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.
Stuff – The drafting of the European Commission’s directive on hedge funds was a rush job without proper consultation and looks to have been subject to "undue political pressure," an industry body said.
The Alternative Investment Management Association said it was concerned about the way the Alternative Investment Fund Managers directive, covering hedge funds, was drafted. The publication of the draft directive has been postponed from this week to Wednesday, April 29.
New York (HedgeCo.Net) – The SEC has targeted hedge funders David Myatt and William Eichengreen, both of Directors Performance Fund, with charges of fraud.
The two men allegedly took $25 million of their investment advisors money and put it into a “prime bank” scheme. This kind of scheme generally involves investors fraudulent claims that funds will be used to purchase “prime” financial instruments, usually in overseas markets, with the promise of high returns. Most of the time, neither the instruments nor the markets they supposedly trade on through special “access” even exist. In this case, Myatt and Eichengreen promised returns in excess of 10% per week with minimum risk.
Eichengreen then falsified documents pertaining to performance while lying about the fund strategy and asset allocation. The hedge fund also raked in performance fees that were based on the doctored numbers.
Investors in the fund should receive their money back, after a previous suit resulted in the court being responsible for distributing the assets back to investors. Myatt also previously pleaded guilty to an obstruction of justice charge that was brought against him in connection with this hedge fund.
Julie Scuderi Senior Editor for HedgeCo.Net Email: julie@hedgeco.net
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New York (HedgeCo.Net) – New York hedge fund Elliott International’s quest to place two members of its team on the board of New Zealand-based Telecom has officially come to an end when they failed to win the bid at the annual shareholders meeting today.
Elliot had nominated Mark Tume and Mark Cross in August, after poor performance by Telecom prompted their desire to shake up the board in pursuit of higher returns.
"In our view, Telecom’s performance languishes behind that of other key telecommunications players in the international market, and we believe this is partly due to an unclear and outdated strategy. Shareholders and customers remain dissatisfied with Telecom’s progress," Portfolio Manager James Smith had said.
Elliot is well known in the states for taking over faltering companies and engaging in proxy battles with the intentions of restructuring.
In 2006, Elliot proposed that Telecom be split into two separate entities, with each company having its own listing on the stock exchange. Telecom Chairman Wayne Boyd came to his company’s defense, saying that a split was not in the best interest of the shareholders.
Julie Scuderi Senior Editor for HedgeCo.Net Email: julie@hedgeco.net
HedgeCo.Net is a premier hedge fund database and community for qualified and accredited investors only. Membership on www.hedgeco.net is FREE and EASY. We also offer FREE LISTINGS for Hedge Funds! Be sure to check out our sister sites. For more information, visit www.hedgeconetworks.com
New York (HedgeCo.Net) – Merrill Lynch is still hoping to strike a deal in which Korea Asset Management Corp. would purchase a significant amount of their bad debt. Talks have been stagnant because of recent disputes over prices, but some say those debts could sell for under $200 million.
"We have been seeking to buy a significant amount, but a deal may be difficult at this rate,” said Lee Chol Hwi, head of Korea Asset, in an interview with Bloomberg.
Merrill, like other large financial institutions that have been pummeled by subprime related losses, is trying to raise capital to overcome the $40 billion plus of losses they have had to write down. Merrill recently had to get rid of about $31 billion of collateralized debt obligations, another form of mortgage backed securities, for about 22 cents on the dollar.
Korea Asset, which was created in 1962 and aims to purchase delinquent loans, set up a $870 million fund that buys bad debts in the United States. Lee says the company can afford to be patient, since he feels the turmoil in the marketplace is only going to push prices lower.
"The U.S. market desperately needs capital,” Lee said. "It’s practically a buyer’s market there.”
Shares of Merrill are trading for almost 66% less of what they were a year ago. Financial institutions have written down over $500 billion in losses stemming from the credit crunch. Merrill leads the pack along with Citigroup of those that have been hit the hardest, with the banks writing down $51 billion and $55 billion respectively.
Julie Scuderi Senior Editor for HedgeCo.Net Email: julie@hedgeco.net
HedgeCo.Net is a premier hedge fund database and community for qualified and accredited investors only. Membership on www.hedgeco.net is FREE and EASY. We also offer FREE LISTINGS for Hedge Funds! Be sure to check out our sister sites. For more information, visit www.hedgeconetworks.com
New York (HedgeCo.Net) – Philip Richards, head of hedge fund RAB Capital, is stepping down and will be replaced with Finance Director Stephen Couttie, according to a statement made by the company yesterday.
Richards ran the $1.4 billion Special Situations Fund, which received poor press and even worse returns when it lost millions thanks to the nationalization of Northern Rock in February.
Richards will still be employed by RAB, serving as an executive director while still managing the Global Mining and Resources funds, which holds assets of around $210 million. He made headlines recently with his controversial personal stake in Bahamas-based oil exploration company BPC, in which his Special Situations Fund along with Falkland Gold & Minerals facilitated a takeover bid that earned him a hefty paycheck.
RAB currently manages around $5.9 billion in assets, a sharp drop from the over $7 billion it managed in 2007.
Julie Scuderi Senior Editor for HedgeCo.Net Email: julie@hedgeco.net
HedgeCo.Net is a premier hedge fund database and community for qualified and accredited investors only. Membership on www.hedgeco.net is FREE and EASY. We also offer FREE LISTINGS for Hedge Funds! Be sure to check out our sister sites. For more information, visit www.hedgeconetworks.com
New York (HedgeCo.Net) – Fortress Investment Group, who oversees more than $18 billion in assets, is starting a new hedge fund that will invest in markets throughout the Middle East and North Africa.
The new fund, Fortress MENA, is set to launch near the end of September and seeks returns of 20 percent annually, according to insider documents obtained by Bloomberg. Headed by Philippe Peres, who has run the company’s Drawbridge Global Macro funds for the past five years, the fund will use a “significant” amount of its employee’s personal capital to launch. The documents did not state how much money the fund aimed to raise up front.
Fortress MENA will deal with equities, fixed-income securities and currencies throughout regions seeking to reduce their oil dependencies. This includes countries such as Lebanon, Qatar, Pakistan and Turkey.
This will be the fifth hedge fund in the company’s portfolio. Fortress went public in February, but has seen shares decrease 36 percent this year compared to the 13 percent decline of the Standard & Poor’s 500 Index. Shares are trading almost 50 percent below their initial offering of $18.50.
Julie Scuderi Senior Editor for HedgeCo.Net Email: julie@hedgeco.net
HedgeCo.Net is a premier hedge fund database and community for qualified and accredited investors only. Membership on www.hedgeco.net is FREE and EASY. We also offer FREE LISTINGS for Hedge Funds! Be sure to check out our sister sites. For more information, visit www.hedgeconetworks.com
New York (HedgeCo.Net) – Harbinger Capital Partners is no stranger to aggressively seeking strategic changes within companies in which they invest. This month, it’s Harbinger vs. Cleveland-Cliffs Inc. The mining company is urging shareholders to reject a bid by the activist hedge fund that would give them veto power over one of Cleveland-Cliffs proposed acquisitions.
Harbinger is the company’s largest shareholder with a 15.5 percent stake. The hedge fund is protesting the potential acquisition of Alpha Natural Resources in what would be a $8.1 billion deal. Harbinger believes it is not in the best interest of the shareholders. Meanwhile, the hedge fund is trying to increase its stake in Cleveland-Cliffs to as much as one-third.
Harbinger has made headlines recently for similar antics involving their other investments, including the New York Times and Media General. Harbinger was awarded two seats on the board of the Times, while acquiring three seats on Media General’s board.
In order for the deal to take place, 66 percent of shareholders must approve the bid for Alpha. The vote which will decide Harbinger’s control share acquisition will take place on October 3.
Julie Scuderi Senior Editor for HedgeCo.Net Email: julie@hedgeco.net
HedgeCo.Net is a premier hedge fund database and community for qualified and accredited investors only. Membership on www.hedgeco.net is FREE and EASY. We also offer FREE LISTINGS for Hedge Funds! Be sure to check out our sister sites. For more information, visit www.hedgeconetworks.com
New York (HedgeCo.Net) – New York-based Ore Hill has suspended investor redemptions after hefty withdraws set off an “automatic gate.” The $1.2 billion Ore Hill International Portfolio, which is partially owned by hedge fund giant Man Group Plc, was frozen after investors sought to redeem about $300 million.
The credit strategies fund posted a loss of about 6.5 percent this year, after an unimpressive 2007 in which the fund returned a mere 1.8 percent. A board meeting has been planned to discuss the next course of action. Often, hedge fund will suspend redemptions in an effort to wait out unfavorable market conditions. Other times, it serves as a precursor to the eventual closing of the fund.
This year has proven to be one of the toughest for the hedge fund industry, with hedge funds down as a whole 3.5 percent, according to data from Hedge fund Research. Like many other funds, Ore Hill experienced losses stemming from the credit crisis.
Julie Scuderi Senior Editor for HedgeCo.Net Email: julie@hedgeco.net
HedgeCo.Net is a premier hedge fund database and community for qualified and accredited investors only. Membership on www.hedgeco.net is FREE and EASY. We also offer FREE LISTINGS for Hedge Funds! Be sure to check out our sister sites. For more information, visit www.hedgeconetworks.com
New York (HedgeCo.Net) – RAB Special Situations hedge fund is contemplating a share buyback, after getting burned by the nationalization of Northern Rock and the plummeting of share values that followed. The fund said it may repurchase the shares and either hold or cancel them.
"Our strategy has now lost money for three straight quarters ever since the credit crunch spread from the debt markets and began to hurt equity valuations," said RAB head Philip Richards.
While he did write off the Northern Rock loss as “very regrettable,” Richards went on to explain how he believes in a twenty year super-cycle for commodities. This would be driven by urbanization and industrialization in China, India and the Gulf region; areas that he says are experiencing supply shortages stemming from decades of under-investments in the mining and energy industries.
The $1.5 billion fund lost about 37% of its NAV this year. While it was the biggest holder of Northern Rock, other sour investments would have still forced the decline in Net Asset Value. The fund posted a loss of 28.9 million pounds, or 53.8 million dollars in the first six months of this year.
Julie Scuderi Senior Editor for HedgeCo.Net Email: julie@hedgeco.net
HedgeCo.Net is a premier hedge fund database and community for qualified and accredited investors only. Membership on www.hedgeco.net is FREE and EASY. We also offer FREE LISTINGS for Hedge Funds! Be sure to check out our sister sites. For more information, visit www.hedgeconetworks.com
New York (HedgeCo.Net) – Harbinger Capital has taken an 8 percent stake in Cablevision Systems Corp., according to a regulatory filing done yesterday with the Securities and Exchange Commission.
The activist hedge fund now owns nearly 19 million shares of the cable operator. The filing communicated Harbinger’s views that the stock is undervalued and also touched on the possibility of a strategic restructuring, saying they may “seek to influence or change the control” of the company.
It is not uncommon for hedge funds and other private equity firms to try to replace or enhance a company’s board of directors in order to give them more control or decision making privileges. Hedge funds generally seek high returns in a short time frame, and are more than prepared to try and replace management should the current slate fail to share their views.
Harbinger is no stranger to this practice. Already, the hedge fund has sought seats on two of the boards of companies in which they invest: The New York Times and Media General. Harbinger was awarded three seats on Media General’s board and two seats on the board of the Times after a much publicized near proxy battle.
Shares of Cablevision closed at $32.46 on Thursday, down 10 cents.
Julie Scuderi Senior Editor for HedgeCo.Net Email: julie@hedgeco.net
HedgeCo.Net is a premier hedge fund database and community for qualified and accredited investors only. Membership on www.hedgeco.net is FREE and EASY. We also offer FREE LISTINGS for Hedge Funds! Be sure to check out our sister sites. For more information, visit www.hedgeconetworks.com
New York (HedgeCo.Net) – Greenwich-based Andor Capital Management will liquidate its $2 billion hedge fund after posting losses due to unfavorable market conditions, following in the footsteps of many failed hedge funds this year.
Co-founder Daniel Benton announced the decision in a letter to investors this week while outlining a liquidation to start in October.
"My desire to devote more time to my family and other interests runs counter to the obligations of a hedge-fund manager who must be immersed in the markets in order to meet client expectations," Benton said in the letter. He also stated that he will be retiring from managing outside capital after 24 years in the business.
In 2004, Andor made headlines when Benton split from Co-Founder Christopher James. At that time, Andor held over $6 billion in assets and was just starting to experience turbulence after a period of enviable returns.
Benton, having been a technology investor at Pequot, built up high stakes in energy and commodities companies. However, the volatility associated with these companies has not translated well for many hedge funds invested in those sectors.
The hedge fund will continue to invest throughout August and September.
Julie Scuderi Senior Editor for HedgeCo.Net Email: julie@hedgeco.net
HedgeCo.Net is a premier hedge fund database and community for qualified and accredited investors only. Membership on www.hedgeco.net is FREE and EASY. We also offer FREE LISTINGS for Hedge Funds! Be sure to check out our sister sites. For more information, visit www.hedgeconetworks.com
New York (HedgeCo.Net) – Paul Eustace, former head of Philadelphia Alternative Asset Management Company, has been ordered to pay back nearly $300 thanks to his fraudulent ways.
According to a statement by the Commodity Futures Trading Commission, the Canadian resident was able to swindle clients by constructing false account statements and exaggerating the fund’s portfolio worth.
Prosecutors alleged that Eustace was able to hide losses from his clientele while the fund experienced trouble from October 2002 to May 2005, when the fund collapsed. He has been indicted on two criminal counts of commodities fraud.
Philadelphia Alternative Asset Management was a commodity fund that was peddled as a hedge fund. Eustace was able to raise about $230 million, despite the fact that his company never traded options or futures on the investor’s behalf.
The Philadelphia-based law firm of Stradley, Ronon, Stevens & Young will act as the collector and has already recovered $96 million. In addition to returning the money to investors, Eustace has also been ordered to cough up $12 million in civil penalities.
Julie Scuderi Senior Editor for HedgeCo.Net Email: julie@hedgeco.net
HedgeCo.Net is a premier hedge fund database and community for qualified and accredited investors only. Membership on www.hedgeco.net is FREE and EASY. We also offer FREE LISTINGS for Hedge Funds! Be sure to check out our sister sites. For more information, visit www.hedgeconetworks.com
