The Morning Brief: Pine River Takes Aim at Anworth REIT; John Paulson Breathes Easier in Sino-Forest Case

April 03, 2013   Stephen Taub

Hedge fund Pine River Capital Management has taken a 6.4 percent stake in Anworth Mortgage Asset, a real estate investment trust that invests in mortgage securities. In a 13-D filing, the Minnetonka, Minnesota–based hedge fund firm complained that Anworth, with about $904 million in market capitalization, has historically underperformed its peer group. Pine River threatened to raise questions on how to improve performance and increase shareholder value. The stock barely budged, however, closing at $6.33 in Tuesday trading.

Good news for John Paulson. A federal judge threw out a class action suit filed against the hedge fund manager’s Paulson & Co., stemming from its 2011 investment in the Chinese forestry company Sino-Forest. Sino-Forest’s stock plummeted after Canadian securities regulators filed fraud charges against the company, causing Paulson’s Advantage fund to lose $100 million.

Daniel Loeb’s Third Point, among the top hedge fund performers in the first quarter, disclosed its top positions at the end of March: Yahoo!, Virgin Media, gold, American International Group and Ally Financial (multiple securities were held in Ally Financial). This was the same lineup in February. Top winners for the month were Yahoo!, a Japanese macro position, Cheniere Energy, Virgin Media and DE Master Blenders 1753 NV, a German distributor of coffee and tea. Its top disclosed losing positions were mostly overseas: Greek government bonds, which contributed greatly to 2012 returns, Volkswagen, and Porsche Automobil Holding SE. The losers also included Bond Street Holdings, a Florida bank holding company, and an unidentified short position.

Here come the monthly indexes. The Credit Suisse Liquid Alternative Beta Index indicates that the hedge fund industry in general was up 1.22 percent in March. This performance was attributed to merger arbitrage, the strongest performer for March, finishing up 2.34 percent and 4.69 percent year-to-date. Meanwhile the Liquid Alternative Beta Index was up 2.17 percent for the first three months of the year.

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