Billionaire Carl Icahn has purchased debt from Philip Falcone’s LightSquared Inc.’s bondholders as the satellite-broadband-service provider struggles to start service, two people familiar with the transaction said. Icahn, along with investors Andrew Beal and David Tepper purchased $300 million in LightSquared debt sold by Farallon Capital Management LLC. last month, said the people, who declined to be named because they weren’t authorized to speak. The move may give Icahn control of LightSquared’s radio spectrum for less than Falcone originally paid.
Soros Proves Nothing Rotten In Denmark For Home Loans: Mortgages (Businessweek)
Billionaire George Soros’s assertion that Denmark’s $480 billion mortgage credit system can weather any crisis better than any country where mortgages are bought and sold is proving the rule for international investors. The Nykredit Mortgage Bond Index, which includes the largest, most-traded of the securities, rose to a record this month, holding up through a real estate slump, a banking meltdown and Europe’s debt crisis. Home-loan bonds have gained 29.2 percent since 2007, beating U.S. Treasuries.
George Soros About To Leap Back Into U.S. Politics? (Investors)
In a classic case of burying the lede, Politico reports today that George Soros is mulling whether to return to big-time financing of Democratic candidates in the 2012 election. The article in question is a very lengthy piece about the Democrats’ ambivalence towards so-called Super PACs, outside groups that can raise funds and run election ads, and how that has stymied Priorities USA Action, a pro-Obama Super PAC. Obama had repeatedly criticized the Supreme Court decision that allowed the groups.
Marc Faber Resumes Bloodfeud With Treasurys, Still Sees Entire Financial System Imploding (Zerohedge)
The only thing that is as consistent as Marc Faber‘s message to get out of government bonds ahead of a bout of global hyperinflation which will arrive once the vicious cycle of printing to pay interest finally dawns (which in turn would happen once central planners lose control of an artificially created situation, which by definition, always eventually happens), is the passion with which he repeats it over… and over… and over, like a man possessed, if ultimately 100% correct.
Financier Perelman And Ex-Best Friend Go To Trial (Reuters)
New York corporate financier Ron Perelman and his longtime business partner and best friend Donald Drapkin had a bad falling out when Drapkin left Perelman’s company five years ago. So bad, in fact, that after decades making fortunes together buying and selling companies, they will face each other at trial in Manhattan federal court next week over what amounts to a contract dispute of about $20 million. Drapkin, 63, who now runs a hedge fund, was the first to sue in February 2009 for $18.5 million in unpaid compensation under a separation agreement. Perelman, 69, counter-sued three months later.
Investors Pull Cash From Hedge Funds (WSJ)
Hedge-fund investors, rattled by lackluster performance, yanked more money from the industry than they added during the final months of 2011, data released Thursday showed. The $2 trillion hedge-fund industry saw net investor withdrawals of about $127 million in the fourth quarter, according to data by Hedge Fund Research Inc. It was the first time investors had collectively pulled out more money than they put in since the second quarter of 2009, when the markets were still digging out of the worst of the financial crisis.
Seth Klarman Increases His Stake In ITRN (Value Walk)
Seth Klarman’s Baupost Group increased his total holdings of Ituran Location & Control Ltd. to $55m , on January 15th according to local fillings in Israel. His original purchase of shares of the company occurred in 2007. Klarman has made several recent foreign equity purchases in some European and Asian countries, which we will disclose on Monday.
Banks Lift FTSE After US Results And Liquidity Boost (Reuters)
Britain’s top share index closed higher on Thursday, led by banks after bullish earnings from their U.S. peers and with hopes building that the recent coordinated action by central banks and the IMF would be enough to avoid an economic crisis. The FTSE 100 index rose 38.78 points, or 0.7 percent, to 5,741.15, after breaking resistance at 5,700. “More and more people are realising what a bazooka that (the recent action by central banks and the IMF) is,” Steven Bell, director at hedge fund GLC, said.
Wall Street ‘Likes’ Facebook IPO, But It’s A Hard Climb From Private To Public (Reuters)
Facebook has millions of “friends” — but when the company goes public this spring, the big question will be whether shareholders are among them. Investors are hungrily anticipating what is expected to be the biggest initial public offering for a tech company in history. But the imperviousness to criticism that helped the website become a global sensation can be a drawback for a publicly traded company. “An IPO is really the tail of the dog, and the overall market is the dog,” said Bob Gelfond, CEO of the hedge fund MQS Asset Management. “There’s a lot going on in the global macro economy that continues to dominate the news. Even though companies can tell great stories, if the macro environment deteriorates, all bets are off.”
Copper Bears Retreating As Prices Rebound The Most Since 1987: Commodities (Bloomberg)
Copper traders are the least bearish in a month as the metal has its best start to a year since at least 1987 and stockpiles tracked by the world’s biggest metals exchange were poised to slump to the lowest in 3 1/2 years. Speculators are paring bets on lower prices. Hedge funds and other money managers had a net-short position of 2,465 U.S. futures and options in the week ended Jan. 10, compared with 9,489 contracts three months ago. They’ve held a net-short position since mid-September, the longest stretch since July 2009, a month after the last U.S. recession ended.
Bovespa-Index Futures Gain As Rousseff Signals Further Rate Cuts (Bloomberg)
Bovespa futures advanced, a sign the equity gauge may extend a third weekly gain, after a report that President Dilma Rousseff wants the central bank to keep lowering borrowing boosted the outlook for companies that sell in the local market. “It’s becoming clearer and clearer that the main goal of this administration is to boost growth, no matter what,” Rogerio Freitas, a partner at hedge fund Teorica Investimentos, said by phone from Rio de Janeiro.
Batista’s MMX Shuns Bid Proposed By Falcone-Backed Ferrous (Bloomberg)
MMX Mineracao & Metalicos SA, the miner controlled by Brazil’s richest man Eike Batista, said it’s not interested in a deal with Ferrous Resources Ltd (FER). after the closely held iron-ore producer proposed a takeover. Ferrous, backed by billionaire Philip Falcone’s Harbinger Capital Partners LLC hedge fund in New York, proposed on Dec. 19 a $2.3 billion takeover of MMX, according to a letter about the plan obtained by Bloomberg News. The companies held “several discussions” on a merger over the past 18 months, according to the letter, to which a response was requested by Jan. 10.
U.S. Defends Use Of Wiretap Evidence In Rajat Gupta Prosecution (BusinessWeek)
U.S. prosecutors opposed a bid by former Goldman Sachs Group Inc. (GS) director to block use in his criminal case of wiretap evidence obtained from the mobile phone of convicted inside trader Raj Rajaratnam. Rajaratnam, the former Galleon Group LLC hedge fund manager, was convicted last year of directing the biggest insider-trading ring in a generation. It was one of the first insider-trading cases in which the government made extensive use of wiretaps.
Citigroup Awards Pandit $3.7 Million In Stock As Profit Climbs (Bloomberg)
Citigroup Inc. (C), the third-biggest U.S. bank by assets, awarded Chief Executive Officer Vikram Pandit about $3.7 million in stock as the firm reported a 6.4 percent increase in full-year profit. The award is the latest payout for Pandit, 55, since the bank returned to profitability. Last year, when Citigroup shares slid 44 percent, he received a base salary of $1.75 million and a retention plan that could be valued at more than $40 million. In July, he received the remaining $80 million of the $165 million that Citigroup owed him from the bank’s 2007 buyout of his Old Lane Partners LP hedge fund.
Kodak’s 7.25 Percent Notes Fall As Company Files For Bankruptcy (Bloomberg)
Eastman Kodak Co. bonds dropped after the 131-year-old imaging company filed for bankruptcy protection. Banks, hedge funds and other investors had bought or sold a net $788.8 million of protection against a Kodak default as of Jan. 13, according to the Depository Trust & Clearing Corp.
Greece Pushes Toward Debt-Swap Deal (Bloomberg)
Greek officials and private creditors started a third day of negotiations on a debt swap deal that’s crucial to lowering the country’s borrowings and freeing up a second round of international aid. Hedge funds holding Greek bonds may resist the deal, seeking greater profit by getting paid in full, either by the Greek government or by triggering payouts from credit-default swaps. Winning support from banks seeking to limit their losses may be easier than including hedge funds and other speculators who bought securities at distressed levels.
Greece Nears Debt Deal (WSJ)
Greece and its private creditors on Friday were nearing an agreement on a deal to write down 50% of the face value of the country’s debt by swapping existing bonds for new bonds with longer maturities and lower interest rates. Greece and representatives of bondholders, predominantly banks and hedge funds, were closing in a coupon that would begin at 3.5% on new bonds with shorter maturities and rising to a cap of 4.6% on longer-dated bonds, people familiar with the matter said. This would bring the average coupon on the new bonds to around 4% to 4.2% over the span of the coupon ladder.
Jana Partners Takes 5.5 Percent Position In Marathon Petroleum (Bloomberg)
Jana Partners LLC bought a 5.5 percent stake in Marathon Petroleum Corp (MPC), the refining company that split from its parent last year and is under pressure to split again by putting its pipeline business into a master limited partnership.
Fracking Market To Grow 19% To $37 Billion Worldwide In 2012 (Bloomberg)
The worldwide market for hydraulic fracturing will grow 19 percent this year to a record $37 billion, one-third the pace of expansion in 2011 after tumbling natural-gas prices discouraged exploration for the fuel, said Spears & Associates Inc. In North America, which accounted for 87 percent of the fracking market last year, spending on the technique used to extract oil and gas from shale will top $30 billion in 2012, said Richard Spears, vice president of the Tulsa, Oklahoma-based firm that advises about 400 oil producers, hedge funds, equipment providers and manufacturers.
Blackrock Fourth-Quarter Net Income Falls 16% As Markets Drive Fees Lower (Bloomberg)
BlackRock Inc. (BLK), the world’s biggest asset manager, said fourth-quarter profit fell 16 percent as market swings eroded fees. Net income decreased to $555 million, or $3.05 a share, from $657 million, or $3.35, a year earlier, the New York-based company said today in a statement. BlackRock cut 3.4 percent of its workforce in the quarter, after adding 900 employees throughout the year, bringing the total number of employees to about 10,100 as of Dec. 31. BlackRock, which saw investment advisory fees fall by 4.5 percent to $1.86 billion, joins Northern Trust Corp. in reducing headcount as market volatility and interest rates near zero reduce income. Chief Executive Officer Laurence D. Fink, 59, after expanding into passive products such as exchange-traded funds in 2009, is adding to multi-asset strategies and hedge fund-like mutual funds as investors have turned away from traditional holdings such as stocks.
Goldman Sachs Hosts Barney Frank At Fixed-Income Sales Event (Bloomberg)
Barney Frank, co-author of the Dodd- Frank financial-reform law, was scheduled to speak today at a private event for Goldman Sachs Group Inc. (GS) clients in New York. Others scheduled to speak include Lorenzo Bini Smaghi, a former executive board member of the European Central Bank, and Daniel Och, CEO of hedge fund firm Och-Ziff Capital Management Group LLC (OZM).
Sears Rises On Report CIT Approving Orders As Early As Today (Bloomberg)
Sears Holdings Corp. (SHLD) advanced in New York trading following a report that CIT Group Inc. will approve financing for the retailer’s vendors as soon as today. Sears has lost customers and market share to discounters such as Wal-Mart Stores Inc. (WMT) and Target Corp. (TGT), which are attracting budget-minded consumers. Chairman Edward Lampert, who along with his hedge fund owns about 60 percent of the U.S. department store chain, has presided over four years of declining sales since merging Sears Roebuck with Kmart in 2005.
Porsche’s Out-Of-Court Settlement Failed –Magazine (Thomson Reuters)
U.S. investors rejected an offer from the lawyers of Porsche SE to drop over a billion euros in expected damages claims in exchange for an out-of-court settlement worth a fraction of the amount, a German magazine reported on Thursday. Sources at Porsche SE told monthly Manager Magazin that the U.S. funds had turned down a deal worth an amount in the low hundreds of millions of euros offered last year by the automotive holding’s legal firm Sullivan & Cromwell, preferring to file a lawsuit in Germany instead. Hedge funds led by Elliott Associates have been pursuing Porsche SE in courts for over a year, accusing the company of tricking investors into shorting Volkswagen voting shares only to declare in October 2008 it had effectively cornered the market.
Hedge Funds End 2011 With $2 Trillion, Investors Yanking Money Out Of HFs, Fixing The Futures Market Post-MFG And More (Reuters Hedge World)
What’s news around the hedge fund industry for Thursday, Jan. 19, 2012…
Falling Inflation May Mean Global Slowdown – Reuters Breakingviews (Reuters Hedge World)
Global inflation is falling, which could signal further slowing down in global growth, though there may still be light on the horizon, says Reuters Breakingviews Assistant Editor Peter Thal Larsen. “The worry is that this is a sign of a global slowdown,” Larsen says. “And really it’s quite telling. It’s coming down in China, it’s coming down in Europe, it’s coming down in the U.K. and in the U.S.”
The NFL’s Top-Secret Seed (WSJ)
Ray Rice, the leading rusher for the Baltimore Ravens, prepared for the NFL season with a grueling fitness regimen of running and lifting weights. The brand of seeds Rice uses is called Health Warrior. The company was started by two partners at a New York hedge fund, Dan Gluck and Nick Morris, who had used the seeds themselves in endurance sports training and to lose weight. Health Warrior’s supplier, Pharmachem Laboratories, said orders have skyrocketed in the past year as health-food connoisseurs and amateur athletes have increased the demand for the seeds.
Spain And France In The Driving Seat For Now (WSJ)
Spain and France, two key victims of Standard & Poor’s ratings downgrade on Friday 13, got investors to pay more for new cars Thursday, so everyone is happy. Come again? The explanation for Europe’s recent sovereign debt auction trends lies in the difference between the market for used and new cars, says Stephen L. Jen, managing partner of London hedge fund SLJ Macro Partners, in his latest research note.
Tom Keene Talks To Second Curve Capital’s CEO (Businessweek)
Tom Brown, chief executive of the research firm, talks about U.S. banks.
Evans To Step Down At TIAA-CREF (FINalternatives)
Scott C. Evans will step down as executive vice president of asset management at TIAA-CREF. Evans’ departure, after 27 years with the company, was confirmed for Pensions & Investments by TIAA-CREF spokeswoman Abby Cohen. Cohen said Evans “will continue to work with us to ensure a smooth transition as we conduct a search for his successor,” but did not say how long such a search could take.
Hedge Funds End Difficult Year With $2T AUM (FINalternatives)
Total capital invested in the hedge fund industry returned to $2 trillion at the end of 2011, according to the latest Hedge Fund Research data. The industry first hit $2 trillion in AUM in the first quarter of 2011, peaked at $2.04 trillion mid-year, then declined to $1.97 trillion in Q3. By the end of Q4, however, total hedge fund AUM was at $2.01 trillion, as performance gains offset a nominal net capital outflow of $127 million for the quarter.
Seth Klarman Purchases New Stake in SAMCHULLY CO LTD (Value Walk)
According to foreign filling, Seth Klarman’s Baupost Group bought $30m of SAMCHULLY CO LTD, a South Korean natural gas company on 1/12/11.
Ifina And IQE Enter Into “Co-Operation Initiative” (HFM Week)
Fund administrator Ifina has entered into what it describes as a “Co-operation Initiative” with IQE, an Isle of Man-based international fiduciary services company and trust, the companies have announced. Ifina provides fund admin services to hedge fund assets worth around $1.6bn in total, while IQE is a leading provider of international fiduciary services.
Fund Admin Trinity Opens New York Office (HFM Week)
Trinity Fund Administration, who service hedge fund assets worth around $2.1bn, has opened a new office in New York, it was announced today. The firm, ranked as the industry’s 52nd-largest hedge fund administrator by HFMWeek’s November survey, will be “primarily a local contact point enabling the firm to better facilitate its North American clients and business partners,” according to a statement.
Global Macro And CTA Ucits Set For Inflows (HFM Week)
Global macro and CTA strategies are poised to see the biggest inflows among Ucits hedge funds in the first quarter of 2012, new research suggests. The 5th edition of the quarterly ML Alternative UCITS Barometer, from ML Capital Asset Management, found that Global Macro-Discretionary funds were attracting the most interest from Ucits hedge fund investors, with 54% of its respondents looking to increase their exposure.
Canadian Newspaper Discusses Ackman’s Proxy Past (HFN)
A column in a Canadian newspaper holds hedge fund manager Bill Ackman’s activist reputation under a microscope. Toronto Star business columnist David Olive, in a piece published Friday, offers suggestions to Canadian Pacific Railway to not give in to Ackman’s push for Canadian Pacific’s current chief executive Fred Green to be replaced with former Canadian National Railway CEO E. Hunter Harrison.
Private Equity Tax Bill Coming (CNN Money)
Just days after Mitt Romney acknowledged that his effective tax rate was approximately 15%, Congressman Sander Levin (D-MI) announced plans to reintroduce legislation that would close the so-called “carried interest” loophole. For the uninitiated, carried interest is the percentage of investment profits that a private equity fund manager receives (the remainder — typically 80% — goes to the private equity fund’s actual investors). It currently is treated at the 15% capital gains rate rather than ordinary income rates, and also is exploited by fund managers in the venture capital, real estate and hedge fund spaces.
Hedge Fund Movie ‘Arbitrage’ Debuting at Sundance (HFN)
Where does a movie audience get to see Hollywood actor Richard Gere play a hedge fund magnate? Try the prestigious Sundance Film Festival, which kicked off Thursday at its Park City, Utah base. Gere is the star of “Arbitrage,” a film by director Nicholas Jarecki about a fraudulent hedge fund manager, who while trying to sell off his empire, commits a tragic error and must turn to an unlikely person for help.
Hedge Fund CFO Admits To $10.4M Theft (HFN)
The former chief financial officer of a New Jersey hedge fund admitted Wednesday in federal court to stealing more than $10.4 million from his employer. New Jersey U.S. Attorney Paul Fishman announced that David Newmark, who was once the CFO of Columbus Hill Capital Management, pleaded guilty to one count of wire fraud and one count of tax evasion.
Enercare Accepts Octavian Request to Hold Special Meeting (HFN)
Canadian company EnerCare will hold a special meeting to meet a request by New York hedge fund firm Octavian Advisors to add new board members. EnerCare, a water heater rental and sub-metering company, issued a statement Wednesday that said it will go forward with the requisitioned special shareholder meeting on April 30 to coincide with EnerCare’s previously announced annual shareholders meeting.
Barbican Launches Fresh Takeover Bid For Omega (Financial Times)
The backers of Barbican Insurance have launched a fresh indicative takeover bid for rival Omega Insurance, calling on it to begin talks to create a “merger of equals” between the two Lloyd’s underwriters. In a letter dated Thursday to Omega’s directors, obtained by the Financial Times, Carlson Capital – the Texan hedge fund behind Barbican – sought to ratchet up the pressure on the target’s board. Omega declined to comment.
Sprott: Gold To Still Top $2k An Ounce, Silver Seen Rallying In 2012 (Barrons)
Prominent commodities manager Eric Sprott, whose firm runs closed-end funds dealing in gold (PHYS) and silver (PSLV), says he expects futures prices for the yellow metal to surpass $2,000 an ounce this year. In an interview with Reuters, Sprott was less optimistic about other commodities:
Warren Buffett Partied With Jay-Z Last Night (CNBC)
So this happened. Here’s a picture of Warren Buffett hanging out with Jay-Z. Last night Warren was one of the guests hanging out at the re-opening of the hip hop artist’s 40/40 club.
That Giant Sucking Sound You Hear… (The Reformed Broker)
Man, has this game gotten tough. Anyone who tells you it’s easy is a charlatan. Even the supposed “best and brightest” in the hedge fund industry are struggling – and the investors are saying hasta la vista. Here’s Steve Eder at the Wall Street Journal: Hedge-fund investors, rattled by lackluster performance, yanked more money from the industry than they added during the final months of 2011, data released Thursday showed…
SEC Expands Inquiry Into Two Portland Hedge Funds (Oregon Live)
Federal investigators have expanded their inquiry into two Portland hedge funds, last week interviewing investors of Sasquatch Capital who say they have not been able to withdraw their money. Last year, officials from the U.S. Securities and Exchange Commission interviewed people who invested with and worked at Grifphon Asset Management, said Michael J. Esler, an attorney in Portland representing investors. Last week, they interviewed investors of Sasquatch Capital, which has ties to Grifphon.
New York Hedge Fund Takes Investment Stake In Sparrows Point Owner (Baltimore Brew)
Cerberus Capital Management, one of the country’s leading private equity investment firms, has tossed a lifeline to RG Steel, committing new capital to the cash-short owner of Sparrows Point. After days of rumors about a mystery investor, RG Steel tonight confirmed that affiliates of Cerberus have “committed to provide RG Steel with significant new capital.” The release adds that Renco Group, RG Steel’s parent company, has also supplied more cash. The amount of capital provided by Cerberus – or whether the hedge fund has taken a direct ownership position in RG Steel – was not disclosed.
