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West Palm Beach (HedgeCo.net) - Hedge fund manager OakRun Capital announced the appointment of Rolando Hermoso as director of funds. Their newly launched Short Term High Yield Fund also delivered November annualized yield of 9.58%.
Hermoso has over 27 years in the investment banking industry at various senior executive levels specializes primarily in the structuring, marketing and the execution of structured finance products. With 10 years at the Bank of America he was also Head of the Investment Bank for Citicorp for Venezuela and the Antilles. He holds Masters degrees in Management and Operations Research from Stanford University and B.S. degrees in applied mathematics and physics.
The Cayman Islands exempted fund launched on October 1st and came in at 9.48% annualized in its first month. The fund’s objective is to generate above average current income with a lower overall credit risk profile and maintain a stable NAV.
"We do not believe that simply managing for relative performance is satisfactory to our clients or ourselves." says Scott Rhodenizer, Founder, CEO, and Chief Investment Officer, "While we work to outperform the markets, we strive to do so without excessive risk."
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Reuters - Merrill Lynch & Co Chief ExecutiveJohn Thain has suggested to directors that he get a 2008 bonus of as much as $10 million, but the battered company’s compensation committee is resisting his request, the Wall Street Journal said, citing people familiar with the situation.
The compensation committee has not reached a decision, but is leaning toward denying Thain and other senior executives bonuses for this year, the people told the paper.
Merrill could not be immediately reached for comment.
Shareholders on Friday approved Bank of America Corp’s takeover of Merrill, a deal fraught with risk but one that would create a banking giant with a leading position in almost every major area of the financial system.
New York (HedgeCo.Net) - A former UBS AG executive has been sentenced to 6-1/2 years in prison after pleading guilty to selling private information about the bank’s stock recommendations. Mitchel Guttenberg, a former manager in UBS’ equity research department, was accused by the prosecution of running the most pervasive insider trading rings since the 1980’s.
“From the moment he joined the investment review committee he planned to give that information to others to use illegally,” Judge Deborah Batts of U.S. District Court in Manhattan said yesterday.
Guttenberg didn’t try to deny the allegations and instead plead guilty to two counts of conspiracy and four counts of securities fraud. He admitted that on numerous occasions he tipped off two traders about analyst stock recommendations along with dispersing information about UBS analysts’ upgrades and downgrades that were used to net more than $17.5 million over hundreds of transactions.
Guttenberg was one of a dozen people charged with orchestrating the insider trading ring. Other employees came from such companies as Morgan Stanley, Bank of America and Bear Stearns. His sentence includes three years of supervision following his incarceration at a minimum security prison in New Jersey.
Julie Scuderi Senior Editor for HedgeCo.Net Email: julie@hedgeco.net
West Palm Beach (HedgeCo.net) - BNP Paribas has launched a global, transversal, multi-asset, hedge fund client service team. The team will be a single point of entry for Hedge Funds for all inquiry, according to BNP, leveraging the bank’s capabilities and focusing on operational efficiencies.
The team is headed globally by John Polivko, based in New York and reporting locally to Jean-Patrick Kaiser, Deputy Chief Operating Officer, and globally to Bernard Gavgani, Equity and Commodity derivatives COO and Francois Freyeisen, Fixed Income COO.
Polivko recently joined the firm from Merrill Lynch where he was in charge of the client service organization for Prime Brokerage and more recently worked in financing sales. Prior to Merrill Lynch, Polivko also spent 7 years as a Managing Director at Bears Stearns in Prime Brokerage.
In addition, the appointments of regional managers reporting directly to John Polivko are Victoria Baker, Neil Spice and Jacqueline Man as regional head of hedge fund client service based in Hong Kong.
Talbot Stark, global head of hedge fund relationship management said, "Hedge Funds are a very important client base for BNP Paribas, following the acquisition of Bank of America’s Prime Brokerage business as well as the growth of the hedge fund relationship managements team, the creation of this function is another step in better serving those clients."
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Los Angeles Times - Traders and investment bankers might have more to worry about than dwindling bonus pools this year as mass firings on Wall Street are set to hit a record.
The fallout from this year’s global credit crisis has claimed jobs throughout Wall Street, from hedge fund managers to floor traders and beyond. More than 110,000 people have lost their jobs so far this year, and some industry experts forecast it could come close to 200,000 before the year is over.
Even the financial industry’s biggest name isn’t immune. Goldman Sachs Group Inc., the world’s biggest investment bank, made plans Thursday to cut 3,200 positions from its staff of 32,000. Barclays Capital is in the midst of purging 3,000 jobs as part of its takeover of Lehman Bros., and Bank of America Corp.’s acquisition of Merrill Lynch & Co. is sure to add thousands more.
Bloomberg - The Bush administration will invest about $125 billion in nine of the biggest U.S. banks, including Citigroup Inc. and Goldman Sachs Group Inc., in the government’s latest attempt to shore up confidence in the financial system.
The proposed cash injections in exchange for preferred shares are part of a $700 billion rescue approved by Congress and follow similar moves by European leaders to unfreeze credit markets by helping beleaguered banks. The other companies are Wells Fargo & Co., JPMorgan Chase & Co., Bank of America Corp., Merrill Lynch & Co., Morgan Stanley, State Street Corp. and Bank of New York Mellon Corp., said people briefed on the plan.
The Times of Trenton - Stocks prices fell sharply again yesterday, ending the Standard & Poor’s 500 Index below 1,000 for the first time since 2003 on speculation banks and real-estate companies are running short of money as the credit crisis worsens.
Bank of America tumbled 26 percent after cutting its dividend in half and saying it plans to sell $10 billion in common stock to brace for a recession. Morgan Stanley, KeyCorp and JPMorgan Chase slid more than 10 percent as investors shrugged off signs the Federal Reserve will reduce interest rates. General Growth Properties, a mall owner, plunged 42 percent on concern it won’t be able to repay debt.
"We’ve approached the edge of the cliff," Leon Cooperman, 65, who manages $6 billion at hedge fund Omega Advisors, said at the Value Investing Congress in New York. "Do we go over the cliff or begin to recede? History says we recede, but there’s no guarantee.
Reuters - John Thain, the Merrill Lynch & Co Inc chief executive who engineered the firm’s sale to Bank of America Corp, will head investment banking, securities and wealth management at the new company — at least for now.
But analysts don’t expect Thain, who has now led two major Wall Street companies, to remain in his new job for long. They expect him to aim to succeed Bank of America (BAC.N) Chief Executive Ken Lewis, 61, or seek a CEO job elsewhere.
"The fact is that he’s a CEO — he’s not going to stay long," said Greg Donaldson, director of portfolio strategy at Donaldson Capital Management in Evansville, Indiana.
Thain, 53, was previously CEO at NYSE Euronext Inc (NYX.N) and before that was president and chief operating officer at Goldman Sachs Group Inc (GS.N).
Reuters - Hedge funds are keeping borrowings and risk low and seeking sanctuary in safe-haven assets during the current market turbulence, but some are beginning to see opportunities to make attractive investments.
The events of the past few days — the collapse of Lehman Brothers, the $50 billion sale of Merrill Lynch to Bank of America and the $85 billion rescue of AIG — have hit funds’ returns and caused many to cut back their bets.
"Managers have been reining in leverage given the extreme volatility in the market. Sentiment is so bad, people are loath to make big bets," said Jack McDonald, chief executive of hedge fund service provider Conifer Securities.
Eclectica Asset Management, co-founded by high-profile hedge fund manager Hugh Hendry, told Reuters its hedge fund had 140 percent of net asset value invested in mid- and long-dated German bunds.
Reuters - Hedge funds are keeping borrowings and risk low and seeking sanctuary in safe-haven assets during the current market turbulence, but some are beginning to see opportunities to make attractive investments.
The events of the past few days — the collapse of Lehman Brothers, the $50 billion (28 billion pounds) sale of Merrill Lynch to Bank of America and the $85 billion rescue of AIG — have hit funds’ returns and caused many to cut back their bets.
"Managers have been reining in leverage given the extreme volatility in the market. Sentiment is so bad, people are loath to make big bets," said Jack McDonald, chief executive of hedge fund service provider Conifer Securities.
Eclectica Asset Management, co-founded by high-profile hedge fund manager Hugh Hendry, told Reuters its hedge fund had 140 percent of net asset value invested in mid- and long-dated German bunds.
The remainder of its exposure is to bond yield swaps and soft commodities.
New York (HedgeCo.Net) - Just one day after reaffirming their stance they would not rescue America International Group Inc., the Fed has agreed to lend the collapsing insurer $85 billion in exchange for a 79.9 percent majority stake.
The Fed justified the move, stating “a disorderly failure of AIG could add to already significant levels of market fragility.” The two-year loan will assist AIG in “meeting its obligations,” although the government has the right to halt dividends to common and preferred stockholders. Parts of the company may also be broken off and sold to pay off the debt.
The move came after a whirlwind week of plunging share pricing and other Wall Street firms trying to stay afloat. With the recent bankruptcy of Lehman Brothers and Bank of America’s purchase of Merrill Lynch hanging in the background, AIG looked to be another casualty of the credit crunch.
The federal government had urged AIG to seek a private investor, not wanting to use taxpayer funds to support a bailout. However, fears of larger worldwide market implications forced the Fed to retract on that belief while denying any aid to Lehman Brothers, who collapsed this week.
Fears of systematic risk and greater market turmoil have been the catalyst for many actions taken by the federal government as of late. Just weeks ago, the Fed stepped in and took over Fannie Mae and Freddie Mac after it was clear the companies could not weather the mortgage crisis. Earlier this year, the Fed helped to facilitate the purchase of Bear Stearns by JPMorgan by providing the needed financing.
AIG has agreed to an interest rate that is 8.5 percentage points above the three-month London Interbank Offered Rate, putting it at about 11.4 percent.
After helping AIG avoid surpassing Lehman as the largest bankruptcy ever filed, the U.S. government has now spent over $700 billion in efforts to stabilize the markets and reverse the damage caused by the housing crisis.
Julie Scuderi Senior Editor for HedgeCo.Net Email: julie@hedgeco.net
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Reuters UK - "Does anyone know what is happening with the markets?" former U.S. Treasury Secretary Lawrence Summers asked after stepping out of his car and into a hedge fund industry conference in Connecticut on Tuesday.
And he wasn’t the only one wondering.
As Summers, now a managing director at hedge fund DE Shaw, and hundreds of managers and investors scanned Blackberries for prices and dialled cell phones for updates, the words Morgan Stanley American International Group tripped off dozens of tongues and faces went pale.
Only one day after watching financial markets tumble as Lehman Brothers Holdings hurtled toward liquidation and Merrill Lynch stunned investors with a surprise sale to Bank of America Morgan Stanley’s share price tumbled but its CFO declared that things were getting out of hand.
AIG’s shares sank 48 percent after the market closed as the insurance group struggled to get the funding it needed to survive.
"I would describe the mood here as a little bit wary," said Raj Mohamad, who travelled to the two-day conference from Singapore where he helps U.S. hedge funds find Middle Eastern investors as Managing Director at Five Pillars Pte Ltd.