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New York (HedgeCo.net) – Hedge fund manager Paulson will own 9.9% of private health insurance company Conseco’s common stock after a private share sale, buying $77.9 million in stock and warrants.
Paulson & Co. Inc., on behalf of several hedge funds and accounts he manages will also have certain registration rights in connection with its acquisition of the common stock and warrants.
“This is a bold move,” said Andrew Schneider, founder and co-principal of HedgeCo Networks. “With the current healthcare debate in full swing, the timing is everything. But then, this is the kinds of risk we’ve come to expect from Paulson.” Paulson made $2.5 billion last year, hedging against the U.S. housing market.
Paulson’s warrants will also convert to common stock at $6.50 a share. Conseco rose 78 cents, or 16%, to $5.77 at 7:47 p.m. in late New York trading. The shares have dropped about 68% in the past two years.
Conseco, run by Chief Executive Officer James Prieur, will also file for a public offering of $200 million in new common stock and will sell $293 million in convertible notes. The bond proceeds will be used to repurchase existing notes, the company said. The new debt, due in 2016, will pay investors 7%.
Paulson earned an estimated $2.5 billion last year, according to Institutional Investor’s Alpha Magazine. His Credit Opportunities Fund soared almost sixfold in 2007 on bets that subprime mortgages would plummet. Last year, his flagship fund returned 37 %, compared with a loss of 19% for hedge funds on average.
West Palm Beach (HedgeCo.net) – Encouraged by a promising investment environment and accelerated investment pace, New York-based special opportunities fund, Atalaya Capital Management LP, today announced that it has expanded its team, adding three investment professionals and a marketing professional.
“Recent positive changes in our target investment markets have prompted Atalaya to bolster our professional platform in order to capitalize on market conditions and new opportunities,” said Ivan Q. Zinn, Founding Partner & Chief Investment Officer.
Josh Ufberg joined as a Principal from Goldman Sachs’ Special Situations Group, while Rana Mitra and Alex Wang have joined the team responsible for the sourcing and purchase of private credit assets as Senior Associate and Associate, respectively. Ashley Fochtman joined the Firm as a Vice President and will be working in a business development capacity. Previously, Ms. Fochtman worked in hedge fund marketing and at Goldman Sachs as an energy derivatives analyst.
Founded by Mr. Zinn in 2006, Atalaya focuses on the opportunistic purchase of senior secured credit from forced sellers, failed financial institutions and sellers in need of liquidity such as banks, commercial finance companies, and other financial and investment institutions.
About Atalaya Capital Management
Atalaya Capital Management is an alternative investment firm focused on investing in small and middle market credit opportunities. Since inception in early 2006, the Firm has successfully invested over $1 billion through (1) the opportunistic purchase of private, senior secured credit from forced sellers, failed financial institutions and sellers in need of liquidity, and (2) proprietary ‘new issue’ credit investments including DIP loans and other senior secured financings.
West Palm Beach (HedgeCo.net) – Global hedge fund manager Cogo Wolf Asset Management has launched the Cogo Wolf Trimaran Liquidity Fund, a highly liquid fund of hedge funds designed to help institutional and private investors navigate the current global investing storms.
Managed by Co-CIOs and Managing Partners Christopher R. Wolf and Giles Conway-Gordon and offering complete transparency, the Trimaran Liquidity Fund targets 16-18% net return with expected volatility of 6-8% without the use of leverage.
“The global financial markets are forever changed. The industry has experienced a kind of ‘perfect storm’ in recent years—the credit contraction, the housing contraction and the overall economic contraction,” stated Christopher R. Wolf. “Trimaran is the first fund of its kind, designed as a remedy for sophisticated institutional and private investors who are ready to redeploy capital but need new assurances to do so.”
The Trimaran Fund has been designed to provide Alpha with non-correlation and liability protection including: Ultra Liquidity (monthly liquidity, 10-day notice with no lock-up, no gate, no redemption penalties and complete transparency); Flexibility (all underlying investments are ultra liquid, permitting rapid, opportunistic responses to global volatility and market uncertainty); and Stability (diversification).
The “three distinct hulls” the Trimaran Fund invests in include:
* Managed Futures, Global Macro, CTAs and other ultra liquid strategies which have low/negative correlation to equity markets; * ETFs enabling narrow and controlled directionality as a proxy for direct hedge fund investing; * Debt-Related Instruments, notably mispriced credit opportunities offering attractive returns and gains.
“A forward-looking, global tactical asset allocation model will be necessary for investors to deliver profit in the new fund of hedge funds paradigm,” commented Giles Conway-Gordon. “Our top-down investment methodology, namely skating to where the puck is going to be, is paramount to nimbleness and adaptability. We are asset allocators first, talent scouts second.”
“It’s not enough to know what instruments one finds compelling; what’s mandatory is to know why you’re there in the first place. What macroeconomic trend does that investment capture? And if so, how effectively and what risks are associated with that decision? Risk management is more than optimization modeling, VAR and stress testing. It’s a holistic understanding of the environment in which these instruments are being used, the opportunity they’re designed to capture and the finesse necessary to know depth and duration – how long and how much does one hold? That’s the art and a talent we’ve honed over 25+ years,” Wolf concluded.
Cogo Wolf has been nominated by Alternative Investment News and Institutional Investor as “Emerging Manager of the Year” given its strong growth trajectory lead by the firm’s President and Partner, Rachel S.L. Minard, its 14-year history delivering 12% net CAR and having never lost an investor since its doors opened, according to the fund manager.
Alex Akesson
Editor for HedgeCo.Net Email: alex@hedgeco.net
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Reuters India – Satellite Asset Management LP, a $2.8 billion (1.84 billion pounds) hedge fund founded by former employees of billionaire George Soros, is closing down because of client withdrawals, Bloomberg said on its website late Friday.
The New York-based firm has started returning money to investors from its three funds, Satellite Overseas Fund Ltd, Satellite Fund II LP and Satellite Credit Opportunities Ltd, the report said, citing a person familiar with the matter.
New York (HedgeCo.Net) – Hedge funds gained 1.37 percent in March, according to data compiled by the Hennessee Group LLC. It was a successful month for the equity markets at well, with the S&P advancing 8.54 percent, the NASDAQ climbing 10.94 percent, and the Dow Jones advancing 7.73 percent.
"Hedge funds with a focus on the financial sector may potentially outperform in 2009," said Co-Founder of Hennessee Group Charles Gradante. "Not only did Citigroup and Bank of America announce a profitable January and February, but the borrowings at the Fed discount window have been steadily declining. It is possible that the banking crisis of confidence can unwind as quickly as it unfolded."
According to the data, the long/short equity index advanced 1.6 percent, thanks to programs launched by the U.S. government aimed at helping the banking sector. The arbitrage/event driven index gained 1.34 percent, with credit opportunities aplenty and many managers increasing stakes in bank debt, high yield and convertible bonds.
The global macro index saw a steady increase of .74 percent. The Hennessee Group pointed to the fact that many macro managers posted losses on their short-term Treasuries trade after the Fed announced they would buy $300 billion in U.S. Treasuries, which prompted buying and drove down yields.
This puts the YTD gain for hedge funds at just over 1 percent.
Julie Scuderi Senior Editor for HedgeCo.Net Email: julie@hedgeco.net
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West Palm Beach (HedgeCo.net) – Singapore hedge fund manager, 3 Degrees Asset Management, is launching ADF Prime Ltd, a credit opportunities fund that will invest primarily in the performing debt obligations of Asian companies that have been mispriced as a result of the Global Financial Crisis.
3 Degrees also manages the award winning Asian Debt Fund, an Asian distressed debt fund that has been active since 2004.
In Asia, debt prices have corrected far more sharply than in the US and Europe. This is driven by technical factors, the fund manager says, as Asian investment banks unwind their portfolios, global hedge funds close their Asian operations, and capital is generally pulled from the region.
The new fund will capitalize on the systemic inefficiencies endemic to Asian credit markets. Due to the limited number of players, and the highly relationship‐driven nature of Asian markets, inefficiencies are being exaggerated by the global financial crisis.
Targeting quality companies that either have, or can generate, enough cash flow to repay maturing debt without dependence on capital markets, the fund seeks annual, unlevered net returns in excess of 25%.
3 Degrees has received numerous awards, including “Best Asian Distressed Debt Fund” and “Best Singapore Hedge Fund”. In 2007, Moe Ibrahim, the founder, was selected as one of 20 Rising Stars of Hedge Funds by Institutional Investor. ADF Prime will be co‐managed by Moe Ibrahim and Jeff Tolk.
ADF Prime is also available to institutional investors and ultra high net worth individuals via the Firm’s Managed Accounts platform.
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Bloomberg – Paolo Pellegrini, the hedge-fund manager who helped Paulson & Co. make more than $3 billion in 2007 on bets the U.S. housing bubble would burst, resigned to start his own fund, a person familiar with the matter said.
Pellegrini, 52, a manager of Paulson’s credit opportunities funds, left on Dec. 31 in an “amicable” departure, said Armel Leslie, a spokesman for New York-based Paulson & Co. John Paulson, founder of the firm, which oversees $36 billion, couldn’t be reached for comment.
Paulson and Pellegrini became convinced in 2006 that investors were overvaluing mortgage-backed securities whose risk for losses they or credit rating firms had misjudged, according to client letters obtained by Bloomberg News. The firm’s credit opportunities funds soared about sixfold in 2007 as mortgage defaults rose and the value of the securities declined.
Interactive Investor – Paolo Pellegrini, who played a crucial role in helping to implement bets against subprime mortgages that netted Paulson & Co about $15 billion in 2007, resigned from the hedge-fund firm on Dec. 31, the Wall Street Journal said.
Pellegrini, who along with John Paulson was the co-portfolio manager of the two Paulson Credit Opportunities funds, is expected to start his own hedge fund, the paper said.
The departure was amicable, the paper said, citing people close to the matter.
