One of SandRidge Energy Inc‘s top shareholders called for the oil and gas company to consider selling itself and for Chief Executive Tom Ward to step down, saying management’s strategy has been incoherent, unpredictable and volatile. Hedge fund TPG-Axon, which said it owns more than 4.5 percent of SandRidge Energy Inc. (NYSE:SD) and has about $4 billion in assets under management, on Thursday sent the company a letter that also urges a shakeup of the U.S. oil and gas company’s board. The hedge fund repeatedly compared SandRidge to Chesapeake Energy Corporation (NYSE:CHK), which has been besieged by a governance crisis and liquidity crunch. Ward co-founded Chesapeake with Aubrey McClendon in 1989. Ward joined SandRidge in 2006 and took the company public the following year.
Redleaf’s Whitebox to Open Long-Short Stock Mutual Fund (BusinessWeek)
Hedge fund investor Andrew Redleaf’s firm is opening a long-short equity mutual fund for retail investors. Whitebox Advisors LLC, which has $2.3 billion in assets under management, is starting its second alternative mutual fund, Whitebox Long Short Equity Fund, which seeks to provide positive returns regardless of the direction and fluctuations in the U.S. equity markets, according to a filing with the Securities and Exchange Commission. It will be publicly offered to investors starting Nov. 12 and be run by managers including Jason Cross, Paul Karos and Kurt Winters.
Andy Redleaf of Whitebox Advisors
Hedge fund pay rises (eFinancialNews)
According to the Glocap 2013 Hedge Fund Compensation Report, hedge fund pay has increased 15% compared to what it was in 2011. The annual report is a joint effort between executive search firm Glocap and data provider Hedge Fund Research. Adam Zoia, chief executive at Glocap, told Financial News: “Hedge fund compensation is up but it’s still not back up to the peak of 2007. Pay is highly correlated to fund performance but on the back of poor performance in 2008 and, to a lesser extent, 2011, 57% of funds have not yet crossed their high-water marks.”
SEC accuses Commonwealth Advisors and founder of concealing $32m hedge fund losses from investors (Opalesque)
The U.S. Securities and Exchange Commission (SEC) charged a hedge fund manager with defrauding investors by hiding millions of dollars in losses suffered during the financial crisis from investments tied to residential mortgage-backed securities (RMBS). This lawsuit reportedly follows a four-year long investigation. Walter A. Morales and his firm Commonwealth Advisors Inc., located in Baton Rouge, LA, allegedly bought the lowest and riskiest tranches of a collateralized debt obligation (CDO) called Collybus. According to the SEC, Morales sold MBSs into the CDO at prices he had obtained four months earlier, while knowing that the RMBS market had declined precipitously in the meantime. As the CDO investments continued to perform poorly, Morales and his firm conducted a series of manipulative trades between the hedge funds they advised (called cross-trades) in order to conceal a $32m loss experienced by one of the funds in its Collybus investment.
Chinese property bonds, at what price? (IPE)
It has been a year of strong performance for bonds of Chinese property companies according to participants at a recent IPA hedge fund roundtable, held in Hong Kong. (The full discussion will be published in an upcoming special edition of IPA magazine). Eddie Tam of Central Asset Investments says: “If we’d been just in Chinese property bonds, we’d be happy campers, as they’re up 30% this year.” Alex Au of Richland Capital Management Ltd. adds: “My personal portfolio is all in Chinese property bonds as I think they were mispriced and the yields were too high in relation to the credit.” However, it hasn’t been an easy ride for Chinese property in the last two years, and whilst pockets of opportunity have arisen, risks in the sector still exist.
Sciens launches managed account analysis tool for hedge fund investors (Opalesque)
Sciens Alternative Investments, part of the Sciens Capital Management Group and provider of single- and multi-strategy funds of hedge funds and managed account services, today announces the launch of the Sciens Managed Account Risk Technologies (S.M.A.R.T.), an interactive risk analytics and portfolio construction engine that enables investors to evaluate their Hedge Fund portfolios and aggregated fund exposures on Sciens Managed Account Platform (MAP). Mr John Godden, Head of Managed Account Platform, Sciens said, “The main challenge for Hedge Fund investors is insufficient and / or out-of-date information on which to base investment decisions. We created SMART in response to a growing desire among institutional investors to manage Hedge Fund investments in the same way as their traditional Equity / Bond portfolios. SMART is unique because it draws upon up-to-date (T+2) information from our managed account platform and provides the tools for highly accurate analysis and modelling to a much deeper level than previously possible.
Hedge fund founders lose their cool in lunchtime lift ordeal (Telegraph)
NewSmith founders Michael Marks and Stephen Zimmerman had put in a full morning’s work hedging funds in their Berkeley Square base. But disaster struck on the way out to a well-earned Mayfair lunch when the pair got trapped in the office lift for more than an hour. To the great amusement of their hedge fund colleagues, Diary hears it was a case of “I’m a former Merrill Lynch celebrity, get me out of here!” as the pair blustered away to security through the intercom about taking legal action and not paying the rent.
Maitland acquires Admiral Administration (HedgeWeek)
Maitland, a provider of fund administration, multi-jurisdictional legal, tax, fiduciary and investment advisory services, has acquired Admiral Administration. Admiral is a hedge fund administrator with offices in the Cayman Islands; Dublin, Ireland; Halifax, Nova Scotia; and Richmond, Virginia. It combines best of breed technology including Advent Geneva, Advent Partner and Paladyne with qualified staff to provide clients with a customised solution to meet the specific needs of the alternative investments industry including hedge funds, private equity funds, Ucits and other regulated funds.
AMR avoids investigation into $2.26 billion debt deals (TheStar)
Hedge fund Marathon Asset Management has withdrawn a request for an independent investigator to examine the books of American Airlines, a unit of bankrupt AMR Corp, lawyers for the companies said at a hearing on Thursday. The move came after AMR agreed to preserve potential clawback claims relating to debt deals, struck between Marathon and AMR, that left American Airlines with $2.26 billion of debt. AMR entered bankruptcy last November, and is considering its options for emerging either as a standalone firm or to merge with smaller competitor US Airways Group, which is making an aggressive takeover push.
Patanella to Lead Grant Thornton LLP’s National Asset Management Sector (BusinessWire)
Grant Thornton LLP announced that Michael Patanella, 37, will assume responsibility as leader of the firm’s National Asset Management Sector. “Michael’s expertise and vast knowledge of asset management will be key as we continue to drive growth in this area of our financial services practice,” said Jack Katz, Grant Thornton’s Northeast region managing partner, New York Cluster managing partner and National Financial Services managing partner.
NY judge is key to Argentine tangle (NYPost)
A Manhattan federal judge holds the key to Argentina’s future. The South American country will ask Judge Thomas Griesa this morning for more time to fight a ruling that it must make a $1.3 billion bond payment to hedge fund billionaire Paul Singer alongside other bondholders. If Judge Griesa denies Argentina’s request, the country will face two equally distasteful decisions.
Service providers push to deliver greater transparency (HedgeWeek)
Despite the operational challenges that face managers who decide to take on managed accounts, it seems almost inevitable that as more institutional money comes into the alternatives space, managed account AUM will continue to climb. This is because capital raising, for all but the biggest and best managers, remains an almost Sisyphus-like endeavour. According to a recent industry report, assets on the leading managed account platforms rose 15.9 per cent between June 2011 and June 2012 to USD72.8billion. Managed accounts are here to stay. However, to what extent they will supersede commingled funds remains to be seen.
Evolution centres on flexibility and customisation (HedgeWeek)
Greater sophistication among hedge fund managed account investors is changing the way managed account platforms (MAPs) operate. Flexibility and customisation are at the forefront of the offering among independent platforms, free of the regulatory manacles being imposed on banks. What appears to be driving this shift towards a more investor-centric model of customised solutions, is the changing nature of the investor. Increasingly, large institutions – state pension funds, insurance companies – are looking to allocate directly to managers they favour via bespoke single mandates, or, to a lesser extent, via portfolios of mandates. They have the assets to do it – most other investors do not.
Dromeus Capital eyes Greek opportunities (FT)
Wanted: investors for a new hedge fund to bet on soaring Greek asset prices. With fresh austerity measures voted through only this week, and fires in Athens still burning from violent protests on Wednesday, Dromeus Capital is raising a new fund to profit from “outstanding” investment opportunities in the stricken country. The fund will be the first of its kind dedicated solely to taking advantage of the dramatic sell-off in Greek assets that has dragged the Athens stock market down to levels last seen in 1993. The founders of Dromeus, an emerging markets-focused hedge fund manager, say some bond and equity prices have more than priced in the risks of Greece falling out of the eurozone and, as such, certain securities offer a big upside.
Consultant Gray & Co. acquires hedge fund firm Tiburon (PIOnline)
Investment consulting firm Gray & Co. acquired hedge fund manager Tiburon Capital Management. The acquisition, at the end of October, is part of Gray & Co.’s further expansion into discretionary investment management, said Yolanda D. Waggoner-Foreman, principal, director of manager research and chief of administration. Terms aren’t being disclosed, Ms. Waggoner-Foreman said. Including the $54 million managed by Tiburon Capital Management in its event-driven hedge fund strategy, Gray & Co. manages about $500 million in discretionary assets, mostly in the firm’s 11-year-old manager-of-managers strategy.
Fiscal cliff impact may hobble hedge fund FX flows (Reuters)
Among those peering most anxiously over the U.S. “fiscal cliff” are arguably hedge fund foreign exchange sales traders and their banks. The implications of possible U.S. tax hikes for hedge fund FX volumes and, by extension, profitability in early 2013 are not pretty. There are implications for the wider market too. Hedge fund flows are highly prized by banks given that their size can potentially move the wider foreign exchange market. Investors with capital gains on hedge fund investments may be considering crystallising their profits before year-end, given the chance U.S. tax rates will rise on Dec. 31 if the White House and Congress fail to agree a compromise.
Woori readies $200 mln seed capital as Asia hedge funds seek backers (Reuters)
Singapore-based Woori Absolute Partners is raising a $200 million seeding fund with French joint venture partner NewAlpha to invest in capital-starved Asian hedge funds looking for backers. A seeding fund injects early stage capital into a hedge fund in exchange for a cut in the fund’s revenues. Such businesses flourish in a grim capital raising environment, like the one currently prevailing in Asia. While hedge fund managers are reluctant to share profits, rising competition from a number of spin-outs from banks as they shut proprietary trading desks are spurring the hunt for seeders. “This is very much a supply and demand imbalance,” Edward Moon, co-founder of Woori Absolute Partners, said.
SEC Announces Agenda and Panelists for Small Business Forum (SEC)
The Securities and Exchange Commission today announced the agenda and panelists for next week’s Government-Business Forum on Small Business Capital Formation. The event will begin at 9 a.m. on November 15 and will include two morning panel discussions. The first panel will focus on JOBS Act implementation and the second panel will focus on small business capital formation issues not addressed by the JOBS Act. In the afternoon, breakout groups will develop recommendations on a variety of issues related to small business capital formation.
SEC Charges Executives and Auditor of Electronic Game Card Company with Fraud (SEC)
The Securities and Exchange Commission today charged three executives with repeatedly lying to investors about the operations and financial condition of an Irvine, Calif.-based company that purported to sell credit card-size electronic games. The SEC also charged the company’s independent auditor with facilitating the scheme. The SEC alleges that chief executive officer Lee Cole and chief financial officer Linden Boyne orchestrated a scheme in which Electronic Game Card Inc. (EGMI) enticed investors by claiming to have millions of dollars in annual revenue, hold millions of dollars in investments, and own an off-shore bank account worth more than $10 million.
Carlyle Group reports slight gain in assets for quarter (PIOnline)
Carlyle Group LP (NASDAQ:CG) reported $157.4 billion in assets under management as of Sept. 30, an increase of 0.8% from the previous quarter and 5.9% above the third quarter of 2011. Carlyle’s largest AUM is from private equity, $53.2 billion, followed by funds of funds, $44.6 billion; global market strategies, $30.1 billion; and real assets, $29.5 billion, according to its third-quarter earnings statement released Thursday.
