Editor’s Note: Related tickers: Citigroup Inc (NYSE:C), MBIA Inc. (NYSE:MBI), The Bank of New York Mellon Corporation (NYSE:BK)
Philip Falcone and his firm Harbinger Capital agreed to a settlement with the Securities and Exchange Commission that could end Mr. Falcone’s career as a hedge-fund manager. Harbinger agreed to pay $18 million without admitting or denying allegations of fraud, according to a regulatory filing. The agreement bars Mr. Falcone from serving as an investment adviser for two years, meaning he also cannot raise new capital or make new investments through the fund. Terms of the deal allow Mr. Falcone to remain chief executive of Harbinger, although the firm said it wasn’t clear how much time he would devote to the job.
Citigroup Fund Bestowed on Managers Offers Volcker Rule Payday (BusinessWeek)
For a pair of former Citigroup Inc (NYSE:C) hedge-fund managers, Napier Park Global Capital may turn into a multimillion-dollar payday thanks to the Volcker rule. Jonathan Dorfman and James O’Brien are among executives who got 75 percent of the investment firm for free when it broke off from Citigroup Inc (NYSE:C) earlier this year. The business may be worth $360 million, according to hedge-fund consultant Ezra Zask. The estimate is based on the $143.4 million in fees the firm may collect this year, according to internal projections obtained by Bloomberg News. Any windfall Napier Park executives get stems from former Chief Executive Officer Vikram Pandit’s response to the Volcker rule, a Dodd-Frank Act provision designed to force U.S. banks to reduce investments in hedge funds. While Citigroup Inc (NYSE:C) says the decision to give away most of the business served shareholders’ interests, the New York-based lender never publicly disclosed how much it’s paying Napier Park executives.
7th Hedge Fund Fight Nite to feature Asian contenders for first time (TheAsset)
Hong Kong’s annual charity white collar boxing event, the Hedge Fund Fight Nite, returns for the seventh year in 2013. Typically held in October, this year’s event will be held on May 30. To date, an initial number of 48 participants have been narrowed down to a shortlist of 18 contenders. The final list of fighters will be announced on May 15. Contenders of previous Hedge Fund Fight Nite events have comprised a majority of expatriate and Western fighters. This year however, Asian participants Jimmy Heng, a consultant of Michael Page International (Hong Kong) and Ronald Ho, a consultant of Robert Walters International, are on the shortlist. If both successfully proceed to the finals, this will mark the first bout with two Asian fighters.
April confirmed positive for hedge funds (InvestmentEurope)
The Lyxor hedge fund Index was up +0.8% in April, bringing year-to-date performance to +3.2%. Twelve Lyxor Strategy Indices out of 14 ended the month in positive territory, led by the Lyxor L/S Equity Market Neutral Index (+3.9%), the Lyxor CTA Long Term Index (+3.0%) and the Lyxor Merger Arbitrage Index (+1.5%). Risk assets mostly rallied in April after a modest sell off in the beginning of the month and most hedge fund strategies generated positive returns for the month.
Gottex, Astmax to offer hedge fund, multi-asset strategies to Japanese institutional investors (PIOnline)
Gottex Fund Management and Tokyo-based Astmax Asset Management Thursday announced an agreement to work together to provide institutional investors in Japan with absolute-return focused investment strategies, including hedge funds and multi-asset solutions. In a telephone interview, Andre Keijsers, a London-based spokesman for Gottex, said the two companies may develop new products or customize existing ones for Japanese investors looking for absolute return alternatives to current investments in low-yielding bonds.
FRM’s Early View reports broad returns across hedge fund strategies in April (Opalesque)
The latest “Early View” from FRM, Man Group’s $16.7bn fund of hedge funds and managed accounts business, finds that investors entered April on the back of a strong first quarter for risk assets, supported by capital inflows into equities and a more benign economic landscape. For FRM there was concern that markets would follow the pattern of the previous three years, with a setback in the second quarter due to the re-emergence of economic issues. “Our view has been that a possible catalyst for a Q2 correction would be a slowdown in the US growth story. Two core US economic indicators missed expectations in April – the change in non-farm payrolls at the beginning of the month (88k vs. expected 190k) and Q1 GDP towards the end of the month (annualised 2.5% vs. expected 3%), but equity markets finished in positive territory, as the S&P 500 Index returned 1.8% during the month.”
Why is the man who bet against U.S. housing so worried about Canada? (TheGlobeAndMail)
A hedge fund manager who made a killing betting against the U.S. housing market is now publicly fretting about Canadian real estate. Steven Eisman’s comments on Canada are arguably more important than those of other observers given that he put his money where his mouth was in the run-up to the U.S. meltdown, gaining renown and, eventually, becoming one of the players noted in The Big Short, the book by Michael Lewis. Most observers believe that Canada’s housing market, while cooling rapidly, is in a soft landing, with the exception of Vancouver. Canada’s finance minister has moved several times to prevent a burst bubble and tame the mortgage market amid record levels of consumer debt.
Einhorn’s advice to investors: don’t take my advice (Reuters)
David Einhorn, one of the most closely followed managers in the $2 trillion hedge fund industry, had some blunt advice on Wednesday for his fellow investors: Do your own homework. Einhorn, this year’s star attraction at the Sohn Investment Conference, an annual confab where the industry’s top investors share their favorite trade ideas, wrapped up his presentation by offering some words of warning about his public comments. “It doesn’t make sense to blindly follow me or anyone else into a stock,” said Einhorn, president and co-founder of the $8.8 billion hedge fund Greenlight Capital. “Do your own work.”
Allen Partners offers local knowledge for hedge funds chasing super funds (Opalesque)
Neil Power is the new head of hedge fund advisory at Allen Partners in Sydney, a firm that knows where the money is in the Australian institutional sector and what it wants to invest in. Founded in 2009 by three senior professionals from the asset management and alternative assets industries, Allen Partners seeks to address the growing need for foreign asset managers to be appropriately represented in Australia and New Zealand and to successfully raise capital in these markets. Founder Craig Gribble was head of private equity in New Zealand for Merrill Lynch while Chairman Ken Allen established Merrill Lynch and Lehman Brothers investment banking divisions in Australia and was also consulate general to New York from 2001 to 2006.
Japanese hedge funds lead Asian hedge fund capital to five-year high (HedgeWeek)
Investors increased allocations to Asian hedge funds in 1Q13 as stimulus measures, quantitative easing and increased bond purchases by the Bank of Japan drove gains across both Japanese equities and the HFRX Japan Index. Total Asia-focused hedge fund capital increased by 7.6 per cent in 1Q13 to nearly USD95bn (JPY9.4trn), reaching the highest level since Asian hedge fund capital peaked in 2007, according to the latest HFR Asian Hedge Fund Industry Report, published by HFR. Investors allocated over USD1.3bn in net new capital to Asian hedge funds in 1Q13, the largest quarterly inflow since 3Q11, as the total number of Asian hedge funds increased to more than 1,150.
BNY Mellon Named Best Large Hedge Fund Administrator by HFMWeek for Second Year in a Row (BobsGuide)
The Bank of New York Mellon Corporation (NYSE:BK), the global leader in investment management and investment services, has been named ‘Best administrator over $30bn – single manager’ for the second year running at the HFMWeek European Hedge Fund Services Awards, presented in London on April 25. The Bank of New York Mellon Corporation (NYSE:BK) was one of six industry-leading companies to be nominated for the honour as part of the 2013 awards, which recognise firms that have outperformed their peer group over the last 12 months. Companies are judged both quantitatively and qualitatively, based on financial progress, growth, and innovation across a number of areas.
CoA throws out £400m Northern Rock appeal (TheLawyer)
Brick Court Chambers’ Mark Howard QC has been successful in knocking out an attempt to force the Northern Rock to pay compensation to shareholders who lost out when the bank was nationalised in 2008. The ruling gives victory to Mayer Brown partner Stuart Pickford who instructed Howard. The Court of Appeal (CoA) today rejected a challenge by Hedge fund Harbinger Capital Partners to the Independent Valuer of Northern Rock, Andrew Caldwell, who determined that there was no value in the shares at the point when the bank was nationalised.
‘Rottweiler’s’ Toscafund shows its bite with 68% leap (Standard)
The London hedge fund run by “Rottweiler” Martin Hughes, Toscafund Asset Management, enjoyed an upturn in its fortunes last year as profits rose 68%. The company, founded by the former banking analyst in 2000, posted profits of £7.9 million before paying out bonuses and profit share, compared with £4.7 million in 2011. Turnover was up from £8.9 million to £11.9 million.
Greenlight Capital exits “profitable” MBIA short: letter (Reuters)
Greenlight Capital’s David Einhorn told his investors that the hedge fund closed its longstanding “short” position in bond insurer MBIA Inc. (NYSE:MBI) in the first quarter. Einhorn, in an investor letter which was reviewed by Reuters and which an investor said was distributed Wednesday night, called MBIA Inc. (NYSE:MBI) the “third most profitable short position” in Greenlight’s history. A short is a bet that a stock will fall in price. Greenlight had been shorting MBIA Inc. (NYSE:MBI) “in some capacity” since 2002 and rode the stock down from $76 to $2 a share, where it bottomed out in 2009, according to the letter. Shares of MBIA Inc. (NYSE:MBI) have since rebounded to $15.85.
