When a top hedge fund manager donated money to start a student-run portfolio at the University of Virginia in 1994, Richard Gerson was one of the few undergraduates to earn a spot managing the six-figure portfolio. It was the first connection of many that paved his way to the upper echelons of the hedge fund industry. Mr. Gerson parlayed his college experience into an internship at Tiger Management, the vaunted hedge fund firm run by Julian Robertson. He then helped John Griffin, a top deputy of Mr. Robertson and the sponsor of the investment club, start Blue Ridge Capital.
Soros Election-Rigging Scheme Collapses (FrontPageMag)
A George Soros-backed scheme that paved the way for Al Franken’s 2008 theft of a U.S. Senate seat has collapsed months ahead of the critical November elections. Rumors of the death of the Secretary of State Project had been circulating for months. Michael Kieschnick, co-founder of the Secretary of State Project, confirmed that his group has shut down in an interview at the recent “Take Back the American Dream” conference in Washington, D.C.
A Hedge Fund Now Owns 7% Of This Tech Company (SeekingAlpha)
Rovi Corp (ROVI) is a $1.4 billion market cap company which makes a variety of software products including interactive program guides and programs for delivering video content. Glenview Capital, a hedge fund run by former Omega Advisors trader Larry Robbins, filed with the SEC on Monday to declare ownership of 7.9 million shares of Rovi’s stock, giving the fund over 7% of the shares outstanding. Glenview had initiated its position in Rovi in the first quarter of the year, and had only 700,000 shares at the end of March (see the rest of Glenview’s portfolio).
Bessemer Venture’s Rob Chandra leaves to start hedge fund (Reuters)
Bessemer Venture Partners’ Rob Chandra is scaling back his role at the venture firm to launch Avid Park, a $250 million hedge fund, an investor in the new fund said. The hedge fund will use a long-short strategy — meaning it will buy and hold shares in companies it thinks will do well while shorting, or betting against, companies it is less confident in. It will make plays based on volatility in the technology sector, the investor said.
Mark Casella on the Future of Hedge Fund Industry: Part One (AllAboutAlpha)
We spoke recently with Mark Casella, U.S. Alternative Investments leader at PricewaterhouseCoopers. Casella, also the chair of the accounting advisory committee of the Managed Funds Association and a member of the Board of Advisors of the Georgetown University McDonough School of Business, seemed the ideal partner especially in light of the recent publication of PwC’s white paper on the hedge fund industry, (which we summarized in late June), for a wide-ranging discussion of that industry’s structures and opportunities.
Hedge Funds Stay Defensive Despite Rally (CNBC)
Hedge funds remain cautious and defensive after largely sitting out the rally in the U.S. stock market since the start of June, contributing to the lowest U.S. stock market trading volumes since 2007. The lack of conviction comes as the industry struggles with lackluster performance that leaves a quarter of hedge funds at least 10 percent below their high water marks — the point where they can charge investors incentive fees — according to Credit Suisse. Philip Vasan, head of prime services for Credit Suisse, said: “Hedge funds did not take the bait of the June rally. When we look at the amount of risk that the hedge fund community took in the first quarter of 2012 compared to now, by most measures they’ve only been willing to commit a portion of risk with the memories of last year still fresh.”
Biggest Chapter Yet for a Poison Pen (WSJ)
Daniel Loeb isn’t one given to half-measures. The hedge-fund manager competes in triathlons, never, ever drinks from a plastic water bottle and is unsparing at times in his criticism of corporate executives. That is exactly how his investors like him. “I didn’t give him the money to have a mellow Dan Loeb,” said Hugh F. Culverhouse, a Miami investor whose family once owned the Tampa Bay Buccaneers football team. “If I want a mellow Dan Loeb, let me redeem.”
Defendant in Insider Case: I Was Just Doing My Job (WSJ)
One man’s insider trader is another man’s corporate crusader. Or at least that is what lawyers for Doug Whitman plan to argue before a federal jury. Mr. Whitman, a former hedge-fund manager, doesn’t deny that he probed public companies for nonpublic information. But his criminal-defense team plans to argue that its client was doing exactly what he was supposed to do when he persuaded employees of public companies to give him information that those companies’ top brass didn’t want getting out.
Overlook Partners Hedge Fund up 8.2% YTD, Likes JSH (ValueWalk)
Overlook Partners Fund LP was established by Richard H. Lawrence Jr.’s Overlook in 1992. The fund invests in public equity markets throughout Asia excluding Japan. The hedge fund currently has approximately $3 billion under management. According to sources with direct knowledge of the matter, the fund comments on the banking behavior, whereby bankers habitually lie as a requisite for the business. It will never be a smart business strategy to disclose the debilitating condition of assets, rising costs, and reduced profits on investments, so lying comes naturally to them. Following the same line of argument, politicians use denial as their defense mechanism to all calamities that befall the economy. If politicians step up and start making tough calls, rather than sugar coating the crisis, whether its political or financial, things would not mess up as badly as seen today in many regions of the world.
Traditional hedge fund strategies are faced with challenges, London Roundtable (Opalesque)
Traditional hedge fund strategies are faced with challenges as the old structure of the markets are confronted with difficulties brought by the financial crisis in most of the Western economies. This was the agreement reached by hedge fund managers who participated in the latest Opalesque London Roundtable. …Basil Williams, alternative asset manager CEO of Concordia Advisors said that we are currently living in a world of what he termed as bimodal tail risk that depends upon the outcome of the European crisis. He explained that a lot of strategies have become much more difficult to assess considering this tail risk, particularly, directional hedge fund strategies. Significant tail risk may be the consequence of a stroke of a pen, as opposed to an economic outcome, and that causes us to be quite cautious, he said.
Hedge Fund Broker Momentum Calls It Quits (Finalternatives)
Economic uncertainty and market volatility may be hurting hedge funds, but it has killed a brokerage that caters to them. Momentum Trading Partners will close its doors at the end of the day. The firm has been hurt by low trading volumes among hedge funds and other clients. Hedge funds “are less willing to take risks in this environment,” co-founder Lionel Mellul told The Wall Street Journal. “The whole market is contracting.”
HF Industry Insiders Predict Positive Future (HedgeFund)
A panel of hedge fund insiders revealed their optimism in the future of the industry at a symposium hosted by the Hedge Fund Association last week. The event, “The Evolution of the Hedge Fund Industry in a Newly Regulated World,” featured Adam Guren, chief investment officer of hedge fund Hunting Hill Global Capital, Donald Steinbrugge, managing partner of marketing firm Agecroft Partners, and Richard Heller, partner at the law firm Thompson Hine and director of the HFA. The symposium took place at Bloomberg’s New York office.
Bysiewicz Attack Ad at Center of Democratic Debate (ClintonPatch)
Susan Bysiewicz stood by her criticisms of Rep. Chris Murphy’s campaign contributions at a Monday debate between the two Democratic candidates for Senate, while Murphy characterized her accusations as a “very tired attack.” A Bysiewicz advertisement says Murphy has received over $700,000 in campaign contributions from Wall Street interests, “more hedge fund money than any other Democrat in Congress.” Bysiewicz has admitted that this claim is inaccurate, but says Murphy has still accepted significant Wall Street contributions and cannot claim to represent the middle class while doing so.
Billionaire Stanley Druckenmiller’s Top 5 Dividend Picks (SeekingAlpha)
Stanley Druckenmiller is one of the most famous hedge fund managers. He ran Duquesne Capital, a macro hedge fund that he founded in 1981. Druckenmiller shut down his fund in August 2010 because he felt increasingly frustrated with an inability to deliver consistently high returns to his clients. His funds returned about 30% net of fees since 1986. While Druckenmiller was returning less than 30% in 2008 and 2009 (actually, 11% and 10%, respectively), he still outperformed most hedge funds. At the time of closing, Duquesne Capital managed $12 billion in assets.
FUND MANAGER OF THE YEAR (Equities)
OUR fund manager of the year award, sponsored by Standard & Poor’s, will go to a company or individual who has demonstrated strong performance or has taken a headline-grabbing stance during a high-profile corporate issue. …Martin Gilbert Aberdeen Asset Management On the back of a rising share price and a jump in pre-tax profits, Aberdeen Asset Management entered the FTSE 100 for the first time in March 2012. Chief executive Martin Gilbert has steered the firm to the top on the back of strong performance by its emerging market equities, particularly Asia Pacific funds. Gilbert has become an outspoken commentator on anticipated waves of consolidation as banks look to dispose of their asset management businesses to raise capital.
Dollar Repatriation First Since Lehman Evokes Post-LTCM Gain (SFGate)
Until about four months ago, JKMilne Asset Management invested at least half the money in its global fund outside the U.S. No more. With Europe’s debt crisis intensifying, the Fort Myers, Florida-based firm with $1.8 billion under management has all its money in dollars. “It’s been a winning strategy,” John Milne, chief executive officer, said July 26 in a telephone interview. “Given the magnitude of the problem, there was the realization that there was a contagion possibility.”
TT International switches benchmark from FTSE to MSCI (HedgeWeek)
TT International, a UK based high-alpha specialist offering long only and hedge fund strategies, has adopted the MSCI Europe ex UK Index as the benchmark for the TT Europe ex UK Equity Fund, replacing the FTSE Europe ex UK Index. TT International already uses a wide range of MSCI indices as benchmarks for its funds, including the MSCI EAFE, MSCI ACWI ex US, MSCI World ex US, MSCI Emerging Markets, MSCI Europe and MSCI AC Asia ex Japan Indices.
PVE Capital Names New Head Of Corp. Credit Business (Finalternatives)
London-based hedge fund PVE Capital has tapped Derrick Herndon to head up its long corporate credit business, which includes the MAP 6 fund and the newly created UCITS fund. The new Credit Value UCITS fund has a similar investment strategy to MAP 6. It focuses on European credit and aims to take advantage of the current value in the European landscape.
Billionaires bet on this casino operator (MarketWatch)
Analysts across Wall St. are recommending shares of MGM Resorts International MGM +0.42% , the 16-property — and two-joint-venture — casino/hotel operator. For 1Q 2012, MGM missed analysts’ estimates by a wide margin, posting a loss of $0.44 vs. a mean estimated loss of $0.16. One would think such a wide miss would inspire at least one analyst to downgrade the company. No such analyst exists. So, we decided to do our own digging to find out why someone might be interested in the stock.
George Soros Anoints Son, Jonathan, to Inherit Empire (DallasBlog)
In case the enemies of George Soros are curious, Jonathan Soros will likely inherit the Soros global business empire. George is getting very old and photos show him appearing to be in frail health because of his crushing workload to fight the Republican Party and derail the euro currency, which is bringing him closer to his deathbed. Some are speculating that due to his workaholic habits, George Soros would be lucky to live for another three years. Accordingly, it’s necessary for him to anoint his successor before his imminent death.
Egan-Jones Recommends Forest Labs Stockholders Vote The GOLD Proxy Card For All Four Icahn Nominees (MarketWatch)
Carl Icahn today announced that Egan-Jones Proxy Services (“Egan-Jones”), one of the leading independent proxy voting advisory firms, recommends Forest Labs shareholders use the GOLD proxy card to VOTE FOR ALL FOUR ICAHN NOMINEES. Egan-Jones recommends a vote FOR Dr. Eric Ende, Daniel Ninivaggi, Pierre Legault and Andrew Fromkin.
Lionsgate toppers reap $9 mil in bonuses (Variety)
Lionsgate CEO Jon Feltheimer and vice chairman Michael Burns have received $9 million in bonuses in the wake of the launch of “The Hunger Games,” the acquisition of Summit Entertainment and ending the long-running battle with investor Carl Icahn. Feltheimer received $6.44 million in compensation for the fiscal year ended March 31 — including a $5 million cash bonus, according to a Securities and Exchange Commission filing. That was down 19% from a year ago, when he received a stock award triggered by Icahn’s hostile takeover attempt.
Challenging the Paradigms of Investing (ResourceInvestor)
It was an exciting and educational week. I was in Vancouver at the Agora Financial Investment Symposium speaking to hundreds of investors who are eager to learn how to grow and protect their wealth. This year’s theme, “Innovate or Die,” fit well with my presentation, as the conference challenged attendees to adapt their investment strategies just as empires and enterprises adjust to changing circumstances. When I wasn’t behind the podium, I sat with the audience, soaking up new ideas from speakers, including Gloom Boom & Doom Editor Marc Faber, historian Niall Ferguson and Editor of Outstanding Investments Byron King, who surprised me and challenged my current way of thinking.
Enquiring Minds Want to Know (CreditWritedowns)
The July 25, 2012, tribute to Barton Biggs received a large response. Biggs was obviously respected as well as loved. In the end, virtue is its own reward. Virtue is rarely rewarded in the world today; in fact, quite the opposite is true. It is refreshing to see such outpouring for a man who stuck to his guns and was also successful. Some correspondents wanted to know what James K. Glassman and Kevin Hassett, co-authors of Dow 36,000, are up to now. (For background, see Barton Biggs.) This cry poured in from near and far, including a message from J. Rogers in Singapore: “Where are they now? What do they say now?” In elaboration: “You should have exposed them further for the sake of all of us.”
Peregrine Financial: 4 Common Methods of Camouflaging Fraud (WSJ)
Financial frauds are shocking when they come to light and one of the first questions usually raised is “why couldn’t investors/regulators have seen this?” The latest potential example is Peregrine Financial Group Inc., where Russell Wasendorf Sr. allegedly defrauded clients of his futures brokerage firm over a period of 19 years. Wasendorf, who confessed his actions in a statement, has been sued by the Commodity Futures Trading Commission for fraud, violating customer fund segregation laws and lying to regulators. He has been charged by the Federal Bureau of Investigation with making false statements and hasn’t entered a plea.
Regulators Target Day-Trading Firm (WSJ)
In the Romanian city of Cluj-Napoca, inside a garret up a narrow wooden staircase, four young men in T-shirts spend the day moving rapidly in and out of stocks, trying to ride their shifting momentum for profits. “It’s very stressful,” says one, dressed in a green T-shirt, blue shorts and Adidas sneakers. “The market is very hard to figure out.” The four traders are part of a world-wide network initially set up by a Toronto-owned firm called Swift Trade Inc. Swift’s founder, Peter Beck, turned it into one of the largest day-trading operations in the world over the past decade …
Finally, There’s A Fund With A Superstitious Robot Trader That’s Afraid Of Full Moons (BusinessInsider)
Mark Frauenfelder of Boing Boing reports there’s something called the Superstitious Fund Project that has collected money from investors in 50 cities throughout the world, and invests entirely on superstitious beliefs. There isn’t much information on how trades are made. As its brochure states, two of the main parts of the fund are based on numerology and astrology.
Green Mountain CEO Faces Percolating Issue Of Who’s Boss (Bloomberg)
With Green Mountain Coffee Roasters Inc. poised to report its slowest quarterly sales growth since 2005, Chief Executive Officer Lawrence J. Blanford faces pressure to prove the company is a sustainable business. The question for investors is whether Blanford, hired five years ago to help Green Mountain transcend its startup culture, can shake off the influence of founder Robert P. Stiller. While Stiller was removed as chairman in May after violating company policy when he sold stock to meet a margin call, he is the fourth-largest shareholder, sits on the board and plays an active role. Amid the challenges facing the company, the shares have slid 60 percent this year, after more than doubling between March and September last year.
What Supervalu’s new CEO did in Canada (MarketWatch)
New Supervalu CEO Wayne Sales once had to fight the invasion of Wal-Mart and Home Depot onto his home turf when he ran Canadian Tire, a general merchandise retailer that also sells financial products. In his new role, he faces the herculean task of restoring same-store sales growth at long-suffering Supervalu SVU -0.89% , where Sales has been chairman since 2010. Sales drew praise from stock analysts and the Canadian media for his 2000-2006 reign as CEO at Canadian Tire. Revenue climbed 60% to $8.3 billion, while profit more than doubled to $355 million. Gross margin steadily inched up to 8% from 6.4%. More importantly, Canadian Tire’s stock price tripled (Supervalu shares are down 85% since mid-2009).
State Street universe returns slip for quarter, rise for 12 months (PIOnline)
The State Street master trust universe of retirement plans, foundations and endowments had a median return of -1.6% in the second quarter but was up 1.2% for the 12 months ended June 30. Fixed income was the only asset class with positive returns in the second quarter. U.S. fixed income had the highest median return for the quarter, at 2%, while global fixed income came next with a median return of 1%, according to a news release from State Street Corp. (STT)
Private Equity Assets Hit Record $3 Trillion (Finalternatives)
The U.S. economy is struggling and parts of Europe are deep in a recession, but that hasn’t stopped the private equity industry from reaching new heights. Total assets under management held by private equity funds worldwide have reached record $3 trillion, according to Preqin. According to the research firm, the figure is calculated using unrealized portfolio value and the ‘dry powder’ (uncalled capital) available to private equity funds across the whole scope of the asset class.
Pierpont And Cortview Join Forces For Fixed Income Broker-Dealer (Finalternatives)
Broker-dealers Pierpont Securities and Cortview Capital Holdings have agreed to merge in to create a premier broker-dealer that offers a full suite of fixed income products, and a diverse range of sophisticated finance, capital markets and advisory services. The transaction, which is subject to approval by FINRA, is expected to close in the fall of 2012. Financial terms of the transaction were not disclosed.
Suggestions for an Apple Shopping List (NYTimes)
Question: What would you do if you had $117 billion? That’s the challenge facing Tim Cook, Apple’s chief, whose company’s cash hoard keeps growing — by about $1 billion a week. He could hold onto it. He could increase Apple’s dividend, which he instituted this year for the first time.
Alibaba Is Said to Be Close to Raising $8 Billion (NYTimes)
Some American Internet companies may be unpopular with investors these days, but a Chinese one is finding plenty of takers. The Alibaba Group, a Chinese e-commerce giant, is close to completing a more than $8 billion round of financing that will value it at as much as $43 billion in equity, according to two people briefed on the matter. Alibaba plans to use the bulk of that new money to buy back a 20 percent stake in itself from Yahoo for $7.1 billion. Yahoo owns 40 percent of Alibaba.
Levinsohn Confirms That He’s Leaving Yahoo (NYTimes)
Ross Levinsohn, the executive who served as Yahoo‘s interim chief, confirmed on Monday that he was leaving the tech company after being passed over to fill the spot permanently. The departure of Mr. Levinsohn was not surprising, after Yahoo named former Google executive Marissa Mayer as its new leader.
Go Daddy Chief to Step Down, as a K.K.R. Executive Steps In (NYTimes)
When the Go Daddy Group announced on Monday that its chief executive, Warren Adelman, was stepping down, the Web hosting company didn’t have far to go to find an interim replacement. …Go Daddy named Scott Wagner, a senior member of K.K.R.’s Capstone division, as its interim chief while it looks for a permanent new leader. While the company didn’t name a reason for Mr. Adelman’s stepping down, it said that the executive will remain at the company as a special adviser for strategy and global policy.
UBS Profit Falls After Loss on Facebook IPO (NYTimes)
UBS on Tuesday reported a 58 percent decline in its net profit during the second quarter as a fall in investment banking income weighed on the Swiss bank. The drop in profits comes as the chief executive of UBS, Sergio P. Ermotti, is paring back the firm’s investment banking unit to focus on its wealth-management division.
Dell’s Software Bet Looks Like a Long Shot (InstitutionalInvestor)
This month, after a heated bidding war, Dell acquired Aliso Viejo, California–based Quest Software for a $2.4 billion in cash at $28.00 per share. It is the ninth acquisition for the Round Rock, Texas–based personal computing company since the start of its fiscal year 2011. Other companies it recently scooped up include San Jose, California–based manufacturer of thin computers Wyse in May and San Jose–based Ethernet switching manufacturer Force10 in August 2011.
Stoker’s CDO Fraud Case Goes to the Jury (HedgeWorld)
A jury was asked on Monday [July 30] to decide whether one of the few individuals charged over the collapse of subprime mortgage investments intentionally misled investors in a $1 billion Citigroup Inc. deal or had been singled out to take the blame for losses. Brian Stoker, a former manager on Citigroup’s mortgage investments desk, could be barred from the financial industry and ordered to pay fines if convicted on two civil counts of securities fraud. His trial in U.S. District Court in Manhattan began two weeks ago.
Italian police ‘seize Barclays documents in Euribor probe’ (Telegraph)
The search was ordered by prosecutors in the southern city of Trani, who have opened a criminal probe into the possible Euribor manipulation following complaints filed by two consumer groups, Adusbef and Federconsumatori, two judicial sources told Reuters. In a joint statement, the consumer groups said documents, computer material and emails were seized at Barclays Milan offices last week, “with the aim of looking for evidence that Barclays also manipulated Euribor, as it did with Libor, with a negative impact on mortgage rates paid by Italians”.
Prez puts $2M bite on Apple (NYPost)
President Obama swooped into New York yesterday and walked away with more than $2 million in campaign cash from Wall Street honchos. “If the election were held today, I think it would be close, but I think we’d win. And we now have 99 days left,” Obama, who has trailed Mitt Romney in the money chase lately, told a crowd of 60 guests at the posh NoMad Hotel on Broadway near 28th Street. Obama campaign officials were tight-lipped about the event, declining to reveal details about attendees or organizers to reporters even as the president jetted to the city on Air Force One just before rush hour.
Mohamed El-Erian Didn’t Have To Tell Bill Gross To Stop Hitting Golf Balls At 3:30 Every Day. His Raised Eyebrows And Knowing Glances Said It All. (DealBreaker)
On most mornings, Bill Gross wakes early at his beachfront home in Laguna Beach, south of here, and is on Pimco’s trading desk by 6 a.m. He says he is working harder than ever and has no plans to retire anytime soon. Mr. El-Erian, he says, has energized Pimco — and him. Mr. Gross once used to work in a little golf in the afternoons and then return to his office. Not anymore. “You can’t help but be affected by someone who comes in at 4:30 a.m. when you are coming in at 5:30 or 6 and not know that there is an example that is being set,” Mr. Gross says of Mr. El-Erian as the two sit at a round table in Pimco’s offices. “To some extent, I wish that I could go over and hit golf balls like I used to at 3:30, but I have not hit balls in three and a half years,” Mr. Gross says. “Mohamed did not tell me not to hit balls, but his behavior basically said that this is a different company moving at a faster pace.”
Weekend edition: Car Dealers (BronteCapital)
I am a hedge fund manager who trades in marketable securities only. I look at a quote in a market – take it or leave it. I have developed no negotiating skill – if I don’t like the quote I just walk away. If the quote is way too high I short sell it. If it is low I buy. But mostly I just walk away. It is not rude to walk away. The person on the other side of the trade does not even know who you are. It is not personal. Simply: if the quote is not right I do not want to deal.
COOConnect to host webinar on prime custody (MyCOOConnect)
COOConnect will be hosting a webinar on prime custody and asset protection on Monday July 30 at 11am GMT/12pm CET/6am EST. Hosted by COOConnect founder Dominic Hobson, panellists will include David Fletcher, chairman of Odey Asset Management; Malcolm Butler, partner at Comac Capital; Marina Lewin, global head of sales and client relationship management at BNY Mellon AIS; Ashley Wilson managing director and global head of equity finance and head of prime services at Barclays Capital and Kumar Panja, executive director and head of the prime brokerage consulting group for EMEA at J.P.Morgan.
Latest FATCA proposals cause further uncertainty (MyCOOConnect)
Foreign financial institutions (FFIs) including hedge funds operating out of multiple jurisdictions face further uncertainty around FATCA following the US Treasury’s latest announcement on how it will implement the rules through intergovernmental cooperation agreements (IGAs). Several jurisdictions now have different reporting mechanisms in place for FATCA following IGAs with US authorities, which could make life rather challenging for some global financial institutions. Stuart Chalcraft, associate partner at Ernst & Young (E&Y), said there were now three different methods across several jurisdictions for reporting data on American accountholders to US authorities.
