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.
Indianapolis Business Journal – Wall Street loves Conseco Inc.’s deal to get a $278 million shot in the arm from a New York hedge fund.
Shares of the Carmel-based life insurer soared as much as 26 percent, to $6.30 apiece, in morning trading after New York-based Paulson & Co. agreed to buy $78 million in Conseco stock and $200 million in company bonds.
Paulson chief John Paulson is well-known today for betting in 2007 that subprime mortgages would plummet. According to Bloomberg News, his main fund returned 37 percent last year, compared with an average 19-percent loss for hedge funds. Now he’s betting on financial firms, including Bank of America Corp., Goldman Sachs Group Inc. and now Conseco, to come roaring out of the recession.
TheDeal.com – Since increased regulation for hedge funds and private equity managers is essentially inevitable, several organizations, including the Managed Fund Association and the Alternative Investment Management Association, have stopped trying to stymie legislation, but they have instead saddled up alongside regulators in hopes that they can steer them in the right direction.
In a new Intralinks podcast series, Kelli Moll, a partner at law firm Schulte Roth & Zabel LLP, said she expects Congress to enact the recently passed Private Fund Investment Act by the end of the year, with compliance required six to 12 months later.
The Star-Ledger – Gov. Jon Corzine has a stake in a private hedge fund related to the corporate owner of four New Jersey casinos, an investment Republican critics contend presents at least the appearance of a conflict for a multimillionaire governor who has vowed to steer clear of them.
Corzine and his advisers say the investment was properly reported and does not violate state regulations that bar the governor and senior state officials from business relationships with casino operators. They say the hedge fund’s holdings are kept separate from those of its founding company, which bought Harrah’s Entertainment in late 2006.
Bloomberg – Tokio Marine Holdings Inc., Japan’s biggest casualty insurer, plans to trim hedge-fund investments and shift more of its portfolio in the industry to strategies such as macro and long-short equity funds.
Tokio Marine & Nichido Fire Insurance Co., a unit of Tokio Marine Holdings with 8.4 trillion yen ($90 billion) in assets, will trim its holdings in hedge funds “slightly” this year from about 100 billion yen at the end of March, said Eisuke Shigemura, who runs the firm’s hedge-fund investment group. He declined to quantify the planned reduction.
Telegraph.co.uk – RIT Capital Partners, Lord Rothschild’s investment vehicle, had £36.5m ($58.3m) allocated to Atticus at the end of March 2008, but the company’s latest annual report shows the money has been entirely withdrawn.
The trust had invested in Atticus since 2000, and the holding was its largest single hedge fund investment last year.
USA Today – A Spanish banking giant that channeled $3 billion of its clients’ funds to Bernard Madoff has agreed to repay more than $235 million it withdrew from the confessed Ponzi scheme architect in the months before the scam collapsed in December.
Pending federal bankruptcy court approval, the deal announced Tuesday by a hedge fund investment subsidiary of Banco Santander would boost the amount recovered to help repay Madoff’s victims past the $1.2 billion mark.
The settlement would return 85% of the total sought from Spain’s largest bank by Irving Picard, the court-appointed trustee seeking Madoff’s assets for redistribution to thousands of victimized investors worldwide. Picard has so far issued more than $100 million in repayment commitments, a fraction of the total losses.
24/7 Wall St. – According to a civil suit filed today by the Securities Exchange Commission in the Southern District Court of New York, John-Paul Rorech, a bond salesman at Deutsche Bank Securities, and Reanto Negrin, a former portfolio manager at hedge fund investment advisor Millennium Partners L.P., were charged with insider trading in credit default swaps of VNU N.V. VNU, now Nielsen Company, is a Dutch media conglomerate that owns Nielsen Media and other media businesses.
According to Scott W. Friestad, Deputy Director of the SEC’s Division of Enforcement, “This is the first insider trading enforcement action involving credit default swaps.”
West Palm Beach (HedgeCo.net) – At the MFA Legal, Compliance and Operations Seminar in New York last week, SEC staff described its examination and enforcement priorities for the foreseeable future with respect to hedge funds and investment advisers.
According to a letter obtained by HedgeCo, the SEC staff said that as part of their examination of hedge funds and investment advisers, the SEC intends to contact investors, verifying that the hedge fund/investment manager is providing the same statement information to both the client and SEC staff.
The concern here is that the manager might be providing one set of statements to the SEC for exam purposes and another set of statements to the clients that contain materially different account balances or performance information.
This aspect of the exam program may have significant investor relationship implications for fund managers. When questioned, the SEC staff members indicated that they may issue a press release stating that this aspect will be part of examinations going forward.
The SEC staff indicated that fund managers may run the risk of obstructing the examination by getting ahead of the process and communicating directly with investors ahead of SEC staff.
The SEC also warned investors about con-artists who may use the names of SEC employees to mislead, trick and conduct "emergency" examinations.
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Reuters – The nation’s second-largest pension fund, the Universities Superannuation Scheme (USS), said it was sticking by a medium-term plan to double exposure to alternative assets such as hedge funds and private equity.
The 23 billion pound pension scheme confirmed the target as it announced its first appointment to a new hedge funds team on Monday.
USS currently has 10 percent exposure to alternatives, making it already one of the more adventurous UK pension funds.
Its plan to increase that to 20 percent, coupled with specific move to boost hedge fund investment, will be comfort to an industry which struggled with poor performance and heavy outflows during a turbulent 2008.
"We believe that the current turmoil in the hedge fund industry represents a compelling investment opportunity for investors like USS who are able to take the long-term view," said USS’s head of alternative assets Michael Powell.
There have been fears that conservative long-term investors such as pension schemes could be put off future allocations to hedge funds.
Reuters UK – The nation’s second-largest pension fund, the Universities Superannuation Scheme (USS), said it was sticking by a medium-term plan to double exposure to alternative assets such as hedge funds and private equity.
The 23 billion pound pension scheme confirmed the target as it announced its first appointment to a new hedge funds team on Monday.
USS currently has 10 percent exposure to alternatives, making it already one of the more adventurous UK pension funds.
Its plan to increase that to 20 percent, coupled with specific move to boost hedge fund investment, will be comfort to an industry which struggled with poor performance and heavy outflows during a turbulent 2008.
"We believe that the current turmoil in the hedge fund industry represents a compelling investment opportunity for investors like USS who are able to take the long-term view," said USS’s head of alternative assets Michael Powell.
Reuters – Lasair Capital, a hedge fund industry newcomer that boasts General Electric Co as its blue-chip backer, said on Tuesday that it has hired a senior investment officer to help put $180 million to work.
Carrie McCabe, who founded Lasair as a "next generation" hedge fund firm earlier this year, told investors that Jennifer Coffey will now help select hedge funds as well as infrastructure and timber assets for clients.
"Jennifer will report directly to me and I will continue to oversee all investment decisions," McCabe, who cemented her reputation in the hedge fund industry while running Blackstone Alternative Asset Management and FRM Americas, told clients.
