Implode-Explode Heavy Industries news feed http://implode-explode.com/ Tracking the many faces of the global credit implosion. en-us iehi-feed-63882 Thu, 19 Apr 2018 00:09:45 GMT World debt hits record $164 trillion as crisis hangover lingers http://implode-explode.com/viewnews/2018-04-18_Worlddebthitsrecord164trillionascrisishangoverlingers.html The world's debt load has ballooned to a record $164 trillion, a trend that could make it harder for countries to respond to the next recession and pay off debts if financing conditions tighten, the International Monetary Fund said.

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The global debt burden clouded the IMF's otherwise upbeat outlook of the world economy, which is in its strongest upswing since 2011. The fund on Tuesday forecast expansion of 3.9 per cent in 2018 and 2019, while saying in subsequent years the global economy could be impacted by tighter monetary policy and the fading effects of U.S. fiscal stimulus.

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The IMF figures bare the scale of the debt hangover from which the world is still recovering from a decade after the financial crisis pushed the global banking system to the brink, and tipped the world economy into recession. Governments increased spending to boost growth, while central banks resorted to unconventional methods to ease financing conditions, such as buying bonds.

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iehi-feed-63880 Wed, 18 Apr 2018 19:30:17 GMT U.S. Debt Load Seen Worse Than Italy's by 2023, IMF Predicts http://implode-explode.com/viewnews/2018-04-18_USDebtLoadSeenWorseThanItalysby2023IMFPredicts.html iehi-feed-63871 Mon, 16 Apr 2018 15:14:50 GMT Japan PM Abe's woes deepen as ratings drop amidst scandals, Koizumi predicts resignation http://implode-explode.com/viewnews/2018-04-16_JapanPMAbeswoesdeepenasratingsdropamidstscandalsKoizumipredictsr.html Japanese Prime Minister Shinzo Abe's political crisis deepened on Monday after polls showed that suspected cronyism scandals have pushed his support to record lows and a popular predecessor said Abe would probably resign in June....

Abe has denied that he had intervened to ensure preferential treatment for the educational institution Kake Gakuen, run by his friend Kotaro Kake, to set up a veterinary school.

He has also repeatedly denied that he or his wife intervened in a heavily discounted sale of state-owned land to another school operator, Moritomo Gakuen, which has ties to his wife.

The Moritomo affair has ensnared the finance ministry, which has admitted officials doctored documents related to the land-sale.

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iehi-feed-63868 Sun, 15 Apr 2018 17:34:06 GMT Lee Adler - This Uncanny Tool Has Been Right Since 1970;Here's What It's Telling You to Sell Now http://implode-explode.com/viewnews/2018-04-15_LeeAdlerThisUncannyToolHasBeenRightSince1970HeresWhatItsTellingY.html iehi-feed-63865 Sun, 15 Apr 2018 13:37:27 GMT "Elon Knew": New Lawsuit Alleges Musk Knowingly Lied About Model 3 Production http://implode-explode.com/viewnews/2018-04-15_ElonKnewNewLawsuitAllegesMuskKnowinglyLiedAboutModel3Production.html ...after claiming in May 2017 that the company was "on track" to meet its mass production goal, it's alleged the company hadn't even finished building its production lines, clearly meaning it wasn't "on track". The lawsuit alleges that Musk knew the line was "way behind"

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The suit alleges that the company's former CFO, Jason Wheeler - who is one of more than 50 key executives and VPs to have left the company over the last half decade or so - told Elon Musk personally that they wouldn't be able to mass produce by the end of 2017. The entire lawsuit is available at this link and some of the most interesting content was first shared by critics of the company on Twitter.

The drumbeat of accountability for Elon Musk continues to pound louder and louder as each day progresses, with some analysts calling for the SEC to investigate him if the company doesn't meet its stated cash flow positive and "no capital raise" guidance for the back end of 2018.

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iehi-feed-63863 Sun, 15 Apr 2018 13:22:27 GMT Subprime mortgages morph into 'non-prime' loans--and demand soars http://implode-explode.com/viewnews/2018-04-15_Subprimemortgagesmorphintononprimeloansanddemandsoars.html Carrington is not alone in the space. Angel Oak began offering and securitizing nonprime mortgages two years ago and has done six nonprime securitizations so far. It recently finalized its biggest securitization yet -- $329 million, comprising 905 mortgages with an average amount of about $363,000. Just more than 80 percent of the loans are nonprime.

Investors in Angel Oak's nonprime securitizations are, "a who's who of Wall Street," according to company representatives, citing hedge funds and insurance companies. Angel Oak's securitizations now total $1.3 billion in mortgage debt.

Angel Oak, along with Caliber Home Loans, have been the main players in the space, securitizing relatively few loans. That is clearly about to change in a big way, as demand is rising.

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Big banks are also getting in the game, both investing in the securities and funding the lenders, according to Sharga.

"It's large financial institutions. A lot of people with private capital sitting on the sidelines, who are very interested in this market and believe that as long as the risks are managed well, and companies like ours are particularly good at managing credit risk, that it's a good investment opportunity," he said.

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Last summer, Fannie Mae announced it would relax its lending standards for prime loans, allowing borrowers with higher debt and lower credit scores to obtain loans without additional risk overlays, such as large down payments and a year's worth of cash reserves.

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As a result, demand from buyers with higher debt exceeded all expectations. The share of high DTI loans jumped from 6 percent in January 2017 to nearly 20 percent by the end of February 2018, according to a study by the Urban Institute.

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The mortgage industry expectation was that Fannie Mae would mitigate the additional risk with other factors, like a higher necessary credit score, but that was not added. The mortgage insurers balked, since they would be on the hook for the risk, so last month Fannie Mae "recalibrated" its risk assessment criteria again.

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iehi-feed-63862 Sat, 14 Apr 2018 22:40:07 GMT A Sidelined Wall Street Legend Bets on Bitcoin (NOVOGRATZ) http://implode-explode.com/viewnews/2018-04-14_ASidelinedWallStreetLegendBetsonBitcoinNOVOGRATZ.html Novogratz has certainly been making the most of the speculative bubble to rebuild his fortune, but he claims to be invested in the utopian aspects of blockchain as well. He doesn't think that cryptocurrencies will replace the dollar or the yen, but he believes that they will be a boon to countries in the developing world, where people don't have trust in their fiat currencies, and that blockchain can revolutionize the way information is logged and shared and, in our age of data breaches, protected. "I'm good at selling the dream," he said. "I can get onstage and get people to start saying ‘Hallelujah! Hallelujah!' "

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By the fall [of 2017], Novogratz was a billionaire once more. The price of a single bitcoin had been close to three thousand dollars during the summer; now it was clawing at five thousand. I visited him one Wednesday in October, at his office, walking in past a large statue of Evel Knievel in the lobby--the base reads "Bones heal, pain is temporary and chicks dig scars." Plush sofas were occupied by representatives of the Brown University endowment, a member of the board of Tesla, and the heads of a major publicity firm, among others.

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Two weeks earlier, Novogratz had announced his decision to rejoin the hedge-fund world and launch a cryptocurrency fund with a hundred and fifty million dollars of the money he had personally made on crypto and three hundred and fifty million from outside investors.

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After bitcoin and other currencies soared over the summer and fall, Novogratz presented this stage of crypto as a "speculative mania phase" that would crash like the dot-com bust but then reëmerge with more mature players. Out with AltaVista, in with Google. In Novogratz's estimation, individual cryptocurrencies would fail--although he is bullish on bitcoin and ether retaining their value in the long term. "I don't know if the speculative phase ends in March, ends in a year from now, eighteen months from now," Novogratz told me, "but it will end." He suggested that it will end when "too many people have bought in." (At a dinner during the fall of 2017, one of my favorite Oberlin professors, a Marxist, told me that he had just bought some ether.)

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Novogratz's cryptocurrency hedge fund never launched. In December, after the price of a single bitcoin rocketed to more than nineteen thousand dollars, Novogratz told me that "it would be a different proposition raising a crypto hedge fund today than it was three months ago." He said he was not comfortable running other people's money when the currency was at its peak, and predicted that bitcoin would consolidate at between eight and sixteen thousand dollars. "I'd rather look stupid than be stupid," he added. Right after he told me of his plans to shelve his hedge fund, bitcoin experienced one of its habitual micro-crashes, falling to under fourteen thousand dollars a coin.

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Novogratz had described another idea to me, one several magnitudes more audacious--certainly more institutional, and potentially more durable--than a mere half-a-billion-dollar hedge fund. He wanted to launch a publicly traded merchant bank solely for cryptocurrencies, which, with characteristic immodesty, he described as "the Goldman Sachs of crypto," and was calling Galaxy Digital. "I'm either going to look like a genius or an idiot," he said.

Novogratz announced the bank's launch in early January, the same week that Dimon, of JPMorgan Chase, who is one of the most vocal critics of cryptocurrency, publicly regretted calling bitcoin a fraud ("The blockchain is real," he told Fox Business). Shortly afterward, I sat down with Novogratz in his Tribeca apartment's far-flung kitchen to discuss Galaxy Digital.

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The new entity's launch was not so much an I.P.O. as a complex R.T.O., or reverse takeover, involving a Canadian shell company called Bradmer Pharmaceuticals. Galaxy Digital would still be based in New York, but because Canada offered easier and faster access to the public market Novogratz had decided to launch on the Canadian TSX venture exchange, with plans to eventually transfer to Canada's main exchange. He would contribute around three hundred and fifty million dollars, while raising another two hundred and fifty million dollars.

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iehi-feed-63860 Fri, 13 Apr 2018 15:15:14 GMT Big Banks Start Off Earnings Season With A Bang, Surpassing Expectations http://implode-explode.com/viewnews/2018-04-13_BigBanksStartOffEarningsSeasonWithABangSurpassingExpectations.html Beneath the headline numbers there are some early takeaways: First, JP Morgan really had an excellent quarter overall, but keep in mind that the company's revenue did benefit from an accounting rule. Also, currency and commodity trading did great but the fixed income desk didn't do as well as some people thought it would. It's important to hear what Mr. Dimon has to say later today... These are mostly minor quibbles, and pre-market trading showed gains for all three of the banks.

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Bank earnings could possibly provide some stability for the market after months of jumpiness. Perhaps more important than the numbers is what bank CEOs say on their earnings calls. If they see smooth sailing ahead and aren't overly worried about tariffs, that could potentially give the market a tailwind.

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iehi-feed-63859 Fri, 13 Apr 2018 14:54:26 GMT Wells Fargo faces $1 billion fine to settle loan abuses http://implode-explode.com/viewnews/2018-04-13_WellsFargofaces1billionfinetosettleloanabuses.html Wells Fargo & Co (has been offered a penalty of $1 billion by regulators to resolve outstanding investigations related to auto insurance and mortgage lending abuses, the third-largest U.S. bank by assets said on Friday.

The bank said it may have to revise its quarterly results to reflect the final settlement.'

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Wells Fargo is reeling from heavy costs and penalties related to the sales practices scandal, which came to light in 2016 and led to the ouster of ex-CEO John Stumpf and other senior management. Executives were grilled in several appearances before the U.S. Congress.

The U.S. Federal Reserve has also imposed restrictions on the bank's growth, forbidding it to expand its balance sheet beyond 2017 levels until it makes internal changes that addressed its board and risk management.

The restrictions on balance sheet growth will cut its annual profit by $300 million to $400 million this year, Wells Fargo said.

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iehi-feed-63858 Thu, 12 Apr 2018 21:13:26 GMT Trump directs top economic advisers to look at re-entering TPP http://implode-explode.com/viewnews/2018-04-12_TrumpdirectstopeconomicadviserstolookatreenteringTPP.html President Trump has directed his top economic and trade advisers to look into re-entering the Trans-Pacific Partnership, nearly a year after he withdrew the U.S. from the multilateral trade agreement in of his first acts as president.

Trump told a group of Republican senators during a meeting Thursday that he had assigned National Economic Council Chairman Larry Kudlow and U.S. Trade Representative Robert Lighthizer "the task of taking another look at TPP," Sen. Pat Roberts, chairman of the Senate Committee on Agriculture, told reporters at the White House.

"We're very excited about seeing those trade opportunities reaffirmed," said Sen. Deb Fischer, R-Neb., who was also present for the meeting. Fischer said Trump also mentioned "the importance" of the North Atlantic Free Trade Agreement, which his administration is currently renegotiating with Canada and Mexico.

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iehi-feed-63857 Thu, 12 Apr 2018 21:06:46 GMT Federal judges indicate they could remove Mulvaney as acting CFPB chief http://implode-explode.com/viewnews/2018-04-12_FederaljudgesindicatetheycouldremoveMulvaneyasactingCFPBchief.html ... two of the three judges from the U.S. Court of Appeals for the D.C. Circuit indicated they had a problem with the person Trump selected to take the position, Mick Mulvaney, because he also heads the White House Office of Management and Budget. The 2010 law that created the bureau as an independent federal agency specifically said OMB should not have oversight or jurisdiction over it.

That raised the possibility that the legal battle over the future of the watchdog agency could end with Mulvaney's removal as acting director -- a move that would be cheered by Democrats and consumer advocates who have complained about his public opposition to the bureau's existence.

But Mulvaney would not be supplanted as they want by Deputy Director Leandra English, who brought the suit to remove him after his appointment by Trump last fall. Under such a ruling, English might be elevated to acting director for at best a day or so until Trump simply named another person to serve as acting director, pending appointment of a permanent director needing Senate confirmation. Or the administration might appeal such a ruling to the full appeals court.''

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iehi-feed-63854 Wed, 11 Apr 2018 22:52:57 GMT Corker on new $1.9 tln deficit estimate: Tax cuts could be 'one of the worst votes I've made' http://implode-explode.com/viewnews/2018-04-11_Corkeronnew19tlndeficitestimateTaxcutscouldbeoneoftheworstvotesI.html Retiring Tennessee Sen. Bob Corker (R) said his vote on the GOP tax law could be one of the worst of his career if estimates that it will add $1.9 trillion to deficits over a decade prove correct.

"If it ends up costing what has been laid out here, it could well be one of the worst votes I've made," he said at a Senate Budget Committee hearing on the Congressional Budget Office (CBO) estimate that produced the figure.

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The new CBO estimate that the bill would cost $1.9 trillion through 2028 is higher than previous available estimates, largely because it includes the interest costs of servicing the debt, as well as more recent economic data. The Joint Committee on Taxation had estimated the bill would cost roughly $1.1 trillion over a decade at the time Corker cast his vote. Both estimates take into account the effects of economic growth on revenues.

This happened only slightly faster than we expected...

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iehi-feed-63853 Wed, 11 Apr 2018 22:43:41 GMT The Housing ATM is back: Cash-out share of all refis hits pre-crisis levels http://implode-explode.com/viewnews/2018-04-11_TheHousingATMisbackCashoutshareofallrefishitsprecrisislevels.html iehi-feed-63852 Wed, 11 Apr 2018 21:54:48 GMT Venezuela in apparent "Stealth Default"; stopped bond payments in September http://implode-explode.com/viewnews/2018-04-11_VenezuelainapparentStealthDefaultstoppedbondpaymentsinSeptember.html Venezuela stopped paying bondholders in September, according to central bank data, contradicting statements by President Nicolás Maduro that the country would continue to honour its debts while negotiating a resettlement with its creditors.The data show that regular foreign debt payments of hundreds of millions of dollars a month, in line with the country's sovereign obligations, fell to a few tens of millions from last October for fees and the legacy of a 1980s-era restructuring."This proves that Venezuela is deliberately hoodwinking bondholders and engaging in a stealth default," said Russ Dallen of boutique bank Caracas Capital, who follows Venezuelan debt closely.The data were posted in an Excel file as part of a recent revamp of the central bank's website and include monthly expenditures in US dollars on public foreign debt payments going back to 1996. Previously, data on foreign debt payments were published in the form of a ratio that revealed little information, Mr Dallen said. "This must have been posted by an intern," he added.

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The central bank data, which cover payments of sovereign debt only and exclude obligations by PDVSA and other state entities, show that just $83m was paid in October, compared with sovereign obligations amounting to $465m, according to data from Caracas Capital.Payments in November fell to $28m, compared with obligations of $183m, and in December declined to $23m, compared with obligations of $242m.

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"They have been doing it [defaulting] strategically to sow confusion. They have said they have begun the process of paying things they clearly did not pay, and blamed it all on sanctions."The US has imposed several rounds of sanctions on Venezuelan individuals and institutions. Adding to pressures last August, it also banned any involvement in new bonds or shares issued by the government or PDVSA. Last month it prohibited involvement in the country's proposed digital currency, the petro, as well

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iehi-feed-63848 Tue, 10 Apr 2018 21:31:52 GMT WeWork rival Knotel is now valued at $500M http://implode-explode.com/viewnews/2018-04-10_WeWorkrivalKnotelisnowvaluedat500M.html Knotel closed a $70 million in a Series B funding round on Tuesday, with plans to expand rapidly and muster a serious challenge to industry leader WeWork.

The flexible office space startup led by Amol Sarva has now raised $100 million between two seed rounds, and is valued at $500 million, according to research firm Pitchbook.

Knotel, which in the past two years has leased more than 1.1 million square feet in New York, San Francisco and London, said the new funding will allow the company to double in size.

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iehi-feed-63844 Sun, 08 Apr 2018 16:26:03 GMT Kushner Partner in 666 Fifth Ave. Says It Has Deal to Sell http://implode-explode.com/viewnews/2018-04-08_KushnerPartnerin666FifthAveSaysItHasDealtoSell.html The Kushner family appeared on Friday to have struck a deal to buy out its partner in the troubled Fifth Avenue skyscraper at the center of its real estate empire, according to a filing with the Securities and Exchange Commission.

The Kushners' partner, the publicly traded Vornado Realty Trust, has indicated for months that it was interested in selling its stake in the building, and on Friday, Steven Roth, Vornado's chairman, said in the filing that it had reached a handshake deal "to sell our interest to our partner."

The Kushners have attracted enormous public attention because of their connection to President Trump. Jared Kushner, Mr. Trump's son-in-law, was chief executive of the company until he joined the White House last year as one of Mr. Trump's key advisers.

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It is unclear if the announcement from Vornado means the Kushners have found a new partner, or who might be providing the financing for such a deal.

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In 2011, the Kushners sought to restructure their debt. Vornado bought a 49.5 percent interest in the building's office space and agreed to invest up to $80 million and take responsibility for a portion of the mortgage. The mortgage was divided into a $1.1 billion note and a $115 million secondary loan.

But Vornado imposed stiff terms. It was getting 11 percent interest on money it actually invested in the building, and a 3 percent return on the remaining money, if any, according to a financial report from Trepp, a company that tracks real estate debt.

The mortgage has swelled to $1.4 billion with accrued interest. The partners have been forced to cover shortfalls on the mortgage payments. And Vornado subsequently bought much of the retail space along Fifth Avenue from Crown and Carlyle for $707 million, except for a portion owned by Zara, the Spanish clothing chain. Vornado is expected to hang onto the retail space.

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iehi-feed-63841 Fri, 06 Apr 2018 21:48:43 GMT San Francisco Median Home Prices Have Over Doubled Since 2012 (Now $1,610,000) http://implode-explode.com/viewnews/2018-04-06_SanFranciscoMedianHomePricesHaveOverDoubledSince2012Now1610000.html iehi-feed-63840 Fri, 06 Apr 2018 19:16:32 GMT German court says Carles Puigdemont can be released on bail; extradition for "rebellion" barred http://implode-explode.com/viewnews/2018-04-06_GermancourtsaysCarlesPuigdemontcanbereleasedonbailextraditionfor.html iehi-feed-63839 Fri, 06 Apr 2018 18:14:07 GMT Stocks Tank on Jobs Data and Trade Worries http://implode-explode.com/viewnews/2018-04-06_StocksTankonJobsDataandTradeWorries.html Wall Street is under pressure Friday, April 6, after the U.S. added less jobs than expected in March. The U.S. added 103,000 jobs in March. Analysts polled by FactSet expect the U.S. economy added 185,000 nonfarm jobs to the payroll in March, which would be a slowdown from the 313,000 jobs added in February. February's nonfarm payroll additions was the fastest in a month since July 2016.

The unemployment rate came in at 4.1%, steady from February's rate, a 17-year low. FactSet economists expect the U.S. unemployment rate for March to come in at 4%.

The Dow Jones Industrial Average was down 1%, or 242 points, to 24,263 while the S&P 500 fell 0.8% and the Nasdaq dropped 0.78%.

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Chief Operating Officer Sheryl Sandberg told Bloomberg that some advertisers have, in fact, reduced their spending. "We've seen a few advertisers pause with us and they're asking the same questions that other people are asking," Sandberg was reported as saying. "They want to make sure they can use the data and use it safely." Sandberg added that Action Alerts Plus holding Facebook is engaging in "reassuring conversations with advertisers, just as [it is] with people."

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iehi-feed-63838 Thu, 05 Apr 2018 18:28:16 GMT Ackman Is Abandoned by Big Pershing Square Investors http://implode-explode.com/viewnews/2018-04-05_AckmanIsAbandonedbyBigPershingSquareInvestors.html About two-thirds of the capital that investors could withdraw from Pershing Square Capital Management's private funds was redeemed at the end of last year, according to a person with knowledge of the matter.

Blackstone Group LP has been pulling its money, while JPMorgan Chase & Co. has removed Bill Ackman's Pershing Square from its list of recommended funds for clients, the person said. The Wall Street Journal reported the news of the redemptions earlier, citing people it didn't identify.

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Pershing Square Holdings Ltd., the U.K.-listed firm that controls a separate pool of money from the private fund, had a net loss of 4 percent last year, compared to a 22 percent gain on the broader S&P 500 benchmark index during the same period. The biggest hits to the portfolio came from its investments in Herbalife Ltd. and Mondelez International Inc.

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