The Morning Brief: Hedge Funds Experienced More Redemptions in January

February 27, 2017   Stephen Taub


Investors pulled more money out of the funds last month, but year-on-year redemption figures fell substantially.

Hedge funds suffered another month of net redemptions. But the magnitude of dissatisfaction is possibly declining. Investors yanked out $5.2 billion in January 2017, according to data tracker eVestment. This is less than the $19.3 billion investors redeemed from hedge funds in January 2016. Altogether, 49 percent of hedge funds reported positive inflows last month, according to the data firm’s report. At the end of January, total hedge fund assets stood at $3.033 trillion. Little surprise, the struggling managed futures funds suffered the largest redemptions last month, amounting to $3.67 billion. Over the past three months, $13.19 billion has been removed from the strategy. Other strategies that suffered sizable redemptions in January include event-driven and relative-value credit funds. On the other hand, multi-strategy funds enjoyed the largest amount of inflows, amounting to $3.80 billion. This brings the most recent three-month total to $4.31 billion.

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Jeffrey Smith’s Starboard Value sold about 650,000 shares of The Brink’s Co., reducing its stake to 7.9 percent. The activist started investing in the security company in early 2015. In early 2016 Brink’s announced an agreement with Starboard in which the company named three new directors to its nine-member board, including Peter Feld, Starboard’s research director. In addition, Brink’s chairman, president, and CEO Thomas Schievelbein announced his retirement. The stock has been a homerun for Starboard. It gained nearly 40 percent last year and is up another 26 percent this year already.

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Clifton Robbins’ Blue Harbour Group cuts its stake in Agco Corporation to 4.8 percent. As a result, the activist hedge fund firm no longer needs to file timely updates when it sells additional shares. The activist initially publicly disclosed its position in the farm equipment manufacturer in June 2015. The stock is up about 20 percent since then.

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Shares of hedge fund favorite Restoration Hardware surged nearly 25 percent, to close at $31.35, after the high-end home furnishings company reported strong quarterly results and announced a stock buyback. At year-end, Balyasny Asset Management owned more than 1.8 million shares, making it the sixth largest shareholder. At the end of January, it boosted the stake to 2.2 million shares, or 5.4 percent of the total outstanding. Citadel was the tenth largest shareholder at the end of the year.


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