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Brief: Billionaire investor Leon Cooperman told CNBC on Monday the U.S. government should offer financial assistance to companies struggling with the economic effects of the coronavirus pandemic. “If the government lets all these companies go bankrupt and they do disgorge labor, the government is going to have to basically pay a lot of unemployment benefits,” Cooperman said on “Fast Money Halftime Report.” “Instead, they make low-interest rate or interest-free loans to these companies that are experiencing [a] liquidity crisis, the companies fix themselves up and they come back.”
Brief: British investment manager Polar Capital has revealed that its assets under management (AuM) dropped 12% on a year-on-year basis to £12.2bn at the end of March 2020.The firm attributed the fall to the impact of the pandemic and a sharp fall in the oil price, which led to a fall in global equity markets. The AuM dipped by £1.9bn in the three months ended 31 March 2020. The firm’s AuM as of 31 March 2019 was £13.8bn.
Brief: SoftBank Group Corp. forecast a 1.35 trillion yen ($12.5 billion) operating loss for the fiscal year ended in March, a sign of how badly Masayoshi Son’s bets on technology startups have been battered in recent months. The Japanese company expects to record a 1.8 trillion yen loss from its Vision Fund and another 800 billion yen in losses from SoftBank’s own investments. It has written down the value of investments in companies, including office-rental startup WeWork and satellite operator OneWeb, which filed for bankruptcy last month. Son’s conglomerate has taken one blow after another since the implosion of WeWork’s initial public offering last year and SoftBank’s subsequent bailout. It bet heavily on sharing-economy startups, which allow people to split the use of offices or cars, but those investments have been particularly hard hit as the coronavirus pandemic curbs unnecessary human interaction.
Brief: Organized as a Maryland corporation, AEW Core Property Trust (U.S.) is an open-ended U.S. core real estate vehicle managed by Boston-based AEW Capital. Like other real estate funds, the trust is concerned about liquidity during the Wuhan coronavirus (COVID-19) pandemic. At December 31, 2019, the open-ended fund had US$ 9.5 billion of gross property value and net asset value equating to US$ 7.2 billion. AEW Capital informed investors that its suspending fund redemption requests. The fund is concerned about a rapid withdrawal, causing the portfolio’s value to drop sharply.
Brief: EJF Capital LLC, the multibillion-dollar credit-focused investment firm, is asking clients for a loan to avoid additional losses in one of its private funds, according to a recent company letter seen by Reuters. Sent to investors in the $206 million EJF Trust Preferred Fund LP, the letter said recent coronavirus-driven turbulence in short-term funding markets made continuing to use such debt a challenge, risking deeper fund losses if positions had to be liquidated to pay it back.
Brief: Billionaire investor Cliff Asness has spent his quarantine watching $43 billion disappear. Asness’ AQR Capital — which managed $186 billion at the end of 2019 — has updated its Web site to reflect that its assets under management as of March 31 now stand at $143 billion. It’s unclear how much of the massive 23 percent drop in assets is due to investor withdrawals versus investment losses, but the notoriously outspoken Asness, 53,has been sufferingfrom redemptions amid sagging performance since last year. Returns have worsened this year for some of Asness’ funds as the coronavirus pandemicbatters the economyand the stock market, according to AQR’s Web site.
Brief: U.S. Treasury Secretary Steven Mnuchin said on Thursday that the American economy could start to reopen for business in May, despite many medical experts saying that closures and social distancing measures will need to stay in place for longer to defeat the coronavirus. Asked on CNBC whether he thought President Donald Trump could reopen the U.S. economy in May, Mnuchin said, “I do.” “As soon as the president feels comfortable with the medical issues, we are making everything necessary that American companies and American workers can be open for business and that they have the liquidity they need to operate the business in the interim.” U.S. economists have cautioned against bringing large numbers of people back to their workplaces too quickly.
Brief: Morgan Stanley’s (MS.N) Chief Executive Officer James Gorman said he has fully recovered from the illness caused by the novel coronavirus, according to a video that was sent to the bank’s employees on Thursday. Gorman released the 10-minute video to staff by email in which he said he had tested positive for coronavirus and had been fully cleared by doctors more than a week ago. Gorman is currently undergoing self-isolation at home and working remotely, according to the video. A Morgan Stanley spokesman confirmed the contents of the video, adding the development was not considered to be material because Gorman was not incapacitated at any time.
Brief: The UK’s accountancy watchdog has paused its plans to separate the Big Four accountancy firms, as the profession tackles the disruptions caused by the Covid-19 downturn. In astatementfrom the Financial Reporting Council on April 9, the watchdog said it would stop all “demands on, requests from and meetings with audit firms on operational separation”. The pause will be reviewed in one month’s time. The decision to put the break-up on hold comes shortly after the FRC wrote to the leaders ofDeloitte, EY, KPMG and PwC outlining its separation plans. In a statement at the end of February, Claire Lindridge, the FRC’s director of audit firm monitoring and supervision had said the firms would be expected to ensure their “audit practice is properly ring fenced”, so that “financial results are clear and transparent”.
Brief: BlackRock Inc. won’t layoff any employees this year as a result of the coronavirus, according to chief executive officer Larry Fink. The world’s largest asset manager will also pay full-time wages to the people staffing its facilities, including cafeteria and maintenance workers, even if they can’t come to work, Fink said Wednesday in a post on LinkedIn. More than 90% of BlackRock employees are working remotely. The firm employs more than 16,000 people worldwide. The announcement comes as global companies grapple with major changes to their businesses, with the pandemic spurring an unprecedented shift to working from home. Fink said last month he had “never experienced anything like this” in more than four decades working in finance, but expected the economy to recover eventually.
Brief: Paul Singer, billionaire founder of the $40 billion Elliot Management hedge fund, apparently warned his staff of the coronavirus' ramifications well before many other leaders appeared concerned. On February 1, according to a memo seen by Bloomberg News' Katia Porzecanski, Singer told employees to prepare for at least a month of self-isolation at home. That meant making sure they had "access to sufficient food, water, and medicines." His memo came well before many US officials warned of such drastic effects. New York State, for example, did not close bars and restaurants until March 16, the same week the Centers for Disease Control warned against gatherings of more than 10 people.
Brief: San Francisco-based Colchis Capital Management LP, a pioneer backer of online direct lending platforms, is winding down its main funds as disruptions caused by the novel coronavirus have started to hit its consumer and real estate loans, according to materials reviewed by Reuters. “The largest risk to the Colchis Income Funds is unemployment for our consumer loans and weakness in the housing market for our bridge real estate loans,” Colchis Chief Investment Officer Robert Conrads wrote in a letter to investors on March 31. “Moreover, there is no consensus as to the timing or strength of the recovery in employment and economic conditions.”
Brief: Blackstone Group Inc. has finished raising a 9.8 billion-euro ($10.7 billion) fund that will target European real estate. The fund swells the firm’s uninvested capital for opportunistic property bets to about $30 billion just as the coronavirus roils markets worldwide. It’s also the largest private equity capital raising to complete since the pandemic’s outbreak, according to data compiled by Bloomberg. “Our scale and reach allow us to put capital to work strategically during this period of elevated volatility,” James Seppala, Head of Real Estate Europe, said in an emailed statement. “The significant demand for the fund is testament to the confidence our investors have in our ability to deploy strategic long-term capital to assets and businesses across Europe.”
Brief: Universa Investments posted an astonishing year-to-date return of more than 4,000% in March following “one of the scariest months on record,” even as the firm issued a stark warning about a still-overinflated market. According to a client letter obtained by Yahoo Finance, Universa’s investors in the Black Swan Protection Protocol (BSPP) strategy saw a staggering +3,612% net return on capital in March, based on required invested capital at the start of the year. Year-to-date, the fund’s investors reaped an even more eye-popping +4,144% net return on capital. The contents of the letter were first reported by the Wall Street Journal. The hedge fund founded by Mark Spitznagel specializes in convex tail hedging and investing. Universa’s specific brand of tail-risk hedging limits losses from an outsized market event. When markets go down, this tail hedge acts like insurance for a portfolio. And since its inception, investors have seen a +239% net return on capital, according to the report.
Brief: The management board of listed private equity group Aurelius Equity Opportunities has decided to reduce their total salaries for the second quarter of 2020 by 25%. In a letter to shareholders, chief executive officer Dirk Markus said the management wants to shoulder some of the burden and that over the coming weeks or months, they might have to make some difficult decisions for some portfolio companies. “Each and every loss of a portfolio company is unfortunate, but, to a certain extent, part of private equity in general and special situations investing in particular,” he said. He added that a number of the firm’s portfolio companies are struggling to stay on top of things and deal with dramatic changes in their respective markets.
Brief: Investing heavyweight Howard Marks, who only a few months ago was telling investors to use extreme caution, now thinks the time for playing defense is over. In the latest chapter of his evolving market views, Marks said a number of conditions have changed recently that argue for more risk-taking as the coronavirus crisis evolves. “Given these new conditions, I no longer feel defense should be favored,” the Oaktree Capital founder said in the latest of his “memos” that are read widely on Wall Street. Specifically, he points notes that “the risks in the environment are recognized and largely understood.” Also, he pointed out that potential returns are rising, specifically citing the typical yield for high-yield bonds rising from 3.5% to about 9%.
Brief: Hedge fund Lansdowne Partners, formerly revered as one of the world’s star stock pickers, was wrong-footed by the historic bull-run. It fared even worse in last month’s bear market. The firm’s main hedge fund run by Peter Davies and Jonathon Regis tumbled 13% in March’s rout, the biggest monthly decline since it started trading almost two decades ago, according to an investor update seen by Bloomberg. Its smaller Princay Fund suffered a 35% drop. The sharp losses pile pressure on London-based Lansdowne, which has seen an investor exodus after lagging both rising and falling markets since 2016.
Brief: The coronavirus pandemic has hit Wall Street hard as banks, hedge funds and private equity firms navigate an unprecedented business stoppage. As the biggest firms on the Street work to pump money into the economy, and manage their mammoth portfolios of assets through the tumult, they’re also putting big money towards relief efforts.KKR & Co, co-founded by billionaires Henry Kravis and George Roberts, has created a $50 million fund dedicated to supporting frontline workers and mitigating the financial hardship created by the pandemic.The fund will be used to help first responders and health workers, and in various financial relief efforts aimed workers and small businesses in the communities where it invests.
Brief: On April 2, the day that coronavirus infections around the globe hit 1 million, managers inside JPMorgan Chase & Co. were emailing their latest plans for staffing New York-area trading floors amid the deadly pandemic. One worker on the sales team noticed a colleague wasn’t on the list and asked where he’d be “Corona Town, U.S.A.,” the person wrote back. Then one of the bank’s credit-trading leaders, Nicholas Adragna, weighed in: “The trading desk will be in the office unless they have a medical condition with a dr’s note.” More than 100 employees were on the message chain seen by Bloomberg, and some were horrified. It came soon after an outbreak of COVID-19 inside JPMorgan’s Madison Avenue headquarters, in which at least 16 people tested positive on a single trading floor.
Brief: A leading global health fund has asked international businesses and governments to provide $8 billion to support development and production of COVID-19 tests, drugs and vaccines. British-based Wellcome Trust said the initiative, dubbed COVID-Zero, is aimed at the private sector and it is urging chief executives of multinational companies to join the coalition and save lives. An initial $8 billion by the end of April - a fraction of the sums wealthy governments have injected into struggling economies - would be enough to develop new COVID-19 tests, drugs and vaccines and to begin scaling up production, the fund said.
Brief: The head of the U.S. Securities and Exchange Commission (SEC) said on Tuesday that companies in discussions about bailouts resulting from the economic impact of the coronavirus outbreak should disclose to investors where they stand. “We’re in a very different environment,” SEC Chairman Jay Clayton said in an interview on CNBC. “Companies are going to be talking about where they stand ... and their plans going forward is sensitive information. I encourage companies to disclose where they stand and limit speculation ... as we move forward.” Clayton added that companies must communicate with investors about plans for dividends, share buybacks and capital preservation.
Brief: Convicted former drug company CEO Martin Shkreli, known as “Pharma Bro,” wants to get out of prison so he can help research a treatment for the coronavirus, his lawyer said Tuesday. Defence attorney Ben Brafman said that he will file court papers asking federal authorities to release Shkreli for three months so he can do laboratory work “under strict supervision. His client — best known before his arrest for drug price-gouging and his snarky online persona — is housed at a low-security prison in Allenwood, Pennsylvania. “I have always said that if focused and left in a lab, Martin could help cure cancer,” Brafman said in a statement. “Maybe he can help the scientific community better understand this terrible virus.” In a research proposal posted online, Shkreli called the pharmaceutical industry’s response to the pandemic “inadequate” and said researchers at every drug company “should be put to work until COVID-19 is no more.”
Brief: The liquidity crunch that shuttered 35 bond funds in Sweden last month has revealed some disturbing truths about the country’s credit market. As the spread of Covid-19 across Europe triggered a sell-off in corporate bonds, investors keen to withdraw their savings in Sweden suddenly learned they couldn’t. While the Swedish funds were legally entitled to suspend trading to ensure fair treatment for all their customers -- a process known as gating -- it now seems clear that investors weren’t aware of the risks they faced. The episode has sparked calls for funds to drastically adjust their marketing practices. “It’s reprehensible that some corporate bond funds have marketed themselves as an alternative to savings accounts,” said Frida Bratt, a savings economist at Nordnet Bank AB. But many investors “haven’t realized there’s a whole different risk level involved.”
Brief: Activist investor Bill Ackman was so concerned about the potential impact of the coronavirus that he considered liquidating his hedge fund’s entire portfolio for the first time. Instead, the billionaire opted for another strategy: a lucrative credit hedge that earned his firm about $2.6 billion in profits when the market plummeted. Ackman said in a letter to investors in the fund, Pershing Square Capital Management, Monday that he used the proceeds from the credit bet to substantially boost investments in several portfolio companies. That included increasing his stake in Warren Buffett’s Berkshire Hathaway Inc. by 39%, and reinvesting in Starbucks Corp. in a new position valued at roughly $730 million.
Brief: JPMorgan Chase & Co’s top boss, Jamie Dimon (JPM.N), on Monday said he sees a “bad recession” in 2020, and that the largest U.S. bank could suspend its dividend if the coronavirus crisis deepens. Dimon, widely regarded as the face of the U.S. banking sector, is the most prominent voice on Wall Street so far to project that the economic cost of the coronavirus will not evaporate quickly, and said the bank’s earnings will be down “meaningfully in 2020.” But, Dimon said, even in the worst case scenario, the bank is strong and will continue lending to customers and will not need any relief from the federal government.
Brief: After pushing for weeks for government intervention to help asset-backed securities markets, Tom Barrack isn’t optimistic about his chances. “We’re fighting politics,” the founder and chairman of Colony Capital Inc. said in a phone interview from his Santa Barbara, California, home, where he’s riding out the Covid-19 pandemic with his family. “In an election year, nobody wants to be viewed as bailing out over-leveraged industries -- even if that’s not what is happening.” Barrack, 72, is no stranger to politics: His first job after graduation was at the law firm of Herb Kalmbach, President Richard Nixon’s personal attorney, and he later served as a deputy undersecretary in the Reagan administration before starting his business career. He has been close to President Donald Trump and remains friends with Steven Mnuchin, who he called one of the best treasury secretaries ever.
Brief: Four equity portfolio managers were fired from Ken Griffin’s Citadel hedge fund last week, after one of the most volatile months for stocks on record. The four managers are Chris Connor, who ran a technology portfolio; Tio Charbaghi and Steve Bergman, who both ran baskets of industrial stocks; and Chip Fortson, who ran a book of financial stocks, according to people familiar with the firm. The managers all worked in the firm’s Global Equities group, which got a new head at the beginning of March, when Justin Lubell took on the role. He previously worked for Steve Cohen’s Point72 Asset Management. A spokeswoman for Citadel confirmed the firings, and declined to comment further. Connor declined to comment, and the others couldn’t be reached for comment.
Brief: The co-founder of a huge private equity firm sent an email this week to Jared Kushner and other Trump administration policymakers seeking to relax rules on coronavirus relief money in a way that would benefit the company, according to sources familiar with the matter. Kushner's family real estate business has financial ties to the company, Apollo Global Management. A source close to Kushner says there was nothing remarkable about his receipt of the email, from Apollo co-founder Mark Rowan. Kushner gets hundreds of proposals from all sorts of people, the source said. But Apollo is not just any business: It made a $184 million loan in 2017 to Kushner Companies, the real estate company in which Jared Kushner, President Donald Trump's son-in-law and senior adviser, retains an interest.
Brief: The hedge fund that’s vacuumed up almost 100 local newspapers hit its Southern California papers with another round of layoffs Thursday, cutting jobs that the state deems “essential” in fighting the pandemic. The Orange County Register, Riverside’s Press-Enterprise, Pasadena Star-News, and Long Beach Press-Telegram belong to the 11-paper umbrella group — called the Southern California News Group (SCNG) — that laid off numerous staffers from both the editorial and advertising sides, according to a source with knowledge of the situation. Controversial hedge fund Alden Global Capital owns the papers and forced the cuts, the source told Institutional Investor. SCNG leaders called an all-hands meeting Thursday evening after breaking the news to each laid-off employee individually. Leaders did not tell the remaining staff precisely how many people got cut.
Brief: Zach Schreiber’sPointState Capitalhas suffered an estimated$2.1 billionof redemptions so far this year amid lackluster performance and as the coronavirus pandemic tears through markets. The hedge fund also forecast nearly$640 millionof withdrawals in the coming months, said a person familiar with the matter, who asked not to be identified because the details are private. It managed assets of around$5 billionat the end of last year, the person said. The outflows are estimates as of late March and could change. A spokesperson for New York-based PointState declined to comment.
Brief: As firms brace for the financial impact of COVID-19, money managers and large banks with investment management staff, like Morgan Stanley, Goldman Sachs and T. Rowe Price Group, say they have no immediate plans to turn to layoffs amid the pandemic. For most firms it remains unclear how long this will be the case, however, as the coronavirus continues to wreak havoc on the economy and businesses, pushing U.S. unemployment claims to new highs. On March 26, Morgan Stanley CEO James Gorman told employees that there will not be a reduction in the workforce in 2020, according to an internal memo obtained by Pensions & Investments.
Brief: Ray Dalio’s flagship hedge fund at Bridgewater Associates ended the first quarter down about 20%, according to people with knowledge of the matter. Bridgewater extended this year’s decline after getting caught on the wrong side of the market sell-off that began in late February as a result of the rapidly spreading coronavirus. The firm’s Pure Alpha II strategy fell about 16% in March after posting smaller losses in the first two months of the year, said the people, who asked not to be identified because the information isn’t public. Dalio, who earlier this year urged investors not to miss out on an opportunity to benefit from strong markets, wrote in mid-March that the pandemic hit the firm at the “worst possible moment” because Bridgewater’s portfolios were tilted to benefit from a rise in the market.
Brief: Billionaire activist investor Christopher Hohn’s hedge fund suffered its steepest ever monthly decline in March as the global market turmoil hit his stock bets. The Children’s Investment Fund lost about 19% during the month, the worst since it started in 2004, according to people with knowledge of the matter. The decline pushed the fund’s first-quarter loss to about 23%, the people said, asking not to be identified because the information is private. A spokesman for the London-based investment firm, which managed about $30 billion before March losses, declined to comment.
Brief: Half a million of Bank of America Corp.’s 66 million customers have deferred loan payments because of financial fallout from the coronavirus. “The idea is to defer the payment, defer the impact,” Chief Executive Officer Brian Moynihan said in an interview Friday on CNBC. “We’re working with our customers who need help, who are losing their jobs. We have to preserve their ability to have cash flow.” The bank’s portal for small-business relief loans went live Friday morning and had 40,000 applications by the afternoon, according to a person familiar with the situation.
Brief: A Russian state fund called on Thursday for promoting dialog between Moscow and Washington, which is crucial in tackling the global spread of coronavirus, as Moscow stepped up diplomatic efforts on the global stage in fighting the infection… The Russian Direct Investment Fund (RDIF) said it was the fund that took up half the cost. The fund said it has been consistently calling for dialog between Russia and the United States. Relations between the two countries have been strained in recent years by matters ranging from Syria to Ukraine to U.S. election interference, which has been denied by Russia.
Brief: Citadel Securities this week opened an office in Florida to help ensure billionaire Ken Griffin’s giant trading firm can continue at full capacity during the coronavirus pandemic -- and cope with the explosion in volume the illness has spurred. The firm opened a new, temporary trading floor in Palm Beach on Monday with 24 people, according to a memo from the firm to employees seen by Bloomberg. The market maker debuted the facility two days before Florida’s governor announced astay-at-home orderfor the state of 21.5 million.
Brief: JPMorgan Chase & Co (JPM.N) Chief Executive Officer Jamie Dimon has returned to lead the largest U.S bank, after recovering from recent heart surgery, according to an internal memo to employees seen by Reuters. Dimon, who is working remotely due to the widespread lockdown caused by the coronavirus outbreak, had an emergency heart surgery on March 5 to repair a tear to his aorta. In an email to employees on Thursday, Dimon said he was “happy to be back to work this week”. “I have been recuperating well and getting stronger every day,” said Dimon, who is widely seen as the face of the U.S. banking industry.
Brief: Starboard Value is pushing ahead with its second proxy fight since the outbreak of the coronavirus, arguing its board nominees for GCP Applied Technologies Inc. would be better able to navigate the company through the crisis. The New York-based hedge fund run by Jeff Smith, which owns 9% of GCP, has nominated eight directors to take control of the chemical maker’s board. It plans to push ahead with the fight because it believes its slate of directors have the right skills to turn around the company, according to a regulatory filing Thursday. “We recognize the Covid-19 crisis has created a difficult environment for many companies,” Starboard Managing Member Peter Feld said in a letter to shareholders. “GCP is no different and needs strong leadership and oversight during these challenging times. We believe the nominees we have put forth are uniquely capable to help govern the company through and after this crisis.”
Brief: Amid a major market rout spurred by the coronavirus pandemic, one hedge fund has had outsized returns betting against companies hit hardest. Valiant Capital Management led by Chris Hansen has gained 36% year-to-date through the end of March, before fees, The Wall Street Journal's Juliet Chung reported Thursday, citing people familiar with the firm. In the same timeframe, US stocks have tanked — the Dow Jones Industrial Average lost 23%, its worst first quarter ever. The S&P 500 lost about 20%. The $1.4 billion fund was able to profit in the wreckage by placing strategic bets against leveraged companies that it saw being hit the hardest by the coronavirus outbreak. The hedge fund shorted stocks of cruise lines, international airlines, and travel companies, according to the report.
Brief: It could take up to six months for the global economy to recover from the downturn caused by the coronavirus, a leading market commentator has warned. But a recovery would only take place on two conditions: if mass testing of the virus is introduced, and governments guarantee to support demand, according to Nigel Green, chief executive of financial advisory firm deVere Group. His prediction comes the day after the United Nations released its latest trade report, according to which the world economy will go into recession this year with a predicted loss of global income of trillions of dollars.
Brief: Traditional asset management firms are expected to lose around a third of their assets under management as a result of the coronavirus pandemic, according to Fitch Ratings. The ratings agency projected an average decline in assets of between 29.9 percent and 36.9 percent for large, publicly traded U.S. firms, due to a combination of declining asset prices, fee pressures, and outflows. AllianceBernstein was projected to be the worst hit of the peer group analyzed by Fitch, with an expected AUM decline of 33.8 percent in the ratings agency’s best-case scenario.
Brief: Oaktree Capital founder Howard Marks believes the coronavirus pandemic could have a “much wider” range of negative outcomes than the 2008 financial crisis.In a newmemooutlining the potential economic repercussions associated with the virus, Marks sought to determine whether asset prices had fallen “appropriately, too much or too little” over the last few weeks. “In the last six weeks the markets have seen the best of times and the worst of times,” the Oaktree co-chairman wrote in the memo, released Tuesday evening.
Brief: The $3 trillion hedge fund industry is under pressure amid market turmoil prompted by the spread of the coronavirus. A wide dispersion of gains and losses is expected to emerge as firms disclose their returns for March. Below are some of the winners and losers. Dan Loeb’s Third Point posted losses in its flagship hedge fund last month, according to people with knowledge of the matter. The Third Point Offshore Fund dropped 11%, bringing its loss this year to 16% percent, said the people, who asked not to be identified because the matter is private.
Brief: Standard Chartered has made $1 billion (€0.9 billion) of finance available for companies able to provide ventilators, face masks and other goods and services to help fight the Covid-19 pandemic. Companies in scope include healthcare providers, along with manufacturers and distributors in the pharmaceutical industry. Companies in non-related sectors that can switch their production to support the fight against the virus and Standard Chartered said it is also trying to identify companies who are considering changing to, or adding anti-virus products to their production line, but have not yet said they will.
Brief: The lockdown of U.K. property funds has now put about 20 billion pounds ($25 billion) out of investors’ reach as the coronavirus pandemic batters the economy and makes valuation of assets nearly impossible. BlackRock Inc., Schroders Plc and Legal & General Group Plc are among the latest firms to freeze some funds, telling their institutional clients that withdrawals are halted indefinitely because of the outbreak, according to company statements. The suspensions of these funds for professional investors, which have about 9 billion pounds of assets under management, follow previous decisions by a range of firms to lock up about 11 billions pounds of mom-and-pop clients’ cash.
Brief: Lobbyists representing the private equity industry pushed the Trump administration and members of Congress to provide hundreds of billions of dollars in relief for businesses hammered by the spread of coronavirus. The American Investment Council, which lobbies on behalf of the private equity industry, spoke to congressional leaders from both sides of the aisle and Treasury Department officials, according to people with direct knowledge of the matter. These people declined to be named because the conversations were deemed private.
Brief: The Commodity Futures Trading Commission’s Division of Swap Dealer and Intermediary Oversight (DSIO) today announced that it has issued additional targeted, temporary no-action relief to foreign affiliates of certain futures commission merchants (FCMs) in response to the COVID-19 (coronavirus) pandemic. The relief expires on September 30, 2020. “The CFTC will continue to provide targeted, temporary relief to market participants where appropriate,” said DSIO Director Joshua Sterling. “This action bolsters our efforts to facilitate orderly trading and liquidity in our derivatives markets during this volatile period. We encourage market participants to engage with the CFTC early and often as market developments continue to unfold.”
Brief: Although some have opined that shareholder activism appears unseemly during a global pandemic, a new survey shows that investors think this mindset won’t last for long. A recent survey by Boston Consulting Group found that 59 percent of the investors it polled think activists are coming for companies amid the devastation caused by the spread of Covid-19 — and that management should do more than sit and wait. These investors also think companies should "take proactive steps to mitigate activism risk by strengthening their businesses’ near- and medium-term fundamentals,” according to the survey, entitled “Investor Pulse on the COVID-19 Crisis.”
Brief: Wall Street bank Goldman Sachs (GS.N) is offering employees 10 days of paid family leave to care for children or elderly parents who are at home during the coronavirus pandemic, according to a memo sent to staff on Tuesday that was seen by Reuters. Several banks have been extending extra paid time-off to employees, as the flu-like virus has shut down schools and forced many to stay at home.
Brief: Billionaire trader Steven A. Cohen is cautioning the staff of his investment firm, Point72 Asset Management, to remain cautious amid markets that have recovered slightly from coronavirus-driven lows. “Markets don’t come back in a straight line; after an earthquake there are tremors,” Cohen wrote to staff on Friday in an internal memo seen by Reuters. “We need to continue to be disciplined. We are seeing plenty of opportunities to generate returns, but I don’t want us taking undue risks.”
Brief: The European Union markets watchdog is considering leverage curbs on hedge funds and private equity funds to shore up financial stability as the coronavirus outbreak roils global markets.The proposal from the European Securities and Markets Authority (ESMA) could give more powers to countries like Spain, Italy and France - that have over the past week slapped bans on short-selling - a favoured trading strategy of hedge funds in particular.
Brief: Prophet Capital Asset Management LP, an investor in loans and structured credit securities hit by recent market turmoil, plans to temporarily block withdrawals from one of its hedge funds and ultimately dissolve it, according to a letter sent to investors on Monday seen by Reuters. “As you are no doubt aware, financial markets are experiencing extreme volatility and impaired liquidity as a result of the Coronavirus crisis,” Prophet executive David Rosenblum wrote.
Brief: As Covid-19 continues to create disruption across Europe, 195 institutional asset managers are appealing to companies to stay the course when it comes to maintaining staff and prudent cost management. The group, which includes such heavyweights like BMO, Aviva Investors and Nordea, has collective assets under management of $4.7tn. In an open letter, the group said the long-term viability of firms they invest in is closely linked to the welfare of their employees, suppliers, customers and the communities in which they operate.
Brief: A collection of 30 investor and sustainability focused groups have raised concerns in a letter to the Federal Reserve over potential conflicts of interest and lack of transparency and oversight in the recent agreement between the central bank andBlackRock. On March 24, the Fed announcedBlackRockas investment manager and adviser for three new programs aimed at supporting the U.S. economy amid the COVID-19 pandemic. Two of the three appointments relate to the Fed's new measures to ensure credit continues to be available to large employers: The primary market corporate credit facility, providing new bond and loan issuance; and the secondary market corporate credit facility, providing liquidity for outstanding corporate bonds.
Brief: SEC Chairman Jay Clayton said Monday that the practice of short selling — effectively betting that a stock will drop — is needed to “facilitate ordinary market trading.” “We shouldn’t be banning short selling,” Clayton told CNBC’s However, he said the Securities and Exchange Commission did replace the old uptick rule with a new measure to help mitigate the volatility that short selling can bring to an already agitated market like the one that investors have been dealing with for weeks now because of the coronavirus crisis.
Brief: JPMorgan Chase & Co.’s alternative-investments division is seeking to raise as much as $10 billion in an effort to bolster its spending power as the Covid-19 pandemic roils global markets. “The magnitude of these dislocations is so significant,” Anton Pil, the global head of alternatives for JPMorgan’s asset-management arm, said in an interview Monday. “And to get some of these markets functioning, you need a lot of capital.” JPMorgan plans to raise $5 billion to $10 billion “in the next couple of months” from clients including pension funds, sovereign-wealth funds, family offices and private banks, Pil said.
Brief: The chief financial officer of Jefferies Group LLC, Peregrine "Peg" Broadbent, has died from coronavirus complications, the company said in astatementSunday.Broadbent, who was 56-years-old, had served as CFO of the financial services company since 2007. The company has appointed Teri Gendron, CFO of Jefferies Financial Group, as the interim CFO and chief accounting officer ofJefferies Group(JEF)."For over a dozen years, Peg has been our CFO and partner, and helped us build Jefferies from less than half its current size, and navigate through hard times and good times," the company said. "He has also been a much-loved and respected leader to the incredible global team that provides the support, foundation and glue across our firm."
Brief: Losses at Izzy Englander’s $40 billion hedge fund were erased this past week as markets rebounded following unprecedented aid from the U.S. government. Millennium Management finished last week down 67 basis point for the month, compared with a decline of 5.1% a week earlier, according to a person familiar with the matter. That fund is now up 17 basis points for the year. Millennium Management and most other firms struggled in the first three weeks of March as the effects of the spreading coronavirus virtually halted the global economy and seized up markets from stocks to bonds to commodities. Then came unprecedented moves by the Federal Reserve and the promise of a $2 trillion stimulus bill that was signed by President Donald Trump on Friday.
Brief: After a brutal meltdown, some investors have been wading back into U.S. stocks. But others are wary of another leg down as the coronavirus spreads and its economic impact is difficult to predict. High-profile investors from BlackRock Inc (BLK.N) to billionaire William Ackman have turned more bullish on equities in recent days, as unprecedented stimulus from the Federal Reserve, a $2.2 trillion stimulus bill signed Friday, and a call by President Donald Trump to get the United States back to work in weeks rather than months sparked the biggest weekly rally in the Dow Jones Industrial Average since 1938.
Brief: Allianz Global Investors said on Friday that it had decided to liquidate a pair of hedge funds after suffering losses during the market turmoil of the coronavirus outbreak.The two funds are part of the money manager’s 27 Structured Alpha funds, the company said. The funds are private and Allianz Global Investors doesn’t disclose their performance or size. The investor said it decided it was in the best interest of investors to liquidate after “significant realized losses”.
