Ex-SAC Manager’s Indictment Boosts Pressure to Cooperate (HereIsTheCity)
The insider-trading indictment of ex-SAC Capital Advisors LP portfolio manager Mathew Martoma sets in motion a criminal trial process that puts new pressure on him to cooperate with the government’s investigation of the hedge- fund firm founded by billionaire Steven Cohen. ‘It’s another step on the government’s march into Cohen’s office’, Erik Gordon, a professor at the University of Michigan Law School and Ross School of Business, said in an e-mail after the indictment. ‘Given the prosecutors’ success in getting convictions and serious jail sentences, it’s time for anyone at SAC who is connected with insider trading to start having nightmares’.
For Hedge Funds, It’s All in the Game (HuffingtonPost)
There are few greater examples of the irrationality of investors than the world of hedge funds. Hedge fund managers are paid enormous sums, usually 2 percent of the investment amount and 20 percent of profits above a fixed level. As money has poured into these funds over time, hedge fund managers and others working in the industry have become fabulously wealthy. But, now, here’s the rub, the investors haven’t benefited. In fact, hedge fund investments have consistently performed substantially worse than basic investments in low-fee equity index funds, exchange traded funds or a simple mix of equity and bond funds. I am an outsider to the world of hedge funds in that I neither work nor invest in hedge funds. Without an ounce of insincerity, I can state that I don’t understand how this industry survives, let alone has thrived for so long.
Herbalife calls analyst meeting (SMDailyJournal)
Herbalife Ltd. and hedge fund Pershing Square Capital Management appear to be squaring off over claims that have pummeled the company’s stock this week. …Ackman said Wednesday that he has been shorting the company’s stock for several months. Short sellers earn money when a stock declines. Ackman detailed his allegations in a presentation Thursday at the Sohn Conference Foundation meeting in New York and confirmed that he has an “enormous” short position. On Friday, Pershing made the information used in its presentation public, launching the web site www.FactsAboutHerbalife.com. It includes the source data used to create its presentation that it titled “Who wants to be a Millionaire?”.
Elon Musk Goes From Renter to Owner in Bel Air (WSJ)
Tesla Motors Inc (NASDAQ:TSLA) -1.25%founder Elon Musk has bought the Bel Air estate he’s been renting for the past three years for $17 million. The 20,248-square-foot home has six bedrooms, nine bathrooms, five fireplaces, a wine cellar that holds 1,000 bottles of wine and a two-story library. The property overlooks Bel Air Country Club and includes a lighted tennis court, five garages, a pool and spa, gym and guest quarters. The home, which is owned by Mitch Julis, co-founder of hedge fund Canyon Capital Advisors, was put on the market in 2008 for $27 million. Mr. Musk, who also co-founded PayPal and founded SpaceX, started renting the property in 2009. The home was built in 1990.
Dow Jones Credit Suisse Hedge Fund Index up 0.64 per cent in November. (HedgeWeek)
Hedge funds, as measured by the Dow Jones Credit Suisse Hedge Fund Index, finished November up 0.64 per cent, with nine out of 10 strategies in positive territory. In total, the industry saw estimated outflows of approximately USD1.3bn in November, bringing overall assets under management for the industry to approximately USD1.76trn.
What SEC chief needs to OK hedge fund ad rule (MarketWatch)
Observers say the new chairman of the Securities and Exchange Commission can succeed at brokering a deal to relax decades-old rules that have kept hedge funds, buyout shops and small businesses from publicly advertising, even with a deadlocked agency. At issue is an SEC proposal introduced in August that, if approved, would let them solicit investors publicly through the Internet, cold-calls, mailings and other means. Elisse Walter, a Democrat who took over as the chief of the SEC last week, recently expressed concern about the proposal, saying the agency should worry about whether allowing public advertising could result in fraud or sales of securities to investors that aren’t sophisticated enough to understand the risks. She noted that it is the responsibility of regulators to obtain the benefit of the change while “safeguarding” against the risks to investors.
