March was an especially strong month for emerging markets hedge funds. The HFRI Emerging Markets Index surged 6.9 percent for the month, enabling it to overcome the huge losses posted in January. As a result, the index finished the quarter up 0.8 percent. In fact, March was the best month for emerging markets funds since May 2009. Chicago-based HFR, which publishes the index, points out that last month equity and commodity markets reversed declines from earlier in the quarter.
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Jeffrey Altman’s Owl Creek Overseas Fund, managed by New York-based Owl Creek Asset Management, posted a very strong March, gaining 6 percent. However, longtime investors are still in the red. The fund is down by 0.6 percent for the year, lost 3 percent last year and fell 8 percent in 2014. Only those who were in for the 48.6 percent gain in 2013 are still in positive territory.
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New York-based Starboard Value trimmed its position in Darden Restaurants by a little more than 60,000 shares, to 5.2 percent of the total outstanding. Earlier in the week Starboard’s Jeffrey Smith resigned as chairman of Darden’s board of directors.
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UBS cut its price target on hedge fund favorite Allergan from $366 to $300 after the drug maker’s merger deal with Pfizer felt apart. Even so, the bank tells clients in a report that the stock “is once again” one of its favorites. It points out that on a conference call following the deal’s cancellation, management “said all the right things regarding capital deployment, M&A aggressiveness, cost cutting, its commitment to a R&D-driven business model, and its preparedness for this contingency.”
UBS also stressed that management “fully acknowledged the attractiveness” of a share buyback at the current stock price “which investors clearly wanted to hear.” As we earlier pointed out, at year-end, 185 hedge funds held a position in Allergan, making it the third most popular hedge fund stock.
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Shares of Valeant Pharmaceuticals International rose another 4 percent after creditors gave the embattled drug company another month to file its annual report before it would be deemed to be in default.
