Tuesday March 7, 2017

March 7, 2017

Alaska's Wealth Fund Seeks 11 Funds for Investments Number of the Week By Hema Parmar ’s $55.4 billion wealth fund is seeking up to 11 funds for allocations, following its decision in May to redeem from its funds of hedge funds and invest in $1.06 Billion managers directly. The Alaska Permanent Fund Corp. prefers experienced managers that have a track Net inflows into macro hedge funds in record of producing returns of at least inflation plus 5 percent, according to public January, according to eVestment. documents from its quarterly board of trustees meeting. Alaska is seeking funds with low correlation to equity markets, "appropriate" risk controls as measured by historical drawdowns and volatility and that can show they have protected capital during down Inside markets, the documents from the Feb. 22-23 board meeting show. Equity-focused Viking Global saw a Marcus Frampton, Alaska’s director of private markets, declined to comment. slight loss in February, while Alaska currently has nine managers in its program that invests directly in hedge funds. Renaissance's equities fund gained It plans to invest a total 5 percent of the firm’s assets, or about $2.8 billion, in managers in the month: Returns in Brief via that program, the documents said. As of Dec. 31, Alaska had a 4.5 percent exposure to commingled funds, either directly Macro funds run by Prologue and or via the funds of hedge funds from which it is redeeming. The move to allocate to State Street are closing: Closures managers directly will save Alaska $15 million a year, according to the documents, as it allows the wealth fund to cut the layer of fees paid to funds of funds for making Ray Dalio jolts Bridgewater as Jon investments. Rubinstein exits: People News In the past seven months, Alaska has made two hedge-fund investments: a $44 million allocation to Lansdowne Partners’s equity-focused Developed Markets Fund and Almost three-quarters of hedge a $100 million investment in Pharo ’s macro Gaia Fund, the documents funds are creating new fee said. structures as a result of investor Alaska's hedge-fund investments, excluding separately-managed accounts, gained pressure: Research 4.8 percent in the second half of last year, the documents said. Alaska is also seeking access to some of the "most sought after" funds that were Coatue Management names long previously closed to new money, according to a performance update included in the positions in Symantec and Facebook; meeting documents. It is moving away from seeding new managers — an area that beefs up data science and software dragged down returns last year — and has "a very high bar" for investing in emerging team: Market Calls managers, the documents said. The Alaska fund manages at least 25 percent of all mineral lease rentals, royalty sales Baupost partner Blumenthal faces a proceeds, federal mineral revenue-sharing payments and bonuses received by the tax-fraud trial in France: Regulatory state, according to its website. Paul Tudor Jones pranks Funds Outperform Funds of Funds for First Time Since 2013 environmentalists at the Audubon awards gala: Over the Hedge

Quantum, CSX, NRG Energy are among companies targeted by activists this week: Activist Situations

What to Read: Quant Edition

Luring beautiful minds — Citadel joins Two Sigma chasing quants in campus hiring push.

Acadian to use Microsoft's big data Funds of funds on average gained about 0.5 percent in 2016, compared with a 5.5 percent technology to inform wagers. return for hedge funds, according to Research, Inc. It's the first time since 2013 that hedge funds have outperformed funds of funds, the data show.

Returns in Brief Hedge Funds March 7, 2017 2

Returns in Brief

The main hedge fund at Greenlight February Returns Capital, led by David Einhorn, rose 2 percent in February as stocks marched higher. The performance brings the fund, which mostly makes wagers on stocks, to a gain of 2 percent in 2017 after a flat January, according to an e-mail to clients last Tuesday that was seen by Bloomberg News. The fund trails the equity market in the U.S., as the S&P 500 Total Return Index climbed 6.2 percent in the first two months of this year. While Einhorn has generally outpaced peers, his performance has lagged behind the S&P each year since 2012. Jonathan Gasthalter, an external spokesman for -based Greenlight, declined to comment on the results. — Simone Foxman Year-to-Date Returns Through February Och-Ziff Capital Management Group, the $33.7 billion publicly traded hedge fund, gained about 1 percent last month in its OZ Master Fund, according to public filings, dated March 2. The fund rose 3.1 percent in the first two months of the year, after returning 3.8 percent last year, the filing said. were up about $100 million in March from $33.6 billion as of Feb. 1, the filing shows. The New York-based firm, led by Daniel Och, managed $43 billion as of March 1, 2016. — Hema Parmar Viking Global Investors, the $30.6 billion firm run by Andreas Halvorsen, Funds in the charts not mentioned in the accompanying text were reported in other issues of the lost 0.2 percent in its flagship hedge fund Brief or in Bloomberg News stories. For questions, e-mail [email protected]. last month, bringing year-to-date returns to 1.7 percent, according to a person familiar with the matter. The Viking Renaissance Technologies’s equity two months of 2017, the person said, Global Equities fund fell 4 percent in hedge fund gained 3.5 percent last while the S&P 500 Index returned about 2016, the biggest annual loss since the month, according to a person familiar 6 percent. A spokesman for the $32 flagship fund’s inception in 1999, with the matter. The Renaissance billion New York-based firm, founded by according to a letter previously seen by Institutional Equities Fund rose 2.3 Jim Simons, declined to comment. Bloomberg News. Rose Shabet, chief percent in the first — Hema Parmar operating officer of New York-based Viking, which wagers on and against stocks, declined to comment. — Hema Parmar

Hedge Funds March 7, 2017 3

Closures Hedge Funds March 7, 2017 4

Closures

Prologue to Close After Macro Funds See About $1 Billion in Inflows in January Political Bets Misfire Prologue Capital, the $775 million macro hedge fund run by David Lofthouse and Graham Walsh, is closing after more than a decade as clients pulled their money amid poor performance. “Last year we started well but we got the big political events wrong, it’s as simple as that,” Walsh said in an emailed statement Wednesday. “We tried to secure a one-year commitment from our big investors, but that didn’t come through. The timing is unfortunate, but I fully understand investor disappointment with recent performance.” Macro hedge funds started the year with $1.06 billion in net inflows after investors yanked about Prologue, based in Greenwich, $10 billion from the funds last year, according to data compiled by eVestment. The industry , with offices in London and overall had its fifth consecutive month of outflows in January, with $5.2 billion in redemptions. Miami, was founded in 2005 by Lofthouse and Walsh, former colleagues at RBS Greenwich Capital, to wager on Management in Paris. “They are likely to business. Rather than offer traditional macroeconomic trends with a focus on continue to generate gains over the next hedge funds that charge a 2 percent sovereign debt and currencies. Macro quarters as long as the macro and 20 percent of hedge funds have suffered withdrawals divergence theme between Europe and gains, the Boston-based firm will seek to after years of middling performance, with the U.S. holds true. With the Fed on track replicate their strategies and charge managers blaming low interest rates and to hike rates as soon as mid-Match and lower fees, Heinel said. other central-bank policies for restricting the U.S. dollar still trending upward, their The firm has expanded its money- their ability to make money. positioning has proved right so far." management business after its active Prologue lost 1.8 percent in 2016 and — Nishant Kumar and Saijel Kishan strategies shrunk and it lost ground to has been little changed over the previous BlackRock Inc. and Vanguard Group Inc. three years, according to the statement. State Street Closes Global in exchange-traded funds. Under Ronald The fund returned an annualized 8.7 O’Hanley, who took charge of the $2.47 percent from 2006 to 2013. Prologue’s Macro Hedge Fund trillion asset-management unit in 2015, best years were during the financial State Street Corp. shut its sole hedge State Street sought to grow its alternative crisis, when it returned 19 percent in fund after three years and plans to shift investment business. 2008 and 12 percent in 2009, according its focus to offering similar strategies that But investors have lost patience with to an investor letter. charge less. macro hedge funds as the strategy About 782 hedge funds shuttered in the The firm decided to liquidate the global struggled in a low interest rate first nine months of last year, the fastest macro fund after a review of the environment. Even marquee firms in this pace of closures since the aftermath of alternatives business, Lori Heinel, arena have faced redemptions and the financial crisis, according to the latest deputy global chief investment officer at pressure to reduce fees. data from Hedge Fund Research Inc. State Street Global Advisors, said in an State Street, which liquidated the The $3 trillion global industry has interview. The review was spurred by last hedge fund at the end of October, had suffered a widespread backlash over year’s purchase of General Electric Co.’s difficulty attracting additional assets after poor returns and high fees, forcing some asset-management unit. the bank seeded the pool with $50 million large macro firms to cut charges. "The acquisition enabled us to take a and Hartford HealthCare’s pension and Prologue is closing as the outlook for step back and look at our complete endowment added $33 million. macro funds is improving amid monetary offering in the alternatives space," Heinel Michael Ho, who helped run the global policy divergence between leading said. "The macro strategy was not as macro strategy, left in January. Ho central banks and investors allocating compelling given how it performed in a declined to comment. Don Torey, who money to outperformers. challenging market environment." joined State Street through the GE “Macro managers have experienced a State Street is reversing course after acquisition, oversees alternatives. positive start to the year," said Philippe trying to a grab a piece of a lucrative — Sabrina Willmer Ferreira, a senior strategist at Lyxor Asset

People News Hedge Funds March 7, 2017 5

People News

Dalio Jolts Bridgewater as Rubinstein Exits Obituary By Saijel Kishan and Katherine Burton Ray Dalio shook up management at his for the second time within a year in a sign that the is Kevin Bell, Executive at grappling with succession planning at the world’s largest hedge fund. Arrowgrass, Dies at 47 Dalio said he will step down as interim co-chief executive officer next month and will remain co-chief investment officer. He also Kevin Bell, the head of credit risk at dropped a bombshell: his star hire Jon Rubinstein, one of the Arrowgrass Capital Partners in New creators of the iPod, will leave after 10 months as co-CEO. York and a veteran of Saba Capital In announcing Rubinstein’s exit, Dalio conceded that his plan to Management, has died. He was 47. bring in an industry outsider — a high-profile Silicon Valley tech “We are deeply saddened that our executive — to his $160 billion hedge fund fell flat. friend and colleague Kevin Bell has Source: Bloomberg/ Jason Alden “We mutually agree that he is not a cultural fit for Bridgewater,” passed away today,” Arrowgrass said Ray Dalio Dalio, 67, said in a LinkedIn post. in an emailed statement. “We extend Bridgewater, which Dalio founded more than four decades ago, is our sympathies and condolences to contending with lackluster performance and a series of management shuffles at the top. his family.” Last year, Greg Jensen lost his role as co-CEO as part of a power struggle and kept He died in an apparent suicide, the his position as co-CIO. Dalio is seeking to hand over responsibilities as part of his long- New York Post reported. Police, term succession plan at the firm, which he has said is a tough place to work due to its without releasing the victim’s name, unorthodox culture. confirmed a man the same age as Dalio said Bridgewater President David McCormick, who earlier this year was Bell died Wednesday morning after considered for a post in the Trump administration, will move into the co-CEO role with jumping from an apartment building Eileen Murray. They’ve both worked at the firm for eight years. Dalio is sharing the CIO at 390 West End Ave. in . post with Jensen and Bob Prince, another Bridgewater veteran. Bell was most recently head of "I’m excited about this change and expect to remain a professional investor at credit risk at Arrowgrass, the U.K.- Bridgewater until I die," Dalio said in the post Wednesday. “Or until those running based hedge fund led by former Bridgewater don’t want me anymore.” Group AG traders Dalio started a 10-year succession process around 2010 and plans to hand over Henry Kenner and Nicholas Niell. Bell control of Westport, Connecticut-based Bridgewater to a team rather than a single joined the firm in August 2015 along person. with several other former employees Rubinstein was a longtime deputy to Apple co-founder Steve Jobs and played a key of Boaz Weinstein’s hedge fund Saba role in the company’s reemergence from near-bankruptcy to technology industry Capital Management. pioneer. Dalio said Rubinstein helped to plan a redesign of Bridgewater’s technology Arrowgrass was founded in 2008 and will remain as an adviser to the firm. and has more than 100 employees in Dalio runs Bridgewater according to 210 principles — everything from "Don’t try to offices in New York and London, please everyone” (No. 210) to “Don’t bet too much on anything.” He promotes “radical according to the firm’s web page. truth” and “radical transparency,” encouraging employees to critique each other in Bell joined Deutsche Bank in 1999, meetings, which are taped and archived. according to his LinkedIn profile, and “Some people love this forthright way of operating and wouldn’t want to work in 2004 was named co-head of a new anywhere else, while others dislike it and leave,” Dalio said on LinkedIn. unit that traded structured products in Bridgewater’s Pure II fund has gained 1.2 percent this year, according to a North America. He left the bank in person with knowledge of the returns. In 2016, it rose 2.4 percent. 2007. After that, he spent time at The turnover rate at Bridgewater is "unusually high" within the first two years for new Inc., where he was a employees, with 21 percent leaving in the first year and another 10 percent in the next, managing director in structured credit Dalio has said. Those rates then drop off to 3 percent by the fifth year — which is products, and Ken Griffin’s Citadel. “exceptionally low,” he said in a January LinkedIn post. He joined Saba in 2011, according to Also Wednesday, Dalio said Carsten Stendevad, the former CEO of Danish pension LinkedIn. fund ATP, will be joining the firm as part of a new senior fellowship program. It will bring He received a bachelor’s degree such individuals into Bridgewater for a year to explore its culture and share insights. from Duke University in Durham, — With assistance from Katia Porzecanski , in 1991. Bell had a wife and two daughters, the Post reported. — With assistance from Nishant Kumar and Chris Dolmetsch

Research Hedge Funds March 7, 2017 6

Research

By Melissa Karsh and Hema Parmar biggest potential global risk this year, where those in that category had the Hedge funds are feeling the pressure according to a survey of attendees at the weakest bonus expectation. "The 2016 from investors regarding fees, with about Cayman Alternative Investment Summit, market was marked by a sustained 72 percent creating new fee structures as which took place Feb. 15-17. About 44 positive trend, making it very clear where a result, according to a report from Citco percent of the more than 200 alternative the hedge fund industry stood relative to and HFM Global. In addition, 60 percent investment industry attendees named the broader market," according to the of the 225 global hedge-fund firms this as the biggest risk, followed by report. "As a result, we believe surveyed said they are now offering cybersecurity with 25 percent, China with expectations were more inclined to be investors customized portfolios, including 14 percent, European elections at 13 realistic." Still, about 61 percent of those those with specific liquidity terms to percent and Brexit at 4 percent. The surveyed indicated that they are unhappy attract new investors. Of the managers investors are most bullish on 2017 with their compensation — a trend that polled for the Hedge Fund Distribution returns for real estate and real assets at has grown in recent years, up from 56 Trends Survey 2017 in September, 19 40 percent, followed by commodities, percent last year and 54 percent the year percent said managed accounts are now equities and credit. About a third of before that. Hiring intentions for the biggest source of inflows, though half attendees said artificial intelligence is the operations, risk management, legal and still rely on traditional onshore/offshore emerging technology that will have the research, due diligence and investor strategies as the main source. About 41 most impact on the world in 2017. relations positions were all down slightly percent of managers said they are A correlation between fund by the end of 2016 from the prior year, looking to diversify into a new strategy performance and bonuses is returning to the report found. Looking at fund over the next year, with long- equity the industry, according to the Hedge strategies, long-short equity emerged as being the most favored option at 17 Fund Compensation Report. Of the more the favorite for the third year in a row with percent, followed by commodity trading than 200 hedge fund employees surveyed 47 percent of respondents indicating that advisers and , according to in late 2016, those in firms that saw a their firm is pursuing the strategy, the report, released March 1. return of 25 percent or more reported the followed by event-driven and long-only. A dedicated short strategy was the least The Trump administration presents the highest bonus expectation for 2016 at about $179,000 versus the prior year popular for the second year in a row, the report found.

Market Calls Hedge Funds March 7, 2017 7

Market Calls

Coatue Management Is Long Symantec, Facebook Market Calls, Revisited

By Taylor Hall and Simone Foxman By Hema Parmar Coatue Management’s largest long Last March, Brightlight Capital portfolio manager Dima Rubinchik said Vertu positions include Symantec Corp. and a Motors was his stock pick for 2016. The U.K. automotive retailer has "a healthy legacy holding in Facebook Inc., balance sheet, improving margins and cheap trading at approximately 10x P/E according to a March 3 investor letter ratio," he said in an interview published on March 15, 2016. reviewed by Bloomberg News. With 6.1 million shares, Facebook was Coatue’s largest disclosed long position as of Dec. 31, while Symantec was its 25th-largest, according to a separate regulatory filing. Symantec is “the only company offering a platform of products that span across the network and endpoint to protect against threats in consumer and enterprise,” Philippe Laffont, chief investment officer of the stock-picking hedge fund, said in the letter. His flagship fund is up 6 percent this year through Feb. 28 after posting a gain of 1.2 percent for all of 2016, he wrote. Click on chart for a live version or run G #HF.BRIEF 76 on the Bloomberg Terminal. The New York-based firm is confident in the road ahead for Symantec after its Since then, Vertu has fallen about 26 percent, compared with a 20 percent gain in recent acquisitions, the appointment of a the FTSE 100 Index. new chief executive officer in August and The company remains misunderstood by the market and saw forced selling by as the stock continues to trade at large U.K. shareholders in June and July following the Brexit vote, Rubinchik said in “attractive” multiples, it said in the letter. an email on March 2. Brightlight increased its position in Vertu last summer, he said. Regarding its Facebook investment, The stock has gained about 39 percent since July 6, 2016, when it reached the Coatue sees a “meaningful” upside to lowest level since December 2012. "It remains extremely cheap and mispriced," said what the social-media company can Rubinchick, who is also managing partner at the Westport, Connecticut-based charge advertisers and a “powerful cycle” global equity hedge fund. of product development picking up steam.

Coatue, which mainly makes wagers shows signs of normalizing. technology stocks after the U.S. around technology, media and In the letter, Laffont also said he is presidential election in November. telecommunications companies, said it beefing up his data science and software Laffont said that the firm’s future plans to take “bold concentrated team and that "data science has become money-making abilities lie in its positions” in its highest-conviction long an integral part of our investment willingness to take risk and to reinvest ideas in the 8 percent to-11 percent process." profits in research, something he said range and that its top 10 positions On the effect of Trump on his hedge some "complacent" large hedge funds comprise about 70 percent of its long fund, he was less sanguine. "The three don’t do. exposure. consecutive days after Trump’s election Coatue is using data science to better The firm is taking advantage of represent the three toughest understand both individual companies “historically low” put option pricing to performance days of my career," Laffont and large trends. "For example this team position a portion of its short portfolio to wrote. He blamed last year’s modest has a system in place that allows us the capitalize in the event of meaningful return — after gains of 8 percent through ability to track billions of anonymized market correction, it said, adding that it's late October — on declines in mid- and credit-card transactions," Laffont wrote. in a position to materially increase the large-cap size of its short book when the market

Regulatory/Compliance Hedge Funds March 7, 2017 8

Regulatory/Compliance

Baupost Partner Faces Tax-Fraud Trial in France Deutsche Bank Said to By Miles Weiss and Gaspard Sebag Meet With Funds A Baupost Group partner has been ordered to stand trial for tax fraud in France following a decade-long dispute between the government and the hedge fund over its A decade ago, Deutsche Bank AG real estate profits, according to a person with knowledge of the case. pitched hedge funds at a Thomas Blumenthal, head of international real estate, was notified in January that a industry conference in magistrate judge had charged him and other directors of two Luxembourg affiliates with Las Vegas on a big short. Now at the criminal tax fraud, according to a Baupost filing with the U.S. Securities and Exchange same annual gathering, it’s offering to Commission that month. help clean up what remains of the France has been scrutinizing investment firms that it says created Luxembourg subprime mortgage mess. companies to avoid paying taxes on local real estate. Baupost, the $30 billion hedge The bank met last week with hedge fund led by Seth Klarman, set up an investment venture in the 1990s with the late funds that specialize in handling developer Howard Ronson’s HRO Group that built and renovated European office delinquent home loans and that may buildings in London, Paris and Frankfurt through affiliates in Luxembourg. want financing, according to people with knowledge of the meetings. The “France is attacking every single Luxembourg entity to try and get tax, whether they are right or wrong,” said Robert Anthony, a professor of international tax law and the deals could help Deutsche Bank principal partner of Anthony & Cie, a multi-. “They haven’t always won.” meet some of its requirements under The French Tax Administration began auditing the Luxembourg affiliates of Boston- its $7.2 billion mortgage-bond based Baupost funds after they sold three investments in 2006. The ensuing court fights settlement with the U.S. government, and criminal investigation weren’t made public until the January SEC filing, although finalized on Jan. 17. Baupost has kept clients aware of the legal proceedings since 2011. Deutsche Bank would finance the Baupost is fighting the tax assessments in France’s highest administrative court, the hedge funds’ purchase of defaulted Conseil d’Etat, and is backing Blumenthal in contesting the criminal case. The other loans, and investors would then ease directors charged with tax fraud don’t work for Baupost. the terms of the mortgages. The “Everyone who knows Tom understands that he is a person of the highest integrity,” funding could count toward Deutsche Baupost spokeswoman Diana DeSocio said in an e-mailed statement. “In all instances Bank’s requirement under the he acted in good faith for the benefit of our clients and we fully support him in this settlement to provide $4.1 billion of matter.” relief for mortgage borrowers, Blumenthal, who joined the firm in 1993 and co-heads its private investment group, according to the people. declined to comment. Some of these loans may end up coming from taxpayer-backed Fannie Mae and Freddie Mac, said the Traders Said to Make Illegal Gains on Fortress Deal people. Troy Gravitt, a spokesman for the German bank, declined to By Matt Robinson comment. Unknown traders made more than $3.6 million in illegal profits by investing in shares Before the housing bubble burst, and derivatives ahead of Softbank Group Corp.’s announcement last month that it would Deutsche Bank traders at the buy Fortress Investment Group LLC, according to U.S. regulators. conference pitched investors on The traders are believed to be overseas investors who used accounts outside the shorting mortgage bonds, as United States, the Securities and Exchange Commission said in a court filing. The SEC chronicled in the book and movie said it won an emergency court order freezing the traders’ assets. “The Big Short.” The defendants engaged in “highly suspicious trading” that involved buying 950,000 Business has been booming again Fortress shares through accounts at Maybank Kim Eng Securities Pte in Singapore, the for delinquent and soured mortgage SEC said in a statement last Tuesday. The stock was purchased on Feb. 14 at prices loans that remain from the 2008 ranging from $5.92 to $6.35 a share. After the market closed that day, Softbank said it financial crisis, in part because of planned to acquire Fortress for about $3.3 billion, or $8.08 a share. lenders like Deutsche Bank that are The asset freeze “ensures that the profits cannot be removed from the accounts while required by legal settlements to the agency’s investigation of the trading continues,” the SEC said in its statement. provide relief to consumers. Firms The defendants also include traders who purchased derivatives representing about 1 are bundling last decade’s subprime million shares of Fortress from Feb. 10 through Feb. 14, the SEC said in a filing. The home loans into bonds, and some of derivatives were bought from London-based R.J. O’Brien Ltd., according to the regulator. the securities are performing well “We are currently assisting, and extending our full cooperation to the relevant thanks in part to recovering home authorities investigating this matter,” Maybank said in a statement. “We wish to clarify prices. that neither Maybank Kim Eng nor any of its employees is a party to this litigation in the — Matt Scully United States District Court involving the securities of Fortress Investment Group.” R.J. O’Brien “is neither a defendant in the complaint nor in any way a target of the investigation,” a spokesperson said in an e-mailed statement. The firm said it monitors for unusual trading activity and complies with obligations to notify regulators. — With assistance from Pooi Koon Chong Hedge Funds March 7, 2017 9

Over the Hedge Hedge Funds March 7, 2017 10

Over the Hedge

Paul Tudor Jones Pranks Environmentalists at Audubon Awards Gala By Amanda Gordon But the crowd needed levity, too. Jones Just about every award presenter this delivered, taking the stage to present the week got a laugh out of the Oscars’ Best Lufkin Prize for Environmental Picture gaffe, but Paul Tudor Jones Leadership, a $100,000 award created took it to a whole new level. by Dan Lufkin, co-founder of Donaldson The setting was the National Audubon Lufkin & Jenrette. Society’s annual gala in New York, "In just a moment, I’ll be announcing gathering some of the nation’s leading the winner of the Lufkin Prize, that environmentalists at tables decorated fantastic prize designed by Dan to go to with hologram-like birds. Pete McCloskey those doers of good deeds, thinkers and helped pass the Endangered Species Act fighters, the people actually protecting Source: Bloomberg/Amanda Gordon and co-founded Earth Day. Carol our natural resources," Jones said. Paul Tudor Jones and Nathaniel Reed Browner led the Environmental It was classic, inspiring Jones — aside Protection Agency and the White House from the way he was flaunting an nature for solace in adverse Office of Energy and Climate Change envelope in his hand. circumstances. "Many a time, at the Policy. The current and former heads of "Without further ado, the winner is...” sound of a wood-thrush’s melodies have the Natural Resources Defense Council, He paused to tear open the paper. "Scott I fallen on my knees," Jones said, Rhea Suh and Frances Beinecke, were Pruitt, EPA. Is Scott here?" reading a longer passage. in the room. Laughter pealed through Gotham Hall That quote, for Jones, summed up All these folks have reason to feel as a member of the Audubon staff ran up what has made Reed so consistent and embattled, not only with glaciers melting to the stage with another envelope. persistent an environmentalist, showing and birds losing habitats, but in the era of Jones quickly ripped it open. up day after day, year after year. "You President Trump. The Republican- "Nat Reed," Jones bellowed, now can’t just pull out arguments of controlled Senate is reviewing the naming the correct prize recipient, who’d sustainability or academic arguments Endangered Species Act and EPA been previously announced and printed about economic benefits," Jones said. Administrator Scott Pruitt plans to roll in the program. Jones then paid tribute to Being an environmentalist "requires the back Obama-era rules. Reed, a compatriot of his in working to sustenance that comes from those David Yarnold, the chief executive of restore the Everglades, whose career moments of grace that we all get when Audubon and a former journalist, on stands in a stark counterpoint to Pruitt, we’re alone in the woods and hear the Wednesday night acknowledged the the former attorney general song of a bird." stakes are high, and said Audubon is who repeatedly sued the environmental well-positioned to take on the necessary agency he now runs. For more from Amanda Gordon's Scene Last fights "in these interesting times," with Jones closed his remarks by quoting Night columns, run NI SCENCE on the state-based offices and membership John James Audubon about turning to Bloomberg Terminal. spanning the political spectrum.

HFC's New York Gala Raises $1.4 Million for Charity

By Hema Parmar Group Inc. was Help for Children’s New York Gala honored at the event for the firm’s raised $1.4 million for charity as more commitment to the charity. The than 500 people in the hedge fund award was accepted by Goldman industry attended the 19th annual Sachs managing director Dean event on March 2, according to Backer, who is also chairman of spokesman Mitch Ackles. HFC's board of directors. The evening took place in the Last year, HFC donated more than Source: Mitch Ackles American Museum of Natural $1 million to organizations working to Goldman Sachs's Anne Black and Dean History's Milstein Hall of Ocean Life combat child abuse in metropolitan Backer at the gala and included a silent auction. .

Deal Hedge Funds March 7, 2017 11

Deal Arbitrage

The table below tracks pending corporate mergers in North America and the deal spreads — the difference between the offer price and the target's stock price. The table shows the week-over-week change in those spreads through Monday. Spreads that have moved by 2 percent or more are flagged in the far right "major move" column by an arrow indicating the direction of movement. Projected annualized returns are based on the spread and the deal's expected completion date.

Offer 1W Deal Expected Target Projected Per Payment Change *Major Target Acquirer Size ($, Completion Price Spread Annualized Share Type in Move M) Date ($) Return ($) Spread Time Warner Inc. AT&T Inc. 107,131 12/31/17 108.30 98.12 C&S 10.4% 12.6% 0.3% Monsanto Co. Bayer AG 65,696 12/31/17 128.00 114.65 Cash 11.6% 14.2% -0.9% EI du Pont de Nemours & Co. Dow Chemical Co. 65,603 06/30/17 81.45 79.81 Stk 2.1% 6.5% 0.3% Reynolds American Inc British American Tobacco PLC 59,553 09/30/17 62.15 61.28 C&S 1.4% 2.5% -0.4% Energy Transfer Partners LP Sunoco Logistics Partners LP 51,382 03/31/17 38.69 38.58 Stk 0.3% 4.0% -0.2% Level 3 Communications Inc. CenturyLink Inc. 33,500 09/30/17 59.51 56.26 C&S 5.8% 10.1% -1.4% Potash Corp of Saskatchewan Agrium Inc. 18,197 12/31/17 94.95 94.81 Stk 0.2% 0.2% -0.3% Inc. Mead Johnson Nutrition Co. Reckitt Benckiser Group PLC 17,810 9/30/17 90.00 88.34 Cash 1.9% 3.3% -0.6% ONEOK Partners LP ONEOK Inc. 17,378 6/30/17 55.76 54.93 Stk 1.5% 4.8% 0.1% Rite Aid Corp. Walgreens Boots Alliance Inc. 14,616 7/31/17 7.00 5.23 Cash 33.8% 84.0% 17.3% ▲ Linear Technology Corp. Analog Devices Inc. 12,814 3/10/17 65.46 65.45 C&S 0.0% 1.6% -0.7% WhiteWave Foods Co. Danone SA 12,349 3/31/17 56.25 55.06 Cash 2.2% 31.6% 0.3% Westar Energy Inc. Great Plains Energy Inc. 12,117 12/31/17 60.00 54.89 C&S 9.3% 11.3% -1.7% Valspar Corp. Sherwin-Williams Co. 11,206 3/31/17 113.00 111.49 Cash 1.4% 19.8% -0.2% Private Advantage FIC FI Cabela's Inc. 9,876 6/30/17 65.50 47.01 Cash 39.3% 123.8% 0.2% Multimercado Private Advantage FIC FI VCA Inc. 8,793 9/30/17 93.00 91.04 Cash 2.2% 3.8% -0.1% Multimercado Harman International Industries Inc. Samsung Electronics Co Ltd. 8,651 6/30/17 112.00 111.50 Cash 0.4% 1.4% 0.1% B/E Aerospace Inc. Rockwell Collins Inc. 8,245 3/31/17 64.26 63.86 C&S 0.6% 9.2% 0.4% Alere Inc. Abbott Laboratories 8,040 — 56.00 38.05 Cash 47.2% 0.0% 5.0% ▲ WGL Holdings Inc. AltaGas Ltd. 6,289 6/30/18 88.25 83.50 Cash 5.7% 4.3% -0.3% Endurance Specialty Holdings Ltd. Sompo Holdings Inc. 6,285 3/31/17 93.00 93.06 Cash -0.1% -0.9% -0.2% Western Refining Inc. Tesoro Corp. 5,890 6/30/17 36.77 36.42 C/S 1.0% 3.0% 0.2% Brocade Communications Systems Broadcom Ltd. 5,551 10/31/17 12.75 12.35 Cash 3.2% 5.0% -0.2% Inc. CST Brands Inc. Alimentation Couche-Tard Inc. 5,265 6/30/17 48.53 48.33 Cash 0.4% 1.3% 0.2% Allied World Assurance Co Fairfax Financial Holdings Ltd. 4,771 6/30/17 54.00 53.17 C&S 1.6% 4.9% -0.4% Holdings AG Manitoba Telecom Services Inc. BCE Inc. 4,171 6/30/17 39.64 39.35 C/S 0.7% 2.3% -0.1% Mentor Graphics Corp. Siemens AG 4,012 6/30/17 37.25 37.08 Cash 0.5% 1.4% 0.0% Canadian Imperial Bank of PrivateBancorp Inc. 3,833 3/31/17 51.42 57.72 C&S -10.9% -159.2% -1.8% Commerce Radius Health Inc. Shire PLC 3,651 — 90.00 42.11 Cash 113.7% 0% 3.7% ▲ MARB North American deals *Spread moved by more than 2% of price target: ▲ = up, ▼= down C/S=cash or stock

Activist Situations Hedge Funds March 7, 2017 12

Activist Situations

Significant Actions at Companies Targeted by Activist Investors

COMPANY ACTIVIST WHAT HAPPENED Mantle The railroad appointed Hunter Harrison as chief executive officer on March 6 in a bow to pressure from the activist investor. The board will CSX Corp. Ridge LP include three directors agreed on by the company and the activist, according to a statement. (Web link) The computer hardware and storage company entered into an agreement with the activist, which has a 10.9 percent stake as of Feb. 2, to Viex Capital Quantum Corp. reconstitute its board of directors "over the next several months,” according to a March 3 statement. The company will identify three new Advisors independent directors within 90 days, subject to the activist's approval. VenBio Immunomedics The activist investor said in a March 3 statement that it won all four board seats sought in a shareholder vote over its proxy fight at the Select Inc. biotechnology company. Advisor LLC The jets- and auto-parts maker under attack by the activist investor said in a statement March 2 that it is submitting a proposal to change its Elliott board structure. The New York-based company will seek shareholder approval to declassify the board structure, eliminate a super-majority Arconic Inc. Management vote and amend company by-laws to provide eligible shareholders with a proxy access mechanism to nominate director candidates, it said in Corp. the statement. The -based company faces a board proxy fight after the activist investor nominated two dissident candidates to replace key directors up for a vote at the mall owner’s next annual meeting. In a statement March 2, the activist refers to “transgressions,” including moves to Land & solidify family control and the 2003 rejection of a takeover offer by Simon Property Group Inc., and also blames “sub-par returns” on “poor Taubman Buildings capital allocation, bloated G&A, inferior operating margins and abysmal corporate governance.” In a separate e-mailed statement, the Centers Inc. Investment company said it has a highly qualified and independent board, noting two new directors appointed last year, and said the family had Management maintained about 30 percent ownership of the company’s operating partnership “ensuring the alignment of its interests” with other shareholders. Elliot NRG Energy The extent of the energy company’s bid to shed assets and cut costs may not be known for months as the power producer begins a strategic Management Inc. review after appointing two activist board members earlier this month, according to a Feb. 28 conference call with investors. Corp. Source: Bloomberg News, NI SHRHOLDACT , BI BESG Note: Links go to stories on the Bloomberg Terminal, unless otherwise noted

This table was compiled by Bloomberg LP employees involved with data collection and was edited by the News department. To suggest ideas or provide feedback, contact the editor for this table: Melissa Karsh at [email protected]. — Michael Thieme and Jason Martino, Bloomberg Data

Bloomberg Briefs: Hedge Funds

Bloomberg Brief Managing Editor Reporter Marketing & Partnership Director Paul Smith Hema Parmar Courtney Martens [email protected] [email protected] [email protected] +44-20-3525-8653 +1-212-617-6990 +1-212-617-2447

Hedge Funds Editor Contributing Reporters Advertising Melissa Karsh Suzy Waite Lucy Rosen [email protected] [email protected] [email protected] +1-212-617-4557 +1-212-617-6759 Contributing News Reporters Interested in learning more about

Contributing Editor Katherine Burton Reprints & Permissions the Bloomberg terminal? Request a Nathaniel E. Baker [email protected] Lori Husted free demo here. [email protected] [email protected] Saijel Kishan This newsletter and its contents +852-2293-1176 +1-717-505-9701 x2204 [email protected] may not be forwarded or Darshini Shah Simone Foxman redistributed without the prior [email protected] [email protected] consent of Bloomberg. Please +44-20-35250790 contact our reprints and permissions group for more information. © 2017 Bloomberg LP. All rights reserved. Hedge Funds March 7, 2017 13

Calendar Hedge Funds March 7, 2017 14

Calendar

To submit an event e-mail [email protected]. The "event" column links to websites. "Attendees of note" links to individual's BIO page, where available, on the Bloomberg terminal.

DATE ORGANIZER EVENT SPEAKERS/ATTENDEES OF NOTE/DETAILS LOCATION Donald Tang, D.E. Shaw; John Sitilides, Trilogy; Marc March 7 Access-Alts Asia Asia-Global Hedge Fund Summit Lasry, Avenue Capital; Michael Weinberg, Protege; Ethan The Pierre, New York Devine, Indus; Samuel Belk, Cambridge. Navigating Private Placement Presentation and panel sessions focusing on individual March 20 AIMA New York Regimes Around the World 2017 countries. April Wilcox, Calstrs; Jenny Tsouvalis, OMERS; Henry March 21-22 InvestOps Trade Tech Invest Ops 2017 Kravchenko, Marshall Wace; Tiffany Fleming, Prudential Tampa, IM. Dick Pfister, AlphaCore; Bryan Fujita, LA Employees Retirement System; Michael Wu, GenSpring; Jim Burritt, March 22 Markets Group ALTSLA 2017 Omni Hotel, Los Angeles Pacific Life; Donald Pierce, San Bernadino Employees Retirement Association. Kenny King, JPMorgan; Judith Posnikoff, Paamco; Ron March 30 Talking Hedge Emerging Managers & Diversity McIntosh; Lomas Capital; Aoifinn Devitt, Policemen's UBS Tower, Chicago Annuity and Benefit Fund of Chicago. Cap Intro: Credit/Fixed Income April 3 Catalyst Investment manager and investor meeting. New York Alternative Lending 3rd Annual Liquid Alternatives Yung Shin Kung, Quantitative Investment Strategies; Dick April 4 Joint Venture Events Group New York Strategies Summit Pfister, AlphaCore; Anton Schutz, RMB Funds. Steven Wilson, Teacher Retirement System of ; Ed April 4 Markets Group Alts Investor Forum South Dallas Butowsky, Chapwood Investments. 4th AML, Sanctions &FCPA April 4 American Conference Institute Summit for and To be released. New York Hedge Funds The Modernization of Due Lionel Erdely, Investcorp; Shakil Riaz, Rothschild; Steven April 5 Talking Hedge Diligence for Alternative Kahn, Talpion; Benjamin Alimansky, Glenmede; Harvard Club, New York Investments Alessandra Tocco, JPMorgan. Contact Rachel Wheeler at [email protected] for more April 13 Hedge Funds Care San Francisco Benefit San Francisco information. April 20 Context Summits NYC 2017 One-on-one meetings with investors. New York Mark DeGaetano, KKR Prisma; Samantha Greenberg, Ritz Carlton, Grand April 23-26 informa GAIM Ops Cayman Margate; Elizabeth Madden, Davidson Kempner; Steve Cayman Metzger, Two Sigma; Mark Schein, York Capital. Alex Denner, Sarissa; Clifton Robbins, Blue Harbour; Jeff Smith, Starboard; Mick McGuire, Marcato; Ed Garden, April 27 13D Monitor Active-Passive Investor Summit Plaza Hotel, New York Trian Partners; Keith Meister, Corvex; Paul Hilal, Mantle Ridge. Contact Rachel Wheeler at [email protected] for more May 3 Hedge Funds Care 15th Annual Chicago Benefit Chicago information. May 8 Sohn Sohn Investment Conference To be released. New York Cap Intro: Alternative Investing May 15 Catalyst Investment manager and investor meetings. San Francisco Funds West Bill Ackman, Pershing Square; Dan Loeb, Third Point; Jim Chanos, Kynikos; Kyle Bass, Hayman Capital; Troy May 16-19 SkyBridge Capital SALT Gayeski, SkyBridge; Joshua Friedman, Canyon Partners; Las Vegas Michael Hintze, CQS; Boaz Weinstein, Saba; Roslyn Zhang, CIC. Greg Irlbeck, Dallas Police & Fire Pension System; Justin June 13 Markets Group Alts Investors Forum West Pawl, Covenant Multi Family Offices; Darsh Singh, Satori San Francisco Alpha. Cap Intro: Multi-Fund FinTech June 19 Catalyst Investment manager and investor meetings. New York Platforms DISCLAIMER: The information on this page was compiled by Bloomberg from multiple sources, public and private, and is deemed to be accurate, but not definitive or exhaustive. Questions about events should be addressed to the event organizer.