Imagine that a multibillion-dollar hedge fund is accused of fraud and pays a huge fine to settle with the Securities and Exchange Commission while its famous founder personally ponies up millions more to move past the scandal. No, this is not SAC Capital Advisors, the $14 billion hedge fund that may face civil charges over an alleged insider-trading scheme. It was Israel “Izzy” Englander’s Millennium Management, whose $180 million settlement on fraud charges related to market timing shook the hedge-fund industry in 2005. Today, Millennium has more money under management than ever — $17 billion — and boasts an annualized return of 14.45 percent and a reputation for having the toughest compliance in the industry.
Hedge Fund Association launches HNW advisory board (HedgeWeek)
The Hedge Fund Association has created a high net worth advisory board focused on developing educational programmes and networking events globally for HNW investors. Its chairperson will be April J Rudin, who has over 20 years of marketing experience in both corporate and financial services settings. In a separate move, the HFA promoted Ryan Mitchell to HFA west coast chapter regional director.
Apple: A hedge fund liability? (CNN)
Once a friend of the hedge fund industry, Apple’s stock may have already turned into a foe. With roughly one out of every five hedge funds counting Apple Inc. (NASDAQ:AAPL) among their top 10 stock holdings, the recent sell-off in Apple’s stock could start cutting into their returns. Shares of Apple have dropped nearly 25% since mid-September, when they hit an all-time high of $705. In a year where hedge funds have been struggling to generate returns, firms with outsize Apple holdings have been among the best performers. Returns for the average hedge fund haven’t been pretty. The Dow Jones Credit Suisse Core Hedge Fund Index was up just 2.37% through the end of the November, according to Goldman Sachs’ research.
BarclayHedge and TrimTabs: Hedge fund investors redeemed $10.8bn (0.6% of assets) in October (Opalesque)
BarclayHedge and TrimTabs Investment Research reported today that hedge fund investors redeemed $10.8 billion (0.6% of assets) in October, reversing a combined $9.8 billion inflow for August and September. Based on data from 3,040 funds, the TrimTabs/BarclayHedge Hedge Fund Flow Report estimated that industry assets stood at $1.8 trillion in October, down 26.1% from the June 2008 peak of $2.4 trillion. “From a cash-flow standpoint, the hedge fund industry has been losing ground for the past year,” said Sol Waksman, founder and president of BarclayHedge. “October’s redemptions pushed year-to-date outflows to $13.7 billion and 12-month outflows to $22.9 billion.”
Hedge fund take off to short airlines stocks despite tie-ups (Equities)
SHORT selling of airline stocks by hedge funds has continued to remain buoyant despite a spate of proposed deals between national carriers, data out yesterday revealed. Demand to borrow stock from Air-France-KLM has increased by just over six per cent, with 4.9 per cent of the stock out on loan, a record high, in spite of its US partner Delta taking a stake in Virgin Atlantic, according to the data from Markit. Shares in Virgin Australia, which is also part-owned by Sir Richard Branson and listed in Australia, have also soared in demand. The total shares out on loan have jumped 142.4 per cent over the month and now stands at 4.2 per cent of share lent out.
Martin Currie shuts down China Hedge Fund after being hit with $14m fine (Opalesque)
International equity specialists Martin Currie is closing down its long/short equity strategy China Hedge Fund after the firm was slapped with a $14m fine from U.S. and UK regulators for favoring one client over another. A spokeswoman from the $7.4bn UK asset manager told AsianInvestor that the closure of the China-focused hedge fund after 10 years, marks the end of the once-profitable strategy. The fund has been operating with less than $10m in assets and its liquidation is currently underway.
Harvard Graduates Targeted by Alumni-Backed Loan Funds (Bloomberg)
Michael Cagney, a hedge-fund manager backed by China’s largest social-networking website, is starting a series of funds to help students at Ivy League and other top U.S. colleges refinance their loans at lower rates. Cagney has registered SoFi Capital Advisors LLC with the U.S. Securities and Exchange Commission to manage funds that will finance loans at top colleges, including six members of the Ivy League. Each of the 18 funds will be dedicated to one school and will seek money from institutional investors as well as alumni of that school, according to company officials and regulatory filings.
Hedge Funds Stride the Stage of World Affairs (CNBC)
Argentina’s president, Cristina Fernndez de Kirchner, was re-elected with a huge margin last year, leaving her political opponents fractured and demoralized. But in recent months, she has found herself locked in battle with a determined adversary who may outmaneuver her. Her opponent is not a participant in Argentina’s domestic political scene. Rather, he is Paul Singer, a soft-spoken New York hedge fund manager. Through one of his funds, Mr. Singer is fighting in United States courts to press Argentina to pay up on some defaulted bonds. Mrs. Kirchner has refused.
Texas Enron trader’s fortune helped fund Engage Rhode Island (WPRI)
Some of the secrecy surrounding Engage Rhode Island has been pierced. The deep-pocketed advocacy group, which provided crucial support to Treasurer Gina Raimondo last year in her push to pass the landmark state pension overhaul, received between $100,000 and $500,000 from a Houston billionaire who was a trader for the ill-fated energy company Enron, The Wall Street Journal revealed Tuesday night. A spokesman for John Arnold, 38, and his wife, Laura, confirmed their donations to the paper. Arnold founded Centaurus Advisors LLC, a Houston-based hedge fund, with $8 million of his own money in 2002. He closed the fund earlier this year. Arnold’s net worth is estimated at $3 billion by Forbes magazine.
Service Provider Directory HedgeFundSpecialist.com Launches Today (TimesUnion)
NyamiNyami Holdings LLC, a holding company of websites focused in the alternative investment industry working with hedge funds and private equity firms and professionals today announced the launch of HedgeFundSpecialist.com. As the first pure service provider directory and interactive marketing tool for the hedge fund industry, HedgeFundSpecialist.com provides a web-based site for service providers to advertise their services and thus grow and strengthen their brand among hedge funds and the entire alternative investment community. With access to NyamiNyami Holdings’ community of experienced alternative investment professionals who represent thousands of firms, hedge fund service providers can effectively and actively market their services and products to this niche community.
LACERA taps Grosvenor Capital for opportunistic credit (PIOnline)
Los Angeles County Employees’ Retirement Association, Pasadena, Calif., committed an additional $200 million to a customized hedge fund-of-funds portfolio managed by Grosvenor Capital Management focused on opportunistic credit, said David Kushner, chief investment officer for the $39.8 billion pension fund. LACERA initially committed $250 million to Grosvenor in a customized fund-of-funds program, when it began its hedge fund program in October 2011, according to a recently released memo to the board of investments for its Nov. 5 meeting.
Siris Capital Wraps Up Latest Fund at Nearly $650M (DowJones)
Siris Capital Group recently closed its first institutional fundraising effort since spinning out from hedge fund manager SAC Capital Advisors , said people with knowledge of the effort. The New York firm wrapped up Siris Partners II LP at nearly $650 million, surpassing a target of $400 million, said the people. The fund ended up closing near its revised hard cap of $650 million, said one of the people. Prior to raising the hard cap, Siris Capital ‘s ceiling was set at $600 million, but talks began earlier in the fall to raise that hurdle….
New York hedge fund operator spent $439,000 on advertising against Rep. Peter DeFazio (OregonLive)
Here’s one more wrap-up item from the 2012 election: Final disclosure reports showed that New York hedge fund billionaire Robert Mercer wound up spending $439,354 on an independent advertising campaign against Rep. Peter DeFazio, D-Ore. That’s less than the nearly $650,000 Mercer gave to a similar effort in 2010, when DeFazio was also running against Republican Art Robinson. The first time around, Robinson — and the ads financed by Mercer — caught DeFazio somewhat by surprise, although DeFazio wound up winning by 10 percentage points.
Einhorn takes on another hedge fund manager (Marketwatch)
Billionaire David Einhorn of Greenlight Capital is a closely followed hedge fund manager, possibly most closely when he gives public presentations at investor conferences. He famously recommended shorting Green Mountain Coffee Roasters Inc. (NASDAQ:GMCR) in October 2011, before the stock began plummeting; He had also been a public critic and short-seller of Lehman Brothers in late 2007 and 2008. However, at least so far one, of his more recent short calls has been completely wrong: Einhorn led his presentation at the mid-May Ira Sohn Conference with a short thesis on Martin Marietta Materials, Inc. (NYSE:MLM) +0.94% , and the stock is up 22% since then, easily beating the market. The stock had been declining quite a bit in early May, so it might not be entirely fair to measure its performance from the conference date, but even if we use the beginning of May as our baseline Martin Marietta is up 11% against a flat S&P 500.
Rajat Gupta Should Pay Maximum Civil Penalty, SEC Says (Bloomberg)
Rajat Gupta, the former Goldman Sachs Group Inc. (GS) director found guilty at an insider-trading trial, should be required to pay the maximum civil penalty, the U.S. Securities and Exchange Commission said in a court filing. Gupta was motivated by personal gain and can afford the $15 million fine the SEC is seeking because he still has tens of millions of dollars for an “enviable retirement,” Kevin McGrath, an SEC attorney, said in today’s filing in federal court in Manhattan. The former Goldman executive is worth about $85 million, evidence at his trial showed, McGrath said.
When Does Groupon — Still at More Than 80 Percent Off — Become a Deal for Someone? (AllThingsD)
Is it time for Groupon to be looking for a buyer? Wall Street is certainly enthusiastic for such an outcome — even grabbing onto a specious rumor that perhaps Google was sniffing around the troubled Chicago-based social discount deals company, which is currently valued at just over $3 billion. On Friday, Groupon’s stock jumped 23 percent on takeover speculation after Tom Forte of Telsey Advisory Group was quoted as saying: “Where the stock is currently trading, it’s a takeout candidate.” …At least one big investor is betting something will happen: Tiger Global Management, which recently bought up close to 10 percent of Groupon. The well-regarded hedge fund and private equity firm may be betting it can’t get worse, and perhaps would even push for a sale.
SEC Charges New York-Based Fund Manager with Conducting Fraudulent Trading Schemes (SEC)
The Securities and Exchange Commission today charged a New York-based fund manager with conducting a pair of illegal trading schemes to financially benefit his investment fund Octagon Capital Partners LP. The SEC alleges that Steven B. Hart made $831,071 during a four-year period through illicit trading while he also worked as a portfolio manager and employee at a New Jersey-based firm that served as an adviser for several affiliated investment funds. In one scheme, Hart illegally matched 31 pre-market trades to benefit his own fund at the expense of one of his employer’s funds.
Blackstone Eyes $2 Billion For Asia Real-Estate Fund (Finalternatives)
The Blackstone Group aims to raise at least $2 billion for its first real-estate fund focused on Asia. The alternative investments giant’s first foray into the space will focus on Japan, China, Australia and India. “We’re now starting an Asian real-estate fund,” Blackstone President Tony James said last week. “These are unique products, and they’re unique products in an asset class that investors increasingly want. It’s hard assets.” James added, “there is not another Pan-Asian real-estate fund in existence.”
Barclays To Spin Off $2 Billion Trading Desk (Finalternatives)
Next year’s first billion-dollar hedge fund launch is set to emerge from Barclays Capital. The bank will spin-off its Los Angeles-based trading operation at the end of the year, Absolute Return magazine reports. The resulting firm will be known as Cloverfield Capital Management, and will focus on distressed debt. Cloverfield is led by Matthew Barrett, Barclay’s head of distressed debt and special situations investing. The firm will have the ability to invest across all asset classes, according to AR.
NYSE Says JPMorgan Units Will Have a Fire Wall on Copper ETF (Bloomberg)
JPMorgan Chase & Co. (JPM) will put a fire wall between its proposed exchange-traded fund backed by copper and its metals trading operations, according to a filing with the U.S. Securities and Exchange Commission. The bank will prevent its units from accessing non-public information on the JPM XF Physical Copper Trust, NYSE Arca Inc. said in amendments, dated Nov. 30, to its proposal for the ETF filed with the SEC. NYSE Arca is the electronic platform of NYSE Euronext. Copper consumers including Encore Wire Corp., AmRod Corp., Southwire Co. and hedge fund RK Capital LLC oppose the proposed ETF, saying it may make it more difficult for consumers to get the metal as it removes supplies from the market.
