General Motors could face $918 million hit from bankruptcy-related lawsuit (NDTV)
A US bankruptcy judge could soon rule on whether the 2009 government-led restructuring of General Motors Company (NYSE:GM) improperly favored hedge funds, and an adverse ruling could cost the automaker nearly $1 billion. Judge Robert Gerber must decide whether a “lock-up agreement” in the restructuring sent $367 million to a group of hedge fund note holders at the expense of other creditors. A trust representing unsecured creditors has sued to undo the lock-up agreement, arguing that it was a last-minute deal secretly folded into GM’s bankruptcy to ensure the hedge funds’ support.
Narula’s No.1 Hedge Fund Gains 38% Betting on Mortgage Bonds (SFGate)
Fannie Mae and Freddie Mac have a friend on West 57th Street. That’s the New York address of Metacapital Management LP, the hedge fund founded by Deepak Narula. The much-maligned mortgage aggregators were taken over by the federal government in 2008 and have since absorbed $140 billion in taxpayer bailout money. The head of the House Financial Services Committee wants to abolish them. Yet they still own or guarantee more than half of all U.S. housing loans — and for that reason, the administration of President Barack Obama isn’t about to let them go belly up.
Like Wine: Hedge Funds Have a ‘Terroir’ (AllAboutAlpha)
Wine connoisseurs speak of the terroir of a wine, the specific characteristic that it acquires by virtue of where the grapes grow. With a New Year just underway, it may be well to mention that a firm conviction of the significance of terroir is the reason the French are unhappy when the makers of sparkling wines from anywhere outside of Champagne call their product “champagne.” This is our concern at AllAboutAlpha because Balter Capital Management has just prepared a statistical review of hedge funds on the basis of the cities in which they are located, its Hedge Fund Regional Performance Study. It is a study of the possible terroir of alternative investment management.
A Short Seller Takes on a Vitamin Vendor (WSJ)
When does a so-called multilevel marketing company go to the dark side and become a pyramid scheme? That’s the question aimed at Herbalife, HLF +12.89% the Los Angeles-based maker of vitamins and weight-loss pills. A month ago Herbalife was in apparent robust health. Annual sales were on track to soar past $4 billion, and its stock was sailing smoothly in the mid-40s. Herbalife’s market cap was a nontrivial $6 billion, ranking it with companies like Southwest Airlines LUV +2.39% and BMC Software, Inc. (NASDAQ:BMC) -0.80%.
What former hedge fund analyst learned from Bill Gates (BayouBuzz)
Former hedge fund analyst Sal Khan never intended to befriend Bill Gates nor flip the typical model of education upside down by posting tutoring videos on YouTube back in 2004. Khan, living in Boston at the time, was remotely tutoring his cousins in New Orleans and began noticing the effectiveness of uploading lessons online. Soon enough, he developed a following and Khan eventually quit his day-job to start Khan Academy in 2008, a non-profit with a mission to create a “free world-class education for anyone anywhere.” The academy’s website now has a library of over 3,400 videos covering K-12 math, biology, chemistry, physics in “digestible chunks” about ten minutes long.
Fairholme Announces Appointment of Fred Fraenkel as President (EON)
Fairholme announced today that Fred Fraenkel will now serve as President of the Firm. Mr. Fraenkel will continue to serve in his current role as Chief Research Officer of Fairholme Capital Management, where he oversees all of the Firm’s research activities. “Fred’s role as President is an exciting development for Fairholme,” said Bruce Berkowitz, Chief Investment Officer and Managing Member of Fairholme. “Fred’s extensive experience in the mutual fund and hedge fund space has proved invaluable to the Firm. This is just a formal announcement of what has already been the reality, and it allows me to focus on what I do best – investing.”
