Hedge-fund manager Paul Sinclair is the latest casualty of Europe’s sovereign-debt turmoil, almost six thousand miles away from the epicenter of the crisis. Sinclair, who is based in Los Angeles, is liquidating his $458 million health-care equities fund, Expo Capital Management LLC, after five years, as political decisions made on the other side of the globe have undermined his stock picks and spurred losses for a second year.
Former Citadel, Highbridge Manager Plans North Asia Hedge Fund (Bloomberg)
Toby Bartlett, a former manager at Citadel LLC and Highbridge Capital Management LLC, plans to start his own North Asia-focused stock hedge fund as soon as next month, according to a document given to potential investors. The market-neutral equity long-short fund from Bartlett’s Hong Kong-based Arena Capital will be focused on domestic-demand industries in Japan and South Korea, according to the document obtained by Bloomberg News. Bartlett declined to comment on plans for the fund in an e-mailed response to questions.
Ex-Silicon Valley hedge fund manager in federal fraud trial (Mercurynews)
A former Silicon Valley hedge fund manager is on trial in San Jose federal court, accused of bilking local investors out of millions of dollars in a wide-ranging scam in which he lured clients with phony claims of backing from prominent international law firms and well-known auditors. In a jury trial set to resume Thursday, Albert Ke-Jung Hu faces seven counts of wire fraud for his alleged role in a scheme prosecutors say was “a facade (he) fabricated to lure victim-investors to invest in his funds.”
Wall St. insider trading trial nears end (CBC)
A former Goldman Sachs board member fed secrets about the banking giant to a close friend and fellow Wall Street heavyweight who used the information to make a killing on the stock market, a prosecutor said Wednesday in closing arguments at the board member’s insider trading trial. Rajat Gupta “abused his position as a corporate insider,” Assistant U.S. Attorney Richard Tarlowe said in federal court in Manhattan.
Dimon Faces Senators Over JPMorgan’s ‘Hedge Fund’-Style Trading (SFGate)
U.S. senators preparing to hear testimony from JPMorgan Chase & Co. Chief Executive Officer Jamie Dimon said they will press him to explain what led to more than $2 billion in trading losses and will be looking closely at whether they need to tighten exemptions in the so-called Volcker rule. U.S. Senator Jeff Merkley, the Oregon Democrat pushing for stronger restrictions on banks’ bets with their own money through proprietary trading, said this morning that JPMorgan took too much risk through a strategy the company described as hedging.
Former hedge fund boss’s returns questioned (Moneyweb)
On the face of it, former hedge fund boss Herman Pretorius and his company, Abante, have delivered excellent returns for his investors – in the region of 20% a year for the past five years. This would rank him among the top money managers in the country. Pretorius has an unknown number of relatively wealthy private investors. Those known to Moneyweb are typically from smaller towns with no special expertise in finance.
Mindich’s Eton Park Says New Credit Fund Raised $401 Million (Bloomberg)
Eton Park Capital Management LP, the hedge fund founded by Eric Mindich, raised more than $400 million for a hedge fund that will invest in trust preferred securities and collateralized debt obligations. Credit Opportunities Fund II LP and its offshore affiliate closed on May 1 with about $401 million in capital commitments, the New York-based money management firm said in an amended investment adviser registration filed last month with the U.S. Securities and Exchange Commission.
New Canadian ETF the first to tap into U.S. hedge funds — but it’s not cheap (Financialpost)
Canada’s first exchange-traded fund tracking the performance of top-ranked U.S. hedge funds gives retail investors in the country access to some of the best minds and alternative strategies in the business, but it’s not quite the real thing and it doesn’t come cheap compared to other ETFs, analysts say. The Horizons Morningstar Hedge Fund Index ETF launched in April is a low-volatility alternative for investors looking to expand their market exposure beyond stocks and bonds that should usher in a wave of similar hedging products that were previously reserved for the wealthiest corners of the market.
Ballmer, Nordstroms part of Seattle arena investor group (Seattletimes)
The announcement Wednesday that two names synonymous with Seattle business and civic identity — Ballmer and Nordstrom — are part of an investment group to build a new Seattle sports arena buoyed supporters and eased some concerns of local politicians. But the presence of Microsoft CEO Steve Ballmer and Erik and Peter Nordstrom among the investors joining San Francisco hedge-fund manager Chris Hansen to build a proposed $490 million arena in Sodo cuts two ways, say city- and county-council members, who must still approve the deal for it to take effect.
Judge: Level Global Deserves XL Insurance Coverage (Courant)
A Manhattan federal judge has ordered an insurer to keep advancing legal fees of a hedge fund implicated in a criminal insider trading probe, saying the insurer was not excused because a fund analyst knew there might be a fraud when the policy was taken out. Wednesday’s decision by U.S. District Judge Paul Engelmayer is a defeat for XL Specialty Insurance Co., which had sought to rescind its $10 million policy for Level Global Investors LP and recoup more than $7.3 million already advanced, including to co-founder Anthony Chiasson.
Banking Vets Plan Launch of HF (Hedgefund)
A proprietary trading firm run by Credit Suisse and Goldman Sachs veterans is preparing to open its first hedge fund in July. HFMWeek reported that Odin Capital Management’s offshore fund will commence with between $4 million to $8 million in assets under management followed by the onshore launch in the U.S. later in the summer.
Family fortunes (HFMWeek)
Unable to compete with larger institutional investors in the hedge fund arena, HFMWeek reveals how family offices are using their size and agility to make their own way. Once considered to lead the way in hedge fund investment, family offices have found competition at the top increasingly tough in recent years, as the growing clout and sophistication of institutional investors has come to the fore. But while larger investors continue to favour ‘franchise’ brands, these more nimble and adventurous investors are using their size and experience to their advantage and, as a trio of panelists told the audience at HFMWeek’s US breakfast briefing at the end of last month, family offices remain more open-minded to new managers and niche strategies than many of their larger counterparts.
A Former Fund CEO Pioneers Alts (MFWire)
A former CEO of Pioneer Investments just took over operations for an alternative investments manager. Today Advent Capital Management president and chief investment officer Tracy Maitland revealed the hiring of Osbert Hood as chief operating officer, succeeding Ed Johnson. Hood served as chief operating officer of Pioneer from 2000 to 2003 and CEO and president from 2003 to 2006. Later he served as chairman and CEO of MacKay Shields, an institutional asset manager, before stepping down two years ago.
State Street: A Possible Acquisition Of Goldman’s Hedge Fund Business Makes Strategic Sense (Citybizlist)
Shares of State Street (STT) are among the few gainers in today’s trading session. The financial holding company focused on investment servicing and investment management for institutional clients saw its shares rise 1.5% after a weekend report in the Financial Times suggested the company looks to acquire the hedge fund activities of Goldman Sachs (GS). A Possible Deal Nothing has been confirmed yet as spokespersons of both companies declined to comment on a possible deal. According to the Financial Times a deal in which State Street will acquire the accounting, valuation and risk management functions of the hedge fund business is in a “late stage”. Reportedly the prime brokerage division, the clearing facility for hedge funds, would be excluded in a possible deal. Goldman’s hedge fund business has about 250 employees servicing about 500 funds.
Paulson & Co Supports Fresenius’s Offer For Rhoen-Klinikum (Foxbusiness)
Hedge fund manager Paulson & Co. Inc. said Wednesday it supports health-care company Fresenius SE & Co KGaA’s (FRE.XE) proposed takeover of German private hospital operator Rhoen-Klinikum AG (RHK.XE), in which Paulson holds a significant stake. The endorsement comes after Rhoen-Klinikum’s board recommended its shareholders accept Fresenius’s offer. Paulson owns 5.04 million shares in Rhoen Klinikum, or 3.6% of the company’s over 138 million outstanding shares.
Hedge Funds and Risk Transparency Make Strange Bedfellows (Qfinance)
Imagine a random collection of hot shot “boutique” (i.e small) fund management houses, each doing its own thing in its own, jealously guarded way. Then, over the top of this, layer two things, the first being the massively increased appetite for regulation from the political class and the second, investor demand for more transparency about risk. The result, from the fund management house’s perspective is a very contradictory, but unignorable, confluence of pressures. Hedge funds have traditionally been all about getting investors to invest fairly chunky sums on the back of promises of returns that dwarf what can be achieved by traditional, long only equity funds. Typically the fund’s strategy was a “black box”, described only by an opaque phrase or two, such as “statistical arbitrage” and investors bought in not because they had a clue about what the fund was doing or what risks it was running, but because it could demonstrate either a track record of mouth watering returns, or, in the case of newly launched hedge funds, the promise of out-performance, based perhaps on the reputation of the manager or managers involved.
BlackRock Talks Alternatives (Hedgefund)
Remember the old slogan, “When E.F. Hutton talks, people listen.” BlackRock did as it gathered members of the media to hear various executives talk about the $3.7 trillion firm’s alternative investments. Its alt portfolio has $110 billion in assets under management includes hedge funds with $28 billion and fund of hedge funds with $19 billion.
Buffett guests realize there is no free lunch (Chinadaily)
Seat at the table with ‘Oracle of Omaha’ is not cheap but it is for a good cause, Ma Liyao reports in Beijing. Having hosted his annual charity “power lunch” for high-flying, well-heeled investors for the past 13 years, Warren Buffett may be forgiven for not remembering the name of each and every guest, despite their huge outlay to gain a seat at the table – this year’s top bidder shelled out a cool $3,456,789 for the pleasure of spending three hours in the company of the chairman of the investment house Berkshire Hathaway.
Harvest Northstone JV attracts managed account interest as launched confirmed (HFMWeek)
Harvest Northstone Capital, the credit hedge fund platform co-founded by Deutsche Bank’s former head of securitised products Asia and China’s second-largest asset manager, is attracting interest from investors keen on separate managed accounts, HFMWeek has learned. Details of the firm’s creation, originally revealed as an HFMWeek exclusive back at the end February, were officially announced Tuesday, confirming the names of the firm’s partners and senior staff.
Opalesque Round Table Series JAPAN (RFPConnect)
When it comes to investing into Japan, many global investors believe that “nobody can make money in Japan.” But the reality is that this attitude makes it easier for the remaining players to make money in this market. While long-only investors in Japan, including domestic pension funds, are withdrawing from the markets, the hedge fund space continues to make money. As everywhere else, the hedge fund space has also contracted in Japan, however the opportunity set has grown at the same time.
Reed Smith, BuckleySandler, Nelson Mullins: Business Of Law (Bloomberg)
Skadden Arps Slate Meagher & Flom LLP represented Upsher-Smith Laboratories Inc., which agreed to buy Proximagen Group Plc (PRX), a U.K. biotechnology company pursuing treatments for central nervous system diseases, for as much as 356.8 million pounds ($554.7 million). Skadden’s London mergers and acquisitions partners included Michael Hatchard and Scott Hopkins. Corporate finance partners David Goldschmidt in New York, and Jim McDonald in London, worked on the deal, as did London partners Clive Wells, banking and Tim Sanders, tax.
Private Equity Has Too Much Money To Spend On Homes (Bloomberg)
Funds planning to invest more than $6 billion to buy and rent foreclosed homes are finding it easy to raise money. The difficulty is spending it. The number of low-cost foreclosed homes coming to market has dropped, bulk sales have been slow to materialize and prices are recovering in markets such as Phoenix, making it hard for private-equity firms, hedge funds and pension systems to buy as many homes as they need.
Danoff’s Contrafund Is Best Of Biggest: Riskless Return (Bloomberg)
Fidelity Investments’ William Danoff meets with executives from as many as 1,000 companies a year, jots down tickers in a tattered old notebook to identify what he calls “best of breed” companies and shuns an index-tracking approach to managing the $79.5 billion Contrafund. That has helped Danoff’s fund produce the best risk- adjusted return among the 10 largest actively managed U.S. stock funds over the past decade, according to the BLOOMBERG RISKLESS RETURN RANKING. Danoff steered the fund to the biggest gain over the past 10 years, and achieved that with less volatility than all but one fund in the group, according to the Bloomberg ranking.
Polar Capital profits rise after bumper inflows (Reuters)
Fund firm Polar Capital posted higher profits after its strongly-performing funds attracted more than $1 billion of net client cash over the past year, and its CEO pointed to further inflows despite investor caution over the euro zone debt crisis. The London-based firm, which has been winning clients to its mutual funds at a far greater rate than investors have exited its hedge funds, said pretax profit for the year to end-March rose 5 percent to 9.6 million pounds ($14.9 million), roughly in line with analyst forecasts.
AOL, Starboard set for board battle at annual meet (Reuters)
Activist hedge fund Starboard Value may gain at least one of the three seats it is seeking on AOL Inc’s board during the Internet company’s annual shareholder meeting in Boston on Thursday, two top shareholders said. Jeffrey Smith, the founder and CEO of Starboard is one of the nominees up for an AOL board seat, and a person close to the matter said Smith will be at the shareholder meeting.
Here’s What You’d Learn If You Were A Kid In Mike Novogratz’s Wrestling Program (Businessinsider)
Hedge-funder Mike Novogratz may be on to something. The Princeton wrestler turned Fortress Investment Group Principal is the Chairman of Beat the Streets, a relatively new initiative designed to expose New York City’s youth to wrestling.
Ka Shao Lee of Cavenaugh Capital – from coffee boy to CIO (Opalesque)
Ka Shao Lee had an unique start to his career in hedge funds – his first exposure to trading was as a coffee boy on the Asian trading floor for JP Morgan. In this role, he literally stood behind the traders as they worked, fetching coffee and also learning on the job. Over time he moved through the ranks, and now serves as the Chief Investment Officer at Singapore-based Cavenagh Capital where he leverages his experience and background as a statistician to trade the Asian markets. Lee was recently interviewed by Matthias Knab for Opalesque TV. He explains that many events within the Asian markets are mispriced. The discrepancy is the direct result of monetary policy in the region serving as more of a signaling tool than a pure policy. As such, managers like Lee are able to create derivative instruments that exploit these opportunities. Using his background as a statistician he examines the probabilities around market events and makes bets on their likely direction.
TCI ultimatum to Coal India (Business-Standard)
UK-based hedge fund, The Children’s Investment fund, (TCI) on Wednesday said it would sue Coal India Limited (CIL) and its directors for damages if they did not take steps to bring coal prices on par with market levels. The fund, in a letter to Coal India Chairman Narsing Rao, said the supply of coal at below market prices was a corrupt practice on par with allocation of coal blocks. “We regard the conduct of the Government of India in relation to the disposal of coal blocks as having very substantial parallels with its unlawful and improper interference in the affairs of Coal India, whereby it has compelled CIL to enter into fuel supply agreements for the supply of coal at prices well below markets,&” Oscar Veldhuijzen, partner, TCI, said in a letter addressed to Rao.
