Editor’s Note: Related tickers: Dell Inc. (NASDAQ:DELL), The Blackstone Group L.P. (NYSE:BX), Metlife Inc (NYSE:MET), Verizon Communications Inc. (NYSE:VZ)
Dell Inc. (NASDAQ:DELL) urged shareholders to vote for a $24.4 billion buyout by founder Michael Dell and Silver Lake Management LLC at meeting set for July 18, continuing to dismiss a rival proposal by billionaire Carl Icahn as inferior. After contacting more than 70 potential strategic and financial buyers during a “go-shop” period, Michael Dell’s offer “is the best alternative available — in a challenging business environment,” Dell said in a filing (Dell Inc. (NASDAQ:DELL)) today. The deal requires approval by a majority of shareholders (Dell Inc. (NASDAQ:DELL)), excluding Chief Executive Officer Dell, who has a 15.6 percent stake.
Blackstone May Double SAC Redemption Request (Finalternatives)
The Blackstone Group L.P. (NYSE:BX) is set to pull almost $400 million from SAC Capital Advisors at its next redemption date, more than twice the amount it originally expected to withdraw. If The Blackstone Group L.P. (NYSE:BX) goes through with the redemption, it will leave it with little or any of its money left at the hedge fund. The alternative investments giant already redeemed about $100 million in the first quarter. SAC is facing a June 3 redemption deadline, and could see massive withdrawals despite its moves to ease redemption policies. In the first quarter, SAC suffered $1.7 billion in redemptions; since then, it has emerged that federal prosecutors are seriously considering criminal insider-trading charges against the firm.
NYC Pension Chief Seeks $500,000 Managers to Cut Out Wall (BusinessWeek)
New York City’s $140 billion retirement system pays Wall Street money managers about $360 million a year, the only one of the 11 biggest U.S. public-worker pensions that refuses to manage any assets internally. Larry Schloss, the city’s chief investment officer, says the practice must end. Schloss, 58, points to Ontario’s C$130 billion ($126 billion) teachers’ pension fund, which has returned an average 9.6 percent annually on its investments since 2003 — 1.6 percentage points better than New York’s funds. The Canadian system reaped those gains mostly without paying outside asset managers. Schloss says the same in-house approach could work in New York. “I’m not looking for John Paulson,” said Schloss, who earns $224,000 a year, referring to the billionaire hedge-fund manager. “I’m just looking for a VP at Metlife Inc (NYSE:MET) who makes 500,000 bucks.”
CERN Pension Chief Pushes Global Macro Model (Finalternatives)
One pension fund manager has a message for his peers: Start acting like a global macro hedge fund, or pay someone to do it for you. Theodore Economou, who leads the European Center for Nuclear Research’s 4 billion Swiss franc pension fund, urged other pension to act as his does, employing sophisticated risk-management systems to cut volatility and improve returns, much as the best global macro hedge funds do. And if that’s not possible, Economou says, pension should hand their entire portfolio to a hedge fund manager.
Tense finish looms in cricket rights battle (TheAustralian)
While Nine chief executive David Gyngell and his team play out dual negotiations — not just for the cricket rights but also a potential deal with Bruce Gordon’s WIN Corporation over his Adelaide and Perth TV stations — the outcome of the negotiations is being watched closely by key Hollywood studios. NBC Universal studio is known to have postponed negotiations with Australian networks for its program line-up as it waits to see which of the Nine and Ten networks will have the most funds to spend on new programming. …On any deal Nine needs to win the backing of its major US-based hedge fund shareholders Oaktree Capital and Apollo Management.
How to Turn $10,000 Into $1,461,920? Find a Hedge Fund That Cheats (HuffingtonPost)
How would you like to invest $10,000 and watch it grow over twenty years into $1,461,920? Well that’s what happened at the giant hedge fund, SAC Capital Advisors, which made a 30 percent return for 20 years in a row. How is it possible to make such profitable investments again and again and again? The U.S. Attorney for Manhattan, Preet Bharara, believes he has the answer: SAC is cheating… again and again and again. …To date, nine current and former SAC employees face insider trading criminal charges stemming from their work at the firm. Four have pled guilty and two are still fighting their indictments.
Ex-SAC Hong Kong trader readies hedge fund to bet on price swings (Reuters)
Miaodan Wu, a former portfolio manager at billionaire Steven A. Cohen’s hedge fund SAC Capital Advisors, is preparing to launch his own hedge fund in Hong Kong to bet on price swings in financial securities, people familiar with the matter told Reuters. Wu was among at least seven SAC Capital staff who left Hong Kong this year, at a time when Cohen and his firm are drawing increased scrutiny in the U.S. government’s long-running investigation into insider trading. Known in the industry as “Dr Wu,” his hedge fund, named Bach Option, will launch by the end of 2013, said three sources who could not confirm the start-up capital as the plan was at an early stage. The amount of money he plans to raise is not yet clear.
Two activist hedge fund firms join efforts and plan new strategy (Opalesque)
Two activist hedge fund firms, a new one based in California and another head-quartered in London, announced today they had formed a new partnership. They will join marketing efforts and together launch a global constructive activist strategy. They are Engaged Capital (EC) and Governance for Owners (GO). The two firms’ investment philosophies are aligned: their funds want to generate superior returns by investing in under-valued, small and mid-cap ($500m–$8bn), publicly listed companies and work to catalyse change in those companies to create shareholder value. Like most activist funds, they take concentrated, strategic ownership positions and then engage the management and board of directors in an attempt to influence decisions that are meant to raise the companies’ value for shareholders.
Hedge Funds Care becomes Help For Children (HedgeWeek)
The organisation was started as a dinner in New York City with one mission and two goals. The one mission was preventing and treating child abuse and the two goals were raising as much money as possible for the mission and to showcase the philanthropy of the hedge fund and finance industry. Between 1998 and 2013 Hedge Funds Care grew to branches and affiliates in 12 cities in five countries and distributed over USD33m in 900 grants to organisations that do the actual work of preventing and treating child abuse. Under the new name, hedge funds, their service providers, and the finance industry will continue to constitute the board of directors and will remain the primary base of our support, which the organisation will continue to herald.
Ship of knaves (Economist)
ANITA RAGHAVAN’S new book, “The Billionaire’s Apprentice”, purports to chronicle “the rise of the Indian-American elite”. It does not. Rather, it describes the rise and fall of two members of that elite: Raj Rajaratnam, a hedge-fund boss, and Rajat Gupta, a former head of McKinsey, the world’s most prestigious consultancy. Mr Rajaratnam (pictured) is the money man; Mr Gupta, his apprentice. Mr Rajaratnam is a straightforward scoundrel. A brilliant mathematician, he could have grown wealthy honestly. Instead, he amassed a $5 billion fortune by trading on inside information.
Obama to nominate Republican former Bush official and hedge fund counsel for FBI head (AllVoices)
President Obama will nominate James Comey to serve as director of the Federal Bureau of Investigation (FBI). The date when Obama will make the nomination is not known. Obama apparently is anxious to please Republicans, Wall Street, and the military-industrial complex. Comey was a former counsel for Bridgewater Associates, a huge hedge fund , and also a senior official in the Bush administration:”As Deputy Attorney General, Comey was the second-highest ranking official in the United States Department of Justice (DOJ) and ran the day-to-day operations of the Department, serving in that office from December 2003 through August 2005.”
First Person: I’m Investing Like a Billionaire Hedge Fund Manager (Yahoo)
There was an interesting article at CoinWeek.com entitled, “The Nickel-Hoarding Billionaire” about wealthy hedge fund manager Kyle Bass. Bass — apparently a man after my own heart, but a tad richer — making an interesting financial move and one that I’ve made myself, although to a much lesser degree. According to the article, “Bass could easily afford coins in the six-figure and up range, but (for now) he is targeting much more mundane pieces. The contrarian investor sunk exactly $1 million into U.S. coins, but his purchase didn’t require numismatic expertise or third-party grading. That’s because Bass purchased 20 million common-date Jeffersons at face value.”
Hedge Funds Are Piling Into This Well-Known Blue-Chip Stock (Nasdaq)
There aren’t any players with a bigger impact on the market than hedge funds. Not only are hedge funds thought leaders, employing thousands of forensic analysts to sniff out the best investment opportunities, they are also huge, frequently carrying multibillion-dollar positions that can single-handedly move a market. That’s why hedge funds have gained a cult following, watched closely by investors trying to gain insight into what the biggest players on the Street are up to. A signal that a hedge fund or the entire industry is hot for a new stock can send shares soaring. And that’s exactly what is happening to the most popular stock among hedge funds during the first quarter. This market leader has been on a tear, up 36% on the year after hedge funds poured $1.6 billion into its shares in the first quarter.
Two Things You Should Know If You Want To Be Real About Hedge Funds (BusinessInsider)
Hedge funds are known for being high powered, high performing financial firms that employ the smartest people and command the top of top dollar for their services. So it’s important to keep up with what they’re doing. This morning, two snippets of information about hedge funds caught our eye. If you think about them at all, you should know these facts about their performance and who’s behind it. …Hedge Fund Research said in April that funds saw inflows in 14 of the last 15 quarters (PDF)—but now there is evidence that substandard returns may finally be having an effect. According to eVestment, the $2.69 trillion industry has seen net inflows of just $5.8 billion through the first four months of the year, which it calls the slowest rate of growth to start a year on record. (The firm’s database goes back to the third quarter of 2003.) The figure is also the second-worst total on record, after the start of 2009, when investors pulled out $260 billion.
The Morning Brief: Hedge Fund Tell-All to Hit Shelves Soon (InstitutionalInvestorsAlpha)
Preqin reports that the top 100 hedge fund managers have combined assets under management of $1.4 trillion, which accounts for 61 percent of total hedge fund capital. This compares with the recently published Hedge Fund 100 ranking by Institutional Investor’s Alpha, which counted total assets among the 100 largest firms at $1.3 trillion. That figure represents roughly 58 percent of the $2.25 trillion in total hedge fund assets worldwide at the start of 2013. Preqin, a London-based collector of data on alternative investments, also counts 176 institutions that have allocated at least $1 billion to hedge funds, 26 more than last year. These investors account for more than $550 billion invested with hedge funds, according to Preqin. In its report, Preqin notes that over the next two months, the $7.2 billion Arizona Public Safety Personnel Retirement System, which now allocates about 20 percent of its total assets to various hedge fund strategies, plans to make six new hedge fund investments.
How Hedge Funds Invest in Volatile Markets (InstitutionalInvestorsAlpha)
Losses of 7 percent and 3 percent in Japan on two different days in the past week, along with subsequent dives —followed by abrupt rallies — in the U.S. market, have caused investors to start worrying. Meanwhile, bond prices are plummeting as interest rates have surged in recent days. What’s a bullish hedge fund investor to do? Buy puts on broad index exchange-traded funds. This is what a cross section of hedge funds did in the first quarter. t is no secret that many hedge funds, especially macro and multi-strategy funds, like to use ETFs as part of their overall strategy, especially when they want to bet on a certain market or industry.
The World According to Britt Harris (InstitutionalInvestor)
In late 2006, Thomas (Britt) Harris found a comfortable new perch from which to weigh in on the world economy. After extricating himself from a brief dip in the shark-infested hedge fund waters of Southern Connecticut, Harris, known to all as “Britt,” took over as chief investment officer of the $117 billion Teacher Retirement System of Texas in Austin. Although he now invests on behalf of 1.3 million teachers, among them his own mother, the CIO is perhaps best known in the pension world as a pioneer in forming “strategic partnerships” with asset managers who took on large, broad mandates to oversee diversified portfolios while at the pension fund of GTE Corp. (now Verizon Communications Inc. (NYSE:VZ)) in the mid-1990s. Today, as head of the fifth-largest U.S. public pension system, Harris commands a rapt audience wherever he goes.
