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New York (HedgeCo.Net) – Although hedge funds finished up 2008 with some of the worst numbers to date, they showed some signs of promise in December. According to the latest research by the Hennessee Group LLC, a New York-based advisor to hedge fund investors, hedge funds advanced .51 percent in December.
Hedge funds finished up the year down 19.15 percent according to the research. Although it was a dismal year for funds as a whole, they still outperformed the S & P, which was down 38.5 percent on the year, the Dow Jones, who dropped almost 34 percent, and the NASDAQ Composite Index, which posted a 40 percent drop on the year.
One challenge for hedge funds in 2008 was the record number of redemption requests brought on by clients. Large hedge funds such as Citadel, Harbinger and Cerberus, along with about 80 others, had to put some form of restrictions on client withdrawals.
“Year-end redemptions were significant, as the average fund returned 15% to 25% of investors’ assets. Combined with negative performance and complete liquidations, the entire hedge fund industry started 2009 at close to 50% of the capital it was at the beginning of 2008,” said Charles Gradante, Co-Founder of the Hennessee Group. “However, this should be a positive for funds as less capital will be chasing the same long/short trades, which should lead to better returns.”
The Hennessee Long/Short Equity Index saw a .31 percent advance in December, while the year to date was down over 18 percent. The Global/Macro Index rose .61 percent in December, although taking an almost 21 percent hit for the year. The Arbitrage/Event Driven Index, which was down 18.5 percent on the year, advanced 1 percent in December.
Julie Scuderi Senior Editor for HedgeCo.Net Email: julie@hedgeco.net
West Palm Beach (HedgeCo.net) – Some analysts are saying that the mighty New York Times might be headed down the same path as the bankrupt Tribune Company, owner of the Chicago Tribune and Los Angeles Times.
Hedge fund shareholders, Harbinger Capital Partners Funds and Firebrand Partners own 19% of the NYT Company, and the outlook does not look good. NYT is approximately $1 billion in debt, the result of its move to a new building on Eighth Avenue a couple of years ago.
Harbinger Capital Partners has grown to one of the 15 largest hedge funds, by assets, in America. Firebrand Partners is an operational activist firm that invests in publicly-traded companies whose brand equity represents significant upside relative to their market capitalization.
The NYT Company includes The New York Times, the International Herald Tribune, The Boston Globe and 15 other daily newspapers.
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Financial Times – The London market’s new year bounce continued into a fifth session, but Tate & Lyle missed the trend.
Tate lost 8.5 per cent to 386¼p amid speculation that Harbinger, its second-biggest shareholder, might have to sell to meet redemptions.
The US hedge fund run by Philip Falcone cut its holding from 19 per cent to 13.9 per cent through December.
Tate shares were also hit by concerns that the sweetener industry had failed to push through price rises. Supply contracts for 2009 have been fixed at 1-2 cents above last year’s levels, but below the 3½-cent increase requested, according to a trade press report.
Tate shares rallied 5.5 per cent last week, helped by talk of a Russian investor looking to buy a 10 per cent stake but had struggled to find a broker willing to take the trade.
The FTSE 100 closed up 0.4 per cent, rising 17.85 points to a two-month high of 4579.64. Activity remained at holiday levels, however, with just over 840m blue-chip shares changing hands.
New York (HedgeCo.Net) – John Paulson, head of hedge fund firm Paulson & Co., recently spoke his mind on the wave of redemption freezes that many managers have chosen to impose.
“We think it’s a mistake for our managers to use gates and other tools to limit investor access to their funds,” Paulson stated in a recent outlook to investors that was obtained by Bloomberg News. “While we recognize the difficulties of the current environment, we think it is a manager’s responsibility to raise liquidity to meet the redemption needs of their investors.”
Paulson’s hedge funds did not see the effects of the troubled economy, where most funds posted their worst year to date. In fact, when the subprime crisis wreaked havoc on the financial markets, Paulson was catapaulted into billionaire status, by successfully predicted the housing mess. His hedge funds, in turn, were up about $15 billion in 2007.
This year also saw admirable gains, with his Advantage Plus Fund climbing 3.19 percent in November, and currently up 38 percent on the year. His slightly smaller Advantage Fund was also up 21 percent through the end of November.
Most other funds haven’t experienced that level of success this year. According to the Credit Suisse/Tremont Hedge Fund Index, funds are down over 19 percent on the year through the end of November. Dozens of large, reputable funds have suspended withdrawals including Citadel, RAB, Harbinger and Cerberus, just to name a few.
Paulson also disagrees with managers that “have the cash and one of the stated reasons for restricting withdrawals is so the manager can continue to invest in new opportunities.”
Paulson’s firm is teaming up fellow New York firms Dune Capital Management and J.C. Flowers & Co. to purchase failed bank IndyMac. A deal is expected to be finalized in the near future.
Julie Scuderi Senior Editor for HedgeCo.Net Email: julie@hedgeco.net
New York (HedgeCo.Net) – New York-based Harbinger Capital Partners has capped year-end withdrawals from its largest hedge fund after investors moved to pull $3.5 billion of capital. The hedge fund, run by Philip Falcone, will only honor 60 to 70 percent of the requests, according to a report by Bloomberg News.
The Harbinger Capital Partners Master Fund, which manages approximately $10 billion, has never posted a losing year since its launch in 2001. While 2007 saw returns of 115 percent, the fund has lost 23 percent through the end of November, according to the report which cited people familiar with the matter.
Harbinger is just one of dozens of hedge funds who has suspended redemptions this year amidst unfavorable market conditions. Large firms like RAB, Pardus and Citadel are just among a few who have halted withdrawals in hopes of waiting out the storm and avoiding a liquidity crunch.
Harbinger likes to invest in companies either going through mergers or in companies they feel they can strategically change for the better. The firm made headlines when they sought seats on both the New York Times and Media General; two companies in which they invest. They won their board seats after a much publicized proxy battle earlier this year.
Hedge funds as a whole have suffered this year, posting record losses. According to the Credit Suisse/Tremont Hedge Fund Index, hedge funds are down over 19 percent on the year through the end of November. It is estimated that the once $3 trillion industry will manage a mere $1 trillion at the start of the new year.
Julie Scuderi Senior Editor for HedgeCo.Net Email: julie@hedgeco.net
New York (HedgeCo.Net) – Hedge Fund Appaloosa Management may have tried to turn their back on Delphi, but somehow they just can’t seem to get away. Ensnarled in a nasty court battle with the Michigan auto parts supplier, the judge is now reconsidering original fraud claims brought against the New Jersey based hedge fund.
Delphi had sued the investor group headed by Appaloosa that originally agreed to inject $2.55 billion into the bankrupt company that was supposed to help lift them out of Chapter 11. The investors commitment was going to provide a much needed piece of the $6.1 billion in financing that Delphi needed to secure by the April deadline. When Appaloosa walked away as the deadline neared, Delphi was left scrambling, clinging only to former parent company General Motors.
Judge Robert Drain told a Manhattan Court this week “It seems to me that I was unclear in what aspects of the allegations needed to be dealt with…I may have well been wrong.”
Drain said that when he dismissed this claim for fraud originally, he did not feel that Appaloosa made “affirmative misrepresentations” to Delphi about plans to scrap the financing deal. Now, Drain is reconsidering, saying that any failures to communicate a change of mind could very well constitute fraud.
Both parties were asked to gather more information and submit briefs on the fraud claim by the next hearing on October 21. Delphi is seeking damages from Appaloosa and a ruling that could make them deliver their original financial obligation.
Julie Scuderi Senior Editor for HedgeCo.Net Email: julie@hedgeco.net
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Vindicator – A bankruptcy judge said Wednesday he may let Delphi pursue wider fraud claims against the Appaloosa Management hedge fund, which backed out of a deal to invest $2.55 billion in the auto supplier.
Appaloosa had led a group of investors to inject as much as $2.55 billion into Delphi in exchange for stock once it reorganized, but the investors withdrew from the deal in April. Delphi Corp. sued Appaloosa in May, accusing it of deliberately and secretly working to sabotage Delphi’s effort to satisfy a condition of their deal: that Delphi should raise $6.1 billion in exit financing to support its emergence from Chapter 11.
On Wednesday, lawyers for Appaloosa sought the right to improve its position in the lawsuit, but in doing so the hedge fund may have opened the door to wider charges.
Judge Robert Drain had ruled in July that Delphi could pursue a claim that Appaloosa had misrepresented its intentions. Delphi lawyers argued that Appaloosa manager David Tepper, a Goldman Sachs alum and well-known hedge fund manager, gave his verbal commitment to do the deal when he testified in December 2007. They described his testimony as a declaration that “a deal is a deal,” which to them meant that Appaloosa’s withdrawal constituted fraud.
New York (HedgeCo.Net) – As if trying to secure $6.1 billion in financing to exit bankruptcy isn’t enough of a headache, now Delphi has to deal with counterclaims by hedge fund Appaloosa Management who is demanding that the U.S. auto parts supplier pay them $82.5 million in fees plus expenses.
Appaloosa claims they are entitled to that money because Delphi violated the terms of their agreement. The original agreement entailed Appaloosa heading the rescue of Delphi, offering them $2.55 billion if they secured the rest of the capital needed to exit Chapter 11. On the last day of the deadline, Appaloosa walked away from their commitment, leaving Delphi high and dry with little alternatives.
Delphi then proceeded to sue Appaloosa, hoping to make them deliver on their promise of the much needed capital. The hedge fund however, expressed concern on the company’s overreliance to once parent company GM, who guaranteed Delphi a $2 billion piece of their financial puzzle.
Delphi spokesperson Lindsay Williams said, “"We continue to believe that the plan investors failed to honor their commitment at the April 4 closing, causing unnecessary harm in delaying our emergence from Chapter 11. We’ll continue to pursue legal remedies in court.”
In its counterclaim, Appaloosa sates that the agreement with General Motors “violates the express terms."
Appaloosa is just one of the would-be investors who is seeking a piece of the $82.5 million. Others include Harbinger Capital Partners, Merrill Lynch, UBS and Pardus Capital Management, who all commited to Delphi’s rescue.
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) – While Delphi continues its quest to secure the capital needed to exit bankruptcy, GM has announced they will increase their loan to the auto parts maker to $950 million. The extra $300 million will help Delphi maintain some liquidity throughout the process.
Delphi, who sought bankruptcy protection in October 2005, pulled together an exit strategy that included a $6.1 billion influx of capital. Hedge fund Appaloosa Management took the reins and agreed to provide $2.55 billion to help lift them out of Chapter 11.
Former parent company GM also came to the rescue and promised a whooping $2 billion piece of the puzzle. However, Appaloosa proceeded to walk away from the deal during the final days in April, leaving Delphi with no other alternatives.
Delphi took action against the hedge fund in hopes of making it deliver on the promised capital. The hedge fund bailed amidst what they thought was an increasingly risky situation. They also were concerned whether or not Delphi has an overreliance on GM.
Delphi’s next hearing is scheduled for August 26th in the U.S. Bankruptcy Court in New York. GM just reported a $15.5 billion quarterly loss, one of the largest in their history.
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) – American auto parts maker Delphi has been given the green light to proceed with their suit against hedge fund Appaloosa Management.
U.S. Bankruptcy Judge Robert Drain denied a request by Appaloosa yesterday to dismiss the fraud and breach of contract lawsuit that Delphi had waged against them. Delphi is attempting to collect the $2.55 billion that was originally promised to them by Appaloosa as part of their plan to exit Chapter 11.
While Judge Drain did disregard some of Delphi’s complaints, sources say he rejected the arguments of Appaloosa, including the one that stated the agreement with Delphi only allows for damages of up to $250 million.
The money was part of a bigger, $6.1 billion refinancing strategy that was promised to Delphi through various investors. After $2 billion was granted by former parent company General Motors, Appaloosa got weary of the deal and cited an overdependence on GM. One day before the deadline to walk away, Appaloosa did just that, even though Delphi had attained the rest of the financing needed to solidify the deal.
The lawsuit is scheduled to go to trial next year.
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
Detroit Free Press- Delphi Corp. has hired a Detroit investment bank to find a buyer for its brake business, which has been for sale for more than two years.
The Troy supplier said Monday that it hired W.Y. Campbell & Co., owned by Comerica Bank, to sell the business, which employs 1,000 people, including 100 in Michigan.
Delphi already has sold portions of its brake business in Mexico and Saginaw. Delphi hired W.Y. Campbell to sell the rest of the business, which includes technical centers in Brighton, Dayton, Ohio, and Shanghai, as well as three factories in Mexico and China. The brake business is expected to generate $295 million in revenue this year.
Delphi, with total sales of $22.3 billion last year, is trying to sell its brake business at time when it has become tougher for companies to find buyers for unwanted units.
New York (HedgeCo.Net) – Appaloosa Management is getting hit from all angles in their attempt to walk away from the deal they struck with Delphi. The hedge fund is not only being sued by the auto parts maker, but now creditors of Delphi Corp. are seeking to intervene on the case.
The lawsuit stems from an original agreement, led by Appaloosa, to provide Delphi with $2.55 billion in aid to help them exit Chapter 11. Though $6.1 billion was needed to make that happen, it looked as if Delphi was going to pull it together, thanks largely to a $2 billion influx of cash from former parent company, General Motors.
Appaloosa walked away from the deal at the deadline, claiming that Delphi had violated several agreements and had an over reliance on GM. Now, creditors are siding with Delphi, saying that Appaloosa walked away simply because they lost interest in the deal.
“Because of the failure to provide the agreed-upon investment financing, distributions that should have been made to creditors pursuant to the plan have not been made,” the Creditors Committee said in the court papers.
The committee said it "should have the right" to join in the lawsuit because they would have "directly benefitted" from Appaloosa’s investment.
Delphi is seeking a ruling that would force Appaloosa to deliver on their original promise.
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
