Clinton Son-in-Law’s Firm Is Said to Close Greece Hedge Fund
It was a hedge fund portfolio pitched by Hillary Clinton’s son-in-law, Marc Mezvinsky, as an opportunity to bet on a Greek economic revival.
Now, two years later, the Greece-focused fund is shutting down, after losing nearly 90 percent of its value, according to two investors with direct knowledge of the matter who spoke on the condition of anonymity.
Investors were told last month that the fund would close. The fund, Eaglevale Hellenic Opportunity, had raised $25 million from investors to buy Greek bank stocks and government debt.
Eaglevale Partners, a Manhattan hedge fund firm founded by Mr. Mezvinsky and two former Goldman Sachs colleagues, raised money for the Hellenic fund at a time when some on Wall Street had hopes for a revival in the Greek economy. For a time, Mr. Mezvinsky appeared at hedge fund conferences promoting the Greece investment thesis.
Mr. Mezvinsky is married to Chelsea Clinton, the daughter of former President Bill Clinton and Mrs. Clinton, the former secretary of state who is seeking the Democratic nomination for president.
Betting on Greece has proved to be tricky — some investors have made huge gains while others have had their fingers burned, depending on the timing of their bets.
And the last 17 months have been especially difficult for a number of hedge funds, even ones run by some of the best-known managers.
This year, the Eaglevale flagship fund, which manages about $330 million and specializes in making macroeconomic bets, is down 1 percent. So-called macro hedge funds make trades based on global economic and political events. Last year, Fortress Investment Group and Bain Capital had to shutter hedge funds that had made bets on shifting macroeconomic trends.
The average hedge fund was down 0.63 percent in the first quarter of this year, according to the HFRI Fund Weighted Composite Index.
Mr. Mezvinsky and his partners began raising money in 2011 from investors for the firm’s flagship fund. Since then, that portfolio has posted uneven performance.
A Stanford University graduate, Mr. Mezvinsky worked at Goldman for eight years before leaving to join a private equity firm. He left that job to form Eaglevale with two longtime Goldman partners, Bennett Grau and Mark Mallon. The hedge fund firm is named after a bridge in Central Park.
Some of the firm’s earliest investors were Goldman partners, including Lloyd C. Blankfein, Goldman’s chief executive officer, who let Eaglevale use his name in marketing the flagship fund.
It is not clear why Eaglevale waited until this year to close the Hellenic fund, which already had lost about 40 percent of its value by early last year.
Last year was particularly tumultuous for Greece. The country neared the brink of economic collapse as the country’s leaders and its international creditors engaged in tense negotiations. Ultimately, the Greek government agreed to a number of economic reforms demanded by creditors in return for a new bailout.
The economic situation in Greece is still tenuous as the country continues to squabble with other eurozone nations and its creditors about how to reduce its debt burden. Investors on Wall Street continue to promote investment in Greece nonetheless.
During a recent Sohn Investment Conference charity event at Lincoln Center in New York, Richard Deitz, of the hedge fund VR Capital Group, told an audience of investors that he was betting on Greek banks and government bonds.
In letters to investors in 2014, Mr. Mezvinsky and his partners expressed confidence that Greece would soon be on the path to a “sustainable recovery.” But by the end of that year, Eaglevale’s leaders began to acknowledge that their perspective on the situation in Greece may have been wrong. The fund had earlier stopped taking in new money.
The one silver lining for the fund’s investors from all of this is that they will have a somewhat larger tax loss on investments to claim next year.
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US Market Closed higher helped by rebound in oil, and outperformance of Industrial & Financials. JPY move overnight and implications on Nikkei were also a positive catalyst. WTI crude ended its day higher by 2.9% at $44.70/bbl. Supply disruptions in Canada and Nigeria have been widely credited for the increased buying interest. Industrials names were helped by farm equipment names and aerospace companies outperformed.Caterpillar +2.4% and Deere + 4.0% after the World Agricultural Supply and Demand Estimates Report elicited a bullish response in agriculture names. Financials were helped by CS performance (+6%) on better numbers. in the consumer AMZN continue to trade to new 52 weeks highs. Volume today were below average at 831mil shares. US After Hours Stock moving on ERN +ve : FUEL +17.1%, TROV +17.8%, NAII +15.1%, EA +7.5%, REXX +4.8%, BUFF +4.7%, PLNT +3.7%, CSLT +1.2% -ve : FOSL -30.6%, CJES -23.4%, TRXC -15.5%, FELP -11.6%, CYTX -11.5%, WATT -6.1%, KGC -5.8%, NUAN -5.5%, DIS -5.4%, ALRM -4.9%, DGLY -3.1%, PSEC -2%. WFT +1.3% on insider buying, ODP -26.3% (confirms the FTC's request for a preliminary injunction to block the proposed merger with Staples (SPLS)), SPLS -10.1%. Asian equity markets are mixed despite the biggest rally on Wall St in weeks as investors remain unconvinced that slowdown in China can be contained. Nikkei225 started out strongly with a rally of over 1% above 16,800 but retreated in afternoon session when JPY buyers re-emerged. Japan PM advisor Fuji called on the govt to postpone the sales tax and offer as much as ¥10T in fiscal spending measures. SoftBank +2.67% on Ern.
Nikkei +0.52% Hang Seng -0.71% CSI +0.85% Shanghai +0.59%
Eur$ 1.1387 CNH 6.5356 CNY 6.5115 JPY 108.67 GBP 1.4452 CHF 0.9737 RUB$66.0707 WTI$ 44.42 (-0.54%)
S&P -0.18% EuroStoxx +0.10% Dax +0.13% SMI -0.08%
Macro :
- Goldman Sachs Increases Gold Forecasts, Still Sees Price Decline
- Bafin Warns on Shortfalls in Corporate Pension Funds: Die Welt
- Goldman Calls Dollar Bottom Saying Traders Misprice Fed Resolve
- IMF Might Not Join Greek Bailout at Current Review: Kathimerini
Keep an eye on :
- ABBN VX : Investor AB Says ABB to Make Grid Unit Decision This Year: SVD
- AGFB BB : Agfa-Gevaert bidding to acquire targets, CEO says - De Tijd
- AKER NO : Aker 1Q Net Asset Value Declines to NOK19.7b in 1Q
- ALV GY : Allianz 1Q Net Rises 21%, Non-Operating Result Jumps EU339m
- ALO FP : Alstom Year Sales Beat Ests.; Confirms 2020 Targets
- ATC NA : Altice 1Q Rev. Matches Ests.; Reiterates FY Outlook
- AKE FP : Arkema 1Q Ebitda Beats Estimates; Repeats Ebitda to Rise in 2016
- AST IM : Astaldi 1Q Total Rev. Up 4.6% Y/y to EUR632.6m
- SPR GY : Axel Springer Says Digital Business Boosted 1Q Earnings Again
- BP IM : Banco Popolare 1Q Net Loss EU313.6m vs Profit Expected
- PMI IM : Pop. Milano CEO Particularly Satisfied With 1Q Results
- BEKB BB : Bekaert Sees 1H Adj. Ebit Margin Topping 7%; 1Q Rev. Misses Est.
- GBF GY : Bilfinger Says 1Q Development In Line, Confirms FY Outlook
- CARL BB : Carlsberg 1Q Organic Sales Growth Beats Ests., Confirms Forecast
- CNP FP : CNP Assurances 1Q Net EU281m; Hit by Decline in Brazil Real
- CSGN VX : Credit Suisse Estimates Cut; 1Q Beat Not Sustainable: JPMorgan
- DPW GY : Deutsche Post 1Q Ebit Beats Est, Rev. Misses; FY View Confirmed
- DIS US : -6% after Hours on ERN, ESPN & Theme Park were weaker
- EDF FP : EDF 1Q Sales EU21.4bn, Co. Reiterates FY Ebitda Target
- EDF FP : EDF CFO Says EU1 Billion Cost Savings by 2019 Is ‘A Minimum’
- ENGI FP : GBL Buys Back EU458.3m Engie-Convertible Bonds at 101.25%
- EOAN GY : EON 1Q Underlying Net Income Beats Estimates; Confirms Forecast
- EOAN GY : E.ON Open to Govt Deal on Nuclear Waste Disposal: Handelsblatt
- GALN VX : Sprint Investments 2 Starts Placement of 320k Shares in Galenica --> CHF1,355
- HOT GY : Hochtief 1Q Sales Above Estimates, Confirms 2016 Guidance
- IBAB BB : Ion Beam 1Q Rev. Rises 10% to EU64.6m; Reiterates 2016 Guidance
- DEC FP : JCDecaux 1Q Adj. Rev. Up 15%; Sees 2Q Organic Growth at 3%
- JEN GY : Jenoptik 1Q Rev. Up 8.5%; Profit Down 22%; Reiterates Outlook
- LXS GY : Lanxess 1Q Ebitda Ex-Items Beats Estimates; Raises 2016 Forecast
- LEG GY : LEG 1Q FFO I Rises 22%; Raises FFO I Outlook for 2016, 2017
- LUN DC : Lundbeck 1Q Rev., Ebit Beat Estimates, Lifts 2016 Forecast
- LUPE SS : Lundin Petroleum 1Q Ebitda Meets Estimates
- MHG NO : Marine Harvest 1Q Net Income Beats Est.; NOK1.70/Share Dividend
- MB IM : Mediobanca 3Q Net Beats Estimate; CET1 Fully Loaded 13.2%
- MEO GY : Metro 2Q Sales In Line With Ests., Confirms FY Guidance
- MSK IM : Moleskine Confirms 2016 Guidance, 1Q Rev. Up 8.2%
- MONC IM : Moncler 1Q Total Sales, Constant FX Sales Growth Beat Ests.
- NHH SM : NH Hotel Net Loss EU39.6m vs Net Loss of EU29.1m yr earlier
- OCDO LN : +9.3% on Rumor of AMZ potential bid fueled by BErnstein Report on AMZN stating that co has plenty of CF to invest and not many options.
- OPERA NO : Opera 1Q Rev Beats Ests on Advertising, Consumers Sales Growth
- RBI AV : Raiffeisen Eyes Possible Merger With Parent RZB This Year
- REP SM : Repsol could accelerate disposals opportunistically or to keep IG rating
- RUI FP : Rubis 1Q Reported Rev Rises 16% to EU735M
- SALM NO : Salmar 1Q Operational Ebit Rises; Names Trond Williksen New CEO
- SBMO NA : SBM Offshore Keeps FY 2016 Directional Revenue, Ebitda Guidance
- SCHA NO : Schibsted 1Q Revenue Matches Estimate; Says Had Good Start to Yr
- SWECB SS : Sweco 1Q Ebita Beats Ests., Sales Slightly Below
- UCG IM : UniCredit CEO Confident Bank Will Reach 2016 Targets
- VLA FP : Valneva 1Q Op Loss Narrows, Confirms 2016 Financial Outlook
- VOW3 GY : Qatar Said to Name Hessa Al Jaber to VW Board: Reuters (Earlier)
- WDI GY : BaFin Sees Indications of Manipulation of Wirecard Shares
- WDP BB : De Pauw Family Sells EU7.75m of Warehouses De Pauw Stock
>>> Up
*BREMBO RAISED TO OUTPERFORM VS NEUTRAL AT MEDIOBANCA
*LAFARGEHOLCIM RAISED TO BUY VS HOLD AT KEPLER CHEUVREUX
*PATRIZIA IMMOBILIEN RAISED TO BUY VS HOLD AT KEPLER CHEUVREUX
*RATOS RAISED TO HOLD AT NORDEA
>>> Down
*GALP ENERGIA SGPS CUT TO HOLD AT SANTANDER
*JCDECAUX CUT TO REDUCE VS HOLD AT HSBC
*JCDECAUX CUT TO UNDERWEIGHT VS EQUALWEIGHT AT BARCLAYS
*LAGARDERE CUT TO UNDERPERFORM VS NEUTRAL AT BOFAML
*PEKAO CUT TO SELL AT SOCIETE GENERALE
*UBM CUT TO UNDERPERFORM VS NEUTRAL AT BOFAML
>>> PT Change
>>> Initiation
*MEDICLINIC RATED NEW EQUALWEIGHT AT BARCLAYS, PT 905P
>>> Call
Asian Market Update: RBNZ stability review maintains housing leverage; Australia Westpac confidence improves
***Economic Data***
- (AU) AUSTRALIA MAY WESTPAC CONSUMER CONFIDENCE INDEX: 103.2 V 95.1 PRIOR, M/M: +8.5% (highest since Jul 2010) V -4.0% PRIOR
- (AU) AUSTRALIA MAR HOME LOANS M/M: -0.9% V -1.5%E; Investment Lending: 1.5% v 4.1% prior
- (JP) JAPAN APR OFFICIAL RESERVE ASSETS: $1.26T v $1.26T PRIOR
- (NZ) New Zealand Apr REINZ median home price +7.7% y/y v +4.2% prior; Home sales y/y +18.4% v +8.2% prior; Home sales 8.6K v 9.5K prior
- (KR) SOUTH KOREA APR UNEMPLOYMENT RATE: 3.7% V 3.8%E
***Index Snapshot (as of 04:00 GMT)***
- Nikkei225 +0.3%, S&P/ASX +0.7%, Kospi -0.5%, Shanghai Composite +0.4%, Hang Seng -0.6%, Jun S&P500 -0.2% at 2,074
***Commodities/Fixed Income***
- June gold +0.5% at $1,271/oz, June crude oil -0.5% at $44.43/brl, Jul copper +0.8% at $2.11/lb
- (US) Weekly API Oil Inventories: Crude: +3.4M v +1.3M prior; 2nd straight build; largest build in 4 weeks
- GLD: SPDR Gold Trust ETF daily holdings rise 2.4 tonnes to 839.3 tonnes; 5th straight increase; highest since Dec 2013
- SLV: iShares Silver Trust ETF daily holdings fall to 10,421 tonnes from 10,454 tonnes prior
- (CN) China MoF sells 5-yr bonds at 2.69% v 2.58% prior
- USD/CNY: (CN) PBOC SETS YUAN MID POINT AT 6.5209 V 6.5233 PRIOR
- (CN) PBOC to inject CNY80B in 7-day reverse repos
- (JP) BOJ offers to buy ¥350B in 1-3yr JGBs, ¥440B in 3-5yr JGBs, ¥450B in 5-10yr JGBs
- (AU) Australia sells A$7B in 2.25% 2028 bonds at 2.525%; Largest bond sale ever by AOFM
***Market Focal Points/FX***
- Asian equity markets are mixed despite the biggest rally on Wall St in weeks as investors remain unconvinced that slowdown in China can be contained. Nikkei225 started out strongly with a rally of over 1% above 16,800 but retreated in afternoon session when JPY buyers re-emerged. USD/JPY fell as much as 70pips from the highs to 108.60 without any notable fundamental catalysts. S&P/ASX 200 hit a 9-month high above 5,400 early on as well, but retreated to 5,380 as Moody's warned on Australia banks. NZD/USD was also very volatile, spiking up some 60pips above $0.68 on New Zealand financial stability review that did not introduce any new macroprudential measures on housing as speculated by Fin Min English overnight.
- Among notable speakers, Japan PM advisor Fuji called on the govt to postpone the sales tax and offer as much as ¥10T in fiscal spending measures. Earlier, Abe's advisor Hamada remarked on FX, stating intervention will become necessary if USD/JPY falls to 90-95 range. In Chinese press, the govt had posted a plan for "zombie companies" to help reduce capacity in oversupplied sectors.
- Down under, AUD/USD hit a high of 0.7390 after Westpac consumer sentiment index rose by the biggest margin since mid-2010. Westpac economist attributed much of the improved confidence to the latest easing measure by the RBA. Aussie dollar moved off those highs abruptly as Moody's said major banks face increased challenges for rest of 2016 on expected "moderate weakening in asset quality and a slowdown in earnings growth over the rest of 2016" as well as negative impact on margins from a prolonged period of low interest rates.
- NZD/USD fell overnight after comments from Fin Min English who speculated that RBNZ will unveil new macroprudential measures to control housing inflation. This would, in turn, give greater leeway to the RBNZ in lowering rates. However, today's semiannual Financial Stability Report only stated that imbalances in the property sector are on the rise and that the central bank would closely watch the housing market but did not produce any new steps, sending NZD sharply higher. Later in the day, Gov Wheeler spoke in Parliament, clarifying that the RBNZ is "seriously" looking at further measures in Auckland or nationwide given the central bank's increasing concern. However, there was no specific timing for new measures and no decisions on further steps have been made.
***Equities***
US equities / ADRs:
- EA: Reports Q4 $0.50 v $0.42e, R$924M v $886Me; +7.7% afterhours
- PLNT: Reports Q1 $0.15 v $0.13e, R$83.3M v $77.9Me; +2.9% afterhours
- NUAN: Reports Q2 $0.38 v $0.35e, R$479M v $491Me; -5.5% afterhours
- DIS: Reports Q2 $1.36 (ex-items) v $1.40e, R$13.0B v $13.3Be; -5.5% afterhours
- SPLS: JUDGE BLOCKS MERGER WITH OFFICE DEPOT, CALLING IT ANTICOMPETITIVE; Initiating new $300M cost reduction plan; To pay Office Depot $250M break-up fee; Committed to dividend program, will close 50 stores; SPLS -10.1%, ODP -26.3% afterhours
- FOSL: Reports Q1 $0.20 v $0.18e, R$659.8M v $668Me; -30.8% afterhours
Notable movers by sector:
- Financials: China Galaxy Securities Co 6881.HK -1.3% (Apr result)
- Industrials: Suzuki Motor Corp 7269.JP +5.0% (FY15/16 result); GrainCorp GNC.AU -1.1% (H1 result); CSR CSR.AU +5.8% (FY16 prelim result)
- Technology: Pegatron Corp 4938.TW +0.3% (Q1 result); Taiwan Semiconductor Manufacturing Co 2330.TW +0.7% (Apr result); LG Electronics Inc 066570.KR -3.7% (relocation of mobile division speculation)
- Materials: Marubeni Corp 8002.JP -2.0% (FY15/16 result); Mitsubishi Corp 8058.JP +1.1% (FY15/16 result)
- Telecom: Softbank Corp 9984.JP +2.8% (FY15/16 result)
Staples announced that on May 16, 2016, the company and Office Depot plan to terminate their merger agreement following U.S. District Court for the District of Columbia's recent ruling granting the Federal Trade Commission's request for a preliminary injunction to block the acquisition.
- Under the terms of the merger agreement, Staples will pay Office Depot a $250 million break-up fee. Staples also plans to terminate its agreement to sell more than $550 million in large corporate contract business and related assets to Essendant (ESND) in connection with the termination of the Office Depot merger agreement.
- 'We are extremely disappointed that the FTC's request for preliminary injunction was granted despite the fact that it failed to define the relevant market correctly, and fell woefully short of proving its case. We believe that it is in the best interest of our shareholders, customers, and associates to forego appealing this decision, terminate the merger agreement, and move on with our strategic plan to drive shareholder value. We are positioning Staples for the future by reshaping our business, while increasing our focus on mid-market customers in North America and categories beyond office supplies.'
The company announced a strategic plan to enhance long-term value including the following actions:
- The company is focused on increasing its share of wallet with existing customers and acquiring new customers. The company is increasing its offering of products and services beyond office supplies. Staples also plans to pursue market share gains in core categories like office supplies, ink, toner and paper. To support its growth plans, the company will invest in lower prices and improved supply chain capabilities and add more than 1,000 associates to its mid-market sales force. Staples will also pursue acquisitions of business-to-business service providers and companies specializing in categories beyond office supplies to build scale and credibility and accelerate growth in these areas.
- Staples plans to explore strategic alternatives for its European operations.
- The company generated approximately $750 million of annualized pre-tax cost savings from 2013-2015 by evolving business processes, increasing productivity, and developing more efficient ways to serve customers. Staples is initiating a new multi-year cost savings plan which is expected to generate approximately $300 million of annualized pre-tax cost savings by the end of 2018. The company will primarily focus on reducing product costs, optimizing promotions, increasing the mix of Staples Brand products, and reducing operating expenses.
- Staples will continue to return excess cash to shareholders. The company remains committed to its dividend program. Staples plans to resume repurchasing its common stock through open-market purchases during the second quarter of 2016. The company expects share repurchases of approximately $100 million in 2016.
After Hours Summary: ODP -26%, SPLS -10% before being halted on news that the FTC blocked their proposed mergerAfter Hours Gainers:
Companies trading higher in after hours in reaction to earnings/guidance: FUEL +17.1%, TROV +17.8%, NAII +15.1%, EA +7.5%, REXX +4.8%, BUFF +4.7%, PLNT +3.7%, CSLT +1.2%
Companies trading higher in after hours in reaction to news: SQBG +11.9% (to acquire GAIAM (GAIA) yoga brand for ~$146 mln; expected to be immediately accretive; increases rev guidance), WFT +1.3% (Director insider buy disclosure - purchased of 100000 shares, worth total of $558.7K)
After Hours Losers:
Companies trading lower in after hours in reaction to earnings/guidance: FOSL -30.6%, CJES -23.4%, TRXC -15.5%, FELP -11.6%, CYTX -11.5%, WATT -6.1%, KGC -5.8%, NUAN -5.5%, DIS -5.4%, ALRM -4.9%, DGLY -3.1%, PSEC -2%
Companies trading lower in after hours in reaction to news: ODP -26.3% (confirms the FTC's request for a preliminary injunction to block the proposed merger with Staples (SPLS)), SPLS -10.1% (ODP confirms the FTC's request for a preliminary injunction to block the proposed merger with Staples), ERF -3.5% (announces CAD 200 mln bought deal financing), LPI -2.2% (commences 9.5 mln common stock offering)