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Hedge Fund Focus: September 2, 2016

Ryan FitzGibbon  Follow

In case you missed them, here are the hot topics in the hedge fund space this week…

Fees are back in the spotlight. According to data from Eurekahedge, the average hedge fund management fee for new launches was down to 1.34% in the first half of 2016, after dropping almost every year since 2007. Meanwhile, a growing number of public pension funds are exiting their hedge fund investments altogether, with the Kentucky state pension system potentially the latest to pull back. Private equity giant Carlyle is also considering pulling back from hedge funds. One new area of concern is liquid alts, which can often have hidden or “camouflaged fees.”

It’s been a good year for macro strategies. According to the latest data from Preqin, macro funds returned 3.1% over the past 12 months giving them the highest gains across all hedge fund strategies. Overall, hedge funds posted gains of just 1.1% through H1 2016, down from 2% in 2015 and falling well short of the double-digit figures seen between 2009 and 2013.

The battle over Herbalife took an unusual twist with Carl Icahn and Bill Ackman squaring off, and Icahn increasing his long position after initial reports (by Ackman) that he was looking to sell. Meanwhile, enthusiasm for activist investing hit another low with Preqin reporting that 100% of institutional investors surveyed said the returns on their activist hedge fund investments had fallen short of expectations. One area where activists are still finding lucrative opportunities -- microcaps.

Visium Asset Management announced on August 31 that it would return 95 percent of the roughly $2.3 billion Visium Global Fund’s assets to investors following an insider trading scandal and a failed bid to sell parts of the firm. Bloomberg had the skinny on Visium informant, Jason Thorell, who worked with the FBI and SEC to help bring down the once $8 billion firm.

EpiPen maker Mylan continues to be under fire for hiking the price of its life-saving allergy treatment, with the latest scandal raising questions over executive pay.

Finally, we finish with a bit of extra reading for you all.

Ever wondered what managers are really saying about Brexit? Robin Wigglesworth read a ton of second-quarter hedge fund letters to find out..

David Einhorn, Head of Greenlight Capital, said: “For the last couple centuries populations have celebrated the phrase “The British Are Leaving!” In our view, Brexit by itself will not be a significant economic event. Sure, there will be a handful of companies that suffer idiosyncratic issues, but the U.K. economy is simply not big enough for even a devalued British pound to have a large direct impact on global trade. However, the mere pretense of an event is likely sufficient to entice the global monetary authorities into serving up a fresh course of Jelly Donuts.”

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