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.
Nasdaq – Bank of America Corp.’s (BAC) securities unit must defend an investor lawsuit over whether it aided and abetted Lancer Management Group LLC in deceiving investors about the value of two British Virgin Islands hedge funds‘ holdings.
In an order dated Thursday, U.S. District Judge Shira Scheindlin in Manhattan denied the Charlotte, N.C., bank’s motion for summary judgment in a case brought by investors in hedge funds Lancer Offshore Inc. and OmniFund Ltd.
The Associated Press – Shares of Bank of America shot up Thursday as a new executive at the bank, as well as a prominent hedge-fund manager, decided to place big bets on the company by buying up blocks of shares.
Shares jumped $1.07, or 6.7 percent, to close at $17.
Sallie Krawcheck, the former Citigroup Inc. executive hired last week as part of a management shake up at the Charlotte, N.C.-based bank, bought more than $1 million worth of the bank’s shares on Wednesday, according to a filing with the Securities and Exchange Commission on Thursday.
Bloomberg – John Paulson, the hedge-fund manager whose wagers against the U.S. housing market helped him earn an estimated $2.5 billion last year, bought Bank of America Corp. and Goldman Sachs Group Inc. stock in the second quarter, while adding to stakes in gold companies.
His firm, Paulson and Co., bought 168 million shares of Charlotte, North Carolina-based Bank of America valued at $2.2 billion as of June 30, according to a filing yesterday with the U.S. Securities and Exchange Commission. It was the biggest new purchase in the second quarter for Paulson, 53, and made him the bank’s fourth-largest owner.
Bloomberg – Bank of America Corp. Chief Executive Officer Kenneth Lewis faces more queries about his purchase of Merrill Lynch & Co. after a federal judge refused to approve a $33 million settlement of a lawsuit over bonuses.
The bank agreed on Aug. 3 to settle U.S. claims the bank misled investors while buying Merrill. Yesterday, U.S. District Judge Jed Rakoff in New York said the amount isn’t appropriate if the bank lied about billions of dollars in payments. Rakoff asked for more filings by Aug. 24 and said he won’t rule on the accord before Sept. 9.
Bloomberg – Atticus Capital LP, the New York- based hedge-fund firm run by Timothy Barakett, reversed course in the second quarter, investing more than $3.5 billion in U.S.- listed stocks as equity markets recovered.
Atticus bought $355 million in shares of Charlotte, North Carolina-based Bank of America Corp., a new position, according to a filing yesterday with the U.S. Securities and Exchange Commission. The fund’s holdings in U.S. stocks rose to $3.71 billion as of June 30 from $118 million on March 31.
HedgeCo.net (West Palm Beach) – Hedge fund manager Headline Capital Management LLC, is spearheading a series of capital introduction events showcasing the largest gathering of hedge fund managers from the Charlotte region. Aegis Funds Management, Afton Capital Management, Blackhawk Capital Management, Charlotte Global Advisors, Gorelick Brothers Capital, Keane Capital Management plus other hedge funds in the Charlotte region are also participating.
As the nation’s second largest banking center, Charlotte is also an attractive haven for hedge funds. Some of the nation’s most talented investment professionals relocated here to work for Bank of America and Wachovia, now a wholly-owned subsidiary and east coast headquarters for Wells Fargo. Many of these former bankers and traders stayed here to start their own hedge funds, especially after merger-related layoffs.
What is truly unique about the Charlotte Hedge Fund Forum is that in a highly competitive market, 7+ hedge fund managers from the same city have the foresight to jointly promoting a series of capital introduction events. “We’re still competitors. By working together, however, we can leverage our marketing dollars to attract more investors than we could alone,” says Mark McClanahan, the marketing director at Headline Capital Management.
The Charlotte Hedge Fund Forum provides more value than the traditional cap intro event by showcasing several hedge fund managers from the same city. The Charlotte showcase is more efficient for institutional investors with tight travel budgets who want to meet several managers at the same time. Wealthy families and high net worth individuals who are more comfortable investing in managers located closer to home, especially in this post-Madoff era, will also benefit from this Charlotte showcase. The real payoff is after the event when the investor needs to visit each hedge fund’s office for due diligence. Investors who attend the Charlotte Hedge Fund Forum will save time and money following up with several Charlotte-based managers during one trip.
The Charlotte Hedge Fund Forum is scheduled for September 23, 2009 at the historic Duke Mansion where tobacco baron James B. Duke founded The Duke Endowment. Mark Yusko, President and CIO of Morgan Creek Capital of Chapel Hill, North Carolina will deliver the Keynote Speech on “Alternative Thinking for Investments” during a complimentary luncheon. Afterwards, each hedge fund manager will deliver a formal 10-12 minute podium presentation and then meet with investors during a series of 30-minute, informal “meet the manager” roundtable discussions.
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NASDAQ – Tribridge Investment Partners Ltd., a Hong Kong-based hedge fund manager, said Monday it will launch a new fund in August and hired John Liptak, former head of Bank of America Corp.’s Asia special situations group, to run it.
The new fund will have a pan-Asia focus and seek to identify mispriced or undervalued securities due to financial stress, some corporate event or other special situation. It will be biased toward large-cap companies in more developed markets in the region such as Hong Kong, Australia, Korea, Singapore, or Japan.
"I believe that the opportunities from the upcoming default cycle have not been seen since shortly after the Asian currency crisis back in 1997-1998," Liptak said in prepared remarks.
Reuters – Bank of America Corp’s primary investment management unit is drawing lower than expected bids after its likeliest suitor, BlackRock Inc, inked a blockbuster deal to buy Barclays Global Investor, the Financial Times reported, citing people close to the matter.
Bank of America has been trying to sell its Boston-based Columbia Management unit since earlier this year, but the bank has so far not announced a deal for the unit.
The company is hoping to get at least $3 billion from a sale of Columbia Management, but bids so far have come in closer to $2 billion, the paper said, citing the people.
Reuters – The Federal Reserve sought to hide its involvement in Bank of America Corp‘s (BAC.N) acquisition of Merrill Lynch as Merrill’s financial condition worsened, the top Republican on the House Oversight and Government Reform Committee said on Wednesday.
The Fed "engaged in a cover-up and deliberately hid concerns and pertinent details regarding the merger from other federal regulatory agencies," Representative Darrell Issa said in a statement released to Reuters.
Reuters – Bank of America CEO Kenneth Lewis is facing a $35 billion headache this morning after financial regulators informed the bank that was the figure it need to find now to pass the so-called stress test for viable financial institutions, the Wall Street Journal and New York Times report.
BoA already has received $45 billion in capital from the federal government, some of it to cover the disastrous purchase of Merrill Lynch.
New York (HedgeCo.Net) – Hedge funds gained 1.37 percent in March, according to data compiled by the Hennessee Group LLC. It was a successful month for the equity markets at well, with the S&P advancing 8.54 percent, the NASDAQ climbing 10.94 percent, and the Dow Jones advancing 7.73 percent.
"Hedge funds with a focus on the financial sector may potentially outperform in 2009," said Co-Founder of Hennessee Group Charles Gradante. "Not only did Citigroup and Bank of America announce a profitable January and February, but the borrowings at the Fed discount window have been steadily declining. It is possible that the banking crisis of confidence can unwind as quickly as it unfolded."
According to the data, the long/short equity index advanced 1.6 percent, thanks to programs launched by the U.S. government aimed at helping the banking sector. The arbitrage/event driven index gained 1.34 percent, with credit opportunities aplenty and many managers increasing stakes in bank debt, high yield and convertible bonds.
The global macro index saw a steady increase of .74 percent. The Hennessee Group pointed to the fact that many macro managers posted losses on their short-term Treasuries trade after the Fed announced they would buy $300 billion in U.S. Treasuries, which prompted buying and drove down yields.
This puts the YTD gain for hedge funds at just over 1 percent.
Julie Scuderi Senior Editor for HedgeCo.Net Email: julie@hedgeco.net
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Bloomberg – Bank of America Corp., the largest U.S. bank by assets, received a $138 billion emergency lifeline from the government to support its acquisition of Merrill Lynch & Co. and prevent the global financial crisis from deepening.
The U.S. will invest $20 billion in Bank of America and guarantee $118 billion of assets “as part of its commitment to support financial-market stability,” the Treasury Department, Federal Reserve and Federal Deposit Insurance Corp. said in a joint statement shortly after midnight in Washington.
