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.
Reuters – Shanghai has decided to let foreign investors, including private equity and venture capital funds, register legally as local equities investment firms as China’s financial hub moves to lure more overseas investment.
Foreign investors with a focus on Chinese equities can set up a Shanghai-registered entity with initial capital of 100 million yuan ($14.56 million) or more with the legal status of a local investment company and receive special tax treatment, according to a city government document dated Aug. 11 and obtained by Reuters on Friday.
Qualified foreign investors would include private equity funds, venture capital funds, buyout funds and hedge funds, it said.
West Palm Beach (HedgeCo.net) - Hedge fund advisory firm D5 announced the launch of two new accounts, with each promising capacity of $50 million, for a possible $ 100 million on additional capital for the firm. The new accounts coincide with the hiring of mathematician and scientist Andrew Vizcarra as Director of research.
"Andrew’s 10 years in the study and teaching of mathematics and statistics is a great asset to our research department and is a wonderful compliment to the fundamental nature of our strategy." Theodore Dumbauld, founder of D5 said, "Mr Vizarra will focus on both the enhancement of our current strategy and the exploration of universe expansion."
D5′s strategy utilizes a relative value strategy, trading only a unique set of securities for which net asset values can be calculated.
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New York (HedgeCo.Net) – Less than one week after UBS and Citigroup were called upon to buy back over $30 billion in bad auction-rate securities, New York Attorney General Andrew Cuomo is forcing JPMorgan, Morgan Stanley and Wachovia to follow suit.
In a letter to the three banks, Chief of the Attorney General’s Investor Protection Bureau David Markowitz wrote, “Our investigation’s focus is shifting to the next group of market participants. Any resolution would need to address the same concerns addressed in the previous settlements.”
UBS was slapped with $150 million in fines and is being forced to buy back some $18.6 billion worth of the auction-rate securities. These securities, backed by municipal bonds and other debts, were sold under the assumption they were a safe investment. Instead, the $330 market collapsed in February, leaving investors and now the government, wondering if the banks were up front about the potentially high risks associated with such investments.
The probe launched by Cuomo will investigate 18 different banks. He is insisting that banks create auction-rate securities buyback programs for the customers who got stuck selling their securities far below par.
Citigroup also got slapped with a $100 million fine and had to deal with both state regulators and the Securities and Exchange Commission. They eventually agreed to buyback $7.3 billion worth of the securities from individual customers and small businesses. In addition, they must help over 2,500 clients sell about $12 billion of the securities.
Morgan Stanley has agreed to buy back $4.5 billion worth of the securities at par. According to the Wall Street Journal, Morgan Stanley will repurchase the securities beginning no later than September 30, from all charities and small to mid-size companies with accounts of $10 million or less that were purchased before February 13th of this year.
Merrill Lynch, in an attempt to quell the probe before it starts, offered last week to buy back about $10 billion in the auction-rate securities. However, Cuomo’s office stated that their plan didn’t contain certain “investor protection safeguards.” The Merrill case is currently under review in Cuomo’s office.
Julie Scuderi Senior Editor for HedgeCo.Net Email: julie@hedgeco.net
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New York (HedgeCo.Net) – Merrill Lynch and Citigroup, two banks that have already written down billions in losses, will buy back $30 billion in auction-rate securities as part of an agreement with regulators.
This comes after the threat made by New York Attorney General Andrew Cuomo, who said he would sue Citi for misleading trusting investors about the high risks associated with such securities.
Merrill then followed suit, and other big names firms like Morgan Stanley and Bank of America are expected to strike their own deals with state regulators and the SEC in the near future.
These securities, which accounted for nearly $350 billion, are backed by municipal bonds and other forms of debt, and were peddled as being “safe.” However, the credit crunch blindsided most banks, and those securities were quick to plummet in value.
Citi has to shell out the most cash, agreeing to purchase $7.5 billion in securities and promised to purchase another $12 billion from institutional investors. On top of it all, they were slapped with $100 million in fines. Merrill has agreed to buy back $10 billion in the auction-rate securities.
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
New York (HedgeCo.Net) – Service providers for hedge funds scored a victory yesterday when a New York judge threw out a suit filed against UBS by defrauded investors.
Judge Charles Ramos dismissed the complaint in a Manhattan court at the request of UBS, who served as prime broker and custodian to the now collapsed hedge fund Wood River Partners, LP.
The investors had accused UBS of improperly profiting from the trades of the fund, and claimed that UBS had made $100 million by selling borrowed shares of Endwave Corp., the fund’s main holding.
The plaintiffs also accused UBS of creating a short market for Endwave stock while borrowing from the hedge fund’s account to buy shares. This in turn decreased the fund’s portfolio by almost $20 million, according to their allegations.
"The facts alleged do not support the causes of action,” Ramos stated. "These plaintiffs lack standing."
Investors were duped into thinking their assets were being diversified when in reality they weren’t. The hedge fund exceeded the 10% cap on ownership of any one company, though it wasn’t clear whether or not UBS had knowledge of that situation.
Nevertheless, it was a victory for service providers seeing as how recent trends show more and more of disdained investors going after affiliated or hired help by defunct hedge funds.
Investors in Wood River lost approximately $100 million. The plaintiffs of the lawsuit were made up of a group that had funneled in $79 million. John Whittier, who headed the hedge fund, is now serving three years behind bars.
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
Bloomberg- William Ackman, the activist hedge fund manager, increased his $2 billion bet on Target Corp. as shares of the second-largest U.S. discount retailer declined as much as 38 percent in the past year, according to two people with knowledge of the matter.
Pershing Square Capital Management LP, Ackman’s New York- based firm, added at least $100 million to the hedge fund it started last year to invest in Target. Ackman personally committed $5 million and solicited money from current and new investors, said the people, who declined to be identified because the fund is private.
Bloomberg- William Ackman put more cash into the $2 billion hedge fund he started to invest in Target Corp. as shares of the second-largest U.S. discount retailer declined 38 percent in the past year, according to two people with knowledge of the matter.
Pershing Square Capital Management LP, Ackman’s New York- based firm, added at least $100 million to the fund, while he personally committed $5 million. Ackman also solicited money from current and new investors, said the people, who declined to be identified because the fund is private.
The Target fund’s loss may exceed the drop in the Minneapolis-based company’s stock because it uses derivatives, which can amplify gains and losses. Target peaked at a record $70.14 on July 13, 2007, three days before Ackman disclosed owning a stake. Earnings have fallen for three straight quarters as consumers cut back on purchases of clothing and home goods.
Bloomberg – Leopard Capital, which is setting up a $100 million private-equity fund to invest in Cambodia, said it’s competing to buy a stake in Acleda Bank Plc, the largest Cambodian bank.
“It’s the best-run bank, it’s clean and it has very good margins,” Thomas Hugger, executive director at Leopard Capital, said in an interview in Singapore today.
Leopard Capital is vying with other foreign investors that are seeking to invest in Cambodian companies after the economy grew at least 10 percent in the last four years. Acleda Bank, based in Phnom Penh, reported a 46 percent jump in net income to a record $9.7 million in 2007, according to its annual report.
“We have a lot of people sniffing around, ready to buy into us,” John Brinsden, vice chairman of Acleda Bank, said in an interview in Phnom Penh on June 18, declining to give details.
Acleda’s assets more than doubled to $473 million in 2007, from $223 million the previous year, according to its annual report. Loans almost doubled to $311 million, from $157 million over the same period. The bank had 204 offices across Cambodia at the end of last year.
The Money Times- A $100 million here, a $100 million there, and pretty soon you’re talking about real compensation. U.K.-based hedge fund manager GLG Partners (NYSE: GLG) announced today that it has hired Goldman Sachs (NYSE: GS) partner Driss Ben-Brahim. In 2006, Ben-Brahim sent the London press into a frenzy when it was reported that he earned a $100 million payday.
With those kinds of numbers being thrown around, leaving Goldman might look like an odd decision, but Ben-Brahim can always point to the man whose shoes he’ll be filling. GLG is losing its highest-profile portfolio manager, Greg Coffey, who is walking away from a $250 million stock payday to launch his own fund.
Bloomberg- Taylor Wimpey Plc, Britain’s biggest housebuilder, may get a 100 million-pound ($199 million) investment from a hedge fund to bridge a financing gap, the Financial Times reported, citing unidentified people close to the money-raising effort.
Shares of Taylor Wimpey fell 42 percent yesterday after the company failed to reach a 500 million-pound financing agreement with shareholders and potential new investors; the stock “spiked,” however, in the last minutes of trading, the newspaper said.
New York (HedgeCo.Net) – New York hedge fund Manhasset Capital will start the liquidation process later this month after the decision was made by the fund’s seeder to pull out their $100 million initial investment.
A spokesperson for Fairfield stated, ““As part of a normal rebalancing of capital, FGG has indeed decided to close its co-branded single manager fund, Fairfield Manhasset Offshore Fund Ltd., which we created as part of an agreement with Manhasset Capital Management. However, we cannot comment on any of Manhasset Capital’s choices; they run their own business and have their own investors, and it would be incorrect to state that FGG had caused Manhasset’s current or future decisions.”
Fairfield Greenwich Group, who seeded Manhasset’s offshore fund and had a three-year profit sharing agreement with the firm, decided to pull out just a month and a half after the agreement expired on May 1st. Manhasset ran an onshore fund as well, which engaged in a long/short equity strategy and focused on mid-cap U.S stocks. Total assets of both funds were around $165 million.
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
Black Enterprise- Naeem Holding, Egypt’s second-largest investment bank by market value, will start a 100 million Egyptian pound ($19 million) fund to buy stakes in firms planning public listings, its chief executive said on Wednesday [June 18].
The fund would buy stakes in up to eight companies in its first year ahead of their listing on Nilex, Egypt’s stock exchange for small and medium sized companies, Hany Tawfik told reporters. Naeem would finish raising money for the fund by mid-July, he said.
"The growth for small-cap funds generally outperforms other funds," Mr. Tawfik said.
