Bill Ackman’s Pershing Square Capital Management is taking steps to soften the tax blow for some of its investors already reeling from huge losses this year. Last Thursday the activist hedge fund firm disclosed that it had sold nearly 2.3 million shares of chemicals producer Platform Specialty Products Corp., leaving it with about 40.45 million, or 14.5 percent of the total outstanding.
In a regulatory filing, New York–based Pershing Square said it sold “high-cost-basis shares” for two onshore partnerships that have U.S.-taxable investors so the funds could generate a tax loss for their investors. Pershing Square International and Pershing Square Holdings, the firm’s two offshore funds, didn’t sell any Platform Specialty shares. PSI was off 16.7 percent for the year through November 6, while publicly traded PSH was down 20.7 percent year-to-date as of November 8.
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Boaz Weinstein’s $1.1 billion–plus Saba Capital Offshore Fund surged about 3.90 percent in October, boosting its gains for the year to 10.80 percent, according to the HSBC Holdings hedge fund database. We noted earlier that New York–based Saba Capital Management has been making sizable bets on closed-end mutual funds.
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Barington Partners, the activist hedge fund managed by James Mitarotonda’s Barington Capital Group, was down roughly 0.60 percent last month. That drop left the New York outfit, which manages about $150 million, with a gain of 12.45 percent so far this year.
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Société Générale Prime Services reported that its flagship SG CTA Index posted a 2.60 percent loss in October, its second consecutive down month. As a result, the index has fallen 1.68 percent for the year. The SG Short Term Traders Index lost 2.15 percent in October and is now off 1.57 percent year-to-date; the SG Trend Index fell 3.87 percent last month, extending its loss for the year to 5.61 percent.
The SG Trend Indicator index fared even worse: After dropping nearly 5 percent in October, it’s down 7.69 percent for 2016. “Losses in the Trend Indicator stemmed from the commodity and bond sectors,” Société Générale pointed out in its announcement. “Specifically these losses were predominantly driven by short positions in precious metals and long positions in energy, as well as long European government bond positions.” Currencies were the only sector to contribute positive trend-following returns, SocGen added, mostly thanks to a strong U.S. dollar versus the British pound and the euro.
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Asian hedge funds enjoyed strong gains in the third quarter. The HFRI Emerging Markets: China Index jumped 7.5 percent, putting it slightly in the black for 2016, according to Hedge Fund Research. The HFRI Emerging Markets: Asia-ex Japan Index rose 6.7 percent and is now up between 4 percent and 5 percent for the year.
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Seth Klarman’s Baupost Group liquidated its stake in ChipMOS TECHNOLOGIES (Bermuda) as of October 31. The Boston-based hedge fund firm had owned 3.75 million shares of the semiconductor testing and assembly services provider at the end of the second quarter.
Baupost also slashed its position in Kindred Biosciences by more than two thirds, to about 965,000 shares, or 4.85 percent of the total outstanding. At the end of the second quarter it had held 3 million shares of the development-stage biopharmaceutical company.
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In its recently issued quarterly report, private equity giant Carlyle Group said that $400 million invested in petroleum commodities by one of its hedge funds and certain structured finance vehicles managed by a Carlyle affiliate was “misappropriated by third parties outside the U.S.” The loss is related to a Moroccan oil refinery deal, the Wall Street Journal reported last week, citing people familiar with the matter. The plan was for the hedge fund, Vermillion, to get a cut of revenue from Société Anonyme Marocaine de l’Industrie du Raffinage, but Moroccan authorities seized the facility last year after it suffered financial woes. This year the refinery was put into liquidation, according to the Journal.
