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.
Private Equity Hub – A group of hedge funds that provided bankruptcy funding to Delphi Corp on Monday won a high-stakes auction to take control of the auto parts supplier, scuttling a rival deal brokered by the Obama administration.
Delphi’s board of directors and GM both offered their support for the proposed deal that would hand the company’s assets over to its debtor-in-possession lenders in exchange for their forgiveness of nearly $3.5 billion in loans.
The result, announced by Delphi late Monday, came after a two-day auction in New York.
Pittsburgh Tribune Review – Tollgrade Communications Inc. is challenging the independence of two nominees for seats on its board of directors because a dissident hedge fund group is paying them to run as part of its bid for control.
Tollgrade, based in Harmar, said the fact that Ramius Group is paying $40,000 for two people to serve as nominees to the board could represent a conflict of interest.
The telecommunications services company is girding for a showdown when shareholders gather to vote at their annual meeting on Aug. 5.
Times and Democrat – Activist shareholder William Ackman sought for months to replace four incumbents on the Minneapolis-based retailer’s board of directors with five of his own picks, including himself.
The head of Pershing Square Capital Management, which has a 7.8 percent stake in Target, has argued that the cheap chic discount retailer, which has stumbled as shoppers focus on basics, needed new perspective. He said it especially needed to beef up its board in the areas of retail and real estate to better compete with its chief rival, Wal-Mart Stores Inc., based in Bentonville, Ark.
Shareholders rejected those arguments at their meeting outside Milwaukee Thursday. They also sided with the company in approving a measure that sets the board’s size at the current 12 members, instead of the 13 that Ackman had wanted.
StarTribune.com – Score a big one for Target Corp. provocateur William Ackman.
The activist shareholder got a boost from the business world’s most influential proxy advisory firm on Tuesday, when RiskMetrics Group said that investors should vote for Ackman and one of his dissident nominees on an expanded Target board of directors.
Meanwhile, another proxy-research firm, Glass Lewis, endorsed the Minneapolis-based retailers’ full slate of incumbents.
Banking Business Review – The board of directors of Barclays has entered into an agreement for the sale of its iShares business to Blue Sparkle, a new limited partnership established by CVC Capital Partners, for a total consideration of approximately $4.4 billion.
Barclays has said that this transaction gives the company the opportunity to maximise value through the sale of a business which represents a channel for Barclays Global Investors (BGI); and provides Barclays the opportunity to participate in future value creation through a continuing commercial relationship with the iShares business and the potential crystallisation of consideration through a cash-settled participation interest entitling Barclays to receive a portion of the value uplift on iShares if certain performance-related hurdles are met.
The Plain Dealer – Solon software company Agilysys Inc. has settled its differences with New York hedge fund operator and investor Ramius LLC by appointing two Ramius associates to its board of directors.
The action, which Agilysys announced this week, forestalled the threat of a proxy dispute after itnominated three of its own candidates to the board and Ramius, which owns 13 percent of the company, balked at its choices. Agilysys agreed not to expand the board beyond its current nine members.
Globe and Mail – HudBay Minerals Inc. chief executive officer Allen Palmiere tried to amend the terms of a controversial merger agreement with Lundin Mining Corp. after shareholders slammed the proposed transaction, according to court documents released by a hedge fund trying to oust Mr. Palmiere and the HudBay board.
Monaco-based SRM Global Master Fund LP, which owns 11 per cent of HudBay’s stock, said HudBay’s board of directors is “incapable of creating value and serving the best interest of shareholders,” in a filing with securities regulators Wednesday. The SRM circular calls HudBay’s ill-fated attempt to merge with Lundin a “slip-shod process” that included management-dominated negotiations and “neglect” by the HudBay board. It also includes an excerpt from a text message sent by Mr. Palmiere to Lundin’s CEO, Phil Wright, on Nov. 26, just five days after the deal to combine HudBay’s Manitoba zinc and copper operations with Lundin’s mines in Europe and Africa was announced.
New York (HedgeCo.Net) – Chicago-based Citadel Investment Group has frozen redemptions from its two largest hedge funds after investors moved to withdraw $1.2 billion, according to a letter sent to clients on Friday.
The letter, signed by CEO Kenneth Griffin, informed investors that withdraws in the Kensington and Wellington Funds may resume as early as March 31st. The funds, which manage about $10 billion making them the firms largest, have lost 49.5 percent of their value this year through December 5th.
“We have not made this decision lightly,” Griffin said. “We recognize how a suspension impacts our investors, especially those with current financial obligations of their own to meet.”
The letter also stated that Citadel will absorb a large portion of the funds’ expenses, something that clients usually are responsible for, in the range of 3 to 4 percent of assets.
While Citadel’s two largest funds may be struggling to get through the year, three other funds in the Citadel family which manage about $3 billion, have climbed 40 percent this year.
This marks only the second year since the firm’s launch in 1990 that Citadel will report a loss. The only other loss was posted in 1994, at 4 percent. Hedge funds as a whole have had posted one of the worst years to date, losing 18 percent on average, according to data compiled by Chicago-based Hedge Fund Research.
Julie Scuderi Senior Editor for HedgeCo.Net Email: julie@hedgeco.net
New York (HedgeCo.Net) – Chicago-based Citadel Investment Group lost 13 percent in November, according to a report published by the Wall Street Journal. This brings the hedge fund firm’s total losses to 47 percent for the year.
The losses stem in part from the company’s two largest funds, the Kensington and Wellington, which together manage about $10 billion in assets. Investor redemption requests totaling around $1 billion and plummeting values of bonds were the catalysts behind the losses.
This is the first year since 1994 that Citadel will post a loss. It is only their second loss since CEO Kenneth Griffin launched the firm in 1990. All is not grim, however. Bloomberg News reports that three other Citadel funds, who together manage about $3 billion, have climbed about 40 percent this year.
Hedge funds as a whole have posted their worst record to date this year. According to data by Chicago-based Hedge Fund Research, hedge funds have lost an average of 22 percent this year.
Julie Scuderi Senior Editor for HedgeCo.Net Email: julie@hedgeco.net
Forbes – Financial assets have become so cheap because of the credit crisis that now is a good time to scoop up bargains, the head of one of the world’s biggest hedge funds, Avenue Capital, said on Wednesday.
‘Now is a phenomenal time to buy, assuming you think we’re not in a depression,’ Marc Lasry, chairman and CEO of the company, said at the 2008 Clinton Global Initiative meeting in Hong Kong.
‘We’re looking at valuations we think are extremely low. Unless the unthinkable happens, you’ll be fine,’ he said, referring to the investment environment.
Welcome, I’m Steve Forbes. It’s a pleasure and privilege to introduce you to our featured guest, Cantor Fitzgerald CEO Howard Lutnick. He’ll tell us why October was his company’s best month ever.
But first…This ongoing financial crisis is driven by fear, not by a lack of cash or liquidity in the global markets. There is no reason why our economy can’t get back on track by springtime. But how do we get there form here? One answer is that we simply let financial markets work.
The economy still has very real strengths, and we know how smart, pro-growth policies work. We also already know what doesn’t work. Tax and spending does not work. One-time stimulus checks have no lasting effect. But if we actually lowered tax rates, including corporate tax rates, we’d see real stimulus.
Even Detroit could self-repair, if we let it. Right now they make money everywhere but North America. Why? Because they aren’t allowed to count the thrifty cars made overseas toward their efficiency standards. This makes no sense. Also, consider how the economy would roar ahead if we got rid of the government’s crazy mark-to-market accounting rule and had a sensible monetary policy and a strong dollar. Because if the dollar isn’t right, the world isn’t right economically. That’s the bottom line.
