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Bizjournals.com - A Minneapolis hedge fund has sued Petters Group Worldwide, alleging it was defrauded out of $60 million in a deal involving “imaginary televisions.”
Interlachen Harriet Investments, a Cayman Islands-based unit of Minneapolis-based Interlachen Capital Group, filed the suit Wednesday, saying that it gave $60 million to Petters Co. Inc. to purchase electronic merchandise such as televisions. PCI, a unit of Petters Group Worldwide, was to resell the televisions at a profit. Interlachen alleges that PCI never purchased any merchandise, and used the investment to fund former CEO Tom Petters’ other business ventures, pay down debt and for personal use.
The suit is similar to federal allegations made last week that Petters and several associates bought and sold nonexistent goods with investors’ money for more than a decade by creating the image of a successful retail business.
A new report released Monday by HedgeFund.net estimates the assets under management by hedge funds have reached nearly $3 trillion.
According to the report, hedge fund assets increased 4.41 percent last quarter, in spite of rough equity markets, to reach $2.973 trillion. The report combined data from a bi-annual survey of hedge fund administrators and information from HedgeFund.net’s database of more than 8,400 funds.
Peter Laurelli, vice president of Channel Capital Group which owns HedgeFund.net, said hedge fund assets will probably top $3 trillion sometime in the next couple of quarters, depending on performance.
Fund performance accounted for $91.28 billion being added to hedge funds last quarter, while investors placed an additional $34.21 billion in new assets with hedge funds. One dark spot for the industry was that liquidations of funds last quarter exceeded assets in newly established funds by $8.52 billion. Second quarter saw the third-highest level of hedge fund closures on record.
"It’s a natural evolution of the industry if you have funds that are not performing well," Laurelli said. "When you go through a period like we’ve had where there have been some large losses in the industry, you’re going to have fund closures. That doesn’t mean that the industry is contracting, it just means that there is some turnover."
New York (HedgeCo.Net) - Foreclosed properties present an opportunity, to some, of finding an otherwise unattainable home at a deeply discounted rate. For hedge funds, foreclosures could mean massive returns in the near future. That’s why dozens of hedge funds are quietly building their stake in the decimated U.S. mortgage market.
According to a report published by Philippines News, tens of thousands of distressed loans and foreclosed properties have been sold to hedge funds and other private equity groups.
Lone Star Funds, a Dallas based company that invests in distressed debt, snatched up a string of mortgage-linked investments from Merrill Lynch once valued at $30.6 billion, for $6.7 billion. It’s no surprise Merrill was quick to sell, seeing as how they were one of the biggest financial institutions to get hit by the subprime fallout last summer, writing down an estimated $25 billion.
"We’re much easier to deal with than a bank," said Jacob Benaroya, Managing Partner of Biltmore Capital Group, a hedge fund in New Jersey that has allotted $100 million a year to acquire mortgage debt. "We’ve bought [the loan] at enough of a discount that we can make special arrangements with the borrower."
Hedge funds stress they are more lenient than the banks and in turn, better to deal with. They may make special arrangements with the borrower, or have them turn in their house keys in exchange for forgiving the outstanding balance on the mortgage. The hedge funds then may then turn around and try to sell the property as soon as possible, or hold on to it for a while until market conditions are ideal.
Julie Scuderi Senior Editor for HedgeCo.Net Email: julie@hedgeco.net
HedgeCo.Net is a premier hedge fund database and community for qualified and accredited investors only. Membership on www.hedgeco.net is FREE and EASY. We also offer FREE LISTINGS for Hedge Funds! Be sure to check out our sister sites. For more information, visit www.hedgeconetworks.com
Reuters- Some of the best known U.S. fund firms probably suffered significant losses in last week’s meltdown in the stocks of mortgage finance agencies Fannie Mae and Freddie Mac.
Among the casualties may be the one-time star stock-picker Bill Miller at Legg Mason, whose funds have owned a series of companies that have been battered by the credit crisis and the weakening economy.
Others include Capital Group, including its Growth Fund of America, which is the largest U.S. fund, AllianceBernstein, and Fidelity Investments.
New York (HedgeCo.Net) - New York-based Avenue Capital, the hedge fund that manages roughly $20 billion, is back after a lagging first quarter. The company informed investors that the fund experienced gains in May for the second straight month.
The firm’s $1.5 billion Avenue International Ltd Fund was up over 1.5% in May, while the $1 billion Avenue Europe International Ltd Fund and the $574 million Avenue Investments LP Fund followed suit and also posted gains.
Hedge funds are optimistic after experiencing losses stemming from last years credit crunch and subprime fallout. Improved performance in credit markets as of late are making the future look bright for hedge funds.
The Avenue Capital Group was founded in 1995 and is headed by famed manager Marc Lasry. The funds specialize in a long/short strategy while focuses on distressed and undervalued debt and equity opportunities. The company recently raised $6.1 billion for “special situations” trading strategies.
Julie Scuderi Senior Editor for HedgeCo.Net Email: julie@hedgeco.net
HedgeCo.Net is a premier hedge fund database and community for qualified and accredited investors only. Membership on www.hedgeco.net is FREE and EASY. We also offer FREE LISTINGS for Hedge Funds! Be sure to check out our sister sites. For more information, visit www.hedgeconetworks.com
Reuters- Acceleration Capital Group is the latest entry into the capital introduction space, and plans to offer services that give emerging hedge fund managers an edge for growing their businesses. Acceleration Capital was incorporated toward the end of March as a unit of Saratoga Prime Services, a multi-custody introducing broker-dealer platform that clears through Goldman Sachs, Bear Stearns and Interactive Brokers.
"Our view of the industry is that prime brokerage services are extremely necessary but somewhat commoditized, and the pricing and buying of stock is not much different from shop to shop," said Lance Baraker, one of the founders of Saratoga. "But hedge funds are also looking for branding, and it helps to have a global brand name as prime broker partner and on your documents.