Editor’s Note: Related tickers: The Blackstone Group L.P. (NYSE:BX), Sears Holdings Corporation (NASDAQ:SHLD), Morgan Stanley (NYSE:MS), Fortress Investment Group LLC (NYSE:FIG)
Rather than having his various divisions work together for the mutual benefit of the company, Sears Holdings Corporation (NASDAQ:SHLD) CEO Eddie Lampert turned the company into a series of warring fiefdoms fighting for money and attention, inspired in part by his fondness for libertarian icon Ayn Rand. In a blog post, Paul Krugman points out the major issue with the strategy: “If the different divisions of Sears Holdings Corporation (NASDAQ:SHLD) have no common interests, if the best model is competition red in tooth and claw, why should Sears Holdings Corporation (NASDAQ:SHLD) exist at all? Why not just break it up into units that have no reason not to compete?”
Falcone L’Squared option flits away (NYPost)
It’s official: Bankrupt LightSquared is up for grabs. As The Post predicted last week, hedge fund billionaire Phil Falcone — LightSquared’s founder and largest investor — missed a deadline yesterday to file a reorganization plan for the wireless venture. In court papers, Falcone has asked the bankruptcy court to give his Harbinger Capital hedge fund more time to get a plan together. He had until July 15 to exclusively hash out a deal with LightSquared’s creditors. The first of several hearings on the issue is slated for tomorrow.
Blackstone selects Nephila Capital as a sub-advisor for new mutual fund (Artemis)
Insurance-linked securities and reinsurance-linked investment manager Nephila Capital, the largest asset manager in the space with just over $7.89 billion of insurance-linked assets under management at the firm, has been selected as one of the sub-advisors for a new mutual multi-manager fund offering from The Blackstone Group L.P. (NYSE:BX) Alternative Asset Management. The Blackstone Group L.P. (NYSE:BX) Alternative Asset Management, the hedge fund solutions group of The Blackstone Group L.P. (NYSE:BX), is launching its first alternative investments focused mutual fund which offers daily liquidity to investors. BAAM has $49 billion under management and has developed this new mutual fund offering by partnering with some of the best managers in the alternative asset class space.
Kazarian Emerges After 20 Years With Bid for 10% of Greek Debt (Bloomberg)
Millionaire investor Paul Kazarian is ready to be noticed again. Days after his Japonica Partners & Co. announced on June 3 an offer to buy as much as 2.9 billion euros ($3.8 billion) of Greek government debt, about 10 percent of all outstanding bonds, Kazarian sat on a bike in the gym at the Grande Bretagne in Athens, a hotel favored by hedge-fund managers and overseas investors scouring Europe’s worst-performing economy for distressed assets. Kazarian, 57, wore a t-shirt plastered with the Japonica logo and slogans including “delta force” and “catalyst to create extraordinary value,” according to people who saw him. He put an inch-wide spiral bound presentation covered with the same logo on the bike next to his, placed beside the gym entrance in full view of anyone walking in.
Bayou Hedge Fund Victims Get $31 Million in Forfeited Assets (Lawfuel)
Preet Bharara, the United States Attorney for the Southern District of New York announced that today the Clerk of the Court distributed $31,788,917.44 in proceeds from forfeited assets to victims of the fraud committed at the Bayou hedge funds. The forfeited assets include approximately $2 million seized from a bank account in Singapore and $1 million seized from a bank account in the United Kingdom. This brings the total value of the forfeited assets distributed to Bayou fraud victims to over $128 million. U.S. Attorney Bharara stated: “We are dedicated to using forfeiture to compensate victims for their losses whenever possible. This return of money to Bayou fraud victims underscores the power and flexibility of forfeiture as a tool to help victims of major financial crimes.
Sunofia Capital Readies Market Neutral Hedge Fund Strategy (Finalternatives)
Asset management firm Sunofia Capital Management is gearing up to launch a market neutral hedge fund strategy. The strategy, which will be managed by Moustapha Awada, will initially invest in European and Japanese liquid equities and will subsequently add liquid North American and global stocks. Awada has over 17 years of trading, portfolio and risk management experience. Previously, he was a managing director and global head of the multi-asset systematic trading group at Dresdner Bank.
Asia – China big bears attracting more hedge fund shortsellers (Opalesque)
Among hedge funds, Chinese growth outlook and its ramifications has been a consistent theme. From prescient investors like Jim Chanos to newbies like Patrick Wolff of Grandmaster Capital, a doom in China has been predicted over and over again. The best bets against Chinese equities would be those that took shape when most of the market players were in denial of the dark times that laid ahead and valuations remained high. When it comes to China, the interesting thing is that while every hedge fund manager will say that China is on the road to hit rock-bottom, there are very few who have established direct shorts in the country or very few who share their portfolio exposure.
Former Hedge-Fund Manager Skowron Must Pay Morgan Stanley $10.2 Million in Restitution -Appeals Court (WSJ)
Ex-hedge-fund manager Joseph F. “Chip” Skowron must pay his former employer Morgan Stanley (NYSE:MS) $10.2 million in restitution, a U.S. appeals court ruled Tuesday, denying his request to have a judge’s order overturned. In January, Mr. Skowron, who is serving a five-year prison sentence for conspiracy to commit securities fraud and obstruct a Securities and Exchange Commission investigation, had appealed a ruling that required him to pay Morgan Stanley (NYSE:MS) 20% of his compensation between 2007 and 2010, or $6.42 million, and $3.8 million in legal fees and related costs.
Red Bull-Fueled All-Nighters Put Fortress Fund on Top (BusinessWeek)
As Friday night turns to Saturday morning in Singapore, Adam Levinson regularly stays up drinking Red Bull until 4 a.m., waiting for U.S. jobs data and the close of the trading week halfway around the world in New York. “While there is a distinct advantage in being in Asia, demands on your time here are extraordinary,” said Levinson, 43, chief executive officer of the Singapore unit of Fortress Investment Group LLC (NYSE:FIG) and chief investment officer of the Fortress Investment Group LLC (NYSE:FIG) Asia Macro Funds for the New York-based firm with $55.6 billion under management.
For hedge fund investors, the math is sobering (TheGlobeAndMail)
I applaud the protections given to freedom of speech in the United States. Sure, unrestrained gabbing might be unpleasant and less than edifying – like a few too many reality shows – but that is still far better than the alternative. However, even in the land of the free, some talk has been considered far too dangerous. While it might be perfectly legal for Honey Boo Boo to yammer on, hedge fund advertising has been banned for decades. The imposed limitations effectively threw a veil of secrecy on the now sprawling industry. Paradoxically, it also conferred a measure of exclusivity that isn’t really warranted.
Twitter spoofs hedge fund industry (PIOnline)
Twitter users took to social media to offer a humorous look at what to expect now that the Securities and Exchange Commission decided to lift a long-standing ban on marketing and promoting private funds. They lampooned the industry following the July 10 announcement, creating a hashtag — #hedgefundslogans — to track what became a series of jokes. One of the most prolific posters to reimagine classic ad slogans was Barry Ritholtz, CEO of quantitative software research firm FusionIQ and a blogger. Some of his zingers tweeted under the handle @ritholtz included:
Return of the blueblood macro hedge funds (FT)
It used to be said that you could get on in the world of macro trading – betting on the ups and downs of the global economy – by following two simple rules: the trend is your friend and don’t fight the Fed. For much of the past few years though, with markets veering between panic and central bank-backed calm, it has seemed at times like those two maxims have been tugging in opposite directions. As if to underscore the point, the world’s best macro traders – caught in a seesawing, profit eroding “risk-on, risk-off” environment – have been battered by the slings and arrows of bond market gyrations and ECB intervention. They have foundered.
Hedge Fund Fees: Exotic Expenses (Forbes)
Back in 2008, Warren Buffett made a bet with Protégé Partners, a fund of funds hedge fund manager, that the S&P500 would beat a group of hedge fund managers selected by Protégé. The bet officially started on January 1, 2008, and runs for a decade, ending on December 31, 2017. The performance is being measured by netting out fees, costs and expenses that go into running the hedge funds. Buffett made the bet to prove his contention that hedge funds underperform due to the fact that “costs skyrocket when large annual fees, large performance fees and active trading costs are all added to the active investor’s equation.”
Hedge Funder Whitney Tilson Tells His Daughters What To Do If A Jerk Ever Says ‘Get Down On Your Knees’ (BusinessInsider)
Value investor Whitney Tilson, who runs KASE Capital—a hedge fund named after his three daughters— had a tremendous response to one of the disturbing lines in the New York Times front page story the other day about women hooking up in college. From the New York Times: (emphasis ours) A friend of hers, Kristy, shared a story about a different kind of coercion. She had been making out with a guy at his house, not sure how far she wanted to go, when he stood up and told her, “Get down on your knees.” At first she froze. “I was really taken aback, because I was like, no one has ever said that to me before,” she said. Then he said something like, “ ’I think that’s fair,’ ” she recalled. When she still hesitated, he pushed her down.
REPORT CARD: Here’s How Some Of The World’s Biggest Investors Performed With Their Picks At Conference Last Year (BusinessInsider)
CNBC/Institutional Investor’s Delivering Alpha conference is happening tomorrow at the Pierre Hotel in Manhattan’s Upper East Side. The annual hedge fund conference features discussions with top money managers and Washington insiders. This year’s speaker lineup includes Treasury Secretary Jack Lew, Jim Chanos, Leon Cooperman and Richard Perry, just to mention a few. Closely-followed fund manager John Paulson is giving the lunchtime keynote, too. At last year’s event there were a bunch of different investment ideas and stock picks tossed around.
