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Peltz sets his sights on GE
Hedge Funds
<p>As if turning around GE wasn’t hard enough, Jeffrey Immelt just found another thing to worry about – his good friend, activist investor Nelson Peltz.</p> <p>Peltz, through Trian Fund Management, now owns $2.5 billion worth GE shares, which according to the Wall Street Journal, makes the activist fund one of the conglomerate’s top 10 shareholders.</p> <p>Unlike its usual bets however, Trian’s stake in GE is more of a friendly nudge than an aggressive takeover:<br /> “Trian executives began briefing GE officials on their views starting in May, at the beginning of the fund’s share-buying binge. GE has in recent months indicated it would make a number of moves. On Sunday, both Mr. Immelt and Chief Financial Officer Jeffrey Bornstein said that they largely agree with Trian’s prescription.</p> <p>‘We are completely aligned on the levers that get us from point A to point B,’ Mr. Bornstein said in an interview.</p> <p>Mr. Immelt added: ‘We have the clearest path for GE that we’ve had in the past eight years.’”<br /> That’s not to say Trian’s just going to rest on its laurels.</p> <p>Peltz, in an 81-page white paper titled “Transformation Underway … But Nobody Cares,” laid out a few things that he wanted to see in the company, including:</p> <p> More debt – Peltz apparently wants GE to take on around $20 billion in debt to prop up its EPS.<br /> More stock buybacks – despite GE’s announced $35 billion buyback program, Peltz wants more, calling the company’s limited efforts to reduce its share count “a major factor behind GE’s historically below-average EPS growth.”<br /> Better margins – Trian apparently sees a lot of places where GE can ramp up margins, especially in its services business. Also, the fund sees opportunity in lowering the company’s $2.4 billion in corporate costs.</p> <p>Trian’s activist holding in GE is its largest and most ambitious. In fact, only Carl Icahn’s Apple campaign and ValueAct’s Microsoft crusade was bigger.</p> <p>With Peltz's affinity for big companies however, I don’t doubt that he’ll aim for something bigger sometime soon.<br /> Photo: @mjb</p>
Temasek pumps $62m into Singapore VCs, takes it own fund global
Venture Capital
<p>While some investors might be shying away from venture capital right now, it looks as if Singapore state-backed investment fund, and prolific VC investor, Temasek is doubling down.</p> <p>It has just invested 90 million Singapore dollars ($62 million) in four venture capitals funds, at the same time it’s putting  $600 million into its own VC unit - Vertex Venture Holdings - in a bid to take the firm global.</p> <p>According to the Straits Times, Singapore has backed early stage investors NSI Ventures, Monk's Hill Ventures, Jungle Ventures and Golden Gate Ventures but did not disclose how much each would get. The last two, Jungle and Golden Gate, are in the process of raising $50 million and a $100 million, respectively, for their latest vehicles.</p> <p>This comes two days after it was revealed that Temasek's own VC unit, Vertex Venture, got a $600 million injection from its parent to fund its global expansion. </p> <p>The extra capital will allow Vertex to expand its focus - which has so far comprised Singapore and Southeast Asia - to include the United States, Israel and China. It will also broaden it tech and media sector focus to include healthcare investments. </p> <p>Vertex’s early investments include luxury e-commerce portal Reebonz and mobile taxi app GrabTaxi (yes, it's part that group) , it has also listed four start-ups, including mobile game developer IGG. </p> <p>However, it will be a tough call hoping  for futures IPOs in this current environment, which may explain the renewed focus on the healthcare sector which has been somewhat isolated from the recent IPO drought.<br /> Photo: Shubhika Bharathwaj</p>
Feds bust a $32m cyptocurrency scam - but it's not Bitcoin
FinTech
<p>The cryptocurrency world has been rocked by another scandal after US regulators file fraud charges against the operator of a global pyramid scheme involving a digital currency called GemCoin.</p> <p>About $32 million was swindled out of investors by US Fine Investment Arts (USFIA) which claimed it owned large amber mines in Argentina and the Dominican Republic, the Securities and Exchange Commission (SEC) said in a statement.</p> <p>The SEC has put Californian Steve Chen, and 13 companies linked to him, at the center of the alleged fraud</p> <p>It claims that Chen falsely promoted USFIA as a legitimate multi-level marketing company and told investors they could profit by investing in amounts from $1,000 to $30,000, and earn larger returns as more investors are brought into the program.</p> <p>Chen is alleged to have then converted existing investors’ holdings into Gemcoins, saying the virtual currency was secured by the company’s amber holdings.  In reality, the SEC says, the were worthless.</p> <p>In its litigation filing, SEC said the $32 million raised from Gemcoin went straight into Chen’s personal accounts in China, which are now frozen.</p> <p>However by the time the SEC rumbled Chen. the majority of the funds were already blown on luxury cars, travel, entertainment, and cash withdrawals.<br /> Photo: Michael Rhys</p>
Bitcoin Island: The UK haven leading a revolution
FinTech
<p>Before the birth of Bitcoin, the Isle of Man - a tiny tax haven in the Irish sea - was famous for three things: motorcycle races, the Bee Gees, and a breed of tailless cat. Today it’s becoming synonymous with cryptocurrencies and fintech.</p> <p>This is largely linked to the island’s low taxes, relaxed regulations, and high-speed internet connections which have helped fuel a boom in financial services and online gambling on the island. The Economist reports that these two sectors now account for a third and one tenth of the territory’s income, respectively.   </p> <p>Given the potential applications for Bitcoin in both these areas, its no surprise the island is adopting Bitcoin in a big way. Many of the island’s hotels, taxi firms, restaurants and cafes now accept it as payment. </p> <p>The island’s tax structure, with no corporation, capital gains, or dividend taxes, has also been a draw for bitcoin startups, including exchanges and gambling platforms. </p> <p>In addition to assisting with the  formation of the Manx Digital Currency Association, the local government has encouraged its adoption by bringing in a legal foundation for Bitcoin. </p> <p>In April, the Isle of Man government changed it Proceeds of Crime Act to cover bitcoin exchanges operating from the island so that business have to comply with the territory’s anti-money laundering (AML) laws. </p> <p>While this means companies face greater oversight and more filing requirements, it has broadly been seen as positive news for bitcoin business seeking credibility with consumers and financial institutions. It's no wonder then that regulators around the world now have their eyes on this tiny pioneering island. <br /> Photo: Steve Conover<br /> &nbsp;</p>
Hedge funds prep for a red 2015
Hedge Funds
<p>Nasty verbs such as “whacked,” “hammered,” and “crushed” have been used to describe the hedge fund space lately, and unfortunately for them, it appears they’ll still be used for quite some time.</p> <p>According to Reuters, U.S. hedge funds are on track to their worst showing since 2008, and surprisingly, some of its highest-flyers were among the fallen.</p> <p>Nehal Chopra's Tiger Ratan fund, which came into September boasting over 21% gains, apparently lost all of it – and more – during the recent pharmaceuticals rout.</p> <p>Jason Karp's Tourbillion Capital Partners meanwhile was also hit hard by the sell-off. The SAC alum lost over 8% last month, taking its year-to-date performance down to 8.73%. The fund was up over 18% coming into September.</p> <p>Some of these funds even surpassed their 2008 losses. David Einhorn’s Greenlight Capital, whose offshore fund lost 16.5% in ’08, is currently down 17%, while Bill Ackman’s Pershing Square, which ended the crisis down 12%, has so far lost 12.6%.</p> <p>A lot of variables came into play for this to happen – especially for stock pickers. An investment regime change in the second quarter, Black Monday, and the Fed flip-flop all hurt the industry’s quest for returns, though a large part of the blame seems to be on the recent pharma rout, as Artemis Wealth Advisors’ Peter Rup told Reuters:<br /> “It was the last remaining bastion of alpha and a sector where many hedge funds were hiding. Now it has succumbed.”<br /> There are still some winners around though. Lee Ainslie’s Maverick, which came into September up over 20%, lost only 0.7% last month, leaving the fund up 19.7% for the year.<br /> Photo: Joe The Goat Farmer</p>
Huallywood – the attempt to make a Chinese Hollywood
Lifestyle, 4:01
<p>Postcard from Huallywood via Mathews Asia </p> <p>One of the most notable features of China’s economy in recent years has been the gradual, but steady, migration toward services-led growth. In fact, in recent periods, consumption and services have become the largest parts of the Chinese economy (see recent Sinology). But how is that being accomplished at a micro level? On a recent trip to China’s Jiangsu province, I was able to witness firsthand, how a deserted iron and steel factory is being transformed into China’s premier site for movie production.</p> <p>Two years ago, local government officials in Wuxi began converting the area, dubbed “Hua”-llywood, into what it hopes will be a world-class film studio. The word “hua” is symbolic of China; words such as “hua ren” refer to Chinese people and “hua yu” refer to the Mandarin Chinese language. The focus on digital film production is interesting, and underscores the fact that to succeed in consumer-facing industries, quality has to be a priority. Chinese box office revenues have been growing fast but have increasingly been dominated by imported films. Among several factors, deficient quality in production has been a drag on interest in domestically produced movies in China. Studios like Wuxi that offer more digital and higher-technology capabilities are trying to provide improved facilities to bridge the gap.</p> <p>While Huallywood is still developing, college students and independent artists are arriving in Wuxi for publishing as well as pre- and post-production activities related to the movie industry. The experiment in Wuxi is reflective of other such efforts that may be underway in China. While it isn’t a foregone conclusion by any means, the long-term health of the Chinese economy depends on a successful transition toward more services, and consumption-led growth, such as the entertainment industry.</p> <p>This story first appeared in ValueWalk.<br /> Photo: Shaun Wong</p>
Daily Scan: Asian equities rip higher; EM FX go on a tear
Capital Markets
<p>Updated throughout the day</p> <p>October 5</p> <p>Good evening everyone. Shares of the embattled commodity giant Glencore surged as much as 71.6% today as word on the strasse spread that it was courting takeover offers. The company’s board however was quick to deny any knowledge of this but nevertheless, Glencore shares in the U.K. are still ripping higher. It wasn’t the only one having a good day though – sure that ZIRP would stay place, Asian equities rallied across the board with Japanese shares chalking up its fourth day in the green. Here’s a quick snapshot:</p> <p> Nikkei 225: +1.6%<br /> Topix: +1.3%<br /> Hang Seng Index: +1.4%<br /> Hang Seng China Enterprises Index: +2%<br /> Straits Times Index: +1.4%</p> <p>Over in FX, emerging market currencies continued their blitz against the greenback and among its biggest winners were the Korean won which added 0.7%, the Malaysian ringgit which jumped 0.5%, and the Russian ruble which spiked 0.4%. Doing even better though was the kiwi, which surged 0.9%.</p> <p>Here’s what else you need to know:</p> <p>North Korea set to free NYU student. North Korea is set to release Won-moon Joo, a South Korean student at New York University whom it detained in April, the South Korean government said. The student is expected to be handed over to South Korean officials at the border today. CNN</p> <p>Flash floods in France kill at least 17 people. Four people are still missing after flash floods on the French Riviera killed at least 17 people over the weekend, prompting the government to declare a natural disaster in the southeastern tourist region. Reuters</p> <p>Former Hong Kong Chief Executive charged with misconduct. Donald Tsang, Hong Kong’s Chief Executive from 2005 to 2012, has been charged with two counts of misconduct in public office by the ICAC. He’s currently out on bail but he's scheduled to face the Eastern Court at 2.30pm. ICAC</p> <p>Japan service sector growth cools. In another blow to Japan’s economic outlook, the Nikkei Japan Services PMI came in at 51.4 in September, more than two points lower than August’s 53.7 reading. The accompanying Nikkei Composite Output Index meanwhile fell to 51.2, its lowest level since April. Everything’s still above the mark though, so nothing’s contracting. Yet. Markit</p> <p>Myanmar to sign peace deal with 8 rebel groups   Myanmar's government will sign a long-negotiated ceasefire on October 15 but with only eight rebel forces, officials said, as several major insurgent groups declined to ink an agreement that excludes some factions. Channel News Asia</p> <p>ISIS are smashing relics again.   Syrian activists said late Sunday that Islamic State (ISIS) militants have destroyed a nearly 2,000-year-old arch in the ancient city of Palmyra, the latest victim in the group's campaign to destroy historic sites across the territory it controls in Iraq and Syria. Fox News</p> <p>China “likely” to ramp up market reforms. While all signs point to </p>
Barron's Weekend Roundup: Volatility lovers and green energy ETFs
Capital Markets
<p>&nbsp;</p> <p>Not everyone's afraid of volatility. In this week's cover story, Barron's looks at the volatility lovers. These are the managers who have waited patiently for stocks to stop rising and start falling so they could snap up equities at a great price.</p> <p>Stocks aren't the only think looking attractive. High-yield bond are looking attractive, despite what Carl Icahn may think, writes Barron's.</p> <p>If commodities have gotten you down, it's time to rethink your strategy. Green energy stocks, such as solar or wind, have fallen with oil and natural gas, reports Barron's. While these companies may seem to fall in line, the green energy companies are really tech firms, and it's time to buy those ETFs.<br /> Photo:Global Panorama</p>
Weekend Scan: FOMC to release minutes: Pacific pact near conclusion after seven years of talks
Capital Markets
<p>Earnings seasons starts up again this week, with Alcoa reporting earnings on Thursday. Investors will be looking for clues on how the Federal Reserve is interpreting economic data when the Federal Open Market Committee releases the minutes from its last meeting, also on Thursday at 2 p.m.</p> <p>Pacific trade pact near. The U.S. and 11 Pacific countries seemed on the verge of signing the Trans Pacific Partnership after agreeing on how to handle how long pharmaceutical companies should be able to control new biotech drugs. The trade talks have been ongoing since 2008 and any deal must still go through Congress early next year.  Reuters</p> <p>Syria's president says Russia air strikes are vital. Bashar al-Assaid said the West's air campaign in Syria and Iraq have hurt and are the source of th spread of terrorism.  Reuters</p> <p>Banks may shoulder some of Glencore's woes. The troubled mining and commodities giant struck a $1.4 billion deal with Chad over four years. Banks lent money for the upfront deal when oil was priced at $100/barrel. The loan was backed by oil shipments from Chad, not by cash flows at Glencore. Wall Street Journal (paywall)<br /> You won't believe this.<br /> Mice may help scientists find birth control pill for men. Women will probably rejoice. Vice<br /> Photo: Brookings Institute</p>
The richest US hedge fund managers
Lifestyle, 4:01
<p>This year 33 hedge fund managers made the Forbes 400 list of the richest people in America, reports Business Insider. David Diegel and John Overdeck, co-founders of quant fund Two Sigma Investments, are new additions to the list, with each having a net worth of about $2.8 billion. Bill Ackman, David Tepper, and Steve Cohen all had nice boosts to their personal net worth in the last year. Number one hedge funder, by a $4 billion lead, is still George Soros.</p> <p>Here are the 10 richest U.S. hedge fund managers:</p> <p> George Soros, Soros Fund Management- $24.5 billion, Forbes rank: 16<br /> Carl Icahn, Icahn Capital Management- $20.5 billion, Forbes rank: 22<br /> Ray Dalio, Bridgewater Associates- $15.3 billion, Forbes rank: 29<br /> James Simons, Renaissance Technologies- $14 billion, Forbes rank: 32<br /> Steve Cohen, Point 72 Asset Management (formerly SAC Capital)- $12 billion, Forbes rank: 37<br /> David Tepper, Appaloosa Management- $11.6 billion, Forbes rank: 38<br /> John Paulson, Paulson &amp; Co- $11.4 billion, Forbes rank: 41<br /> Ken Griffin, Citadel- $7 billion, Forbes rank: 69<br /> Bruce Kovner, Caxton- $5.2 billion, Forbes rank: 93<br /> Israel Englander, Millennium Management- $4.8 billion, Forbes rank: 108</p> <p>Photo: International Monetary Fund<br /> &nbsp;</p>