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.
Guardian.co.uk – Lloyd’s of London, the specialist insurance market, has offered to buy back up to 100 million pounds ($145 million) worth of bonds at a hefty discount.
The offer applies to fixed/floating rate subordinated notes due 2024 and subordinated notes due 2025 as well as perpetual subordinated capital securities. The bonds are all rated A-.
Lloyd’s said the transaction would allow it to benefit from a significant discount on the securities without materially affecting its capital position.
Globe and Mail – The multimillion-dollar bills continue to creep up on the Olympic village project.
The city has stashed $25-million into a contingency reserve for the project, while its property endowment fund has now disbursed $100-million for the city’s own "public-realm" improvements for the new neighbourhood.
Those amounts are on top of the half a billion dollars that the city had lent to the private builders of the Olympic village by the end of last month, which is about two-thirds of the $860-million the project is anticipated to cost by the end.
Seattle Times – An official appointed to recover the assets of a prominent Manhattan lawyer accused of defrauding hedge funds of at least $400 million says he has safeguarded more than $100 million in assets, including an $18.5 million yacht.
The court-appointed receiver, Mark Pomerantz, outlined his findings about lawyer Marc Dreier and his 150-lawyer firm, Dreier LLP, in a report made public Wednesday in U.S. District Court in Manhattan.
Dreier, 58, was arrested in December on securities fraud charges. He remains under house arrest while his lawyer, Gerald Shargel, prepares what he says is likely to be a guilty plea for his client.
Reuters – The golden age for super-sized hedge funds may be coming to an end as investors think about putting more money with smaller players, said an industry veteran who is setting up his own fund.
"I think the established hedge funds will get smaller over time because of redemptions, losses, and loss of talent," Thomas Grossman, principal at Union Avenue Advisors told the Reuters Private Equity and Hedge Funds Summit in New York.
Armed with $100 million (68.6 million pounds) in assets, Grossman plans to make bets in emerging markets and raise as much as $300 million for his new fund. Previously he ran Aeneas Capital Management.
Seekingalpha.com – To understand which segments of the U.S. equity market were most affected by hedge fund selling pressures late in 2008, a good place to look is 13F filings with the SEC. These are required from institutional investment managers with US$100 million or more in securities.
Citigroup’s small and mid cap stock strategist, Lori Calvasina, reviewed recently released filings for the fourth quarter and found that small and mid cap stocks were hit hardest.
Seattle Times – Just a third of hedge funds with assets of more than $100 million had positive returns in 2008, according to data compiled by Bloomberg. Abraham Trading Diversified Program, a small operation in rural Texas, was up 30 percent in 2008.
It’s late on a Sunday evening in October, and Salem Abraham is the last diner at the Cattle Exchange steakhouse. Abraham is a businessman and lifelong resident of this tiny oasis of a town — population 2,277 — nestled among cattle ranches in the desolate Texas Panhandle, its green hills watered by the Canadian River.
Bloomberg – Mohammed Syed has spent the past seven years scouting out the best hedge-fund investments for clients of his Axiom Fund Manager Ltd. Now, he’s seeking to expand the $100 million he oversees by acquiring rivals.
“I am looking for two or even three firms that can complement my business,” said Syed, 45, who founded London-based Axiom in 2002. “A year ago most people wanted huge premiums for their businesses, but now it’s a different story.”
Hedge funds are consolidating after record investment losses and customer withdrawals cut assets by 37 percent in the second half of 2008, squeezing their main source of fees. As many as 40 percent of the 9,000 hedge funds and funds of funds may disappear in the next two years, according to Karamvir Gosal, a New York- based investment banker at Jefferies Putnam Lovell. While some will return money to investors and shut their doors, mergers and acquisitions will be more prevalent than in the past.
Bloomberg – Before I quit my job trading bonds for my former Wall Street employer and set up my first hedge fund, I thought long and hard.
I stared at the ceiling every night, unable to sleep, and asked myself, over and over, many difficult questions. For example: “How sincerely do I want to grow my net worth from $10 million to $100 million?” And: “How much pleasure might be had from the envy of others?”
Bloomberg – The victims of Marc Dreier, the New York lawyer charged in a $400 million fraud, included Amaranth Group Inc., Perella Weinberg Partners and Blackstone Group LP’s GSO Capital Partners, U.S. prosecutors said.
Government lawyers identified the firms in a court filing in New York on Feb. 9 as three of the 20 institutions they claim are victims of Dreier’s thefts. Prosecutors didn’t disclose how much it alleges each of the companies lost.
Prosecutors say Dreier, 58, persuaded two hedge funds to give him more than $100 million by falsely claiming he was selling notes issued by Sheldon Solow, a New York developer, at a discount.
Jamaica Gleaner – The presidents of Colombia and Venezuela pledged Saturday to invest US$100 million each in a special fund in hopes of boosting cross-border trade as the world economic crisis slashes global demand for their exports.
The cash will help create small businesses and should finance infrastructure projects along the border, Venezuelan President Hugo Chávez said after four hours of talks in the Caribbean port of Cartagena with his Colombian counterpart, Alvaro Uribe.
"Nobody knows where this crisis might go," Chávez told a televised news conference.
Trade between the two nations reached a record US$7.2 billion in 2008, and Chávez said they should aim for US$10 billion a year in 2009 and 2010.
Reuters India – KSK Emerging India Energy Fund had raised £100 million from AIM last year to invest in Indian energy companies.
Global recession has claimed a victim in India. KSK Emerging India Energy Fund (KEF), a £100 million fund listed in London’s Alternative Investment Market, has been wound up after the shareholders passed a resolution last week demanding the same.
The shareholders – which include large hedge funds – passed a resolution on January 22 asking for the liquidation of the company and the return of funds invested by them. The delisting of the company and liquidation has come into effect from January 23. The EGM was held in Guernsey, one of the Channel Islands.
Bloomberg - Marc Dreier, the New York lawyer accused of cheating hedge funds, said he told his 19-year-old son he could have properties worth $12.5 million after the teenager agreed to spend the summer with him, prosecutors said.
Assistant U.S. Attorney Jonathan Streeter in New York made the disclosure yesterday in a letter urging a federal judge to deny bail to Dreier, who is accused of defrauding investors of hundreds of millions of dollars. Streeter said statements made by Dreier to the receiver of his law firm, Dreier LLP, aren’t “credible” and that Dreier may have assets hidden overseas.
Dreier, 58, was arrested Dec. 7 on charges that he persuaded two unidentified hedge funds to give him more than $100 million by falsely claiming he was selling at a discount notes issued by Sheldon Solow, a New York developer. Prosecutors later said “very sophisticated investors” lost $380 million. In yesterday’s letter, they said the loss topped $400 million.
