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.
Pittsburgh Post-Gazette – In a conference call with analysts yesterday, Joseph A. Ferrara, president, chief executive officer and board chairman of Tollgrade Communications, highlighted the company’s ”transformational activities” during the past quarter, including selling off its cable product line for $3.1 million and closing a deal on a managed services contract expected to bring in $20 million over a four-year period.
But the manufacturer of communications network testing equipment did not experience enough transformation during the past quarter to move into the black. Rather, it reported a second-quarter loss of $1.5 million, or 12 cents per share, on revenues of $10.6 million, compared with a loss of $255,000, or 1 cent per share on revenues of $12.1 million in the same quarter a year ago. The $10.6 million figure does not include $1.4 million from discontinued operations.
Globe and Mail – The ranks of the world’s millionaires shrank at the fastest rate in 2008, with North America suffering the biggest wealth loss worldwide, according to a survey by Capgemini SA and Merrill Lynch & Co.
The global slump in property and equity markets last year cut the number of millionaires by 15 per cent to 8.6 million, wiping out two years of increases, the firms said in their 13th annual World Wealth Report published Wednesday. The value of the world’s millionaires’ assets slid 20 per cent to $32.8-trillion (U.S.), after a 9.4-per-cent increase the previous year, the survey said.
Barron – Shares of auctioneer Sotheby’s have rebounded on hopes for a recovery in the art market, although the economic picture is still difficult to frame. However, although investors have bid up the shares in recent months, the stock still has new buyers.
On June 18 Atticus Capital disclosed that it now owns 3.6 million shares, or a 5.4% stake in Sotheby’s. At the end of the first quarter, the hedge fund showed no holdings in the company.
Reuters – Hedge fund manager Jeffrey Gendell is mounting a comeback after a turbulent 2008.
Gendell’s Tontine Associates LLC, disclosed plans in a Securities and Exchange Commission filing to raise funds for a new total return hedge fund. So far, $12.6 million has been raised for on-shore and offshore versions of the fund, but that is only a fraction of the amount Tontine expects to gather, people familiar with the firm’s plans said on Monday.
Nasdaq.com – Jeffrey Gendell of Tontine Partners LP, who is closing two of his hedge funds after steep losses, has raised money for his new Tontine Total Return Fund, according to regulatory filings.
The Tontine Total Return fund, which Gendell said would be launched in February, has received $11 million from investors, according to a May 21 filing with the Securities and Exchange Commission. A separate filing shows the overseas version of the fund has raised $1.6 million. A Tontine spokesman declined to comment.
Gendell last year began to shut down his Tontine Capital Partners LP Fund and flagship Tontine Partners Fund, after heavy losses. That was after his flagship fund had averaged annual returns of about 39% from 1997 to 2007.
Your Industry News – Falkland Oil and Gas Ltd (FOGL.L: Quote) said it conditionally raised about 7.6 million pounds ($11.8 million) to help fund capital expenditure on long-lead drilling equipment, and general and administrative costs through 2010 into 2011.
The AIM-listed oil and gas explorer said it issued about 10.4 million new shares to certain directors and institutional investors at 73 pence apiece, representing a 19 percent discount to the shares’ closing price of 90 cents on Tuesday.
Falkland Oil said it placed 1 million of the placing shares with one of its founding shareholders, RAB Special Situations (Master) Fund Ltd, managed by hedge fund manager RAB Capital Plc (RAB.L: Quote).
Reuters – The Hong Kong Securities and Futures Commission (SFC) said on Tuesday it had commenced proceedings against 11 defendants related to Descartes Athena Fund SPC, a hedge fund that the regulator is investigating for allegedly falsifying accounts after liquidating the fund.
The SFC said following an urgent application in the High Court by the SFC on Monday, the court appointed two administrators. It also granted an injunction order to freeze assets of up to $90.6 million in relation to two unnamed individuals.
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.
Wall Street Journal – Some numbers are so big you just have to stand back and admire them. An investment banker claiming $550 million of fees in a single year is just such a number.
The number is staggering for an industry in which a great year means an investment banker brought in $25 million in fees and $40 million of fees makes a Wall Streeter a star.
Then there is Merrill Lynch banker Andrea Orcel laying claim to bringing in more than 13 times that for his firm, or $550 million in fees, according to this Wall Street Journal article by our colleague Susanne Craig. That earned Orcel a 2008 bonus of $33.6 million–down just a smidge from the $38 million he received in the M&A boom year of 2007.
Investment bankers’ bonuses are based in large part on the credit the individual bankers claim for the deals they worked on. As today’s Page One Journal article notes, Orcel won a big one-time bonus of $12 million in 2007 just for advising the Royal Bank of Scotland Group-led $101 billion acquisition of Dutch bank ABN Amro.
Forex Pros – Private equity firm TowerBrook Capital said on Monday it had reached an agreement to take control of French debt-ridden auto parts firm Autodistribution Group.
The deal, at a time of slumping sales in the European car industry, will see Autodistribution’s debt slashed and new management brought in.
A majority of lenders have accepted a debt-for-equity swap, which will reduce the company’s debt from approximately 600 million euros ($755.6 million) to 140 million euros, a source familiar with the transaction said.
TowerBrook said it would obtain a 62.5 percent stake, the lenders would hold a 21.5 percent stake, while Bahrain-based private equity firm Investcorp, the company’s previous owner, would retain a 16 percent stake.
The U.S. government announced a restructuring of a bailout plan for the troubled insurer American International Group Inc. Monday, extending $30 billion in additional aid to the company.
News of the additional funds comes as AIG, once the world’s largest insurer, said it lost $61.7 billion in the fourth quarter, the biggest quarterly loss in U.S. corporate history, amid continued financial market turmoil.
Bloomberg – Billionaire investor George Soros’s hedge-fund firm bought more shares of Petroleo Brasileiro SA and Potash Corp. of Saskatchewan Inc. in the fourth quarter, almost doubling its holdings.
Soros Fund Management LLC bought 16 million shares of the Petrobras’ U.S. traded shares, bringing its stake to 1.45 percent, according to a filing yesterday with the U.S. Securities and Exchange Commission. The New York-based firm increased its holdings in Potash by 2.6 million shares to 2 percent in the fourth quarter. Petrobras and Potash are now the firm’s two biggest reported U.S. stocks.
