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 Unlimited – Billionaire hedge fund manager John Paulson has made a £100m profit by betting that the Royal Bank of Scotland’s share price would fall dramatically, according to calculations by the Guardian, adding fuel to the debate about the impact of short-selling on bank stocks.
New York-based Paulson, who made more than $3bn by betting against the US housing market, now appears to be profiting from positions placed on the assumption that bank shares would tumble in the aftermath of the market chaos caused by the demise of the sub-prime mortgage industry.
His hedge fund, Paulson & Co, was one of the few to trade through the ban imposed on short-selling by the Financial Services Authority in September to protect the rescue takeover of HBOS by Lloyds TSB.
The Brown Daily Herald – Several colleges and universities are sustaining large financial losses in the aftermath of Bernard Madoff’s $50 billion hedge fund scam.
Madoff defrauded investors by using money collected from new investors to pay off existing ones – an illegal strategy known as a Ponzi scheme after the man who developed it. The entire scheme collapsed when Madoff was unable to find new investors to continue paying his clients, the New York Times reported Dec. 12.
Yeshiva, Tufts and New York Universities and Bard College had all invested with Madoff before his scheme was revealed late last year. NYU was hit hardest, losing $24 million dollars. Tufts lost $20 million, Yeshiva $14.5 million and Bard $3 million, according to the schools’ respective media relations offices.
San Francisco Chronicle – A major investor called on Yahoo Inc. to sell its search business to Microsoft Corp. on Wednesday, adding to the pressure on the Sunnyvale Web portal to restart talks with its rival.
Meanwhile, Yahoo agreed to water down an employee severance plan that had been criticized as extravagant, raising speculation that the company was shopping itself for a sale. The changes were made to settle a lawsuit in which shareholders accused Yahoo of devising the severance plan to foil Microsoft’s takeover bid earlier this year.
Ivory Investment Management, a hedge fund that owns a 1.5 percent stake in Yahoo, sent a letter to board members that said a sale would garner $15 billion and help restore the company’s tumbling finances.
Reuters – Hedge Fund Firm Centaurus is considering selling its remaining 6.66 percent stake in French IT services group Atos Origin due to the financial crisis, French daily La Tribune reported on Monday.
Centaurus and Atos could not be immediately reached for comment.
According to La Tribune, Centaurus could sell its stake to PAI Partners, which is the group’s main shareholder with a 22.61 percent stake, and thereby relinquish its supervisory board seat.
eBrandz – In a move expected to fuel speculation over Yahoo Inc.’s search for a new chief executive — Corporate raider and billionaire investor Carl Icahn augmented his stake in Yahoo, has bought up close to 7 million additional shares of the Internet Company over three days this week, paying around $67 million, according to regulatory filings.
Icahn, a billionaire hedge-fund manager who now holds a seat on Yahoo’s board, acquired 6.77 million additional shares of Yahoo stock during November 24-26 for 67 million dollars, now owns 75.6 million of the company’s shares, or a 5.4 percent stake valued at around $870 million based on Yahoo’s closing share price on Friday, according to the documents filed with the Securities and Exchange Commission and dated Wednesday.
The company’s stock moved up 93 cents, or nearly 9%, to $11.51 in the shortened trading session after Icahn, a Yahoo board member who has been pushing a strategy shift or a sale to Microsoft Corp., said he had bought about 6.8 million shares.
Struggling General Growth Properties Inc. rallied Tuesday after disclosing an investment from hedge fund manager Pershing Square Capital Management LP. General Growth stock nearly doubled in morning trading.
New York-based Pershing Square Capital bought 20.1 million shares of General Growth Properties stock this month, giving it a 7.5 percent stake in the company. It also has options on an additional 33.4 million shares for a total of a nearly 20 percent stake.
Chicago-based General Growth Properties reported a $15.4 million loss for its latest quarter. It has suspended its shareholder dividend and halted plans for new development. The company, facing a looming deadline for maturing
Bizjournals.com – Struggling General Growth Properties Inc., owner of the St. Louis Galleria and 200 malls nationwide, rallied Tuesday after disclosing an investment from hedge fund manager Pershing Square Capital Management LP.
General Growth stock nearly doubled in morning trading.
New York-based Pershing Square Capital bought 20.1 million shares of General Growth Properties stock this month, giving it a 7.5 percent stake in the company. It also has options on an additional 33.4 million shares for a total of a nearly 20 percent stake.
Reuters – Japan’s Mitsubishi UFJ Financial Group, which has watched Morgan Stanley’s share price plunge 58 percent last week, is seeking more favorable terms to its $9 billion deal, a person briefed on the matter said.
The Japanese lender will still buy a 21 percent stake from Morgan Stanley for $9 billion, but will amend the terms to include only convertible preferred shares and no common stock, the source said.
Morgan Stanley is the latest stricken U.S. financial institution to seek refuge in a deal with a larger bank as the worsening credit crisis and accompanying market meltdown has narrowed the options of once stable banks and brokerages.
The Morgan Stanley news comes as Spain’s Banco Santander SA was in advanced talks to buy full control of Sovereign Bancorp Inc in a deal valued at $2.5 billion, according to another source familiar with the matter.
Reuters – Lehman Brothers Holdings Inc agreed on Wednesday to sell its 45 percent stake in hedge fund R3 Capital Partners for $250 million in cash and a $250 million investment in another fund managed by R3.
Lehman, which filed for bankruptcy protection last month, acquired the stake in May in return of a roughly $1 billion investment, according to document filed in U.S. Bankruptcy Court in Manhattan.
R3 Capital is run by Richard Rieder, a former head of global principal strategies at Lehman.
Lehman owned the non-voting, minority ownership stakes in the master fund, general partner, special limited partner and management company of R3 Capital Partners, an asset manager of funds investing primarily in corporate bonds and loans.
Trading Markets – Morgan Stanley is looking at scaling back its prime-brokerage operation, selling assets or buying a faltering regional bank, the New York Post said citing sources.
The firm may also try to work out a way to piggyback on to the $1.3 trillion deposit base of Japan’s Mitsubishi UFJ Financial Group, the paper said citing people familiar with the matter.
Mitsubishi UFJ took a 21 percent stake in Morgan Stanley for $9 billion earlier this week.
The firm is also eyeing trimming its balance sheet and exiting, or scaling back, from businesses that don’t provide high returns, like prime-brokerage, trading of corporate bonds and high-yield debt, the paper added.
Reuters – Fidelity Investments’ Harry Lange, manager of its one-time star Magellan fund, made what now looks like a poorly timed move in June: he nearly doubled his holdings of AIG.
Lange, who has already seen other financial bets sour, driving the $35.2 billion (19.6 billion pound) fund down 17.3 percent since July, may be just one of several fund managers to get burned by American International Group Inc’s meltdown.
Though it’s unclear where Magellan’s holding stood when the government launched its $85 billion government bailout of the giant insurer on Tuesday, Lange in June boosted the fund’s holdings of AIG to $865.1 million from $475 million in May.
And that was just a piece of the substantial 5.81 percent stake, or 156 million shares, held by Fidelity, the world’s biggest mutual fund company, as of the end of June, according to Reuters data.
AP – Chinese steelmaker Sinosteel Corp. has taken control of 98 percent of Midwest Corp. and will proceed with compulsory acquisition of the Australian miner, Midwest said.
In a brief statement Wednesday, Midwest said Sinosteel would recommend de-listing the company from the Australian Securities Exchange. The conclusion of the deal marks the first successful hostile takeover of an Australian firm by a Chinese entity.
The exchange released a notice from Sinosteel to Midwest that said the Chinese company had gained a 98.52 interest on Monday, after U.S. hedge fund Harbinger Capital agreed to the Chinese firm’s offer for its 15.2 percent stake.
Also Monday, major shareholders Murchison Metals Ltd. and Armadale Offshore Inc. accepted Sinosteel’s takeover bid, giving up their 9 percent and 12 percent stakes in Midwest.
Sinosteel launched a $1.36 billion bid for Midwest in December last year, and gained a controlling stake in July.
