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Newark Star-Ledger – Managers of New Jersey’s embattled pension fund, criticized by lawmakers for bailing out a struggling BlackRock hedge fund in October, secretly gave two other hedge funds the same deal, records from the state investment council show.
The Canyon Special Opportunities Fund and GoldenTree Credit Opportunities Fund were each awarded $49.5 million in state funds on the same day the controversial $49.5 million bailout of a BlackRock Inc. fund took place, according to a memo released by the investment council this week.
The cash infusions were a shade below the $50 million threshold that triggers public scrutiny. The BlackRock deal riled prominent Statehouse lawmakers. So does the new revelation that there was not just one such deal, but three.
Washington Post – New Jersey’s pension fund is under fire over a series of hedge-fund investments, the Wall Street Journal said.
New Jersey made the investments last month, to funds run by BlackRock Inc <BLK.N>, Canyon Capital Advisors LLC and GoldenTree Asset Management LP, as they were "facing the equivalent of margin calls," William Clark, director of the New Jersey Division of Investment, told the paper in an interview.
In effect, the funds, which had borrowed money for investments, either faced or anticipated facing demands from lenders for cash as the value of those investments fell, the paper said.
State legislators, upon learning of the investments, are questioning both the wisdom of the decisions as well as the process, according to the paper.
Newark Star-Ledger – Prompted by criticism from a prominent state lawmaker, the head of the state’s Division of Investment yesterday defended his decision to invest $144 million in pension funds in a BlackRock Inc.-managed hedge fund in the past two weeks, saying the state needed to act quickly to protect its stake and possibly reap big returns.
Senate President Richard Codey (D-Essex) questioned the transparency of the process, taking issue with the state putting $49.5 million in the hedge fund on Oct. 17 — an amount just shy of the $50 million threshold that requires a review by the state Investment Council. On Friday, the state invested another $94 million in pension funds in the BlackRock venture, following a special meeting of the Investment Council.
Reuters- U.S. asset manager BlackRock Inc gave details on Tuesday of the revised agreements it has struck with top shareholder Merrill Lynch & Co Inc that, among other things, try to protect BlackRock’s interests if Merrill’s structure changes substantially.
Merrill is BlackRock’s biggest shareholder and decided last week to retain its 49.8 percent stake in the biggest publicly traded U.S. asset manager after weighing whether to sell it in full or part to raise capital.
In a filing with the U.S. Securities & Exchange Commission, BlackRock said the revised Stockholder agreement has expanded the definition of change of control at Merrill Lynch to include the disposition of two-thirds or more of Merrill’s global private client business.
Bloomberg- BlackRock Inc., the largest publicly traded U.S. money manager, and Ospraie Management LLC, are among five companies that will start Shariah-compliant hedge funds based in Dubai.
The funds will get $50 million each in so-called seed capital from the Dubai Multi Commodities Centre Authority, a government-backed agency. Barclays Capital, securities unit of Britain’s fourth-largest bank, will also back the funds which will start in the next two weeks, said Frank Gerhard, the bank’s head of fund-linked derivatives strategy in an interview.
Shariah forbids investment in companies judged by scholars to be highly indebted, and those involved in alcohol, gambling and weaponry. Financial information companies including Standard & Poor’s and Dow Jones & Co. have started Islamic indexes that show only Shariah-compliant companies. The world’s Muslim community has about $3.6 trillion of combined wealth, Standard & Poor’s estimated in 2006.
The Columbian- The hope at Lehman Brothers is that a management shakeup Thursday will contain the damage of a stunning quarterly loss – yet some on Wall Street fear this is one more step toward a more dramatic outcome for the embattled investment bank.
The ouster of Chief Financial Officer Erin Callan and Chief Operating Officer Joseph Gregory was an attempt to quell investor anger that Lehman’s leadership has failed them. But, with a four-day stock plunge that wiped $4.5 billion from the investment bank’s market value, it was unclear if the upheaval will be enough to satisfy critics.
"These people deserve to be fired," said Dick Bove, an analyst with Ladenburg, Thalmann & Co. "Their mistakes cost their shareholders billions of dollars in wealth." Lehman shares fell 4.4 percent Thursday to $22.70 and are down 30 percent this week. The decline is a blow to investors who bought into a stock offering at $28 earlier this week – including BlackRock Inc. and former AIG chief Hank Greenberg.
