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  Monday, 25 Aug 2014 | 7:00 AM ET

Ackman, Loeb, other activists not finished: Pros

Posted By: Lawrence Delevingne
Bill Ackman
Scott Eells | Bloomberg | Getty Images
Bill Ackman

Hedge funds that bet on corporate shake-ups have been the industry's darlings.

The average "event driven" fund clocked in gains virtually every month for the past year and investors poured in tens of billions of dollars into money managers who promised continued profits. A subset, so-called activist managers who actively push for change versus just predict it—like Bill Ackman of Pershing Square Capital Management and Nelson Peltz of Trian Fund Management—produced large gains for investors by practicing their signature public battles with management teams.

Then came July, when U.S. equity markets gave back some of their gains. The average event driven manager lost 0.85 percent for the month, the worst performing hedge fund strategy measured by data provider Preqin. It was also the first monthly loss for event driven strategies since August 2013.

Dan Loeb's Third Point Offshore fund fell 1.2 percent in July, likely on losses in public portfolio holdings like Sotheby's and AIG. John Paulson's Paulson Advantage lost 4.49 percent for the month in part because of positions in companies that had just reorganized and the health-care industry, according to a letter to investors. And Mick McGuire's Marcato International dropped 2.4 percent because of losses in public positions in NCR Corp. and Life Time Fitness, according to a person familiar with the situation.

But investors are far from panicked and continue to believe in a strong environment for profiting off company mergers, reorganizations and other moves.

»Read more
  Thursday, 21 Aug 2014 | 11:57 AM ET

Why that 20% bank pay raise may be deceiving

Posted By: Jeff Cox

Wall Street banks may appear to be offering higher salaries to junior employees, but the increase may not be as generous as it looks.

Goldman Sachs, JPMorgan Chase and Bank of America are expected to increase pay by at least 20 percent, according to reports from Reuters and the New York Post.

However, banking analyst Dick Bove said there actually may be less than meets the eye to the news, at least in terms of how much big Wall Street financial institutions actually will be spending on employee compensation.

"What they may actually be doing is shifting long-term compensation awards to salaries. Immediate payments may be rising while bonuses and deferred stock awards go down," Bove, the vice president of equity research at Rafferty Capital Markets, said in a note to clients. "Thus, overall compensation may not be changing at all."

»Read more
  Thursday, 21 Aug 2014 | 2:14 PM ET

Vanguard 'king of the hill' thanks to...Buffett

Posted By: CNBC.com staff
Source: Vanguard | Facebook

Investors may be warming up to the stock market, but they're taking the safe way in.

Passively managed funds are all the rage now, with market participants enjoying their low cost, high liquidity and tax advantages.

No outfit has benefited more from that approach than Jack Bogle's Vanguard Group, which has seen its total assets under management swell to nearly $3 trillion thanks to the allure of the firm's funds that track market indexes rather than make individual stock picks, according to a Wall Street Journal report.

That low-risk approach has gotten the imprimatur of none other than legendary investor Warren Buffett, who gave the firm his imprimatur a few months back. In his annual letter to shareholders, he advised them to follow the directions in his will, which mandates that his $66 billion fortune be divided with 10 percent in short-term government debt and the rest "in a very low-cost S&P 500 index fund. (I suggest Vanguard's.)."

»Read more
  Wednesday, 20 Aug 2014 | 2:07 PM ET

Most Americans clueless about market performance

Posted By: Jeff Cox
Traders on the floor of the New York Stock Exchange.
Getty Images
Traders on the floor of the New York Stock Exchange.

Most Americans don't realize the stock market gained 30 percent last year, and only 1 in 9 call themselves savvy about investing, according to a recent survey.

Gallup found that 37 percent of those polled believe the market increased 10 percent in 2013, a year in which the S&P 500's total return was 32 percent. Just 7 percent recognized the 30 percent gain, and 9 percent thought stocks actually decreased.

Those results mesh with a general distrust of the market. Given the choice of what to do with an extra $10,000 in cash, 41 percent said they would put it in the market, but 36 percent opted for cash and 20 percent chose a near-zero yielding certificate of deposit.

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  Thursday, 21 Aug 2014 | 10:29 AM ET

CalPERS cuts stake in a big tech firm

Posted By: Lawrence Delevingne
The offices of the California Public Employees' Retirement System (Calpers) are shown in Sacramento, Calif.
Ken James | Bloomberg | Getty Images
The offices of the California Public Employees' Retirement System (Calpers) are shown in Sacramento, Calif.

The largest public pension in the country has quietly reduced its investment in one of the largest technology investment firms.

The California Public Employees' Retirement System sold about 30 percent of its stake in private equity firm Silver Lake last year, according to Fortune. CalPERS had invested about $275 million in 2008 for a 9.9 percent stake, according to press reports at the time. The investment was in the firm's management company, separate from its positions in Silver Lake's PE funds.

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  Wednesday, 20 Aug 2014 | 1:09 PM ET

Are you rich enough to be a hedge fund investor?

Posted By: Lawrence Delevingne
Yunus Arakon | E+ | Getty Images

Part of the appeal of investing in hedge and other private funds is their inherent exclusivity.

If you've got money with one, it's shorthand for being rich and, in the eyes of the government, sophisticated enough to understand the added risks. In other words, private funds seem sexier to some than pedestrian investments like stocks and mutual funds.

But access to those funds may get much more exclusive.

The Securities and Exchange Commission is considering changing how a so-called accredited investor is defined. In doing so, it's facing pressure from outside groups to dramatically increase the minimum savings and income requirements to invest and adding other measures of financial sophistication, like being a chartered financial analyst or having an advanced business degree. If approved, the changes would slash the number of people who the government deems wealthy and sophisticated enough to invest in hedge, private equity, venture capital and other private funds and investments.

"The new rules could significantly reduce the number of accredited investors. That would narrow the amount of eligible U.S. investors for hedge funds and others," said Steve Nadel, a private funds-focused partner at the law firm Seward & Kissel.

»Read more
  Wednesday, 20 Aug 2014 | 11:54 AM ET

Investors basically have no fear about volatility

Posted By: Jeff Cox
Traders on the floor of the New York Stock Exchange.
Getty Images
Traders on the floor of the New York Stock Exchange.

Forget the headlines, forget the charts: Despite the loopy stock market behavior recently, investors are downright apathetic about the way things are going.

If you looked at the values of the S&P 500 over the past 30 days, little has changed. The stock market index opened at 1,976 on July 21; it opened just 5 points above that level Wednesday. In between, though, the market turned and churned.

During that period, the index hit a low of 1,909 on Aug. 7, and many market experts predicted this was the onset of the correction that just about everyone on Wall Street has been predicting this year, even though the decline was barely 3 percent.

It wasn't to be, however, as investors quickly took advantage of the slump and again pushed the market close to record territory.

All of the reaction has been reflected fairly well in the Chicago Board Options Exchange's Volatility Index, or VIX, which measures market fear as gauged by put (right to buy) and call (right to sell) options. The gauge actually has declined slightly over the past 30 days and is off 12.4 percent for the year.

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  Tuesday, 19 Aug 2014 | 1:56 PM ET

The poor get poorer: Low-wage jobs still dominate

Posted By: Jeff Cox

Not so long ago, Russ Holton was married, making a six-figure income and looking at a promising career ahead.

Now, seven years later, he's divorced, interviewing for $12-an-hour jobs and trying to further his education and stay afloat in a jobs market that is creating in excess of 200,000 positions a month but few that provide an opportunity to live the life to which he had become accustomed.

"I'm not finding what I'm looking for," Holton, a 45-year-old resident of Mason, Ohio, said during a phone interview that provided a break during a day of job hunting. "I just interviewed for a job that pays $12 an hour. I felt really stupid. For 12 bucks an hour, that's not right.... It's a different world right now."

While it may be a different world, it's a familiar story.

Each month the Bureau of Labor Statistics reports the number of new nonfarm payroll positions created, and for the past year the average has been 209,000. That's not a spectacular number, but it is at least in line with historical trends and has contributed to bringing down the unemployment rate from 7.3 percent to 6.2 percent during the period.

Behind those numbers, though, has been a disconcerting brew of statistics—aside from the much-cited decline in labor force participation—that shows the jobs market is far from full health. Part-time jobs continue to grow almost as quickly as full-time positions, the average duration of unemployment is still about eight months and, perhaps most disturbingly, post-recession job creation remains skewed toward lower-wage positions.

»Read more
  Monday, 18 Aug 2014 | 10:34 AM ET

Wall St. taking advantage of junk bond exodus

Posted By: CNBC.com staff
Getty Images

Even as retail investors shy away, Wall Street is still making a dash for trash.

In fact, the recent exodus of funds from high-yield bonds has only whetted the appetite of institutional investors, who are using the slump in junk prices as a buying opportunity, according to an analysis from the Wall Street Journal.

The mom-and-pop crowd ditched a net $13 billion in junk bonds for the four weeks preceding August 6, a trend that has pushed firms like Alliance Bernstein even deeper into the market.

"Investors who panic in these sell-offs—it's the wrong thing to do," Alliance's Gershon Distenfeld told the Journal.

»Read more
  Monday, 18 Aug 2014 | 7:00 AM ET

Investors spending the summer on the sidelines

Posted By: Jeff Cox

After close to a year and a half of pumping money into the stock market, mom-and-pop investors have spent most of the summer in hiding.

Since May, money has been streaming out of mutual funds that invest in the stock market—particularly those that are focused on U.S.-based equities. Domestic equity mutual funds surrendered some $26.6 billion in May, June and July, according to data from Morningstar that reflects investor unease over a confluence of factors facing the market.

"Investors certainly have been given enough reason to be cautious," said Art Hogan, chief market strategist at Wunderlich Securities. "Every day, we wake up to a new or intensifying geopolitical problem, whether it's Russia, Ukraine, Pakistan, which could be building up as a problem. We have issues with Ebola—there's a multitude of concerns at the time, even when the market is just a percentage point or two of its record highs."

Consequently, investor behavior has changed.

»Read more

About NetNet

  • NetNet is where you'll find the low-down and the high jinks of Wall Street. It's the place for insider stories, trader gossip, and tales of the foibles of the moneyed crowd and the culture of finance.Wall Street news and commentary served fresh all day long.

 

  • Jeff Cox is finance editor for CNBC.com.

  • Lawrence Develingne

    Lawrence Delevingne is the ‘Big Money’ enterprise reporter for CNBC.com and NetNet.

  • Stephanie Landsman is one of the producers of "Fast Money."

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