Billionaire investor and philanthropist George Soros made some bold statements in an interview with the Financial Times, saing that Germany must either lead the Eurozone out of recession or leave the currency union in order to save the future of Europe. He advised Germany to boost growth, create a joint fiscal authority, and guarantee common bonds if it wanted to lead the Eurozone out of recession. ‘Lead or leave: this is a legitimate decision for Germany to make,’ Soros said.
Paulson cuts losses in August-reports (InvestmentWeek)
John Paulson, the billionaire hedge fund manager, is reported to have pared losses in August after a difficult year for his strategy. Paulson has reported increases in most of his funds in August as rising stock markets lifted the value of holdings, according to people briefed on the returns.
Stock ratings aren’t much better than hot tips (MarketWatch)
A hot stock tip can be a bum steer as easily as it can be a big winner, but most investors would say that a solid “investment ranking” should never lead them astray. …For proof, there’s a fascinating case involving investment researcher Morningstar Inc. and the perception of the company’s powerful ratings system. While the case involves a hedge fund — and Morningstar’s hedge-fund research database is completely different from its traditional fund research — the underlying concepts should get investors everywhere to thinking about the information they rely on to make decisions.
Hedge fund manager Nikolai Battoo charged for hiding losses by SEC, CFTC (Opalesque)
The U.S. Securities and Exchange Commission (SEC) filed charges against hedge fund manager Nikolai Battoo for allegedly bloating his impressive performance throughout the 2008 global financial crisis and exaggerating the value of the assets he manages and at the same time concealing major losses from investors. In U.S. District Court for the Northern District of Illinois, the SEC last week obtained a freeze order against the assets of Battoo and two of his companies, BC Capital Group S.A. based in Panama and BC Capital Group Limited based in Hong Kong, to prevent additional harm to U.S. investors. At the same time, the SEC charged Tracy Lee Sunderlage, an unregistered broker-dealer who was banned from the industry in a previous SEC enforcement action, for his involvement with Battoo’s investment program.
Hedge funds shun risk-taking practice, as do their investors (InvestmentEurope)
The stereotype of a hedge fund manager is of a gambler on markets, a high risk taker. At the moment, however, the reality is flying in the face of that archetype. Then you read industry biographies of years past, the picture is of managers betting big, all on ‘Black 27’ -or whatever number they chose at the time.
Investors cash-in on land deals as U.S. housing picks up (ChicagoTribune)
From the outskirts of Las Vegas to the coast of California, stretches of undeveloped land in some of the most depressed housing markets in the U.S. are in high demand. Money managers such as BlackRock Inc, hedge fund Angelo Gordon & Co and real estate investment firm Starwood Capital, are beginning to cash-in on so-called shovel-ready residential land-tracts with most of the pre-construction and zoning approvals already in place.
Avalon Lake Partners spins out from WTP Advisors to focus on alternatives (Opalesque)
New York-based Avalon Lake Partners, is launching today after spinning out from New York- based tax advisory firm, WTP Advisors, where it served as the capital markets division. Led by industry veterans Lou Sala, Jay Goldstein, and Ilicia Silverman, Avalon Lake will focus solely on providing a broad set of advisory services to the alternative asset management industry, namely hedge funds, private equity and family offices.
Center Valley’s ‘Mini Madoff’ Sentenced for Bilking Millions from Investors (UpperSaucon)
In front of victims and family, Chief U.S. District Judge William Steele sentenced Anthony ‘A.J.’ Klatch II to five years in a federal penitentiary in August. ?Klatch was arrested in August 2011 after a grand jury in Alabama indicted Klatch on fraud charges for a multi-million dollar scam that wiped out investers life-savings throughout the south. Compared to Bernie Madoff in several articles, Klatch took over $2.3 million from eight investors to “invest” in a hedge fund created by Klatch and his partner, Timothy Sullivan (now deceased).
Nine confident of re-financing (SkyNews)
There are reports a group of distressed debt hedge funds in the US are closing in on a takeover of Nine Entertainment. The Financial Review reports the plan follows Goldman Sachs’ proposal to convert part of Nine’s $3.8 billion debt into equity. The Financial Review says Goldman Sachs is planning to put the proposal to Nine’s lenders, which includes hedge fund Oaktree Capital and Apollo Global Management.
EURUSD & The Shift from Mean Reverting to Fractal Based Markets (ForexTV)
If a hedge fund tried to game a central bank today, as George Soros’ Quantum Fund did to the Bank of England in 1992, the likely scenario might be Central bankers getting together to determine the size of the funds position, then calculating how much of a currency move was needed to wipe out two-thirds of that fund, and moving the currency accordingly until a climactic move incinerated the speculators and allowed the central bankers to exit their own positions. If you think this scenario is an exacerbation, or feel ECB honcho Mario Draghi got lucky when his warning earlier in the summer that “it is pointless to short the Euro”, proved prophetic, you may want to think again.
Custodians eye first cracks in Chinese market (eFinancialNews)
Detailed wording of the scheme – known as the Qualified Domestic Limited Partner, or QDLP, scheme – has yet to be confirmed, but custodians involved in discussions with the country’s main regulator, the China Securities Regulatory Commission, have said that it will permit a selected group of foreign hedge funds to raise renminbi assets in Shanghai, the Chinese mainland’s biggest financial centre. The funds will then be convertible into other currencies to make investments overseas on behalf of Chinese clients. The initiative was proposed in March by the Shanghai Municipal Office of Financial Services, a local watchdog.
US orders hedge fund mogul to pay $92.8m penalty (Nation)
Disgraced hedge fund manager Raj Rajaratnam, already sentenced to prison for 11 years, was ordered Tuesday to pay almost $93 million dollars as part of an insider trading case brought by financial regulators.A New York federal judge ordered Rajaratnam to pay the $92.8 million in a case brought by the Securities and Exchange Commission, which stemmed from the same charges in the criminal case. This was the largest penalty ever assessed against an individual in an SEC insider trading case, the SEC said in a statement.Rajaratnam was accused by the SEC of massive insider trading, with various schemes cumulatively generating more than $52 million in illicit gains.“The penalty imposed today reflects the historic proportions of Raj Rajaratnam’s illegal conduct and its impact on the integrity of our markets,” said Robert Khuzami, Director of the SEC’s Division of Enforcement.
US close: Hedge-fund managers left in the dust? (IFAMagazine)
New York equities finished the day slightly higher, thanks to a late-session upwards push, despite a profit-warning out of predominantly PC chip-maker Intel and after a weaker than forecast monthly employment report. The latter has led to increased market chatter and speculation regarding the possibility of further Fed action -QE3 that is- to fend off downside-risks to the economy. A few commentators seem a bit wary of forecasting another round of QE3 for the Fed’s next meeting however; although at the very least today’s data is thought to have moved it closer.
Hedge fund’s risky ties to Revel casino shine light on N.J.’s investing habits (NJ)
Gov. Chris Christie isn’t the only one betting on Revel. A hedge fund that manages $200 million in New Jersey public pension money also has a financial stake in Revel, Atlantic City’s newest and sleekest casino hotel, a Star-Ledger review of records from the state Division of Gaming Enforcement and Treasury Department shows. It’s a gamble that has put a share of public workers’ retirement income at risk if the struggling resort fails.
Ministry investigates Soros link in Suaram funding (TheStar)
The Domestic Trade, Cooperatives and Consumerism Ministry is investigating whether an American non-governmental organisation allegedly funding Suara Rakyat Malaysia (Suaram) is linked to currency speculator George Soros. Minister Datuk Seri Ismail Sabri Yaakob said the NGO was one of two based in the United States allegedly contributing a huge amount of funds to Suaram.
Soros will surprise Merkel, Barroso (NEurope)
Tomorrow, Monday the 10th, George Soros has planned to make a major intervention in European affairs by communicating an in-depth analysis as to the causes of the current crisis, which besides economic are political, social and systemic. Soros’ analysis will be followed by suggestions and recommendations, which are unlikely to make many happy, in particular the Germans. …On Wednesday, Jose Barroso will address Europeans with a major speech where he will announce the unification of the European banking system, or in real terms he will announce the supervision of European banks.
Marc Faber: Why Industrial Commodities Will Continue To Fail (DBB, JJC, RIO) (ETFDailyNews)
Marc Faber, who shares the moniker “Dr. Doom” with Nouriel Roubini, has made a name for himself not only from his intelligence, but also from his outspoken and often controversial views. Faber has recently predicted a 100% chance of a U.S. economic recession and says that he is simply waiting for things to fail. To put things lightly, he is something of a bear, as he often points out the faults of the economy or singles out failing sectors. It seems as though he has done it again, but this time with industrial commodities, namely industrial metals [for more industrial metals news and analysis subscribe to our free newsletter].
Euro Zone Will Pay ‘Terrible Price’: Jim Rogers (CNBC)
A “terrible price” will be paid for the euro zone crisis eventually, whether the European Central Bank (ECB) embarks on mass bond purchases or not, Jim Rogers, investor and co-founder of the Quantum Fund with George Soros, told CNBC Monday. Rogers said: “These guys have been saying the same old garbage for a long time. It’s not a game-changer – it’s good for the market for maybe a month. The debt keeps going higher and higher and eventually we’ll all going to pay a terrible price.”
TIFF Movie Review – Capital (2012) (FlickeringMyth)
When the CEO of a European bank becomes ill he passes the executive reins to his protégé who suspects that he is merely a sacrificial pawn in a larger financial conspiracy. What the board members soon come to realize is that their puppet has every intention of holding onto his newfound position. Complicating matters is a U.S. hedge fund led by Dittmar Rigule (Gabriel Byrne) which wants to gain control of the financial institution. Duplicity reigns supreme in the relationship between Rigule and the rookie CEO Marc Tourneuil (Gad Elmaleh); an intricate web of deceit is weaved by both men as they attempt to outwit one another.
Xstrata shareholder Knight Vinke turns down Glencore’s sweetened bid (Financial-News)
US hedge fund Knight Vinke Asset Management LLC, a shareholder of Xstrata PLC (LON:XTA), said it had turned down the improved takeover offer from Glencore International Plc (LON:GLEN), asking the board of the British miner to push for a higher price. On Friday, Xstrata said that the Swiss commodities trader had proposed to raise its takeover offer to 3.05 new Glencore shares for each Xstrata stock, from 2.8 new Glencore shares for each Xstrata share proposed in February.
FMA Pyne Gould raid unlawful, says High Court (NZHerald)
Pyne Gould Corp and its trustee unit Perpetual Group are weighing up their options after the High Court ruled the Financial Markets Authority’s raid for information was unlawful, though the market watchdog didn’t have to return the information. …Pyne Gould’s shares were unchanged at 30 cents, having shed 12 per cent this year. More than three-quarters of the company is held in a vehicle controlled by managing director George Kerr and US hedge fund Baker Street Capital.
SAC Capital ups Stake in Vera Bradley, Inc. to 6% (ValueWalk)
According to a 13-D filed with Securities and Exchange (SEC) late on Friday, Steven Cohen’s SAC Capital Advisors, has increased its holding in stake Vera Bradley, Inc. (NASDAQ:VRA) to 5.8% . Vera Bradley, Inc.has a market cap of $870 million, based on a closing price of $21.37 on Friday. The 5.8% stake or 2,338,200 shares purchased by Steve Cohen’s hedge fund, equals approximately 50 million. SAC Capital previously held 189,320 shares of the Fort Wayne, Indiana based company, as of June 30th 2012.
Hedge fund money in commods at 1-year high (Reuters)
The money held by hedge funds and other big speculators in commodities has hit a one-year high, with markets rallying in anticipation of U.S. and European economic stimulus efforts, trade data showed on Friday. Led by surges in gold, oil and grains prices, the speculators known by the regulatory moniker “managed money” increased their bullish net long positions to above $111 billion (69 billion pounds) in the week to Sept 4, according to Reuters calculations of data issued by the U.S. Commodity Futures Trading Commission.
Japan’s Nikkei dips as yen firms on Fed expectations (Reuters)
Japan’s Nikkei share average slipped on Monday, led by exporters as the yen strengthened on mounting expectations that the Federal Reserve would launch further stimulus measures after weaker-than-expected U.S. jobs data. Expectations of another round of quantitative-easing bond purchases by the Fed weighed on the dollar against the yen, hurting Japanese exporters’ competitiveness even though more stimulus could help boost demand for their products. The Fed will next hold its policy meeting on September 12-13.
Icahn urges Navistar to offer board seats to shareholders (Reuters)
Billionaire investor Carl Icahn slammed Navistar International Corp for naming a new chief executive without consulting large shareholders, and urged the company to offer four board seats to shareholders immediately. Navistar board’s recent decision to appoint Lewis Campbell as chairman and interim CEO was “worse than ill-advised”, since it did not discuss the decision with Icahn and three other shareholders who collectively own nearly 60 percent of the company, Icahn said in an open letter to the board on Sunday.
Spirit Realty to raise up to $487 mln in IPO (Reuters)
Real estate investment trust Spirit Realty Capital Inc plans to raise up to $487 million in an initial public offering of common stock. The company, which is backed by Macquarie Group (US) Holdings and hedge fund TPG-Axon among others, said it plans to sell 27.06 million shares at between $16 and $18 each.
Obama or Romney? Investors Play Favorites. (WSJ)
With the political conventions over and the presidential election now just two months away, investors are re-examining their portfolios. Some sectors and stocks figure to do well if President Obama is re-elected, while others should benefit if challenger Republican Mitt Romney moves into the White House. But some caution that it may be tougher than usual to predict the outcome of this election, let alone figure out how to make money from the results. Indeed, some Wall Street pros detect more caution than in some past years among investors playing the election game.
Sharp Faces Crisis as Mechanical Pencil Inventor Turns 100: Tech (BusinessWeek)
The 100-year-old inventor of mechanical pencils needs to pen a new plan to make it to 101. Sharp Corp. (6753), Japan’s biggest liquid-crystal display maker, put up its Osaka headquarters and some plants as collateral last week to win bank loans after its credit ratings were cut to junk. The supplier to Apple Inc. (AAPL) is also renegotiating a stock sale to Taiwan’s Foxconn Technology Group as it tries to recover from record losses and a 70 percent slump in shares this year.
TPG-Axon’s Singh Says Japanese Stocks Cheap, Profits on Rise (Bloomberg)
Dinakar Singh, founder of $4 billion hedge fund TPG-Axon Capital Management LP, said Japanese stocks are inexpensive and profits are rising there. “You look at the U.S. and Europe there aren’t a lot of places where you see margins that have a chance to go up from here,” said Singh today in an interview on CNBC’s “Squawk Box.” “In Japan you still do.”
Plains Exploration to Buy $5.55 Billion Gulf Fields From BP (Bloomberg)
Plains Exploration & Production Company (NYSE:PXP) agreed to buy BP Plc (BP/)’s interests in a group of Gulf of Mexico oilfields for $5.55 billion to increase its crude output. Production from the deep-water fields is equivalent to 59,500 barrels of oil a day, Houston-based Plains said today in a statement. The purchase includes sole ownership of the Marlin, Dorado, King and Horn Mountain fields and minority stakes in fields operated by Exxon Mobil Corp. (XOM) and Royal Dutch Shell Plc. (RDSA)
Hedge funds return 0.7% on average in August: hedge fund news, week 36 (Opalesque)
In the week-ending 07 September 2012, it was reported that Man Group and Nomura are to launch the Nomura Man Systematic Fixed Income fund; Laffitte Capital launched its third fund, the Laffitte Index Arbitrage fund; Blackstone Group raised about $1.5bn from clients for a fund that will be managed by David Blitzer; Sustainable Options Ltd announced the launch of the Sustainable Resources Fund, an open ended hedge fund; Schroders said it would launch in October a Global Macro Bond fund with Bob Jolly; Sweden’s largest hedge fund manager Brummer and Partners launched a European hedge fund that capitalizes on ‘global financial imbalances’; GulfMena and Solo Capital said they plan to launch a new DIFC-based hedge fund; and Duet Asset Management hired a Macquarie executive to start a hedge fund to bet on macroeconomic trends in emerging markets.
SEC Shuts Down San Diego-Based Real Estate Investment Fraud (SEC)
The Securities and Exchange Commission today announced an asset freeze against a San Diego-based firm and its owner accused of running a real estate investment fraud that raised approximately $50 million from hundreds of investors nationwide. The SEC alleges that Western Financial Planning Corporation and Louis V. Schooler sold units in partnerships that Western had organized to buy vacant land in Nevada and hold for sale at a profit at a later date. Schooler and Western failed to tell investors that they were paying an exorbitant mark-up on the land, in some cases more than five times its fair market value. Schooler and Western also failed to tell investors that the land held by the partnerships was often encumbered by mortgages that Western used to help finance the initial purchase of the land.
N.Y.-Based Investment Advisory Firm and Founder Settle SEC Charges for Fraudulent Management of CDOS (SEC)
The Securities and Exchange Commission today announced that New York-based investment advisory firm ICP Asset Management and its founder and president Thomas C. Priore have agreed to settle the agency’s charges that they defrauded several collateralized debt obligations (CDOs) they managed. ICP, Priore, and related entities have agreed to a final judgment ordering them to pay more than $23 million to settle the case the SEC filed against them in June 2010 in federal court in Manhattan.
Wiretaps: Rajaratnam’s Hedge Fund Insider Trading Appeal Set For October 25 (HedgeCo)
A panel of three judge from the federal appeals court is scheduled to hear arguments from hedge fund founder Raj Rajaratnam in a bid to overturn his insider trading conviction. Rajaratnam is pleading on the grounds that the wiretapping evidence was not acquired legally by the US government. His lawyers, in Febuary 2011, won an emergency order relieving him from turning over wiretap recordings because of legal hurdles in obtaining the 14,000 wiretap intercepts.
EIM loses co-head of investments (PIOnline)
Adam Prestandrea stepped down as co-head of investments at hedge fund-of-funds manager EIM to join Element Capital Management, according to two people familiar with the matter. Mr. Prestandrea, based in EIM’s New York office, also served as director of research, said the people, who asked not to be identified because the firm is private. Element Capital is a New York fixed-income hedge fund firm.
HFA Adds 3 To Leadership Team (Finalternatives)
Don Steinbrugge, chairman of third-party hedge fund marketing firm Agecroft Partners, has joined the board of the Hedge Fund Association where he will represent the interests of hedge fund investors. Prior to establishing Agecroft, Steinbrugge was head of sales and a founding principal of Andor Capital Management. Before that, he was head of institutional sales for Merrill Lynch Investment Managers (now part of Blackrock) and head of institutional sales for NationsBank (now Bank of America Capital Management).
AlternativeSoft Launches 3.0 Version (Finalternatives)
London-based AlternativeSoft has released the latest iteration of its portfolio construction and research software. AlternativeSoft 3.0, in addition to asset selection and portfolio construction modules, offers fund duplication removal in database management, due diligence and document management, advanced liquidity analysis, style analysis using the Kalman Filter with jumps, optimization with Black-Litterman, portfolio construction with equal contribution to volatility and more.
Investors Redeemed $12 Billion from Laggard Hedge Funds in July (InstitutionalInvestor)
Investors have been a little leery of hedge funds. And who can blame them, given that hedge funds have now lagged the broader indexes for nearly two years. According to eVestment’s latest data, hedge fund investors redeemed an estimated $11.8 billion in July alone, bringing total industry assets to $2.52 trillion. In fact, more investors redeemed than invested in hedge funds for four of the previous five months through July.
Few hedgies kickin’ butt (NYPost)
The brilliant hedge-fund manager may be an endangered species. After a lousy 2011 for most hedge funds, this year isn’t turning out much better. Some of the bold-face industry names are trailing the S&P 500’s total return of 13.5 percent through August — a return many on Main Street get from their mutual funds. Hotshots like David Einhorn, Dan Loeb and Bill Ackman are some of this year’s laggards. Einhorn’s Greenlight Capital gained 10.9 percent through Aug. 31, while Loeb’s Third Point rose 7.5 percent and Ackman’s Pershing Square was up 6.9 percent, according to investors.
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