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.
New York Times Blogs – After pouring money into Barack Obama’s campaign, what can hedge funds and their executives expect from the new president?
If history is any exmaple, says FINAlternatives, they shouldn’t expect a cuddly relationship.
Mr. Obama didn’t appear sympathetic to the industry on the campaign trail, the publication noted, calling John McCain the candidate of “Joe the Hedge Fund Manager,” a riff on McCain’s pledge to serve the “Joe the Plumbers” of the U.S.
And during his time in the Senate, FINAlternatives noted, Mr. Obama sponsored a bill that would have required hedge fund managers to set up anti-money laundering programs supervised by the Treasury Department. (The Treasury abandoned a similar proposal last week).
The president-elect has also backed tax proposals that increase the burden on hedge funds and private equity shops, the publication said.
Washington Post – The Bush administration’s decision to drop proposed money-laundering rules for hedge funds is "inexplicable, ill-timed and unwise," Sen. Carl M. Levin (D-Mich.) said yesterday.
Hedge funds, private investment pools whose investors are often wealthy individuals, have drawn increased scrutiny during the financial crisis. But even before the market troubles, some legislators worried that the largely unregulated funds could serve as a vehicle for money laundering, perhaps for tax evaders or terrorists.
"Hedge funds are unregulated financial companies that can handle millions of dollars in offshore money without any legal obligation to check who is behind the funds or report suspicious activities," Levin said in a statement. "But instead of plugging the hedge fund regulatory gap by issuing a final rule, the Administration went the opposite way, withdrew its anti-money laundering proposal, and offered nothing in its place."
Washington Post – Given the panic in Washington over the financial markets, it is virtually certain that Congress will soon pass some form of the bailout plan the Treasury put forward last week. This is not an ideal proposal, particularly since it does not address the underlying problem with mortgages and negative housing equity.
No troubled mortgage holders would benefit directly, and key commercial banks might still end up undercapitalized.
However, no legislator wants to risk allowing the economy to collapse on his or her watch, and, according to Treasury Secretary Henry Paulson and Fed Chairman Ben Bernanke, that is what’s at stake.
Times Online- An activist American hedge fund has drawn up detailed plans to buy BSkyB’s 17.9% stake in ITV.
Silver Point Capital, an American fund that specialises in distressed assets, has held talks with investment bankers who could assist with its plan.
It is unclear whether Silver Point has approached BSkyB, but its proposal involves the creation of a complicated structured vehicle. The “warehouse structure” would enable BSkyB to divest the stake and shed the regulatory risk but still share in any future upside with the hedge fund.
BSkyB, which is part-owned by News Corporation, ultimate owner of The Sunday Times, is expected to learn shortly whether it will be forced to cut its stake in ITV by the Competition Commission to at least 7.5%. It is understood to be considering all options for a sale.
MSN MoneyCentral- A British hedge fund said Monday it will accept the Japanese government’s rejection of its proposal to raise its stake in a major utility — although it added that it still doesn’t agree with the reasoning behind the order.
The Children’s Investment Master Fund had proposed raising its stake in J-Power — Japan’s largest electricity wholesaler — to as much as 20 percent from 9.9 percent. The government rejected that proposal earlier this year, citing potential disruptions to public order.
The fund has contested the decision as lacking transparency and including incorrect information and false premises.
But it said the government was unlikely to change its mind. The fund will now instead focus on improving corporate governance at J-Power, it said in a statement.
Bloomberg- J-Power shareholders defeated a proposal by U.K. hedge fund TCI for the company to double its dividend, ending a monthlong proxy battle and sending the stock to its biggest decline since February.
Shareholders of Electric Power Development Co., the official name of Japan’s largest power wholesaler, rejected all five proposals by the investment company including limiting cross- shareholdings and doubling the yearly dividend at the utility’s annual general meeting in Tokyo today. The investors approved the board’s proposal to raise the payout by 10 yen to 70 yen.
Today’s vote marks the end of a public spat between the utility and The Children’s Investment Fund Management (UK) LLP, as the utility’s largest shareholder is officially known. The verdict undermines efforts by an increasing number of foreign investors pushing Japanese companies to improve shareholder returns that are less than half of those in the U.S.
Bizjourmals.com- The country’s largest proxy advisory company recommended the election of four of the five board members nominated by hedge funds engaged in a proxy contest with CSX Corp.
The Children’s Investment Fund Management LLP and 3G Capital Partners Ltd. have nominated five new members for CSX’s 12-member board.
The RiskMetrics Group, a proxy advisory company, withheld recommending Gary Wilson. It also recommended rejecting CSX’s proposal that would allow shareholders to call special meetings except on topics voted on within the last year. Because CSX elects board members at its annual shareholder meeting, that would bar special meetings to recall board members. RiskMetrics said the proposal would further entrench the board and isolate shareholders.
Reuters – Conseco Inc on Thursday rejected hedge fund Steel Partners’ request to raise its shareholding in the insurance company to as much as 22 percent, saying the proposal could reduce its "financial flexibility."
Conseco told Steel Partners in a publicly disclosed letter that "it is not in the interests of all shareholders" for one stockholder to hold over 10 percent of the Carmel, Indiana-based company.
Steel Partners, which holds about 9.8 percent of Conseco, told the U.S. life and accident insurer that it wanted approval to more than double its holding, saying it has been "slow to implement the strategic review process" that it previously disclosed.
Conseco responded that its "review of strategic alternatives" is "the highest priority" for the company and that "we strongly disagree with the suggestions to the contrary."
Steel Partners is pushing Conseco to improve its return on equity, according to public filings.
At the company’s annual meeting May 21, shareholders reelected 10 directors to serve terms expiring at next year’s annual meeting.
Daily Telegraph- German leaders are to propose a worldwide ban on oil trading by speculators, blaming the latest spike in crude prices on manipulation by hedge funds.
It is the most drastic proposal to date amid escalating calls from Europe, the US and Asia for controls on market forces, underscoring the profound shift in the political climate since the credit crunch began. India has already suspended futures trading of five commodities.
Uwe Beckmeyer, transport chief for Germany’s Social Democrats, said his party would call for joint measures by the G8 powers to prohibit leveraged trading on energy contracts. "It’s an extreme step but it has to be done," he told the Berlin media.
