M&A on the decline, says Lyxor
12 August 2014 Paris
Image: Shutterstock
The M&A market has soared since the start of year, but recent conditions have proven more difficult, with two major merger deals collapsing, according to research from the Lyxor managed account platform.
On 5 August, 21st Century Fox (TWX) withdrew its $70 billion bid for Time Warner, sending TWX shares down more than 10 percent. On the same date, Sprint decided to withdraw its $30 billion offer to acquire T-Mobile.
Following the news, on 6 August the stock price of both companies tumbled. Their impact on the Lyxor platform, however, is not part of the recent performance calculations, which run from 29 July to 5 August.
It was a difficult week for event-driven hedge funds with every single manager ending in the red. Managers witnessed mark-to-market declines in several core positions.
On 1 August, the Botox manufacturer Allergan moved to sue both Pershing Square Capital and Valeant Pharmaceuticals claiming insider scheming ahead of the takeover bid with the hedge fund manager Bill Ackman. Analysts expect that the Allergan’s lawsuit may delay the takeover.
High yield spreads widened in the same week, both in cash and derivatives. In Latin America, the effective default of Argentina, for the eighth time in its history, watered down investors’ risk appetite for the other economies in the area.
The below-expectations primary surplus in Brazil did not help investors keep faith in the local credit market, according to Lyxor.
Those events had a dire impact on the platform. The underperformer was hit both by the demise of Argentina and Banco Espirito Santo (BES). The outperformer limited losses thanks to a different positioning in BES, leading to gains, as well as an effective macro hedge.
The Lyxor Hedge Fund Indices are based on the complete range of funds available on the Lyxor Managed Account Platform, a universe of funds eligible for inclusion in the indices is defined on a monthly basis.
On 5 August, 21st Century Fox (TWX) withdrew its $70 billion bid for Time Warner, sending TWX shares down more than 10 percent. On the same date, Sprint decided to withdraw its $30 billion offer to acquire T-Mobile.
Following the news, on 6 August the stock price of both companies tumbled. Their impact on the Lyxor platform, however, is not part of the recent performance calculations, which run from 29 July to 5 August.
It was a difficult week for event-driven hedge funds with every single manager ending in the red. Managers witnessed mark-to-market declines in several core positions.
On 1 August, the Botox manufacturer Allergan moved to sue both Pershing Square Capital and Valeant Pharmaceuticals claiming insider scheming ahead of the takeover bid with the hedge fund manager Bill Ackman. Analysts expect that the Allergan’s lawsuit may delay the takeover.
High yield spreads widened in the same week, both in cash and derivatives. In Latin America, the effective default of Argentina, for the eighth time in its history, watered down investors’ risk appetite for the other economies in the area.
The below-expectations primary surplus in Brazil did not help investors keep faith in the local credit market, according to Lyxor.
Those events had a dire impact on the platform. The underperformer was hit both by the demise of Argentina and Banco Espirito Santo (BES). The outperformer limited losses thanks to a different positioning in BES, leading to gains, as well as an effective macro hedge.
The Lyxor Hedge Fund Indices are based on the complete range of funds available on the Lyxor Managed Account Platform, a universe of funds eligible for inclusion in the indices is defined on a monthly basis.
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