Question: If you’re a top hedge fund manager and the value of your highest conviction stock suddenly drops by 20%, what do you do? Answer: You buy more. Late in 2018, investors panic-sold en masse. Indiscriminate selling. Babies thrown out with bathwater. While the public freaked-out about interest rates, trade wars and recessions, leading hedge funds added to their best ideas.
In a classic scene from the 1967 film Cool Hand Luke, the prison warden whips an insubordinate inmate (Paul Newman) into a ditch then stands over him and seethes: “What we got here is a failure to communicate.” In a Dec. 17 letter to Houston Wire and Cable (HWCC), D3 Funds’ David Nierenberg disclosed a 9.9% stake in the company and quoted the famous movie line. But while Nierenberg was friendlier than the warden in Coll Hand Luke, his sense of frustration with his fund’s long-held investment was evident.
As tech stocks were battered last week, a hedge fund with a history of smart moves was buying. Activist Hedge Fund ValueAct Holdings reported on Nov. 23 that it upped its stake in Seagate Technology (STX) from 26.4 to 26.77 million shares. The purchases by the $16.48 billion fund, headed by Jeffrey Ubben, increased ValueAct’s ownership of STX to about 9.32%.
Acuta Capital Partners, LLC rode a surge in health care stock prices to the top spot in 2nd quarter hedge fund performance.
The dubious distinction of worst hedge fund performance in the 2nd quarter -- based on equal weightings of 13F positions -- goes to Tiger Pacific Capital LP. An equal weighting of the fund’s 14 positions returned -21.69% in the quarter, according to WhaleWisdom.com
Turns out Warren Buffett and Jimmy Buffett are not related. For years the world’s third richest man and the “Margaritaville” singer-songwriter thought they might share ancestors. But DNA testing has apparently ruled that out.