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.
Wall Street Journal Blogs – From its 17th-floor offices in the New Beijing Poly Plaza building, the monolithic landmark commissioned by the state-owned conglomerate China Poly Group Corp., China’s massive sovereign-wealth fund has established itself as a prime destination for overseas hedge-fund managers hoping to come home with big checks in their pockets.
Droves of hedge-fund and private-equity fund managers have made the pilgrimage since last year, when China Investment Corp. moved into its new offices, which is itself just two years old.
CIC, established in 2007, wields control over $200 billion, making it one of the world’s youngest but biggest sovereign-wealth funds. It also is emerging as one of the new hedge-fund emperors, a source of fresh cash for an industry thirsty for it.
Times Online – One of Europe’s most influential industry magnates has thrown himself in front of a train after his business empire began to crumble.
Adolf Merckle, the 74-year-old head of a conglomerate that employs thousands in Britain and elsewhere in Europe, killed himself on Monday.
After writing a suicide note for his family, he checked the railway timetable and walked to the track that ran close to his home in the village of Blaubeuren, southwest Germany. His body was found at 7.30pm.
Mail on Sunday – From movie director Steven Spielberg to to Uma Thurman’s fiance Arpad Busson, the list of billionaire businessmen and Hollywood A-listers sucked into the world’s biggest financial fraud is growing.
Some of the best-known names in banking and business have been forced to admit failing to spot the outrageous deception which culminated in the arrest of Wall Street giant Bernard Madoff in a global con which could cost its victims £33billion.
British-based firms have lost at least £3.5billion – and it is feared that families will pay the price.
Chicago Tribune – The Citadel Investment Group will shutter its Tokyo offices and cut 37 jobs from its Asian operations.
The Chicago-based hedge fund will still have a presence in Hong Kong, where 25 positions will be cut, the company said Monday. The investment firm founded by billionaire Ken Griffin in 1990 will maintain 25 to 30 staffers in Hong Kong. A regional group that invested in companies undergoing mergers, asset sales or lawsuits will be cut.
Citadel’s decision comes after its two primary funds reported losses of 47 percent through November. The firm manages $16 billion in assets.
West Palm Beach (HedgeCo.net) – Hedge fund Trian Partners said that they will buy about 49.4 million shares of fast-food operator Wendy’s/Arby’s Group for $4.15 per share, or about $205 million.
The hedge fund and their affiliates now own about 21.6% of Wendy’s/Arby’s, or 52.1 million shares, up from its previous 11.1% stake. In November, Trian Fund Management L.P., led by billionaire investor Nelson Peltz, Peter W. May and Edward P. Garden, said it would buy shares of the fast-food restaurant business for about $4.15 per share.
The deal was subject to certain conditions, including that there would not be a decline of more than 10% in the Dow Jones Industrial average or the S&P 500 index after Nov. 5. Another condition was that Wendy’s/Arby’s shares would not lose 10% of their value.
Triarc Cos. Inc., which operates Arby’s and was run by billionaire investor Nelson Peltz, bought Wendy’s in a deal that closed in September.
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eBrandz – In a move expected to fuel speculation over Yahoo Inc.’s search for a new chief executive — Corporate raider and billionaire investor Carl Icahn augmented his stake in Yahoo, has bought up close to 7 million additional shares of the Internet Company over three days this week, paying around $67 million, according to regulatory filings.
Icahn, a billionaire hedge-fund manager who now holds a seat on Yahoo’s board, acquired 6.77 million additional shares of Yahoo stock during November 24-26 for 67 million dollars, now owns 75.6 million of the company’s shares, or a 5.4 percent stake valued at around $870 million based on Yahoo’s closing share price on Friday, according to the documents filed with the Securities and Exchange Commission and dated Wednesday.
The company’s stock moved up 93 cents, or nearly 9%, to $11.51 in the shortened trading session after Icahn, a Yahoo board member who has been pushing a strategy shift or a sale to Microsoft Corp., said he had bought about 6.8 million shares.
Bloomberg – Satellite Asset Management LP, founded by former employees of billionaire George Soros, stopped client withdrawals from its three largest hedge funds and eliminated more than 30 jobs after losses reduced the firm’s assets to about $4 billion this year.
Satellite Overseas Fund Ltd., Satellite Fund II LP and Satellite Credit Opportunities Ltd. have declined as much as 35 percent in 2008, said a person with knowledge of the funds’ performance. Simon Rayler, Satellite’s general counsel, declined to comment and wouldn’t disclose how many people remain at the firm’s New York headquarters or London offices. Satellite oversaw about $7 billion for clients at the end of last year.
More than 75 hedge funds have liquidated or restricted investor redemptions since the start of the year as they cope with fallout from the global financial crisis. Investors pulled $40 billion from hedge funds last month, while market losses cut industry assets by $115 billion to $1.56 trillion, according to data compiled by Hedge Fund Research Inc. in Chicago.
Idaho State Journal – Several prominent hedge fund managers told Congress Thursday they support a new central exchange to open the murky world of some complex investments partly blamed for the global financial crisis, but stopped short of endorsing stricter regulation of hedge funds themselves.
The managers testified at a House hearing examining the role of hedge funds in the crisis, and the risks that critics say they pose to the financial system. Hedge funds, vast pools of capital holding an estimated $2.5 trillion in assets, operate mostly outside of government supervision.
Billionaire investor and liberal activist George Soros, who runs a hedge fund, said new regulations were needed to gauge the underlying financial strength of banks. But he warned against "going overboard" with regulations that could do more damage than good to the financial system.
New York (HedgeCo.Net) – Dallas Mavericks owner and billionaire investor Mark Cuban has been accused of insider trading by the SEC after allegedly using private information that helped him avoid over $750,000 in losses tied to stocks.
Search engine company Mamma.com supposedly invited Cuban to participate in its offering, but made Cuban swear he would keep the information private. The lawsuit filed in Dallas claims that Cuban was well aware that his 6 percent stake in the company would be sold below the current market price after learning some inside information. Cuban allegedly took that information and got rid of all of his shares.
"As we allege in the complaint, Mamma.com entrusted Mr. Cuban with nonpublic information after he promised to keep the information confidential. Less than four hours later, Mr. Cuban betrayed that trust by placing an order to sell all of his shares," Deputy Director of the SEC’s Division of Enforcement Scott W. Friestad said. "It is fundamentally unfair for someone to use access to nonpublic information to improperly gain an edge on the market."
In Cuban’s popular blog, blogmaverick.com, the outspoken investor wrote, ““I am disappointed that the Commission chose to bring this case based upon its Enforcement staff’s win-at-any-cost ambitions. The staff’s process was result-oriented, facts be damned. The government’s claims are false and they will be proven to be so.”
Cuban has an estimated net worth of close to $3 billion. In addition to owning the Mavericks, he serves as the Chairman of HDNet, an HDTV cable network.
Julie Scuderi Senior Editor for HedgeCo.Net Email: julie@hedgeco.net
Petroleumworld.com – The hedge fund of billionaire investor George Soros increased its stake in Brazilian state-run oil company Petroleo Brasileiro ( Petrobras) to 21.1 million American Depositary Receipts as of Sept. 30 from 11.5 million at June 30.
Soros Fund Management LLC made the move as the ADRs tumbled during the quarter to about $44 from about $71 each. Although the fund added nearly 10 million ADRs to its Petrobras stake, the value of the holding only rose to $930.7 million from $811.5 million.
Since the end of the quarter, Petrobras ADRs have fallen further, closing on Friday at $21.45.
Bloomberg – Hedge-fund managers including George Soros and Philip Falcone, in an unprecedented appearance before Congress, defended their practices and profits while splitting over whether the U.S. should impose stricter regulations.
"This is not a case where management takes huge bonuses or stock options while the company is failing,” said Falcone, one of five billionaire investors who testified today before the House Committee on Oversight and Government Reform in Washington.
Falcone, senior managing director of New York-based Harbinger Capital Partners, urged Congress to require more disclosure by hedge funds, which oversee $1.7 trillion of investments. Soros, founder of Soros Fund Management LLC, cautioned against “ill-considered” rules because this industry is reeling from market losses and client defections.
New York Post – Billionaire Tom Petters fancied himself the next Warren Buffett – that is until his empire starting crashing down like a house of cards.
The feds accuse Petters, one of Minneapolis’ fastest rising business stars, of secretly being at the center of an elaborate $2 billion corporate ruse, stretching over the past decade, while he hobnobbed with billionaires and movie stars.
Petters stepped down from his Minneapolis-based Petters Group Worldwide after federal agents raided his offices in several cities, acting on a tip from a disgruntled insider.
