremes, as we believe bonds are today, historical price volatility might not shed much light on future risk.” This is an insightful letter from an insightful investor.
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Chase Coleman (Tiger Global) has been at helm of the best performing hedge fund thus far in 2012. Although fund performance has been generally poor this year and withdrawals have been heavy due to widespread uncertainty, there have been a few bright spots, including and especially Coleman’s fund. Tiger Global has returned 18% YTD thanks to a portfolio heavy on Internet stocks and selected shorts according to GuruFocus.
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Coleman’s mentor, Julian Robertson (Tiger Management), recently gave what appears to be an impromptu lecture on how he identifies top hedge fund talent. While the picture quality is poor and the narrative completely bizarre at times, when Robertson takes the mic at 3:38, the content is gold. Robertson explains his process of selecting and seeding new talent in his ever-growing umbrella of hedge fund cubs.
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SumZero Insight of the Week
"I have had numerous interviews with reporters who called looking for quotes about tech bargains. I always explain that we believe the best values today are in growing companies outside of the technology sector....To these reporters, it defies common sense that stocks that have declined 80 percent or more are not yet 'values.' That is a testament to how powerful and unprecedented the technology mania was. Even after such large price declines, most of these stocks are still not cheap."

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