Morning Market, Hedge Fund and Private Equity News

Apr 11 2017 | 9:00am ET

Apr. 11, 2017

The Dow Jones industrial average was ticking lower on news that Secretary of State Rex Tillerson is headed to Moscow to discuss Syria. Ongoing geopolitical tensions over Syria and North Korea are rising as markets turn their attention to the start of earnings season.

Here's what else you need to know on Apr. 11, 2017. 

Today’s Institutional Watch List

Hedge Funds Turn Bullish Again Amid Political and Production-Based Volatility Risks

U.S. hedge fund managers are bullish again on oil prices and have increased their long positions in the primary WTI and Brent futures and options contracts by 54 million barrels. The uptick in expectations comes after five straight weeks of drawdowns, according to Reuters’ John Kemp. However, there appears to be disagreement over the impact of U.S. shale production in the years ahead. While some banks think that massive spending cuts will fuel a supply crunch, Goldman Sachs (GS) argues that we will witness a large surplus by 2019. What everyone can agree on is that we may witness an uptick in merger and acquisition activity in the space, particularly in midstream assets as crude inventory levels continue to tick to record highs. 

Trump to Sell Economic Policies

President Donald Trump will meet with the CEOs of 20 American companies to discuss his goals on bolstering support for U.S. infrastructure spending and other policy goals. The president is trying to gain support for a $1 trillion infrastructure program, tax reform, and increased deregulation. Participants in today’s discussions include the heads of with the heads of General Motors (GM), International Business Machines (IBM), and Wal-Mart Stores (WMT).

Whole Foods jumps after activist hedge fund Jana reveals stake

JANA Partners has taken an 8.3 percent stake in Whole Foods (WFM) and says the firm has suffered from “chronic underperformance.” According to reports, Barry Rosenstein’s shop is lining up potential board nominees and may push for the company to sell itself to a rival. However, Jana Partners has not yet met with John Mackey’s company just yet. The activist fund has set a list of seven demands that range from operational and supply chain improvements to real estate optimization and board changes. WFM stock jumped nearly 10 percent on Monday.

Investors Turning Back to “Macro” Funds

Macro hedge funds are seeing an uptick in interest thanks to a number of big themes happening in the markets today. President Trump’s planned economic proposals, the Fed’s balance sheet and interest rate chatter, and European elections are just a few. But the surprise here – according to Reuters – is that investors are turning to macro startups instead of the more established players. 

A Look Inside Yale’s Fee Negotiations

Yesterday, we highlighted that Yale’s endowment blasted critics of hedge fund and private equity fees. In addition, the authors of the school’s annual endowment report argued that Warren Buffett and others who bash investment fees spent more time complaining about gross fees and less time focusing on net returns. This morning, Institutional Investors looks into Yale’s fee structures with hedge funds. Just five percent of its absolute return managers earn the 2-and-20 structure. The breakdown for the balance typically consists of management fees under two percent, hard hurdle rates, and performance fees below the 20 percent range. It’s an interesting breakdown by strategy and assets. 

Tuesday Morning Reading List

Daily Mirror: Cash-strapped NHS could borrow £10billion from hedge funds to avoid begging Government for more money

Global Legal Post: Private equity set to boom in Africa

Bloomberg: Pension Plans' Risky Flirtation With Private Equity

Wall Street Journal: Calpers Staff Wants To Shed Requirement That It Invest 8% in Private Equity

Reuters: Brinker Capital launches Destinations Funds

Check back for more hedge fund, private equity and market news throughout the day and be sure to read Friday's edition of The Daily Alpha. 

Monday’s edition can be access right here – Real Talk on Gov. Jerry Brown, Kevin Hassett, Yale’s Endowment, and Elliott’s Climate Change Battle.

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