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.
European Voice – Europe may be laying the foundations for the next financial bubble, through its monetary, industrial and regulatory policies.
In the midst of the worst crisis in half a century, it is easy to forget that the real problem is not the bust but what preceded it: a boom filled with bad investments.
The boom was a natural consequence of too much easy money for too long. That policy was itself a response to the bursting of the dotcom bubble, to which Alan Greenspan and the Federal Reserve responded by cutting interest rates from 6.5% to 1% – and keeping them that low for a whole year. The result was a market drowned in cheap money.
Dallas Morning News – An investor in a Perot family hedge fund has sued the Perot Family Trust and several related parties, saying they grossly mismanaged the fund, which went bust in November after starting the year with $2.5 billion in net assets.
Southern Avenue Partners LP said the fund – Bermuda-chartered Parkcentral Global Hub Ltd. – collapsed despite reassurances to investors that its trading strategies would protect it from deep losses. The hedge fund didn’t hedge, the complaint alleges.
"As a result of defendants’ breach of fiduciary duty, the Global Fund imploded," said the lawsuit, referring to Parkcentral Global Hub. "The Global Fund’s net asset value went from over $2.5 billion to less than zero.
FOXNews – MR. LENO: Tell people what happened. I know people have been over it, just –
MR. OBAMA: Well, look, here’s what happened. You’ve got a company, AIG, which used to be just a regular, old insurance company. Then they insured a whole bunch of stuff and they were very profitable and it was a good, solid company.
Then they decided — some smart person decided, let’s put a hedge fund on top of the insurance company and let’s sell these derivative products to banks all around the world — which are basically guarantees or insurance policies on all these sub-prime mortgages.
And this smart person said, you know, none of these things are going to go bust; this sub-prime thing, it’s a great deal, you can make a lot of profit. So they sold a whole bunch of them — billions and billions of dollars. And what happened is, is that when people started going bust on sub-prime mortgages you had $30 worth of debt on every dollar worth of mortgage — and the whole house of cards just started falling down.
Forbes – Commodity prices will remain low for a long time, possibly up to 7 years because of the global recession and falling demand, hedge fund Red Kite told a British newspaper.
Michael Farmer founder of Red Kite, a big player in the industrial metals markets, told the Financial Times the world economy has gone from boom to bust and that markets are going to be bust for a while.
Saudi Gazette – A seven-member investor group including billionaire George Soros and Dell Inc. founder Michael Dell have agreed to purchase failed lender IndyMac Bank, one of the largest casualties of the housing bust, for $13.9 billion.
IndyMac, which specialized in loans made with little down payment or proof of assets, was seized by the government in July after a run on the bank as the US housing market collapsed.
The Federal Deposit Insurance Corp. said Friday that a holding company led by Steven Mnuchin, co-chief executive of private equity firm Dune Capital Management, agreed to buy IndyMac in a deal reached Wednesday.
The investors have formed a partnership, called IMB Management Holdings LP, that includes Dell’s investment firm, MSD Capital.
