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.
ForexHound – I admit I had not heard of this fellow until I saw this interview on Zerohedge, but apparently this is the key brain behind the massive bet against subprime mortgages that made John Paulson both famous and one of the wealthiest men on the planet.
The man who “made billions of dollars for John Paulson shorting real estate,” Paolo Pellegrini of PSQR LLC, discusses his economic outlook and investment strategies.
Bloomberg – Gold climbed in Asian trading as equity gains and an improving economic outlook boosted demand for the metal as a hedge against accelerating prices.
The MSCI Asia Pacific Index of equities gained for a sixth day after an index of leading economic indicators in the U.S. topped projections, indicating the country may be emerging from recession. Federal Reserve Chairman Ben S. Bernanke wrote in the Wall Street Journal that the central bank “will need to tighten monetary policy” to prevent inflation.
Bloomberg – Blackstone Group LP, the world’s largest private-equity firm, fell to a record low in New York trading this week on concern that a rebound in leveraged buyouts will lag behind any economic recovery.
“Given the economic outlook and pressure on asset values, even on existing investments, it’s going to be a while before they have a chance to come back,” said Robert Lee, an analyst with Keefe, Bruyette & Woods Inc. in New York. “It’s hard for investors to see through that valley.”
After announcing about $169 billion of buyouts in 2006 and 2007, New York-based Blackstone has since completed $9.2 billion of deals. An absence of financing for new acquisitions and an inability to sell current holdings have idled the firm and competitors such as KKR & Co. and Carlyle Group LP. Investors say deal won’t resume until after the economy starts to grow and banks can rebuild capital depleted by losses on mortgage-backed securities and previous LBO loans.
Blackstone, run by Chairman Stephen Schwarzman, probably will report a loss tomorrow of 31 cents a share, its third in the past four quarters, according to the average estimate of seven analysts in a Bloomberg survey. The company had a profit, excluding some costs, of 8 cents a share in the same quarter a year earlier.
Of the nine analysts who rate Blackstone shares, six have ratings equivalent to hold, including Lee. One analyst, Barclays Capital’s Roger Freeman, suggests selling the stock. Two recommend clients buy the shares.
Blackstone dropped below $4 a share for the first time on Feb. 23, closing at $3.89, almost 90 percent less than its $31 initial public offering price in June 2007. The stock declined 17 cents to $4.12 yesterday in New York Stock Exchange composite trading.
Reuters – Hedge fund Harbinger Capital Partners said on Thursday it is seeking approval from Cleveland Cliff’s shareholders to boost its ownership stake to as much as a third of the iron-ore company.
Harbinger — already Cleveland-Cliffs’ largest shareholder — opposes Cleveland Cliffs’ proposed takeover of Alpha Natural Resources, saying it believes the Alpha deal is not in the best interest of shareholders.
The fund said in a regulatory filing that it has asked Cliffs for a shareholder vote that would allow Harbinger to acquire shares that would bring its ownership up to more than one-fifth, but less than one-third, of Cliffs’ outstanding shares.
Tampa Tribune – Yahoo is recounting the shareholder vote for its board of directors after discovering that a tabulating firm failed to register the opposition of a major investor.
The revision won’t change the outcome of Friday’s election, which retained Yahoo’s incumbent directors despite shareholder anger about the board’s handling of a now-withdrawn $47.5 billion takeover bid from Microsoft Corp.
However, the change will add a little more punch to the protest against the Yahoo board. The directors re-elected last week had been supported by at least 78 percent of the votes cast, based on the original results.
"It’s important for Yahoo’s board to understand there is still pressure on them," said Eric Jackson, a hedge fund manager who represents a group of stockholders with about 3.2 million Yahoo shares. "I thought Yahoo’s board was kind of let off the hook last week when they didn’t really deserve to be."
Capital Research Global Investors, which owns a 6.2 percent stake in Yahoo, lodged the inquiry Monday that resulted in the election recount. Convinced that its opposition to Yahoo’s board wasn’t reflected in last week’s vote, Capital Research demanded an audit from Broadridge Financial Solutions, the processing firm responsible for casting its ballot.
