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.
The Australian – Blackstone Group posted a wider second-quarter loss, but results beat analysts’ expectations as the private-equity giant reported positive returns and better fund-raising at its credit-oriented and funds-of-hedge-funds businesses.
On a conference call with analysts and investors, chairman and chief Executive Stephen A. Schwarzman said that two-thirds of the companies in Blackstone’s private-equity portfolio expect to see either positive or flat earnings before interest, taxes, depreciation and amortisation, or Ebitda.
That’s compared to 35 per cent of the companies in the Standard & Poor’s 500 that Blackstone expects to see gains in that area.
Pittsburgh Post-Gazette – In a conference call with analysts yesterday, Joseph A. Ferrara, president, chief executive officer and board chairman of Tollgrade Communications, highlighted the company’s ”transformational activities” during the past quarter, including selling off its cable product line for $3.1 million and closing a deal on a managed services contract expected to bring in $20 million over a four-year period.
But the manufacturer of communications network testing equipment did not experience enough transformation during the past quarter to move into the black. Rather, it reported a second-quarter loss of $1.5 million, or 12 cents per share, on revenues of $10.6 million, compared with a loss of $255,000, or 1 cent per share on revenues of $12.1 million in the same quarter a year ago. The $10.6 million figure does not include $1.4 million from discontinued operations.
Forbes – Consolidation in the asset management industry is set to intensify as encroaching regulation and client demands for independence force banks to hive off fund arms, Barclays said on Friday.
Major investment banks were finding it ever harder to keep hold of their fund divisions, Barclays President Bob Diamond told a conference call after agreeing to sell Barclays Global Investors to BlackRock for $13.5 billion.
‘The investment management industry is in early days of consolidation… We’ve made a clear decision that this trend is in place for a while and that is around independence,’ he said.
Bloomberg – Blackstone Group LP and Fortress Investment Group LLC are seeking to take over credit funds from managers unable to support their businesses after the value of investments fell.
There are “a lot of companies that are on the block,” Tony James, Blackstone’s president, said on a conference call yesterday with investors. New York-based Blackstone, the world’s biggest private-equity company, is “looking hard at consolidating acquisitions,” he said.
Financial Times – Blackstonemarked down the value of billions of dollars worth of debt it bought at a discount from Deutsche Bank to zero, demonstrating that the group bet too early on a recovery.
Blackstone bought the debt in April and marked down the value by the end of the year. The private equity group disclosed the markdown in a conference call on Tuesday with investors, who have grown concerned about the impact the global recession is having on the portfolio companies of private equity firms.
New York Daily News – Disgraced Park Ave. lawyer Marc Dreier gave fellow scamsters $100,000 to impersonate others in calls to victims, Manhattan federal prosecutors said Tuesday.
The new details emerged at a bail hearing for former broker Kosta Kovachev, 57, arrested yesterday for allegedly helping Dreier try to steal some $100 million from hedge fund managers.
Prosecutors say Kovachev pretended to be a real estate developer’s controller in an October sitdown with hesitant hedge fund managers. Kovachev also impersonated the developer’s CEO in a conference call, prosecutors say.
Politico – On the same day Lawrence Summers was announced as President-elect Barack Obama’s top White House economics adviser, the veteran economist said he would resign as the part-time managing director of one of the nation’s largest and most successful hedge funds, D.E. Shaw & Co.
But even as Summers takes the lead of economic policy thinking for the Obama White House, which has promised to be one of the most open and transparent in history, neither the Obama transition team nor D.E. Shaw would say exactly what Summers had done in his two years of work for the $36 billion hedge fund, or how much he has been paid.
In a press release issued Monday, D.E. Shaw said only that Summers had been working on “various strategic initiatives, high-level research and advising the executive committee on the overall business.”
USA Today – It is last call for investors to ask for their money back from poorly performing hedge funds. Whether that is a bullish or bearish sign for battered stocks is anyone’s guess.
Wall Street hopes the passing of the Nov. 15 deadline — the last day for many investors to make a request to redeem hedge fund shares payable at year’s end — could mark the beginning of the end of "forced selling" by funds to raise cash. If the selling recedes, it could help lift some of the downside pressure on stocks. Forced selling has been blamed for sharp stock price swings and plunging asset values in the financial crisis.
Investors have redeemed an estimated $85 billion from hedge funds through the end of the third quarter, says Charles Gradante, co-founder of hedge fund adviser Hennessee Group.
The Washington Times – A transition adviser to President-elect Barack Obama earned millions of dollars overseeing an office that led a lobbying effort to prevent increased oversight of mortgage giant Fannie Mae, the company at the heart of the ongoing turmoil in the nation’s financial markets, public records show.
The unpaid adviser, Thomas E. Donilon, held several senior positions at Fannie Mae from 1999 to 2005, including vice president of law and policy, at a time when the company’s officers and lobbyists were insisting that now-troubled Fannie’s finances were sound.
In a 2006 report, the Office of Federal Housing Enterprise Oversight (OFHEO) said Fannie Mae lobbyists, whose office was overseen by Mr. Donilon, tried to use their ties to members of Congress to discredit federal regulators through a campaign aimed at securing the release of a U.S. Department of Housing and Urban Development report to discredit OFHEO.
New York Post – Three board members at the embattled Dillard’s department-store chain lashed out at a pair of hedge funds that are agitating to oust the retailer’s top management.
In a rare public statement, the Dillard’s trio of independent directors rejected a call by Barington Capital and Clinton Group to fire Chief Executive Bill Dillard Jr. The hedge funds have accused Dillard and his three siblings of being "overpaid and underqualified."
The hedge funds note that the four Dillard siblings have earned more than $16 million annually for the past three years despite a steady decline in the company’s performance and stock price.
But Dillard’s directors Warren Stephens, Peter Johnson and Robert Connor countered that the CEO’s salary was "well below the median in its peer group in 2007," citing a report from Institutional Shareholder Services, a leading proxy adviser. The directors also noted that the board decided against paying out bonuses last year, based on the company’s poor performance.
Reuters- Singapore’s Wittenham Investment Management launched a fund of hedge funds to invest in frontier capital markets such as Africa, Middle East and countries in the former Soviet Union.
The MENA Plus fund would start with a minimum $7 million seed capital and has a capacity to take as much as $300 million of funds from investors, said Peter Douglas, an adviser to the fund and founder of hedge fund consultancy GFIA.
"In the emerging Europe, Middle East, and African time zone, we’ve found plenty of experienced managers creating very attractive risk-return profiles," he said in a statement.
The Australian- The shares of Macquarie Bank’s most ardent and successful imitator, Babcock & Brown, and several of its satellites, plumbed new depths yesterday as Barclays lost faith in the group.
Shares in Babcock’s headstock have slumped from $16 to $9.50 in just three weeks and many market observers believe the group’s large debts are being tested by hedge funds.
"It has fallen about 35 per cent over the past three weeks," Patersons Securities senior private client adviser Tony Tascone said yesterday.
It appeared Babcock & Brown was being shorted by hedge funds, he said.
