Each business day HedgeCo.Net keeps you informed with the top hedge fund industry news, opinion and insight from around the globe. From the latest hedge fund launches, to the impact of regulation, competition, and investor activism - we track the topics and people that make a difference to you.
The Hill – President Obama raised far more cash from hedge fund and private equity donors than any other candidate in the 2008 election cycle.
According to an analysis by the nonprofit group Open Secrets, Obama took in nearly $3.5 million from large private-equity donors that year — nearly twice what his general-election rival, Sen. John McCain (R-Ariz.), pocketed.
Reuters – The founder of a hedge fund was found on Tuesday to have defrauded his former partners and was ordered to pay them $35 million in a case described by one lawyer as a “mini-Madoff.”
James Crombie, a one-time JPMorgan Chase & Co trader, was ordered by a Delaware Court of Chancery judge to compensate Peter McConnon and Timothy Lyons for their contributions to starting Paron Capital Management LLC and for lost future earnings.
Reuters – Two top U.S. financial regulators called for a review of the initial public offering of Facebook last week, putting fresh pressure on the company, its embattled lead underwriter and the Nasdaq.
After Friday’s [May 18] nearly flat close and Monday’s [May 21] 11 percent plunge, Facebook shares were down 8 percent at $31.28 in late afternoon trading Tuesday [May 22] on heavy volume of 88 million shares. At that price the company has shed more than $17 billion in market capitalization from its $38-per-share offering price last week.
“The allegations, if true, are a matter of regulatory concern” to the Financial Industry Regulatory Authority and to the SEC, FINRA’s Rick Ketchum told Reuters.
Economic Times – “He’s not an insider trader. He never defrauded anybody. He never cheated anybody,” said a lawyer for Rajat K. Gupta, once one of America’s most prominent businessmen. “He doesn’t belong in this courtroom.”
Yet there was Gupta, sitting stoically before a jury, as his trial got under way Monday in U.S. District Court in Manhattan. Behind him in the spectators’ gallery were his wife and four daughters, one of them wiping away tears as a prosecutor painted a very different picture.
Bloomberg – It’s limbo, Japanese-style: How low can bond yields go without triggering a meltdown? This question gains urgency as 10-year government yields disappear before the world’s eyes.
At 0.83 percent, the lowest level since 2003, they hardly compensate investors for the risks inherent in buying IOUs from the most indebted nation. Public debt is more than twice the size of the $5.5 trillion economy. Worse, it’s still growing. Fitch Ratings today lowered the sovereign-credit rating by one step to A+ with a negative outlook because of Japan’s “leisurely” efforts to cut debt.
Forbes – Facebook‘s 10% decline today has turned the initial public offering of the century into the bust of the century, but consider this: A decade ago, the company probably would have gone public much earlier, say in May 2009 when Digital Sky Technologies pumped $200 million into Facebook at a $10 billion valuation.
As I reported earlier this year, companies are taking longer to go public for a variety of reasons, including all the laws and regulations designed to protect investors from the next dot-com bubble. That’s created a huge opportunity for hedge funds and private-equity firms to step in and supply the capital companies need to grow from the venture-capital stage to public company.
Economic Times – Hedge funds reduced wagers on a rally in commodities to the lowest this year on mounting speculation that Greece will leave the euro, slowing global growth and curbing demand for everything from copper to soybeans.
Money managers reduced net-long positions across 18 US futures and options by 15% to 616,841 contracts in the week ended May 15, the lowest since December 27, Commodity Futures Trading Commission data show. Gold bets fell for a second week and to the lowest since December 2008, while copper holdings tumbled 69%, the most in five weeks. Cotton wagers dropped to the lowest in five years.
Bloomberg – The euro has weathered the worst financial crisis since the Great Depression, bailouts of Greece, Ireland and Portugal, and falling interest rates. Now, investors are betting like never before that a Greek exit would be too much to keep the 17-nation currency above its long-term average.
Hedge funds and other large speculators, which pared trades that would profit from a drop in the euro to the lowest levels since November, rebuilt them to a record high last week, figures released May 18 by the Washington-based Commodity Futures Trading Commission showed. The premium for options that grant the right to sell the euro has more than doubled since March.
Telegraph – The Silicon Valley company will embark on its first full week as a public company, overshadowed by concerns about its lacklustre multi-billion debut on Friday.
It is feared demand for the shares may also be hit by Europe’s deepening debt crisis, which has sent investors fleeing for less risky investments such as US, UK and German government bonds in recent days.
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Pensions & Investments - Hedge funds are becoming more “institutionalized” as they respond to greater demands for transparency and due diligence from pension funds and other institutional clients, according to a new survey report by KPMG and the Alternative Investment Management Association.
Among 150 responding hedge fund managers, 88% reported demand for greater due diligence and 82% for increased transparency, according to the report, “The Evolution of an Industry.”
Reuters – Hedge funds and other money managers liquidated more than $2 billion in gold futures over a week, trade data on Friday showed, before a forceful rebound in the precious metal potentially tripped up some of them.
The majority of fund managers also appear to have bet wrongly against wheat, as suggested by the data from the Commodity Futures Trading Commission which showed a net “short” or bearish position against the grain which finished this week with its highest weekly gain in 16 years.
Bloomberg – Every year, the Ira Sohn foundation invites a group of esteemed money managers to present investment ideas to raise money for pediatric cancer and other children’s illnesses. And every year, those ideas are picked over by investors like jackals around a carcass. For a first-time attendee at this year’s conference on May 16, a few things stood out after six hours of listening to some of the industry’s top figures.
“I try very hard not to speak in public, and you’re about to find out why,” announced Jonathan Kolatch, the rather high-voiced founder of Redwood Capital Management and a former Goldman Sachs head of credit arbitrage. The fund manager went on to explain that the research process at his $4 billion fund was “exhaustive.”
