Editor’s Note: Related tickers: Fortress Investment Group LLC (NYSE:FIG), HSBC Holdings plc (NYSE:HBC), Credit Suisse Group AG (NYSE:CS), Wells Fargo & Company (NYSE:WFC), Capital One Financial Corp. (NYSE:COF), The Blackstone Group L.P. (NYSE:BX), Morgan Stanley (NYSE:MS), Transocean LTD (NYSE:RIG), Apple Inc. (NASDAQ:AAPL), Facebook Inc (NASDAQ:FB)
SAC fund to adopt claw-back provisions, beef up compliance (FoxBusiness)
Vanity Fair Made Steve Cohen Look Like Moby Dick In This Great Graphic (BusinessInsider)
Vanity Fair has gone “Moby Dick” on billionaire hedge fund manager Steve Cohen, the founder of $14 billion SAC Capital. In a piece in the June Issue, Byran Burrough and Bethany McLean refer to the fund manager as the “biggest fish” U.S. Attorney Preet Bharara is going after. They have even included an illustration by André Carrilho to go with the story, “The Hunt for Steve Cohen.” As you can see, Cohen looks like he’s playing the role of Moby Dick and Bharara is Captain Ahab.
Hong Kong Hedge Fund Richland Closes (WSJ)
Hong Kong-based Richland Capital Management Ltd. closed its hedge fund operations and liquidated its two funds, Co-founder and Chief Investment Officer Alex Au said. ” We don’t want to disclose the exact reason at the moment, but our liquidation of the funds has nothing to do with the funds’ performance or any difficulties in raising another fund—our funds have outperformed other hedge funds,” Mr. Au told The Wall Street Journal. Mr. Au, formerly a trader with HSBC Holdings plc (NYSE:HBC), and Eva Lo, a former private banker at Credit Suisse Group AG (NYSE:CS), established Richland in 2006.
The hedge fund con explained (Independent)
In The Independent’s outlook column this morning I described the hedge fund industry as a “con”. Those are strong words and require something to back them up. My analysis is based on the Simon Lack’s The Hedge Fund Mirage. Buy it and read it. The crucial point, which I referred to in the article, is the difference between time-weighted returns and money-weighted returns. Using the former, Lack calculates that the returns of the hedge fund sector as a whole (using the HFRX index) were 7.3 per cent per year between 1998 and 2010. Using the latter, the annual return was just 2.1 per cent per year between those dates.
Hedge fund manager: Fed should rev up ‘printing press’ (CNN)
Speaking at the Milken Institute Global Conference Wednesday, Arbess said that Fed chairman Ben Bernanke could do a better job at keeping his “Helicopter Ben” nickname. In case you’ve forgotten, Bernanke was given that moniker during the financial crisis when he suggested dropping money from a helicopter to fight deflation. Daniel Arbess knows debt. He’s sometimes called a vulture investor since his multibillion dollar hedge fund Xerion invests in troubled companies around the world. He said the Fed is seeing diminishing returns even though it continues to increase the size of its balance sheet.
The lucrative investment trend hedge funds don’t want you to know about (CNN)
Hedge fund executives who descended on Miami last month for a conference on unpaid property taxes were treated to waterfront cruises of estates owned by Madonna, Shaquille O’Neal, and Elizabeth Taylor. But unlike those celebrity residences, the houses the profit-chasing investors were hunting at the gathering have a prosaic facade: tax liens. …The investing has only accelerated amid a federal antitrust probe of past bid-rigging at some auctions and a pullback last year by large banks from the market. Still, some hedge funds are finding help from Wall Street, as big banks that sold risky mortgages in recent years, including Wells Fargo & Company (NYSE:WFC) and Capital One Financial Corp. (NYSE:COF), extend low-interest credit to buy liens.
Fortress First-Quarter Profit Rises 75% as Markets Bolster Fees (BusinessWeek)
Fortress Investment Group LLC (NYSE:FIG), the first publicly traded private-equity and hedge-fund manager in the U.S., said first-quarter profit rose 75 percent because of higher fees paid to the firm for managing its funds. …Shares of Fortress Investment Group LLC (NYSE:FIG) gained 49 percent this year, closing at $6.53 yesterday in New York. The stock is down Fortress Investment Group LLC (NYSE:FIG) 65 percent since the company’s 2007 initial public offering, when it sold shares at $18.50 apiece to become the first U.S.-listed buyout and hedge-fund manager. The Blackstone Group L.P. (NYSE:BX), which followed four months later, has lost (BX) 34 percent of its value.
Varden Pacific hires MCAM Group to raise funds (Opalesque)
Varden Pacific, the San Francisco-based structured credit hedge fund manager launched in late 2010 by a group of senior Wall Street veterans from Morgan Stanley (NYSE:MS), Credit Suisse Group AG (NYSE:CS) and Barclays Capital, announced that it has selected alternative assets placement agent MCAM Group to raise capital internationally for its flagship Varden Pacific Opportunity Partners fund. …The firm was founded by a group of seasoned Wall Street professionals with deep, long-running expertise in structured and derivative-based assets. Varden Pacific manages assets in hedge fund and separately managed account structures, and is registered with the SEC.
Och-Ziff Q1 profit lifted by strong incentive income (Reuters)
Och-Ziff Capital Management Group LLC said its quarterly profit more than doubled and easily beat estimates as it earned much higher fees from more investors putting new money into its hedge fund portfolios. First-quarter distributable earnings, excluding costs related to its November 2007 initial public offering, reached $136.9 million, or 29 cents a share, Och-Ziff said on Thursday. Wall Street analysts expected 16 cents a share, according to Thomson Reuters I/B/E/S. A year ago the company reported $57.3 million, or 13 cents a share, in distributable earnings.
Billionaire’s son pushes for campaign-finance overhaul (USAToday)
Jonathan Soros thinks a push by the New York Legislature to tighten the state’s campaign-finance laws could give the issue national momentum if it’s successful. And the Harvard-educated lawyer, son of billionaire hedge-fund investor George Soros, has a game plan to make it happen. The super PAC that Soros co-founded in April last year, Friends of Democracy, plans to double the number of House races — from eight in 2012 to 16 in 2014 — in which it will spend money backing candidates who support stricter campaign-finance laws. And it hopes to double the amount it raises, from $2.5 million last year to $5 million for the 2014 elections.
Why the Eurozone Recession Is Important for America (Benzinga)
George Soros knows a thing or two about making money from big bets. In 1992, Soros made a $10.00 short wager on the British pound and walked away with a billion dollars in profits. Soros is now convinced Germany needs to rethink its strategy toward the sustainability of the eurozone and, in a draconian manner, believes the country should leave the euro. Of course, should this happen, the 17-country eurozone would collapse, triggering a massive economic Armageddon and financial crisis in Europe that would ultimately generate chaos for the global economy.
Roubini: Fed Risking Sequel To 2008 Financial Crisis (HereIsTheCity)
Roubini, co-founder and chairman of Roubini Global Economics famously dubbed Dr Doom for his accurate prediction of the 2008 financial crisis, wrote earlier this week that “the problem is that the Fed’s liquidity injections are not creating credit for the real economy, but rather boosting leverage and risk-taking in financial markets.” “The issuance of risky junk bonds under loose covenants and with excessively low interest rates is increasing; the stock market is reaching new highs, despite the growth slowdown; and money is flowing to high-yielding emerging markets,” he added.
Icahn’s Transocean dividend proposal draws opposition (MySanAntonio)
An independent shareholder advocacy group has come out against billionaire investor Carl Icahn‘s proposal for Swiss drilling contractor Transocean LTD (NYSE:RIG) to issue a $4-a-share dividend. Glass Lewis & Co., a governance analysis and proxy voting firm, is the second group to oppose the plan. Last week, Institutional Shareholder Services said in a report that it opposes the proposal. Glass, in report it issued this week, said it does not support two of the three Icahn nominees, Jose Maria Alapont and John Lipinski, to serve on Transocean’s board. Glass Lewis did recommend that Transocean shareholders elect Icahn nominee Samuel Merksamer to the board and reject incumbent nominee Michael Talbert, who now is the board chairman.
Apple Bond Issue? Steve Jobs Would’ve Bought Tesla (Bloomberg)
When I woke up yesterday, like every day, I grabbed my iPhone from the bedside table and began looking through my e-mail and checking my stock portfolio, Facebook Inc (NASDAQ:FB) and Twitter. I was interested to note that Apple Inc. (NASDAQ:AAPL) plans to work with several car manufacturers to integrate maps and other products into cars — the reaction, however, was scant at best. In the Steve Jobs era, this would be the type of event reserved for the Worldwide Developers Conference; now, like the last several launches of “new” products, it was thrown into the garbage heap of “So what?”
Preparing the Adult Kids for the Inheritance (WSJ)
The father and mother, both 58 years old, wanted to teach their two grown children financial responsibility before the kids inherited their parents’ multimillion-dollar estate. The father worked at a hedge fund and the mother had inherited wealth later in life. As a result, they had nearly $50 million in investable assets. But their son, an artist, and their daughter, a stay-at-home mother, had little experience with investing and managing wealth. The couple needed help preparing their children to be stewards of their large estate, so they turned to their financial adviser of six years, Dune Thorne.
Marathon Asset Management Gets Creative in Europe (InstitutionalInvestorsAlpha)
For distressed debt hedge fund managers such as Marathon Asset Management, buying troubled assets held by Europe’s big money center banks was the Next Big Strategy that wasn’t. Hedge funds and private equity funds raised an estimated $75 billion for the European distressed strategy, only to find just a trickle of assets for sale instead of the anticipated deluge. Marathon, a New York–based credit management firm with $10.8 billion in assets, is one group that’s found creative ways to deploy the money. While Marathon did not raise a specific fund for Europe, it designated an undisclosed portion of assets for a European strategy. Despite the challenge of finding opportunities outside the balance sheets of big banks, the firm has allocated about two thirds of its European target amount.
