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Foundations and endowments fleeing hedge funds slows


Foundations and endowments slow hedge fund exits

The wave of endowments and foundations cutting their exposure to hedge funds is abating. That’s the conclusion of a survey released Tuesday by Boston-based consulting firm NEPC, which caters to 106 endowments and foundations with assets totaling $61 billion. Almost two-thirds of the 62 business officers who responded to questions said they planned to maintain their current exposure to so-called marketable alternatives, while less than a third cut their total allocation to the asset class in the past year. Scrutiny of hedge funds and their fees had mounted after several years of disappointing returns, prompting endowments and foundations to embrace exchange-traded funds over active management. The biggest bets in the first quarter among the largest US university endowments were in passive ETFs, including four of the five biggest public purchases, which accounted for more than $1.2 billion traded, according to data compiled by Bloomberg. — BLOOMBERG NEWS



Homebuilders are upbeat

Sentiment among American homebuilders unexpectedly increased to a three-month high as builders saw greater prospects for industry demand despite elevated material costs and shortages of labor and lots, according to data Tuesday from the National Association of Home Builders/Wells Fargo. The climb follows an easing to an eight-month low in July as builders were challenged with higher materials costs for items such as lumber. Builders are upbeat about a strengthening job market and still-low mortgage rates that are helping prospective buyers. Housing remains a modest contributor to overall US growth that is finding its footing after a rough start to 2017. — BLOOMBERG NEWS


Prices at the pump in Mass. unchanged

The price of gas in Massachusetts has not changed since last week. AAA Northeast said Tuesday that the price of self-serve, regular is averaging $2.29 per gallon this week. That’s 6 cents below the national average of $2.35 per gallon. A year ago, the average price in Massachusetts was 25 cents lower at $2.04 per gallon. AAA found regular gasoline selling for as low as $2.17 per gallon and as high as $2.51. — ASSOCIATED PRESS



Inventories rose by large amount in June

US businesses increased their stockpiles in June by the largest amount in seven months, while sales also rose. The Commerce Department says business inventories rose by a seasonally adjusted 0.5 percent in June, following May’s gain of 0.3 percent. It was the best showing since inventories had risen 0.9 percent in November. When businesses increase stockpiles, it is generally seen as a sign of their confidence that sales will increase in the coming months. A decrease in inventories can be a sign of pessimism about future sales.


Maker of Angry Birds increases sales

The maker of Angry Birds mobile games is on the rebound, increasing sales at a rate topping 90 percent for a second straight quarter as the company prepares for a potential IPO. Finland’s Rovio Entertainment, which reduced its workforce by more than half in the past three years amid slowing revenue, is now reaping the fruits of a new strategy placing more focus on in-game purchasing and advertising instead of paid downloads. The company is also relying more on licensing partners to handle its movie and merchandising businesses rather than doing it all in-house. — BLOOMBERG NEWS


Bank of America warns of earnings slide

Money managers who’ve watched the surge in corporate profits take US equities to records are starting to fret about earnings growth, and that’s an “ominous” sign, Bank of America says. Just 33 percent of managers in the bank’s latest survey say corporate profits profits will improve, down from 58 percent at the start of the year. The drop represents a “warning sign for equities over bonds, high yield over investment grade, and cyclical sectors over defensive ones,” chief investment strategist Michael Hartnett wrote in a note Tuesday. “Further deterioration is likely to cause risk-off trades.” At the same time, a record 46 percent said equity markets are overvalued. — BLOOMBERG NEWS



Bill Gates donates 64 million shares of Microsoft stock worth $4.6b

Bill Gates made his largest gift since the turn of the century, giving away Microsoft Corp. shares that accounted for 5 percent of his fortune, the world’s biggest. The billionaire donated 64 million of the software maker’s shares valued at $4.6 billion on June 6, according to a Securities & Exchange Commission filing released Monday. While the recipient of the gift wasn’t specified, Gates has made the majority of his donations to the Bill & Melinda Gates Foundation, the charity he and his wife use to direct their philanthropic efforts. It’s the largest gift of Microsoft shares that Gates has made since 2000. The 61-year-old gave away $16 billion worth of Microsoft shares in 1999 and $5.1 billion a year later, according to calculations by Bloomberg. Bill and Melinda Gates have given away about $35 billion of stock and cash since 1994, based on the value of the shares at the time of gifts, according to a review of two decades worth of Gates Foundation tax returns, annual reports and regulatory filings. Gates created the Giving Pledge in 2010 with billionaire investor Warren Buffett, and the pair have been joined by 168 others who’ve promised to give the majority of their wealth to charity. — BLOOMBERG NEWS



Spending up by largest amount in seven months

Consumers went out shopping in a big way in July, pushing up retail sales by the largest amount in seven months. Retail sales advanced 0.6 percent last month, the best showing since a gain of 0.9 percent last December, the Commerce Department reported Tuesday. For most of this year, retail sales have been lackluster, including a decline in May of 0.2 percent and a modest 0.3 percent June gain. Consumer spending accounts for around 70 percent of economic activity, so the latest result is a good sign for overall economic growth.


Mazda recalling nearly 80,000 vehicles over faulty air bags

Mazda is recalling nearly 80,000 cars and SUVs, some for a second time, to replace dangerous Takata air bag inflators. The recall covers front passenger inflators on certain 2007 through 2009 and 2012 CX-7, CX-9, and Mazda 6 vehicles. The recalls vary by state and age of the vehicles. Takata inflators can explode with too much force and hurl shrapnel into drivers and passengers. As many as 19 people have been killed and more than 180 hurt due to the problem. The recall supersedes one issued in January that temporarily replaced older Takata inflators with the same parts. Ammonium nitrate used in the inflators can deteriorate over time. The company says newer inflators are safer. In the latest recall, dealers will install permanent replacement inflators that don’t use ammonium nitrate. — ASSOCIATED PRESS