Hedge Fund Manager Steve Cohen Set to Buy NY Mets


Major League Baseball gave its blessing to the imminent purchase of the New York Mets for what will be a record price of between $2.4 billion and $2.45 billion. Steve Cohen, CEO, and president of Point72 Asset Management will purchase the team from the present owners, the Wilpon and Katz families. If the deal succeeds it will surpass the present record price for a baseball team, set when Frank McCourt sold the Los Angeles Dodgers to Guggenheim Baseball Management in 2012 for a mind-bending $2 billion.

Cohen has promised that he will invest about $9.5 million in additional payments during the off-season to help employees who have been negatively impacted by the pandemic. Detailing his intention, he said that all Mets employees, including security guards, engineers, and union member grounds keepers will have their pre-pandemic salaries restored, reversing the 5%-30% cuts in salary that started in March. He valued salary restoration at more than $7 million.

“I am humbled that MLB’s owners have approved me to be the next owner of the New York Mets,” Cohen said in a statement. “Owning a team is a great privilege and an awesome responsibility.”

Cohen will control an entity that will own 95% of the club, while the Wilpon and Katz families will still hold 5% of the team.

Elliot Management Relocating to Florida

Activist investor Paul Singer has decided to move his $41 billion hedge fund manager to Florida, joining a growing number of investment companies looking to lower their state tax burden.

Elliot Management will keep some office space in Manhattan, but his new headquarters will be in West Palm Beach. He will also open offices in Greenwich allowing some of his employees to stay where they are.

The pandemic is only one of many reasons for companies to leave New York City and head south to Florida. Financial firms were already beginning their exodus from expensive locations like New York and San Francisco to more business-friendly places. Paul Tudor Jones and Wexford Capital have already moved to Palm Beach, an area especially attractive to financial companies. Carl Icahn also left Manhattan, making his new headquarters in Sunny Isles Beach, Florida.

With no state income tax, estate tax or inheritance tax, Florida is an attractive alternative for many companies. New York’s top income tax rate is over 8%.

Since the pandemic’s arrival, many companies have allowed their employees to work remotely, thus prompting a surge of people out of the city center, which is not only expensive but more dangerous in terms of contagion.

Investor Soo Kim Buys Rights to Bally’s Brand for $20 Million


Soo Kim, 45, hedge fund investor and owner of gaming company Twin River Worldwide Holdings, purchased the global rights to the Bally’s name from owner Caesars Entertainment.

The $20 million purchase will give Kim the rights to put the name on all of his gaming investments which include 11 casinos and his publicly traded headquarters.

Kim will also be changing the ticker name TRWH to a more appropriate name for the Bally’s brand. He added that the company will be starting a sports-betting site online branded with the Bally’s moniker.

“This is an opportunity for us to revive a brand that is synonymous with American gaming,” said Soo.

He is a co-founder of the hedge fund Standard General, which has a 39% stake in TRWH. Soo is also the chairman of Twin River.

Bally’s has a long and successful history in the gaming space, getting its first huge boost as Bally Entertainment, the company behind the wildly popular Six Flags amusement park chain. It also owned Bally Total Fitness and a video game company with a stable of iconic arcade games during the 70s and 80s including “Space Invaders,” “Pac-Man,” and “Ms. Pac-Man.”

In 1996 Hilton Hotels acquired Bally’s casinos for $2 billion, resulting in the largest gaming company in the world. In 2003 Bally’s casino generated more revenue than any other casino in Atlantic City, beating out even the second-place Trump Taj Mahal.

Now there are only two Bally’s casinos; one in Atlantic City which is the one Soo Kim bought for $25 million, and the one in Las Vegas, which Caesars still owns.

The deal for the brand allows Soo Kim to put the Bally’s name on all present and future properties but does not require Caesars to rename its casino in Las Vegas.

Twin Rivers, based in Rhode Island, owns many other gambling properties in six states, as well as a racetrack with 13 authorized off-track-betting parlors in Colorado.

Since the pandemic has shuttered gambling halls Soo Kim has been snatching them up like hot cakes, buying three properties this past April alone.

“We appreciate Caesars giving us a chance to use a brand they really weren’t utilizing,” Kim said.

Hedge Funds Rolling Out New Products Despite Economic Slump

According to HFR, the alternative investments data consultancy firm, there were 129 new hedge fund launches between April and June’s end this year.

That number is the highest quarterly tally for new funds since Q2 2019.
HFR’s president, Ken Heinz, explained that hedge funds are also posting high returns, even in the face of the twin uncertainties of the COVID-19 pandemic and the upcoming presidential elections.

“Most institutions are positioning for elevated levels of realized volatility to continue for the foreseeable future and are interested in opportunistic exposures that both preserve capital and realize opportunities created by the uncertain macroeconomic and geopolitical environment,” Heinz said.

Nevertheless, the good news is still just a blip in the long-term trend which is continuing: the total new hedge funds for the entire last four quarters are still at an all-time low with a total of 404 funds launching during the past 12 months.

Snoddy’s Comeback Firm Earns Him 17% Returns with New Japan Hedge Fund

David Snoddy, a graduate of Tiger Management who took a break from investing for a few years, came roaring back over the past year and a half with 17% growth on his newly established long-short Japan hedge fund.

Snoddy worked for Julian Robertson’s Tiger Management in the Tokyo office until he went out on his own in 2000, establishing his Nezu Asia Capital Management. After almost 17 years Snoddy closed the firm’s Nezu Asia Fund and shuttered some of his other funds as well during 2018 and 2019.

Snoddy explained that his company needed to restructure to find “a new model and a new view of what our growth can be.”

In June 2019 he launched the Nezu Speedwell Fund. As of August 2020 the fund posted 17% returns, compared to Japan’s benchmark Topix, which gained only 7% during the same time-frame.

His firm’s August newsletter described the Nezu Speedwell Fund as a vehicle for long investments in companies showing excellent growth and capital efficiency, while simultaneously shorting companies that are weak in those areas and also have downside risks to their earnings structures.

As of September 1, the company managed about $31 million with bets on about 60 companies leaning moderately net-long.

Bridgewater Takes to the Woods to Dodge Corona

In what is certainly a unique way of beating off COVID-19, Ray Dalio has taken his traders to the woods where fresh air and social distancing is sure to reduce Bridgewater employees’ risk of infection.

Dalio put up tents in the forest that abuts the location of the $138 billion hedge fund headquarters in Westport, Connecticut. The tents were pitched in May and can offer refuge to about 50 of the 1,500 global staff from the pandemic that is wreaking havoc around the world, while still working from their desks.

A report describing the working conditions explained that the unusual work environment was chosen when Dalio realized that the safety protocols for safe indoor work were too stressful. The outdoor office space includes kayaks, a nice perk, but it also comes with some less useful conditions, such as birdsong that can make phone calls hard to concentrate on, and falling trees, that could harm a computer or a trader.

Bridgewater expects to stay in the great outdoors until the weather turns too cold to make working there feasible, or until the end of October if the weather stays balmy.

Tesla Not (Yet) Admitted to S&P 500 Index


Investors in Tesla have once again experienced disappointment with the decision by the S&P 500’s index committee’s decision to leave Tesla once again out of the respected index.

Hope is not completely extinguished for Tesla cheerleaders. It often happens that mergers of other companies already on the index will leave a space for the iconic autonomous car manufacturer.

As a matter of fact, mergers are the most common reason that companies fall off the index. If such a merger were to occur, Tesla would have a better shot at inclusion.

Not everyone thinks Tesla should have a place in the S&P 500, wondering if the company’s earnings are really good enough.

One analyst, Tim Ghriskey of Inverness Counsel, said that Tesla “will go into the S&P. There’s no way it cannot at some point. Maybe it’s in the penalty box right now while they assess the situation.”

Adding that Tesla’s valuation “seems absolutely crazy”, he also said that they cannot be ignored.

One of the conditions for entry into the S&P 500 is four consecutive quarters of profit, a condition that Tesla finally met this past July. Investors then believed their favorite company would be have earned its entre into the index, which also led to a significant uptick in the price of Tesla shares.

But instead, disappointment ensued when the list of new additions to the index was announced on September 4th, in time for the index’s quarterly readjustment on September 18.

Hedge Fund Urges Europeans to Move to Rail

Oceanwood Capital, an activist hedge fund headquartered in London, called on European leaders to re-think their country’s travel policies in a radically new way. The goal is to reduce carbon emissions in the fight against climate change, and the method is to make a conscious decision to switch from the wasteful use of flying to the more environmentally friendly railroad.

The fund operates the Channel Tunnel and manages at least $1.3 billion in assets. The fund contacted ministers in France, the UK, the Netherlands and Belgium, in an effort to persuade them to adopt the use of rail for passenger and freight in place of short-haul flights and cross-Channel ferries.

“The key conclusion from our investment research is the catastrophic carbon inefficiency of short-haul passenger aircraft and cross-Channel ferry transport,” Oceanwood wrote in a letter to Transport Secretary Grant Shapps, of the UK.

The move by Oceanwood comes at a historic time when investing is beginning to re-focus its goals away from pure profit-seeking towards a more socially responsible type of money management. Known as ESG for environment, social, and governance, the philosophy maintains that excellent financial results can combine with taking responsibility for our actions. Activists investors such as Oceanwood and Christopher Hohn’s TCI have pushed companies under their auspices to improve their records on pollution, transparency and giving back to their communities.

New 2Q Favs for Hedge Funds

Now that second-quarter SEC 13F filings are available for scrutiny, the public can see where experienced investors put their money in April, May, and June.

There were a few surprises, like Berkshire Hathaway retreating from many positions and finding a safe haven in Barrick Gold. But in general, a look-see at where the investing greats put their bets have yielded some insights into trends.

RBC Capital Markets looked at 337 13F s and observed that investors still like companies in tech, internet, media, and telecom. There were also some movement towards health care stocks.

Evaluated on a dollar basis, the following are the most popular new companies that investors placed their bets on: eBay; JPMorgan Chase; Service Now; PayPal; and T-Mobile US. These companies took the place of Allergan, which was bought by AbbVie, and is still among the 20 favorites; Blogen; Bristol-Myers Squibb; Johnson & Johnson; and Merck.

Investors, as usual, are warned that scrutiny of 13Fs must be done with caution and should not be taken as investment advice. In addition, the forms are released by the SEC 45 days after the last day of the quarter, so the crucial importance of timing is no longer in play.

Yet, the reports can be helpful to investors who already know a fund manager’s general investing strategy. They can help to understand the view of fund managers, and taken together, can reveal an insight into broader market trends.

A New Survey Shows Investors Satisfied with 2020 Performance

A new investor poll shows that hedge fund investors are evenly split when it comes to the question of how satisfied they are with how the industry performed so far this year.

The survey, conducted and released by bfinance, “Managing Through Uncertainty,” asked a broad spectrum of investors from pension funds, insurers, endowments, family offices and sovereign wealth funds, how they felt about the performance of their funds during the first half of 2020. The funds in question included an equally wide range of investment products including hedge funds, private equity, real estate, and risk premia.

The survey queried a total of 368 senior investors who together manage $11 trillion.

A large majority (82%) of the respondents said they were “satisfied” with how their portfolios performed during the first half of 2020, when global stocks markets crashed an the pandemic deepened.

Within specific investment strategies the satisfaction level was not quite as positive, especially within the hedge fund sector. Namely, almost half of hedge fund investors expressed “dissatisfaction” with their returns during the first half of 2020.

The satisfaction level for hedge fund investors looked like this:

• 17% were “very dissatisfied
• 31 % were “dissatisfied”
• 35% were “satisfied”
• 8% were “very satisfied
• 8% were non-committal about their feelings

“Within the hedge fund sector, we have seen wide dispersion of manager returns both within and between strategies as a result of Covid-19 disruption,” Toby Goodworth, head of liquid markets at bfinance, said in the report.
“The sheer speed of market dislocation in March meant all but the fastest trading-oriented strategies were effectively passengers through the turbulence. A number of high-profile names produced unexpected losses and failed to demonstrate the expected diversification behaviour.”