Warren Buffett, the billionaire chairman of Berkshire Hathaway Inc., said low interest rates and inflation should dissuade investors from buying bonds and other holdings tied to currencies. “They are among the most dangerous of assets,” Buffett said in an adaptation of his annual letter to shareholders that appeared today on Fortune magazine’s website. “Over the past century these instruments have destroyed the purchasing power of investors in many countries, even as these holders continued to receive timely payments of interest and principal.”
Warren Buffett: Why Stocks Beat Gold And Bonds (CNN Money)
… Gold, however, has two significant shortcomings, being neither of much use nor procreative. True, gold has some industrial and decorative utility, but the demand for these purposes is both limited and incapable of soaking up new production. Meanwhile, if you own one ounce of gold for an eternity, you will still own one ounce at its end…
Why Soros Sees No Quick End to the Crisis in Europe (financial planning)
In an address to a peer group of high-net-worth investors in New York City, George Soros told the audience that he would have little to say to cheer them about the state of the global economy. “At this junction it does not appear that we are going back to equilibrium and the state of disequilibrium has many facets,” Soros said, according to a summary of his comments provided by members of TIGER 21, which stands for The Investment Group for Enhanced Results in the 21st Century. The group’s 193 members collectively manage more than $16 billion, and include entrepreneurs, inventors and executives.
Falcone’s Harbinger Said to Borrow $190 Million From Jefferies at 15% Rate (Bloomberg)
Phil Falcone’s hedge fund, which tumbled by almost half last year because of a troubled wireless venture, is paying a 15 percent interest rate for a $190 million loan, almost triple what the riskiest corporate borrowers pay, said two people with knowledge of the loan. The billionaire borrowed the money from Jefferies Group Inc. (JEF) after paying off a $400 million loan from UBS AG on Jan. 30. Falcone got $160 million from New York-based Jefferies after fees, and will pay an annualized rate of 15 percent on the loan, which matures on Oct. 31, according to the people, who asked not to be named because the fund is private. Interest on the loan will be paid monthly.
Och-Ziff Profit Drops 94% as Fund Performance Fees Decline (Bloomberg)
Och-Ziff Capital Management Group LLC (OZM), the hedge fund run by Daniel Och, reported a 94 percent drop in fourth-quarter profit on lower performance fees as most of the firm’s funds lost money in 2011. Distributable profit, a measure excluding costs related to Och-Ziff’s 2007 initial public offering, fell to $16.8 million, or 4 cents a share, from $303.1 million, or 74 cents, a year earlier, the New York-based company said today in a statement. Earnings beat the 2-cent average estimate of eight analysts in a Bloomberg survey.
Hedge Fund Snaps Seven Annual Gains (Bloomberg)
Michael Coleman is suspending a three-decade trading career to focus on risk after a year in which the Merchant Commodity Fund he co-founded lost 30 percent and its assets contracted twice as much. Assets fell to about $550 million last month, from $1.56 billion at the end of 2010, said Singapore-based Coleman, who gave up trading to become chief risk officer. The biggest losing bet was in sugar before a 10-month decline ended with winning wagers in oil, fuels, sugar and soybeans, he said. The assets of the hedge fund, started in June 2004 with $10 million, are now traded mostly by co-founder Doug King.
Bacon’s Moore Is Said to Invest $800 Million in Former Traders’ Hedge Fund (Bloomberg)
Moore Capital Management LLC, the New York firm founded by Louis Moore Bacon, invested $800 million in a hedge fund begun last year by two of its former traders, according to two people with knowledge of the matter. The investment allowed Stone Milliner Asset Management AG founders Jens-Peter Stein and Kornelius Klobucar to start trading last month with more than $1 billion, said the people, who asked not to be named because the firms are private. Moore’s assets are in a managed account, the people said.
Louis Bacon Rehires Brother Zack At Moore Capital Management (AR)
Moore Capital Management founder Louis Moore Bacon has rehired his older brother, Zack Hampton Bacon III, as a managing director in charge of strategic planning for his $15 billion firm. A spokesman for Moore confirmed the hire but declined to elaborate on what the role would entail, only to say that it wouldn’t involve trading.
Fortress, Relativity Sued by Investor in Sony Film Deal (Bloomberg)
Fortress Investment Group LLC (FIG) and Relativity Media LLC were sued by an investor who claimed $44 million in losses from a film financing agreement with Sony Corp. (6758)’s movie studio. Aramid Entertainment Fund Ltd., a hedge fund that specializes in financing movies, filed the complaint today in Los Angeles County Superior Court. The fund accuses Fortress of breach of contract, among other claims, for allegedly using confidential information obtained from Aramid to make a deal with Sony that destroyed Aramid’s investments.
Platinum Partners Settles With Razorback Group in Rothstein Ponzi Scheme (Bloomberg)
Platinum Partners Value Arbitrage (PPVAFLP), a New York hedge fund, settled a lawsuit today without paying any money to investors who claimed it aided a $1.2 billion Ponzi scheme run by imprisoned confidence man Scott Rothstein. The settlement came in state court in Fort Lauderdale, Florida, where investors known as the Razorback Group accused Platinum and others of hiding the truth about the nature of the Rothstein fraud, which unraveled in 2009.
Owl Creek Hedge Fund Cuts Stake In Navistar (Reuters)
New York-based Owl Creek Asset Management, a $7 billion hedge fund, reported a 7-percent stake in truck and engine maker Navistar International Corp, down from an 8.4 percent stake in December, a regulatory filing showed on Thursday. Navistar has been in the spotlight as billionaire investor and major shareholder Carl Icahn has supported a potential tie-up with rival Oshkosh Corp, a proposal to which Navistar management has signaled it is open. Icahn owns 10 percent of both companies.
SEC’s Hawke Warns The Young On Insider Trading (Thomson Reuters)
Recent insider-trading prosecutions should serve as a warning to financial professionals too young to recall the crackdowns during the Reagan Era, a top Securities and Exchange Commission official said on Wednesday. “These lessons have to be re-learned” by the many financial workers who were children in the 1980s, said Daniel Hawke, the head of the SEC’s market abuse division, speaking at a Boston University event.
Paulson Rips Hartford Management, Calls for ‘Something Drastic’ (WSJ)
Prominent hedge-fund manager John Paulson excoriated executives at Hartford Financial Services Group Inc. on the insurer’s quarterly conference call Wednesday, telling them they need to “do something drastic” to boost their stock price. Mr. Paulson complained after executives discussed what they termed the “significant challenges” that stand in the way of Hartford splitting itself into two separate insurance companies, a strategy that some analysts and investors have suggested would revive the shares.
Gareth Woodbridge Leaves CVC For Archer (WSJ)
CVC Asia Pacific has lost Sydney-based investment director Gareth Woodbridge to Archer Capital. Mr. Woodbridge last week announced his resignation from CVC, which he joined in 2008.
Big Asian Funds Azentus, Senrigan Deliver Positive Returns In January (Hedge Fund Intelligence)
Two of Asia’s biggest hedge funds eked out positive returns in January after a tough 2011, which comes as good news for investors that have been looking for performance out of Asia…
More Speakers, Securities Lending Session Added To Asiahedge Forum (Hedge Fund Intelligence)
More influential speakers, including Ophelia Tong of HT Capital and Monica Hsiao of CQS, have been added in recent days to the line-up for the AsiaHedge Forum, to take place at the end of this month on 29 February and 1 March at the JW Marriott Hotel in Hong Kong. Tong joins the session on the first afternoon of the event featuring managers in equity strategies, while Hsiao joins the panel session on fixed income and credit on the second morning.
John Paulson Totally Flipped Out During A Conference Call Today (Business Insider)
Imagine the surprise Liam McGree, CEO of Connecticut insurance firm The Hartford, had this morning when John Paulson decided to take the place of his analyst and to give the executive a piece of his mind on the company’s Q4 earnings call
Sovereign Funds Turn Away From Hedge Funds (FINalternatives)
More and more hedge funds are looking to sovereign wealth funds to bolster their assets. But they may be looking in the wrong place.While sovereign funds continued to increase their assets last year, they didn’t put that new money into hedge funds, according to a new study from TheCityUK. Overall portfolio allocations to hedge funds decreased, as did the overall number of sovereign funds investing in the asset class, which dropped slightly from 37% to 36%.
Cohen, Christie Meet At Manhattan Steakhouse (FINalternatives)
Steven Cohen was seen dining Tuesday with one of the Republican Party’s rising stars, stoking questions as to whether he’s playing kingmaker or attempting to cozy up with a close supporter of the likely G.O.P. presidential nominee. Cohen broke bread with New Jersey Gov. Chris Christie at Manhattan steakhouse Quality Meats, Fox Business Network reports. The two discusses politics, including the 2012 presidential contest, over steak and wine that runs at $355 per bottle.
Louisiana Teachers Readies Hedge Fund Consultant Search (FINalternatives)
A $12.7 billion Louisiana pension is set to take the next step towards its first hedge fund investment. The state’s Teachers’ Retirement System will begin a search for a hedge fund consultant next month, Pensions & Investments reports. The move follows the system’s decision to allocate 2% to hedge funds last year.
BREAKING NEWS: Texas County Commits $305m To Fresh Hedge Fund Hires (HFM Week)
The Texas County & District Retirement System (TCDRS), which has $17.7bn in assets, has allocated $305m between two hedge funds, two months after making an extra $885m available to the space, HFMWeek can exclusively reveal. TCDRS, which upped its hedge fund target allocation from 20% to 25% at the start of this year, has hired, Asian Century Quest and Graham Global Investment Fund for $130m and $175m respectively.
Lazard Asset Management Rolls Out Alternative Strategies Fund (HFM Week)
The offering, called the Lazard Alternative Strategies 1099 Fund, is a fund of hedge fund that allows investors to deploy capital to various hedge fund strategies with a minimum investment of $25,000, a figure significantly lower than that for regular hedge funds. The new fund will allocate to between 15 and 35 managers using strategies including relative value, event-driven, long/short and tactical trading.
HazelTree Hires New Tech Chief (HFN)
New York-based hedge fund treasury management provider HazelTree has appointed a new chief technology officer. Sandeep Rawal will start the position immediately, according to a company statement.
Ray Dalio and the De-leveraging Cycle (Value Walk)
Ray Dalio at Bridgewater Associates wrote a paper (updated Oct 2011) describing how a debt-deleveraging cycle works. A debt-deleveraging cycle is VERY different from a normal business cycle slowdown. From peak-to-trough, equities typically decline by 80% and real economic activity by 20%.
Hedge Funds Should Keep Watch On Changing Regulatory Environment (Opalesque)
UCITS or Undertakings for Collective Investment in Transferable Securities funds are becoming more popular amongst hedge fund managers who line up to launch under the platform but many of them miss their mark because of the changing regulatory environment, said research firm Cerulli Associates. While fund managers struggle to break out from the pack and offer complex, high alpha products, regulators and fund distributors are looking for simplicity and straight-forward strategies, the study added.
Fundspire Envelops Growth in the Hedge Fund Cloud (Hedge Co. Net)
Fundspire, a cloud-based technology provider of performance analytics and reporting for the hedge fund industry, announced record revenue as well as significant client, product and employee growth in 2011. “We are very pleased to have had an excellent year in 2011 despite the European credit crisis which affected the hedge fund industry,” Christophe Frèrebeau, Chief Executive Officer, said. “We were fortunate to have won a record number of new clients for our analytics platform while retaining 100% of our existing clients.”
Deadline for Hedge Fund, Private Equity Fund Managers to Register with SEC Rapidly Approaching (Forbes)
Since the Dodd-Frank Act eliminated the private adviser exemption that many investment advisers relied on to avoid registering with the SEC, hedge fund and private equity fund managers now face a deadline of March 30, 2012 to file their registration forms and become be subject to the same registration requirements, regulatory oversight and other requirements that apply to other SEC-registered investment advisers. Importantly, investment advisers that are now subject to registration because of Dodd-Frank must file Form ADV by no later than February 14, 2012 to satisfy the 45-day review period before the March 30, 2012 registration deadline.
House Approves Insider-Trading Ban (Washington Post)
The House on Thursday overwhelmingly approved its scaled-back version of an ethics reform package that would prohibit insider trading on Capitol Hill and in the executive branch. On a 417 to 2 vote, the legislation won approval despite complaints from senators and House Democrats that GOP leaders stripped the measure of several key reforms that the Senate had easily approved.
FATCA deal still inconclusive, experts warn (COO Connect)
The US Treasury’s agreement with the UK, France, Germany, Italy and Spain over FATCA reporting requirements should be welcomed by asset managers albeit with a large pinch of salt. Under the deal, banks in these jurisdictions will be allowed to submit information about US clients via their national governments rather than going direct to the Internal Revenue Service (IRS). KPMG estimates the latest FATCA draft could save hedge funds up to $10 billion in implementation costs.
Morning News: February 9, 2012 (Crossing Wall Street)
The Best Of The Aleph Blog, Part 13 (Aleph Blog)
10 Thursday AM Reads (The Big Picture)
Hot Links: Both Barrels (The Reformed Broker)
The Stock Market, Insider Trading, and Faith in the Markets (CNBC)
Bruce Berkowitz “Sears Intrinsic Value is the $64 Question” (Value Walk)
Frontrunning: February 9 (Zero Hedge)
Thursday 7atSeven: increasingly overbought (Abnormal Returns)
HFMWeek Daily Snapshot – 9 February (HFM Week)
Hedge Funds Up In January, MF Global’s Insurance Policies, ‘Doomsday Capitalism’ And More (Reuters Hedge World)
