Oops, they did it again! Yet another trader with ties to hedge-fund titan Steven Cohen has gotten caught up in Manhattan US Attorney Preet Bharara’s widespread insider-trading probe. SAC technology fund manager Michael Steinberg has been named as an unindicted co-conspirator in the upcoming insider-trading trial of former SAC analyst Jon Horvath, The Post has learned. Steinberg, who works in SAC’s Sigma Capital Management unit and supervised Horvath, has not been accused of any wrongdoing. He is the fifth person to be linked to allegations of insider trading while still at SAC.
Sharp Peak shutting Asia hedge fund after 21 pct loss-source (Reuters)
Hong Kong-based Sharp Peak Capital is shutting down its hedge fund after double digit losses since its launch in October last year, a source with direct knowledge of the matter said, expanding the list of closures this year in Asia. The Sharp Peak Vega Fund, a volatility hedge fund which sought to profit from price swings in Asian securities, had lost 15.5 percent up to end of July this year and 21.5 percent since the launch, a fund information document seen by Reuters showed.
Citi hedge fund spin-out hires Morgan Stanley veteran (eFinancialNews)
Andrew Mack, who left the US bank in June 2010, is chief executive and chief risk officer at Portman Square Capital, the imminent new hedge fund launch led by Sutesh Sharma, Citigroup’s former global head of proprietary trading. The hire reunites Mack and Sharma, who worked together at Morgan Stanley earlier this decade. A spokeswoman for Portman Square confirmed the move. According to two people familiar with the situation, Portman Square is planning to launch a hedge fund on November 1. The fund, which will likely to be one of the biggest launches in Europe this year, is expected to reach $500m within a few months, the sources said. It is understood Citigroup is not investing in the new fund.
ALPS Fund Services opens operational office in Toronto (Equities)
ALPS Fund Services, a wholly-owned subsidiary of DST Systems, Inc. and a provider of administration services to the alternative asset management industry, has opened an operational office in Toronto. The newly formed Toronto office will provide investor services to ALPS’ offshore business. In addition to the newly launched offshore operation, ALPS recently added another resource to their New York team, hiring Mariana Salamanca as a Sales and Marketing Executive. She will report to Jason Cholewa, who heads up East Coast Business Development for ALPS’ alternative investment group, and will focus on further developing the firm’s hedge fund business in New York.
Hedge Funds coming to a place near you (BDLive)
ANOTHER step to introduce and broaden the exposure of hedge funds to mainstream investors was taken last month when the Financial Services Board and National Treasury jointly released proposed regulations to incorporate qualifying hedge funds into the Collective Investment Schemes Control Act (Cisca). The regulations allow for the creation of a new class of funds, retail hedge funds, which will be strictly regulated and allow private investors with at least R50 000 to invest. The steps follow on from the increased allocation retirement savings funds can make to alternative investments (which include hedge funds) that resulted from last year’s revision to Regulation 28, which governs pension fund investing.
Hedge Fund Industry Reached $1.76 Trillion In August – Data (WealthBriefing)
Hedge funds finished up 0.84 per cent in August, with eight out of 10 strategies in “positive territory,” according to the Dow Jones Credit Suisse Hedge Fund Index. With some $2 billion in total inflows last month, the industry saw overall assets under management lift to approximately $1.76 trillion. Specifically, the fixed income arbitrage and multi-strategy sectors posted the largest asset inflows on a percentage basis, with inflows in August of 1.05 per cent and 0.68 per cent from July levels respectively.
Hedge Fund Skeptics Warn on ‘QE Infinity’ (CNBC)
“A man’s got to know his limitations,” says “Dirty Harry” Callahan, the gun-toting, rule book-ignoring cop immortalised by Clint Eastwood in Magnum Force. It is a principle the US Federal Reserve – which earlier this month embarked upon its own, third bout of “unorthodox” enforcement, “QE3” – could learn from, according to Stephen Jen, the former Morgan Stanley FX-guru turned hedge fund manager. “The Fed officials are some of the smartest economists around,” he wrote in his most recent note to clients. The trouble is, said Mr Jen, “they know everything except their own limitations”.
Hedge funds fight image problem in Russia (InvestmentEurope)
The history of hedge fund managers being reluctant to set up in Russia continues, despite evidence that this type of product may be the best way to protect local investors against volatility. Russia took almost half a century longer to launch its first hedge fund than its global peers. Official legislation on hedge fund investing was introduced in Russia as late as 2007, but some investment managers had caught onto the idea of hedge investing long before that. The Diamond Age Russia Fund claims to be the first Russian hedge fund, launched in 1996 with over $20m in assets.
Big Asia-focused hedge fund managers are growing larger (Opalesque)
Big Asia-focused hedge funds are getting bigger as large institutional investors prefer to invest in large hedge funds, according to Albourne Partners Asia head Richard Johnston at a recent conference in Hong Kong. In a report by AsianInvestor.net it was learned that the majority of institutional investors are allocating to big hedge funds in the region in what one executive described as “the big allocating to the big”. According to Johnston, institutional investors tend to allocate to Asia-focused hedge funds with at least $500m in assets under management.
A Hedge Fund’s Complex Scheme May Cost It Millions (CNBC)
Hedge funds are supposed to be the smart money, but sometimes even they can be outsmarted. Take the case of Mason Capital Management and the Telus Corporation, a large Canadian telecommunications company. Mason Capital, a New York and London hedge fund with about $8 billion in assets under management, has made a complex bet in Telus stock that looked shrewd at first, but that may now lose tens of millions of dollars. Telus has two classes of shares, one that is voting and trades only in Canada and another that is nonvoting and trades in Canada and the United States. The nonvoting shares traditionally trade at a discount to the voting shares, but Telus is proposing to convert the shares on a one-for-one basis, giving a windfall to the holders of nonvoting shares.
Here’s What This Massive $27 Billion Hedge Fund Company Has Been Buying (DailyFinance)
Every quarter, many money managers have to disclose what they’ve bought and sold, via “13-F” filings. Their latest moves can shine a bright light on smart stock picks. Today let’s look at Citadel, founded and run by Kenneth Griffin. It’s one of the biggest hedge fund companies around, with a reportable stock portfolio totaling $27.1 billion in value as of June 30. …Among holdings in which Citadel increased its stake were domestic tobacco giant Altria Group, Inc. (NYSE:MO) and Foster Wheeler AG (NASDAQ:FWLT), which specializes in engineering, construction, and power-plant equipment. Attracting many investors to Altria is its 5.3% dividend yield, though some are steering clear because of the shrinking smoker base in the U.S. and increasing regulations and taxes, which can put pressure on profitability. If that’s you, keep in mind that Altria also has a growing smokeless-tobacco business and a stake in beverage giant SAB Miller.
Hedge Funds and Their World: Slow Recovery Ahead (AllAboutAlpha)
Deloitte’s asset management group hosted a breakfast press briefing recently that turned into a wide-ranging bull session regarding the state of the hedge-fund world. The conclusion that sticks in one’s mind is: things are getting better, but you can leave your go-go boots in the back of your closet for some time yet. Hearing the bull thrown by such very well-informed people as Cary Stier, Ellen Schubert, and Ted Dougherty is an enjoyable way to spend a morning, especially when the people in question have been speaking to hundreds of the most influential investors and asset managers in New York.
Hedge Fund Exec Ordered To Pay $1.6M In Misused-Funds Case (Law360)
A Florida federal judge on Monday ordered a former manager of two bankrupt Florida hedge funds to pay back more than $1.6 million he allegedly obtained in a scheme to misappropriate $34 million from investors. Gregory Tindall, one of four fund managers charged by the U.S. Securities and Exchange Commission, received the maximum civil penalty allowed by law. Tindall did not fight the charges, and in May Judge James D. Whittemore entered a default judgment against him.
Time running out to save Nine from receivership (StockJournal)
IT WAS once the cornerstone of Kerry Packer’s multibillion-dollar fortune, but after two full days of talks among creditors Channel Nine was last night still fighting to stave off bankruptcy. Sydney played host to a powerful group, believed to include Nine’s chairman, Peter Bush, and chief executive David Gyngell. They met representatives of the key creditors – Steven Sher of Goldman Sachs, distressed debt specialists Ken Liang and Edgar Lee representing the hedge fund Oaktree, and Asia Pacific head of hedge fund Apollo, Steve Martinez, along with his Hong Kong-based colleague, Kevin Crowe.
India Reviewing 20 Hedge Fund Applications (Finalternatives)
Indian regulators are considering at least 20 applications to launch hedge funds in the world’s second-largest country, just two months after approving its first. The Security and Exchange Board of India gave its blessing to seven hedge funds in July and August; the regulator unveiled new alternative investments regulations in April.
Goldman Sachs sets up hedge fund platform (FierceFinance)
Funds of hedge funds have disappointed plenty of limited partners as of late. In some ways, this segment of the industry has performed the worst since the financial crisis in terms of inflows. Criticism has been rampant, which has led some broker-dealers to take a different approach. Goldman Sachs has put together a new hedge fund platform for customers, which will allow them to make easier investments in hedge funds with lower minimum investments.
Hedge Funds Cut Commodities Bets (Finalternatives)
Hedge funds trimmed their commodities exposure for the first time this month as prices dropped for the first time since September and bad news flowed from China and Europe. Hedge funds and other money managers cut their net-long bets on 18 U.S. commodity futures and options by 1.7% in the week ended Sept. 18, the Commodity Futures Trading Commission said. The drop followed two straight weeks of increased exposure that sent hedge fund holdings to a 16-month high.
Danish HF Appoints State Street for Admin Support (HedgeFund)
Global administrator State Street has been hired by a Danish investment firm to support its newly-launched long/short equity hedge fund. Hedgeweek reported that State Street will provide custody, transfer agency and Luxembourg fund administration services to Maj Invest’s new fund. The new fund, which has $215 million in AuM, was launched in Luxembourg in June and looks to seek returns by selecting long and short positions in the U.S. equity market.
Court to Decide If SEC Can Sue Gabelli Fund Execs (abcNews)
The Supreme Court will decide how long the Securities and Exchange Commission can wait before suing fund executives for securities fraud. The high court on Tuesday agreed to hear an appeal from Gabelli Funds LLC executives Bruce Alpert and Marc J. Gabelli. They were sued by the SEC in 2008 for allegedly committing securities fraud by allowing a hedge fund to rapidly trade shares of a mutual fund. Gabelli and Albert say a five-year statute of limitations started no later than 2002, when they stopped the practice. They say investigators missed their chance to sue them.
Hedge Funds Selling and What it Means To You (Kapitall)
Hedge fund managers have been selling companies that might be considered core holdings. Hedge Fund activity Filings available in August showed Warren Buffett’s Berkshire Hathaway and John Paulson’s funds have been selling. If hedge funds were selling as markets continue their ascent, should you be, too? …Lynch advised investing in companies by first understanding its finances, because losses come from companies with poor balance sheets. Investors ought to wonder why hedge fund managers are selling renowned company brands. It is impossible to get a full picture on hedge fund activity: managers only need to reveal some of their trading activity. Unreported buys and sells means there reported positions are hedges.
Dr Doom reversed his previous bearish views on China stocks: good to buy (MorningWhistle)
Marc Faber, publish of the Gloom Boom & Doom report, told Bloomberg Television’s Betty Liu on “in the Loop” that Chinese stock market was now relatively depressed. So he believed the asset allocator might move some money in Chinese stocks and then they could rally 10 percent to 20 percent. Meanwhile, Faber declared during a hedge fund managers’ forum in Hong Kong, “I think China stocks are quite a good buy,” and added that he also sees opportunities on European stocks, which he has been buying for about four months now.
Roubini: Global Economy Faces Risks on Multiple Fronts (MoneyNews)
The global economy faces four events that could merge into a perfect storm and deal an already tepid recovery a major blow in 2013, said New York University economist Nouriel Roubini. “One is that the eurozone crisis gets worse and becomes a train wreck. The second one is that the fiscal cliff becomes severe in the United States and you have a contraction,” Roubini told Foreign Policy magazine, referring to the fiscal cliff, a combination of expiring tax breaks and automatic spending cuts kicking in at the same time and threatening to throw the economy into a recession next year if left unchecked by Congress.
Icahn, Raynor Spar Over Soured Federal-Mogul Deal (Law360)
An attorney for Carl Icahn told a New York state appeals court Tuesday that a lower court was wrong to rule against the activist investor in two cases over an agreement to invest in auto parts manufacturer Federal-Mogul Corp. with Texas hedge fund manager Geoffrey Raynor. The two suits involve a 2001 agreement between Raynor and Icahn to partner up and buy Federal-Mogul debt. Federal-Mogul went bankrupt in 2001, facing massive asbestos liability, and emerged in 2007. Raynor and his affiliates have alleged that Icahn and…
SEC Charges Bank Executives in Nebraska With Understating Losses During Financial Crisis (SEC)
The Securities and Exchange Commission today charged three former bank executives in Nebraska for participating in a scheme to understate millions of dollars in losses and mislead investors and federal regulators at the height of the financial crisis. One of the executives and his son also are charged with insider trading. The SEC alleges that Gilbert G. Lundstrom, who was the CEO and chairman of the board at Lincoln, Neb.-based TierOne Bank, along with president and chief operating officer James A. Laphen and chief credit officer Don A. Langford played a role in TierOne understating its loan-related losses as well as losses on real estate repossessed by the bank.
Lehman to Pay Legal Fees of Paulson Group, Goldman (WSJ)
A number of Wall Street banks and hedge funds—including Goldman Sachs Group, Inc. (NYSE:GS) -2.66%., Paulson & Co. and Mark Brodsky’s Aurelius Capital—have managed to squeeze a few more millions of dollars out of Lehman Brothers Holdings Inc. As our DBR colleague Jacqueline Palank reported in July, a number of financial firms went to court to have Lehman’s estate cover their legal fees, arguing their work made a “substantial contribution” to Lehman’s Chapter 11 case. Such requests aren’t uncommon in big bankruptcy cases, where rival creditor factions battle it out in court to get a bigger piece of the pie and, in some cases, boost the recovery of all creditors or save the company money.
SEC Charges N.Y.-Based Brokerage Firm with Layering (SEC)
The Securities and Exchange Commission today charged a New York-based brokerage firm and three executives for allowing traders outside the U.S. to access the markets and conduct manipulative trading through accounts the firm controlled. The SEC’s investigation found that Hold Brothers On-Line Investment Services ignored red flags indicating that overseas traders were accessing the markets through the firm’s customer accounts and repeatedly manipulating publicly-traded stocks through an illegal practice known as “layering” or “spoofing.” In layering, the trader places orders with no intention of having them executed but rather to trick others into buying or selling a stock at an artificial price driven by the orders that the trader later cancels. Hold Brothers’ president and co-founder Steve Hold, former chief compliance officer and chief financial officer Robert Vallone, and a third executive William Tobias were aware of several e-mails and other indications that manipulative trading was occurring through Hold Brothers accounts, yet they failed to properly investigate the warning signs and recklessly continued to provide overseas traders with buying power and access to the U.S. markets.
