According to a media report, Atticus Capital, one of New York's most powerful activist hedge fund the largest investor in Deutsche Börse, has put its entire stake in the German exchange into a special limited vehicle to block redemptions by clients and boost its negotiating strength with management.
According to the report published by the FT.com, the stake of just over 11 per cent held through shares and derivatives, made up almost a fifth of Atticus's funds under management at the start of the year but has since halved in value. According to the report, the losses have caused concern among some Atticus clients, who have expressed concern about such a liquid stock being put into a "side pocket."
The report says that Atticus argues that it wants to be able to represent themselves as solid investors in the German exchange, but the decision has not gone down to well with some of the hedge fund's clients.
And this piece of news comes after an article in UK newspaper, The Times, claimed that turbulent stock and bond markets had wiped more than USD 5 billion off the value of the activist fund's portfolio. The article stated the 25 per cent slide meant that Atticus's funds under management stood at USD 14 billion as at the end of July, against a high last year of USD 20 billion. Reports stated that the losses were mainly due to a 32.9 percent loss in the USD 7 billion Atticus European fund from the start of the year to the end of August and a 25 per cent fall in the Atticus Global fund.
Is Atticus risking the wrath of its clients? Judging by its reputation, one can say that the hedge fund knows what it's doing. As for living dangerously - isn't that what activist hedge funds are all about?