Editor’s Note: Related tickers: Tesla Motors Inc (NASDAQ:TSLA), Focus Media Holding Limited (ADR) (NASDAQ:FMCN), Acme Packet, Inc. (NASDAQ:APKT), Penn National Gaming, Inc (NASDAQ:PENN), H.J. Heinz Company (NYSE:HNZ), Robbins & Myers, Inc. (NYSE:RBN), Dell Inc. (NASDAQ:DELL), Apple Inc. (NASDAQ:AAPL), JPMorgan Chase & Co. (NYSE:JPM)
Billionaire investor George Soros has struck back at one of Germany’s top economists for distorting his arguments on Germany’s role in the euro zone. Hans-Werner Sinn, president of the influential Ifo Institute for Economic Research and a member of the German economic ministry’s Advisory Council, said last week that George Soros was “playing with fire” by calling on Germany to exit the euro zone if it continues to block the introduction of Eurobonds. Sinn said mutualization of euro zone sovereign debt would boost support for the newly founded euro-skeptic “Alternative for Germany” party and could spell the end of the single currency.
Former MICG Investment CEO takes the stand in federal court (DailyPress)
The former head of a Newport News brokerage took the stand Monday to say why the hedge fund he managed had a large stake in a solar panel company. Jeffrey A. Martinovich, the former CEFO of MICG Investment Management, is facing federal fraud charges as prosecutors argue during the trial that he sought inflated estimates of a solar company’s value to achieve gains for the hedge fund and increase the incentive fees that MICG would collect. Martinovich countered that argument to say he simply believed in the solar panel company that later collapsed into bankruptcy and hadn’t received negative company information to share with investors. MICG also collapsed in May 2010.
ArbitrOption’s event driven fund up almost 39% YTD as hedge fund strategy generally enjoys positive quarter (Opalesque)
A small U.S.-based event driven fund outperformed its peers this quarter, just as the event driven strategy generally enjoyed a positive first quarter. Furthermore, many agree that the outlook for this strategy this year is bullish. ArbitrOption’s event driven strategy rose 38.97% in the first quarter of 2013, compared to the S&P500’s 10% and the Dow Jones Credit Suisse Event-Driven Index’s return of 4.78%. ArbitrOption’s strategy is up 487% since its August 2009 inception. Heath Winter, ArbitrOption’s managing partner and portfolio manager, explains to Opalesque that the top five contributors to ArbitrOption’s outperformance in Q1 were positions in Acme Packet, Inc. (NASDAQ:APKT), Focus Media Holding Limited (ADR) (NASDAQ:FMCN), Penn National Gaming, Inc (NASDAQ:PENN), H.J. Heinz Company (NYSE:HNZ), and Robbins & Myers, Inc. (NYSE:RBN).
India hedge funds struggle in competitive market (Opalesque)
Indian hedge fund managers are struggling to attract investors but hope to succeed where their much larger foreign counterparts don’t, reports India Times, citing some local fund managers who produce double-digit returns. In a nation where investors prefer stocks, local hedge fund managers, who enjoy the advantage of first-hand information on the local market and the lack of foreign currency exposure, face a huge challenge to convince investors to shift to an unfamiliar investment style (such as long/short equity) and to high fees.
Paulson Leads Hedge-Fund Lobby Push to Privatize Fannie (Bloomberg)
Hedge funds including Paulson & Co. Inc. are pushing Congress to abandon plans to liquidate Fannie Mae (FNMA) and Freddie Mac as investors buy up preferred stock that has long been considered worthless, according to people with knowledge of the discussions. The improving finances of the two government-owned mortgage companies have kindled hopes among shareholders that they could be revived as private firms. Even as lawmakers from both parties and U.S. housing officials say that won’t happen, preferred shares of Fannie Mae have more than doubled in price since early March. They closed at $4.75 yesterday.
Indiana Public Retirement System invests $365 million in hedge funds (PIOnline)
Indiana Public Retirement System, Indianapolis, at a meeting April 26 announced a total of $365 million in new absolute-return hedge fund investments the $27.1 billion pension fund made since March 1, according to an investment report presented at the meeting. Commitments of $100 million each were made to Emerging Sovereign Group, which runs an emerging markets long/short equity fund; MKP Capital Management, for a long/short structured credit fund; and Kepos Capital for its Kepos Macro Fund. Oxford Asset Management was given $65 million for its quantitative equity market-neutral fund. The commitments to all but the Kepos fund were made on March 1; the Kepos commitment was made April 1.
Firm Seeks $39 Million From Convicted Ex-Employee (WSJ)
Diamondback Capital Management LLC is seeking to recoup $39 million in legal fees and compensation from a former hedge-fund manager convicted of insider trading last year. Todd Newman, once a Diamondback portfolio manager, was convicted in December of making improper trades based on corporate secrets about Dell Inc. (NASDAQ:DELL) -0.07% and other technology companies. He is set to be sentenced Thursday. As part of his sentencing, Diamondback, a Stamford, Conn., fund, is seeking to recoup legal expenses associated with its efforts to assist the government’s broad insider-trading probe, including responding to government subpoenas and turning over more than four million documents. It is also asking to recoup a quarter of Mr. Newman’s pay in the three years he was with the firm.
Tesla Is The Next Apple, And It’s Going To $200/Share (BusinessInsider)
Last week, electronic car maker Tesla Motors Inc (NASDAQ:TSLA) announced a bunch of changes to its service and warranty policy that will make it easier for customers to take care of their Model S cars. Since then, the stock is up 5.73%, and it’s at new 52-week highs. This is a headache for a ton of people on Wall Street as Tesla Motors Inc (NASDAQ:TSLA) is a really popular short. And as the bears are heading into their caves, the bulls are coming out to explain their side of the story. Investment firm Longboard Asset Management kindly sent us their long thesis on Tesla Motors Inc (NASDAQ:TSLA). They believe the stock will go to $200/share in 5 years (it’s currently just below $55), that the shorts are going to get clobbered, and that the brand has the power to be the next Apple Inc. (NASDAQ:AAPL).
White Said To Favor Quick Action On Hedge Fund Advertising (Finalternatives)
The Securities and Exchange Commission’s new chairman seems more eager to pass new rules allowing hedge funds to advertise than either of her predecessors. While the regulator has received more than 200 comment letters about the proposal to end the 80-year-old ban on hedge fund marketing, Mary Jo White does not seem inclined to make major changes to the draft regulation formally introduced in August. Instead, White reportedly hopes to add investor protections to the rule later, Bloomberg News reports. The rule was mandated by last year’s JOBS Act, and the SEC was given until this past July to produce a final rule. But it has failed to do so, and the maneuvers around the rule have provoked controversy and much grumbling from both sides.
Paulson, Hedge Funds Could Be Burned By Ally Mortgage Deal (Finalternatives)
Ally Financial appears ready to move forward with the reorganization of its mortgage business—without the support of its hedge-fund creditors. Residential Capital is reportedly close to a deal with some of its creditors that could cut out Paulson & Co., the New York Post reported. The lender last week offered to increase its payment to those creditors at mediation. A deal could allow ResCap to file a reorganization plan in federal bankruptcy court by a May 7 deadline, and could allow Ally to distance itself from ResCap’s troubles. According to the Post, Ally does not believe it needs the approval of Paulson’s creditor group to win the court’s approval. Instead, it has been focused on creditors that include monoline insurers and mortgage-backed securities. Paulson and Appaloosa Management in January urged Ally to back ResCap to ensure a full repayment of RecCap’s debts, threatening litigation if it chose not to do so.
How to Stop Lying (HuffingtonPost)
I lied to him to get a job. The hedge fund manager asked me how much money I had in the bank. I had ZERO but I said, “a million dollars”. This was in 2002. In the prior two years I had lost all the money I ever made and my home. Now I was broke. He said, “how can you afford to live on that?” Which strikes me as ludicrous now but I felt every blood cell in me turn upside down in shame then. I felt he would think it was courageous if I threw the question back at him. “Well, how much money do you have?” He said, “one hundred million dollars.” Who knows? One friend of mine told me something, “you can never tell how much money someone has until they file for bankruptcy.”
CBS Introduces Veeven A. Cohen To The World (DealBreaker)
Hedge fund honcho Steve Cohen made the jump from Wall Street to Main Street this week when a character loosely based on him appeared on a CBS crime drama. In a story ripped from the headlines, Thursday night’s “Person of Interest” centered on a hedge fund’s insider-trading scandal gone awry. The show’s hedge fund was called VAC Capital. Cohen’s firm is SAC Capital. “I almost fell off the couch laughing,” one viewer told The Post about the show’s thinly veiled reference to Cohen’s $16 billion fund. There were more similarities. The show centered on a doctor who told a young trader at VAC that a drug trial he was overseeing was “about to fail.” The trader earned VAC $500 million on the insider tip, which he called “black edge.” SAC’s traders have also reportedly called such tips “black edge.”
Carl Icahn stops Atlantic City Trump Plaza Hotel sale (GamingToday)
The man responsible for stopping the sale of the Trump Plaza Hotel and Casino in Atlantic City to a California group is billionaire investor Carl Icahn. It is Icahn who is the senior lender to the property and as such has to agree to the sale price. The $20 million offered by the Meruelo Group is too low, he said. Just what would be a fair price? Icahn hasn’t said. He holds the mortgage for both Trump Plaza and Trump Taj Mahal Casino Resort, both in Atlantic City. The mortgage was said to total $289 million.
Another Executive Leaves JPMorgan, Raising Questions as Vote Nears (NYTimes)
In the depths of the financial crisis, Jamie Dimon, the chief executive of JPMorgan Chase & Co. (NYSE:JPM), and his top lieutenants were hailed as “The Survivors” on a Fortune magazine cover. Today, of the 15 executives featured in that article, only three remain — and one of them has been demoted. The most recent high-level exit at the bank — that of the co-chief operating officer, Frank J. Bisignano, regarded within JPMorgan Chase & Co. (NYSE:JPM) as something of an operational wizard — has heightened worries about the persistent executive turnover at the bank and raised fresh questions about who is ready to succeed Mr. Dimon one day.
