Fidelity Magellan Continues to Leak Assets
While recent stock gossip involves hedge funds 24/7, ten years ago the gunslingers in Boston were the focus of my obsessions.
Fidelity was the 800 lb gorilla, and trampled everything in their path. They would leave their footprints on your back getting in and out of stocks...and keeping tabs on their positions was essential to staying out of harms way.
While Joel Tillinghast might be their best fund manager, their best known fund has always been Magellan. But its glory days are long past, and the fund has dropped from over $100 billion in assets to $28.3 as a succession of managers try to right the ship that Peter Lynch made famous.
Unfortunately, Harry Lange, the latest manager, is not succeeding:
Fidelity Investments’ flagship Magellan fund sharply raised its holdings of Bank of America Corp and JPMorgan Chase & Co in September, as it moved into bigger U.S. banks amid the worsening credit crisis.
The $28.3 billion fund, managed by Harry Lange, also sold out of positions in Merrill Lynch & Co, Morgan Stanley and Wachovia Corp in September and slashed holdings of Goldman Sachs Group Inc, according to data posted on Fidelity’s website on Thursday.
Magellan also slashed its holdings of insurer American International Group Inc at the end of September from the prior month. AIG’s shares sank in September as the U.S. government took it over to prevent its failure. Reuters
Getting caught in AIG is one thing, but Lange’s biggest position is Nokia Corp, with Corning, Canadian Natural Resources, Monsanto and Staples rounding out the top five positions.
Hindsight is 20-20, but I am hardly inspired by his picks and his largest position, in particular.
Nokia?
Harry’s stocks have left him down 46.82% year-to-date, which is 97th percentile against his peers.
And while you can’t pin it all on Harry, given he has not been running the fund very long, the 3 and 5-year number are just as dismal, assuming you have a problem with bottom decile funds.
Perhaps it is time for Fidelity to rename the fund the Fidelity Road Apple; not only does the performance stink, but Harry owns a bunch of turds.
And you can quote me on that.
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Actual bear poop...in a bear market. This is not a joke, but Magellan’s performance is.
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Fidelity’s Magellan fund buys big banks in September
Reuters
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The content contained represent the opinions of 1440 Wall Street. This commentary in no way constitutes a solicitation of business or investment advice. It is intended solely for the entertainment of the reader, and the author. No Position
Citadel to Close Fusion FOF
Lots of rumors have been flying around Citadel, nearly every one has been bogus.
Last week, before the shit hit the fan, I heard they might be closing their seeder programs. They had just spent the summer months interviewing teams to join the NYC office, and rumor had it they were pulling the plug on some of them after only two or three months. But that does not appear to be true:
``We have seen strong interest in the incubation and seeding strategies that we've developed,'' Katie Spring, a Citadel spokeswoman, said in the statement. ``We believe these will be important components of expanding investment talent over the years to come.
Citadel hired a guy out of Goldman to take on IR duties roughly a year ago....but he makes Katie do the heavy lifting, apparently. But the following is accrurate:
Citadel Alternative Asset Management is closing Fusion, its $1 billion hedge fund of funds, said a source with knowledge of the firm.
About 95% of the assets are internal, and that money will be moved to two CAAM seeding and incubation funds, Discovery and Pioneer. The 5% from external investors will be returned.
Discovery and Pioneer have $1 billion total. The hedge funds invest in new and early-stage hedge funds.
Jon Venetos, managing director, will remain head of CAAM, the source said. CAAM was started about 18 months ago by parent Citadel Investment Group. Pension & Investments
I have yet to see any rumors on Citadel that were close to the mark, maybe everyone can give it a rest?
Citadel reallocates capital from fund of funds
Pension and Investments
Update:
Citadel to Wind Down $1 Billion Fund of Funds, Shift Capital
Bloomberg
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The content contained in this blog represents the opinions of 1440 Wall Street. This commentary in no way constitutes a solicitation of business or investment advice. It is intended solely for the entertainment of the reader, and the author. No Positions
Hedge Fund Losses in VW Exceed the Cost of Marshall Plan
How much did hedge funds lose shorting Volkswagen (VLKAY-NYSE) in a pair trade with Porsche? Initial estimates ranged as high as $30 billion, but it depends where they covered.
The number ultimately could rival the monies spent to reconstruct Europe after World War II. That does not adjust for inflation, of course, but makes for good copy. Will it mark the high water mark in the war against hedge funds? Perhaps, but it appears that proprietary trading desks at banks were bigger losers.
In any case, it continues to keep tongues wagging, as another issue emerges...how will Porsche pay the taxes on their outsized profits?
Hedge funds were heading for a full-blown row with the German Government last night as it emerged that funds sitting on tens of billions of euro losses after short-selling Volkswagen could go bankrupt.
Porsche, VW's biggest shareholder, stands to pocket a quick €6billion (£4.7billion) profit from the short-selling. Times Online
I need to check my math, but I am pretty sure that number only includes the realized gains after Porsche bled out some stock in the name of liquidity. But Hedgistan is up in arms, although they are receiving scant sympathy:
The Other Griffin of Chicago
Citadel Investment Group is not the only Chicago based hedge fund that has run into a buzzsaw of late. Ken Griffin's wife Anne runs Chicago-based Aragon Global Management LLC, and seems to have gotten sucked into buying the hedge fund and global growth favorites that every Tom, Dick and Harry in Hedgistan favored earlier this year. She calls herself a value investor, but chasing fertilizer stocks in the second quarter might qualify as style drift...lets hope Julian Robertson, who provided seed capital, can take the pain.
October 23, 2006
She's the founder and managing partner at Aragon Global Management LLC, a $55-million hedge fund that invests in, and sells short, communications, financial and consumer stocks.
Ms. Anne Dias Griffin brought her value-investing fund to Chicago in 2003, weeks after marrying Mr. Griffin in her native France. She also brought an investment pedigree not often seen in these parts.
A Harvard University MBA, she worked as an analyst and portfolio manager for legendary currency speculator George Soros. After Mr. Soros shuttered Soros Fund Management LLC in 2000, Ms. Griffin started Aragon with seed funding from another financial titan, Julian Robertson, whose hedge fund, Tiger Management Corp., was a force on Wall Street in the 1990s.
Neither she nor Mr. Robertson will say how much he invested in Aragon, but Mr. Robertson is still an investor — and a fan of Ms. Dias Griffin.
"Anne has the drive, moxie and brains to be a great hedge fund manager," he says. "And by the way, she's not lacking in charm, either." Crains Chicago 40 under 40/ 2006
Fahrvergnugen a Dirty Word to Hedgies As Porsche Pulls a Fast One
Hedge funds have been hit by a perfect storm in recent weeks, and the $15 billion short sellers lost betting against Volkswagen in Europe Monday certainly will not help:
Volkswagen’s shares more than doubled on Monday after Porsche moved to cement its control of Europe’s biggest carmaker and hedge funds, rushing to cover short positions, were forced to buy stock from a shrinking pool of shares in free float.
VW shares rose 147 per cent after Porsche unexpectedly disclosed that through the use of derivatives it had increased its stake in VW from 35 to 74.1 per cent, sparking outcry among investors, analysts and corporate governance experts.....Porsche revealed on Sunday that it held 31.5 per cent in derivatives in VW. Bafin, Germany’s financial regulator, recently ruled that companies were not obliged to disclose such positions where the derivatives were settled into cash rather than shares. FT
This was a devious move by Porsche, evil in its design and execution, effectively removing the float in the shares. Did Porsche come up with it on their own or get a helping hand from bankers? The point might be moot for now; it seems anything goes in the war against Hedgistan.
“This was supposed to be a very low-risk trade and it’s a nuclear bomb which has gone off in people’s faces,” said one hedge fund manager.
I don't know whether to laugh or cry; Porsche claimed its disclosure of the transaction was aimed at giving short-sellers a chance to close positions “unhurriedly”.
Whatever.
Hedge funds hit as Porsche moves on VW
FT
Update: Losses on short positions are roughly $30billion, albeit a moving target. Hedge fund managers are literally "in tears".
