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The Austin Chronicle - Oh, this is just dandy! Hedge-fund schemers and Wall Street manipulators – the very characters who brought us the Great American Housing Collapse – have a new target for their fast-buck profiteering: farming. E-I-E-I-O!
Speculators have long messed with farmers by artificially manipulating prices on everything from corn to soybeans. But now they’re pooling up billions of dollars from global investors to go after the farms themselves, as well as fertilizer plants, grain elevators, ships and barges, and other basic tools for producing, transporting, and storing our food supply. As one hedge-fund operator says: "It’s going on big time.
Reuters - Broker-dealers such as Morgan Stanley and Goldman Sachs are losing out in the battle for hedge funds’ dwindling pool of assets, as funds seek out banks with diverse sources of funding in a major shake-up of prime broking.
The collapse of investment bank Lehman Brothers in September shocked hedge funds, as those with accounts at Lehman when it sought bankruptcy protection had those assets frozen and risked being unable to close trades.
Bloomberg - The steepest plunge in crude prices on record may be setting up oil investors for a rally this year, if history is any guide.
The so-called forward curve of futures contracts traded on the New York Mercantile Exchange suggests oil will rise 30 percent to $60.29 a barrel by December. The curve looks almost the same as 10 years ago, after Russia’s default and the collapse of the Long-Term Capital Management LP hedge fund raised concerns that a global economic slowdown would reduce energy demand. Crude prices fell 25 percent in the final quarter of 1998, the steepest drop in seven years.
Tacoma News Tribune - It was a year of disillusionment, betrayal and excruciating pain for investors.
Wall Street got investing so wrong that the financial system needed an emergency $700 billion transfusion of taxpayer money to avoid collapse, and investors lost trillions of dollars of their life’s savings.
For the regular person with a 401(k), it didn’t help much if they obeyed the lessons of sound investing. Although investors are told that diverse mutual fund choices will help them get through a stock market downturn, the practice didn’t save them from a miserable 2008.
As the stock market plunged more than 50 percent from its October 2007 high, everything but U.S. Treasury bonds suffered drastic losses – real estate, commodities, U.S. stocks, international stocks and even hedge funds, municipal bonds and corporate bonds. As investors panicked and headed for the exits, strong and weak investments were sold. Virtually nothing was immune.
“All 10 sectors within the Standard & Poor’s 500 fell, from a 22 percent slump for consumer staples to a 74 percent thrashing for the financials,” said Standard & Poor’s chief investment strategist Sam Stovall.
Trading Markets - Morgan Stanley is looking at scaling back its prime-brokerage operation, selling assets or buying a faltering regional bank, the New York Post said citing sources.
The firm may also try to work out a way to piggyback on to the $1.3 trillion deposit base of Japan’s Mitsubishi UFJ Financial Group, the paper said citing people familiar with the matter.
Mitsubishi UFJ took a 21 percent stake in Morgan Stanley for $9 billion earlier this week.
The firm is also eyeing trimming its balance sheet and exiting, or scaling back, from businesses that don’t provide high returns, like prime-brokerage, trading of corporate bonds and high-yield debt, the paper added.
Reuters - JPMorgan plans to invest more than $1 billion in Asian real estate over the next three years, hoping to fill a gap as Indian and Chinese developers crave funds and rival investors recoil from property markets.
The investment bank, which has fared better than some Wall Street rivals because of smaller exposure to U.S. subprime mortgage investments, is using its special opportunities group to finance Asian property firms and their projects.
"It’s a fantastic opportunity for us at a time when a lot of our competitors are scaling down because of difficulties accessing their balance sheet," the group’s Asia real estate head, Bryan Southergill, told Reuters in an interview.
Milwaukee Business Journal - An activist British hedge fund has taken a 5 percent stake inSovereign Bankcorp Inc.,according to a filing with the Securities and Exchange Commission.
London-based Toscafund Asset Management said its passive stake amounts to 33.5 million shares.
Banco Santander Central Hispano, Spain’s largest bank, owns roughly a quarter of Sovereign’s stock and ultimately can exercise an option to buy the Philadelphia-based bank.
Sovereign has struggled after years of rapid expansion through acquisition. The bank’s stock price has fallen in the last year from roughly $20 and bottomed out at $7 as it suffered negative earnings caused by some problem loans. The stock closed down 1 percent Thursday at $9.52. Under new CEO Joseph Campanelli, Sovereign has focused the last year on reducing the size of its balance sheet risk and zeroing in on its core mid-Atlantic and New England retail markets.
Reuters - Belgian-Dutch financial services group Fortis said on Wednesday it had sold former ABN AMRO unit International Asset Management IAM.L as part of a strategy to bolster its balance sheet.
Fortis said in a statement it had sold London-based fund-of-hedge-funds manager IAM to its management, supported by certain third party investors.
The deal would not have a material impact on Fortis’ net profit per share but would give some solvency relief, it said.
Fortis two weeks ago announced a programme to shore up its finances by 8.3 billion euros (6.6 billion pounds), partly by selling assets, after buying parts of former rival ABN AMRO.
Bloomberg- A year after Andrew Rabinowitz yanked his hedge fund’s cash from Bear Stearns Cos. because of concern the Wall Street firm wouldn’t make good on its trades, he’s ready to return.
For Rabinowitz’s New York-based Marathon Asset Management LLC, the lure is a prime brokerage that’s now part of JPMorgan Chase & Co., whose $1.6 trillion balance sheet is more than four times the size of Bear Stearns’s. JPMorgan Chief Executive Officer Jamie Dimon is counting on customers like Rabinowitz, some of whom helped bring Bear Stearns to its knees in March, to make his $1.36 billion takeover worthwhile.
After a run on Bear Stearns prompted a bailout by the Federal Reserve and the sale to New York-based JPMorgan, Dimon said one of Bear Stearns’s biggest attractions was its prime brokerage, which provides loans and processes trades for hedge funds. Bear Stearns lost as much as 40 percent of its so-called prime brokerage volume in the month after the March 16 acquisition.