Edward Lampert, the billionaire hedge-fund manager who controls Sears Holdings Corp. (SHLD), entered into a new agreement to continue to serve as the retailer’s chief executive officer. Lampert, 50, will earn a salary of $1 a year, effective as of Feb. 1. During the first three years of his tenure, he’ll participate in the company’s annual incentive plan with a target payout of $2 million a year, according to a regulatory filing. Lampert will also receive $4.5 million in Sears stock a year.
Aurelius Sues Energy Future Unit Directors Over Loans (Bloomberg)
Hedge fund Aurelius Capital Management sued directors of Energy Future Holdings Corp. and its chief executive officer, claiming loans made within the power producer harmed creditors. Texas Competitive Electric Holdings Co., a unit of Energy Future, is owed more than $725 million in additional interest after making loans to the parent company for billions of dollars, Aurelius said in a complaint filed yesterday in federal court in Dallas. “The loans did not reflect a fair transaction between the companies: No unaffiliated third party would have extended such loans,” Aurelius said. Energy Future, formerly known as TXU Corp., was taken over in a $48 billion deal in 2007 led by private-equity firms KKR & Co. (KKR) and TPG Capital.
Relative Value Now Largest Hedge Fund Strategy By AUM: JPMorgan (Barron’s)
Hedge funds’ total assets under management increased to $2.25 trillion at the end of last year, up from $2 trillion at the start of 2012, and some see the industry hitting new record highs in 2013 after a strong February. Yet not all funds are attracting the same kind of cash, and most investors are flocking to relative value funds. That’s according to new data from J.P. Morgan. Nikolaos Panigirtzoglou and his team note this week that new net inflow for last year was only about half of what investors poured into hedge funds in the prior year.
SAC Capital up 4 percent this year as probe continues (Reuters)
Hedge fund titan Steven A. Cohen‘s SAC Capital Advisors has gained about 4 percent this year, beating the industry average at a time the $15 billion fund is still very much in federal investigators’ crosshairs. An investor with the Stamford, Connecticut-based fund said the firm’s flagship portfolio had risen about 4 percent through early March. Another person familiar with SAC Capital’s performance confirmed the 4 percent figure.
ICE Said to Put Hold on Investor Swaps Clearing After SEC Rule (Bloomberg)
Intercontinental Exchange Inc. (ICE) has put on hold plans to clear some credit-default swaps for hedge funds and money managers after the U.S. Securities and Exchange Commission doubled the amount of collateral the traders need to post, according to two people familiar with the decision. Intercontinental, owner of the world’s largest credit-swap clearinghouse, and investment firms agreed to wait to begin clearing so-called single-name trades after the SEC’s March 8 decision made them too costly, said the people, who asked not to be named because the decision was private.
SEC Digging Into Fund Fees (The Wall Street Journal)
The Securities and Exchange Commission is closely scrutinizing the fees and expenses, including travel and entertainment, that hedge funds and private-equity firms charge to their investors. Many managers of hedge funds and private-equity funds—collectively called “private investment advisers”—had long been largely unregulated and therefore had less oversight in how they billed their investors.
Pound Gains as BOE Minutes Reveal Concern on Stimulus Impact (Bloomberg)
The pound rose for the first time in three days against the dollar after minutes of the Bank of England’s most recent policy meeting showed a majority of policy makers said more bond purchases may erode their credibility. Sterling pared its drop versus the euro as the minutes revealed most of the nine-member Monetary Policy Committee said more quantitative easing “might also lead to an unwarranted depreciation of sterling.” Gilts fell before Chancellor of the Exchequer George Osborne unveils his budget for the fiscal year ending March 2014. A government report showed jobless claims fell less than economists predicted last month. “The comments were more of a surprise than the actual vote,” said Neil Jones, head of European hedge fund sales at Mizuho Corporate Bank Ltd. in London.
Fortress hedge fund bets yen slide has further to run (Reuters)
The flagship hedge fund of Fortress Investment Group is betting on a further slide in the Japanese yen, predicting the new central bank governor in Tokyo will step-up the pace of monetary policy easing. The $3.2 billion fund has proved one of the most successful macro funds – funds which bet on big shifts in the global economy and which are among the best-known in the industry – returning almost 18 percent last year when many top names shied away from bold bets and struggled to make money.
Prominent entrepreneur says Goldman misrepresented debt fund (Reuters)
Richard Caruso, who launched Integra LifeSciences Holdings Corp in 1989, told Reuters he invested personal assets in a distressed debt fund Goldman Sachs Group, Inc. (NYSE:GS) launched in 2007, only to learn it was riskier than the firm and its advisers indicated in a preliminary pitch before the fund launched. Financial Industry Regulatory Authority (FINRA) arbitrators last week, rejected claims that Caruso raised in an arbitration filed against a unit of the Goldman Sachs Group Inc in 2009. The case, filed in the name of Caruso’s family investment vehicle, Athena Venture Partners LP. sought recovery of $1.4 million in losses from Goldman Sachs Group, Inc. (NYSE:GS).
Gottex Adds Frontier To Multi-Asset Biz. (FINalternatives)
Gottex will pay for the US$550 million firm with a combination of about 1.2 million Swiss francs in Gottex shares and further cash payments over the next two years, depending on Frontier’s performance. Frontier founder and CEO Michael Azlen will retain a “substantial” stake in his firm and will be named a senior executive in Gottex’s multi-asset business, which Frontier joins, in addition to retaining his role as head of Frontier, which will see no changes to senior management or its investment team, and which will continue to offer its current product range.
Hermes makes first hedge fund acceleration investment (Risk.net)
Hermes BPK Partners has teamed with Seattle-based private equity company Northern Lights Capital Group to create a hedge fund early-stage investment vehicle. Known as the Accelerator Fund, the vehicle has an initial $250 million from institutional investors to use to help start-up hedge fund managers grow. The fund’s first allocation is to the Taurasi Capital Master Fund, a long/short credit hedge fund run by Taurasi chief investment officer Mark Melchiorre.
Absolute Capital’s Homm Is Charged With Securities Fraud (Bloomberg)
The fugitive German hedge fund manager who more than five years ago fled the Spanish island of Mallorca with $500,000 hidden in his underwear and luggage was charged with securities and wire fraud. A federal grand jury in Los Angeles, California, charged Florian Homm, 53, in a 10-count indictment, U.S. Attorney Andre Birotte Jr. said today in an e-mailed statement.
Jefferson County Appeals Court Sets Mandatory Talk Dates (Bloomberg)
Jefferson County, Alabama, and creditors it is fighting in bankruptcy were ordered to meet with a court mediator, a routine process used to try to settle cases before they are argued in front of appellate court judges. The list of participants include the trustee for sewage system creditors owed about $3.2 billion, JPMorgan Chase Bank, bond insurers and a group known as the Ad Hoc Sewer Warrantholders. Those holders include hedge funds Brigade Capital Management LLC, Claren Road Asset Management LLC, Fundamental Advisors LP and Monarch Capital Master Partners LP.
Keystone XL pipeline debate rattles Massachusetts Senate race (Reuters)
A former hedge fund manager turned environmental activist who opposes the Keystone XL pipeline has waded into the Massachusetts U.S. Senate race, threatening to undermine a pledge by the two Democratic candidates to reject outside money. California billionaire Tom Steyer has called on Democratic Representative Stephen Lynch to abandon his support for the proposed Keystone XL pipeline, which would transport crude from Canada’s oil sands to refineries in Texas.
