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.
Business Spectator – European shares jumped for a fifth straight session on Monday, led higher by financials, as investor sentiment improved following further assurances over the health of the US banking sector.
At 0948 GMT, the FTSEurofirst 300 index of top shares was up 2.3 per cent at 718.41 points, extending the previous session’s gain of 0.8 per cent. But it is still down 14 per cent this year after plunging 45 per cent in 2008.
The broader STOXX 600 was up 2.1 per cent at 172.15 points, with banks and insurers topping the gainers list.
Daily Guide – Foreign investors in the Nigerian capital market withdrew some $4 billion from the Nigeria Stock Exchange and precipitated its steep decline, the Exchange’s Director General, Professor Ndidi Okereke-Onyiuke has said.
Appearing before the joint Senate Committees on Finance, Capital Market, Banking, Insurance and other financial institutions investigating the economic crisis facing the country, Mrs Okereke-Onyiuke said in 2008, foreign hedge fund managers went out and withdrew their investment of N556 billion due to the financial crisis in their countries.
Okereke, who was responding to questions posed to her by Senators as to the reasons why share prices in the stock market kept crashing despite assurances by financial managers that the fundamentals of the nation’s economy are strong, said hedge fund managers were shocked by the global financial crisis and quickly withdrew their investments from Nigeria and took it back to their countries.
CNNMoney.com - Railroad CSX Corp. said Wednesday it has settled a case of alleged securities law violations with two activist shareholder hedge funds.
If the settlement is approved by a federal court, CSX will receive $10 million from TCI, which manages The Children’s Master Investment Fund, and $1 million from 3G Capital Management.
The case, brought by a CSX shareholder, accused the hedge funds of collecting "short-swing" profits, or using insider information to nab a short-term gain. But under the settlement, the hedge funds deny any wrongdoing.
West Palm Beach (HedgeCo.net) - Transport company, CSX Corporation announced that it has joined in a civil action brought by the plaintiff, shareholder Deborah Donoghue, in federal court in New York to recover so-called "short-swing" profits under Section 16(b) of the Securities Exchange Act of 1934.
The Children’s Investment Fund and 3G Capital Partners LP are there in connection with their alleged purchases and sales of CSX securities. CSX is party to the suit in name only, which was brought for the benefit of CSX.
If approved by the court, CSX will receive $10 million from TCI and $1 million from 3G and the defendants will be released from claims of violations of Section 16(b) of the Securities Exchange Act. The settlement provides that counsel for the plaintiff will seek approval by the court for attorney’s fees and costs of up to $550,000, which will be paid from the proceeds of the settlement payable to CSX.
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!
Sify – Bernard Madoff, the long time Wall Street executive accused of cheating investors worldwide out of $50 billion, scrambled to find relatives or friends to guarantee his bond on Tuesday and keep him of jail.
In Massachusetts, where the disgraced investor long cultivated a loyal group of wealthy individuals, the state’s chief securities regulator subpoenaed Bernard L. Madoff Investment Securities and Cohmad Securities Corp, a firm that marketed Madoff investment products.
The two firms must hand over the names and addresses of all local residents who let Madoff invest their money by December 29. They must also deliver notes, emails, meeting agendas related to investments made since 2000, William Galvin, the state’s Secretary of the Commonwealth, said on Tuesday.
In New York, Madoff, who was arrested last week, has not yet fully met the conditions of his $10 million bond, according to court papers. He must find three co-signers to guarantee the bond.
New York Daily News – Is Park Ave. lawyer Marc Dreier a Blood? Or maybe a Crip?
Federal prison officials are refusing to remove the accused hedge fund swindler from 24-hour lockdown until they determine whether he’s a gang member, attorney Gerald Shargel told a judge Thursday.
"How ludicrous is that?" Shargel told Magistrate Judge Douglas Eaton during a failed attempt to get the Yale grad and Harvard Law School alum released on $10 million bail.
Eaton agreed to look into Dreier’s conditions after Shargel said prison officials told him it will be another three weeks before they can remove Dreier from lockdown at theManhattan Correctional Center.
Reuters – Merrill Lynch & Co Chief ExecutiveJohn Thain has suggested to directors that he get a 2008 bonus of as much as $10 million, but the battered company’s compensation committee is resisting his request, the Wall Street Journal said, citing people familiar with the situation.
The compensation committee has not reached a decision, but is leaning toward denying Thain and other senior executives bonuses for this year, the people told the paper.
Merrill could not be immediately reached for comment.
Shareholders on Friday approved Bank of America Corp’s takeover of Merrill, a deal fraught with risk but one that would create a banking giant with a leading position in almost every major area of the financial system.
New York (HedgeCo.Net) – The hedge fund formerly run by the late Michael Klein has been sued by two individuals who owned a mortgage lending business in which the fund had a stake.
John and Kitty Gaiser are suing California-based Pacificor after the fund allegedly “misused a position of trust and control in order to attempt to take control of and acquire – without compensation – John and Kitty Gaiser’s ownership of Quality Home Loans,” according to a statement made by the Gaiser’s legal team. According to the Gaisers, Quality Home Loans filed for Chapter 11 bankruptcy protection, at which time the hedge fund acquired the business.
“It is our hope that this lawsuit will rectify the massive damage done to the Gaisers by the named defendants,” said their lawyer John Edgar. “We will look forward to proving these damages at trial.”
Pacificor is finding themselves in the middle of several lawsuits ever since Klein and his daughter were killed in plane crash last December over a Panama forest. The Sorenson Trust and Relief Return International, who had $24 million tied up in the hedge fund, is suing over a promise that Klein allegedly made before his death.
According to the company, Klein made a verbal promise to the company, saying they could still withdraw their investment if given notice by December 31, 2007. When they moved to withdraw $14 million from the fund and redeem $10 million in stock on December 27th, they were denied by Pacificor after the fund stated they had no knowledge of the promise made by Klein.
In addition to the suit, Klein’s estate is also being sued by his ex-wife over their daughter’s death and by the family of the daughter’s friend, who was the only survivor of the crash.
Julie Scuderi Senior Editor for HedgeCo.Net Email: julie@hedgeco.net
Petroleumworld.com – The hedge fund of billionaire investor George Soros increased its stake in Brazilian state-run oil company Petroleo Brasileiro ( Petrobras) to 21.1 million American Depositary Receipts as of Sept. 30 from 11.5 million at June 30.
Soros Fund Management LLC made the move as the ADRs tumbled during the quarter to about $44 from about $71 each. Although the fund added nearly 10 million ADRs to its Petrobras stake, the value of the holding only rose to $930.7 million from $811.5 million.
Since the end of the quarter, Petrobras ADRs have fallen further, closing on Friday at $21.45.
New York (HedgeCo.Net) – Activist hedge fund Harbinger Capital might be looking to make some strategic changes to another management team. They are expected to hold talks with Leap Wireless International, in which they hold a substantial 14.8 percent stake or just over 10 million shares. The hedge fund is looking to discuss both short-term and long-term management solutions while figuring out the best way to maximize shareholder returns.
“We respect and welcome the views and opinions of all Leap stockholders, said Leap spokesman Greg Lund while avoiding any specifics. “We look forward to continuing the open and productive dialogue we’ve had and expect to have with all of our stockholders.”
Harbinger is no stranger for pushing for internal change within companies in which they invest. By acquiring board seats, the hedge fund gets a say in major decisions while giving them more control over the company. Harbinger won three seats on the board of Media General and two seats on the board of the New York Times after a nasty near proxy battle.
Shares of Leap closed at $27.90 yesterday and have fallen over 60 percent in the course of a year.
Julie Scuderi Senior Editor for HedgeCo.Net Email: julie@hedgeco.net
Reuters – Turmoil in financial markets could halve the number of hedge funds by next year, and the survivors will likely charge less for their service, an industry executive said on Monday.
Ultra-wealthy investors, who fueled a doubling in hedge-fund industry assets to about $1.9 trillion in the last three years, are now increasingly fearful about hedge-fund failures and pulling their money out, fast.
"I think people are nervous," said Robert Elliott, senior managing director at Bessemer Trust, a New York asset manager that advises clients with at least $10 million in assets.
"They have seen noteworthy blowups and don’t understand them," he told the Reuters Wealth Summit. "Hedge funds could be the next hiccup and people could say this is another example of poor regulation."
CFO.com – Even hedge funds are not immune to the credit crunch. A small hedge fund that provided short-term debt to companies has filed for Chapter 11 bankruptcy protection.
Greenwich, Connecticut-based SageCrest Finance, managed by Windmill Management, said in its Chapter 11 petition filed in U.S. bankruptcy court that it had listed assets of $50 million to $100 million, and debt between $1 million and $10 million, reported Reuters. The fund had about $1 billion in assets under management as recently as a year ago, according to hedgefund.net.
In fact, the website points out that the credit crunch put the squeeze on SageCrest’s business strategy — which is providing asset-backed specialty financing to smaller private companies that have been closed out of traditional sources of capital. Many of its projects involved extending art-, real estate-, and structured settlement-based loans.
