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 (HedgeCo.net) – Hedge fund manager Thane Ritchie announced that he has been wrongly blocked from meeting with The Chicago Newspaper Guild and developing a coalition offer to buy the Sun-Times Media Group. A Chicago Newspaper Guild representative stated that until today, the union had no idea of Ritchie’s interest, much less its desire to work with the Guild in devising a Private Equity/Union coalition bid.
“The American newspaper is not just another recession driven victim industry like autos or housing,” Ritchie said, “its ink is the lifeblood of our political system and democracy, as our Founding Fathers emphasized by enshrining only this commercial endeavor by name in our Constitution.”
Despite requests to set up such a meeting, Ritchie was told that it was against Federal labor laws for a potential bidder to have a conversation with the Guild, which represents many of those employed at Chicago’s #2 daily and associated sister publications, according to Steve Denari of Third Millennium Group strategic consultants, Ritchie’s point man looking at the investment.
When Ritchie heard of this blockage, he became personally involved and retained labor experts to review it. “This is a travesty — why shouldn’t forward looking private equity sources be able to form a coalition offer with a union, which represents the largest set of stakeholders here? The only bidder reportedly has made it clear that not only do they refuse to negotiate with the Guild, but that they would actually like to withdraw their bid unless the Guild gives in on everything.”
Reuters – Wealthy clients believe the worst of the crisis is probably over and have started to come back to higher-risk assets such as hedge funds, a top banker at JP Morgan Private Bank said on Wednesday.
Felipe Godard, Head of European International Markets at JP Morgan Private Bank, also told the Reuters Global Wealth Management Summit in Geneva he was on the lookout for buys in his region and expected double-digit revenue growth in the coming years.
“We have seen a return of risk appetite. Clients are comfortable with the risks of hedge funds if those risks are explained,” said Godard, whose bank is the world’s second-largest hedge fund manager by assets.
Securities Industry News – Hedge fund manager Philip Goldstein, who successfully curbed the Securities and Exchange Commission’s attempts in 2006 to regulate hedge funds, has lost a “freedom of speech” case against the state of Massachussetts.
A Massachussetts court on Sept. 30th ruled that the state’s fop financial regulator,the Massachussets Secretary of the Commonwealth was allowed two years ago to order Goldstein to stop unqualified investors from looking at his firm’s website for information on the funds his firm, Bulldog Investor, manages. William Galvin, the secretary of the commonwealth, had also ordered Goldstein to pay a $25,000 fine.
The case — Suffolk Superior Court Civil Action No. 07-1261-BLS2, Bulldog Investors General Partnership, et al. vs William F. Galvin, Secretary of the Commonwealth of Massachussetts –involved an unsolicited request for information through the Bulldog website in January 2007 by a Massachusetts resident who did not qualify under current securities law to receive such information because of insufficient net worth.
New York (HedgeCo.net) – A new whitepaper published by Pershing LLC, a BNY Mellon company, and Aite Group LLC examines critical hedge fund operations, entitled, Fueling Growth: Outsourcing Solutions for Hedge Funds, reports that an increase in client redemption requests is threatening the viability of even the most well-managed hedge funds.
Key findings from the whitepaper include:
* Choosing the Proper Outsourcing Model
* Smaller Hedge Funds Challenged by Resource Restrictions
* The Role of the Prime Broker
* Consider Disaster and Recovery Planning in Vendor Selection
“It is important for hedge funds to develop a thoughtful, long-term outsourcing strategy to ensure that its needs for support during various stages of the fund’s lifecycle are closely aligned with its goals and objectives to serve investors well.” Craig Messinger, managing director of Pershing Prime Services, said, “Employing this type of approach will enable hedge fund managers to focus on generating profitable returns for their clients and help them grow their businesses in a more productive manner.”
To help hedge fund managers better understand business continuity and disaster recovery planning processes and principles, Pershing Prime Services, in collaboration with Eze Castle Integration and its colleagues across BNY Mellon, has developed a guidebook entitled, Establishing Business Continuity and Disaster Recovery Plans: A Hedge Fund Manager’s Guide.
Boston Herald – Secretary of State William Galvin’s office didn’t violate a well-known hedge fund manager’s free-speech rights when the state cracked down on the fund’s use of the Internet to advertise to nonqualified investors.
Suffolk Superior Court Judge Judith Fabricant rejected the claims of Phillip Goldstein that his First Amendments right were violated by Galvin’s securities division.
Fabricant effectively said that case law allows some restrictions on commercial speech if it’s for a greater good promoted by the state, such as securities regulation.
New York (HedgeCo.net) – Hedge fund manager Richard Bookstaber will be speaking at is year’s HedgeWorld Fall Conference. He is the author of “A Demon of Our Own Design: Markets, Hedge Funds, and the Perils of Financial Innovation,” a book that pinpointed the market weaknesses that spun out of control to create today’s financial crisis.
“A Demon of Our Own Design” ranked number one on Amazon in finance and was selected as a finalist for the prestigious Loeb Award. Bookstaber was named to this year’s Conde Nast Portfolio list of top 25 technical innovators, joining the ranks of Steve Jobs, Jeff Bezos, Jeffrey Katzenberg and Eric Schmidt.
He has testified before the House and Senate, calling for greater transparency and improved regulation for Wall Street long before it was fashionable. BOOKSTABER recently worked at Bridgewater Associates, the world’s largest hedge fund, and before that ran the Quantitative Equity Fund at FrontPoint Partners.
He was in charge of risk management at Moore Capital Management, another hedge fund with over $10 billion in assets. He served as the managing director in charge of firm-wide risk management at Salomon Brothers and was a member of Salomon’s powerful Risk Management Committee. Bookstaber also spent ten years at Morgan Stanley, first designing and marketing derivative instruments, then as a proprietary trader, and concluding his tenure there as Morgan Stanley’s first market risk manager. In addition to A Demon of Our Own Design (Wiley, 2007), he is the author of three other books and scores of articles on finance topics ranging from option theory to risk management. He has won the Graham and Dodd Scroll from the Financial Analysts Federation and the Roger F. Murray Award from the Institute for Quantitative Research in Finance for his research. Bookstaber has a Ph.D in Economics from M.I.T.
The conference is being held at the Metropolitan Club in New York on October 6th, 2009.
Alex Akesson
Editor for HedgeCo.net alex@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!
Lexington Herald – CIT Group Inc.’s shares soared Tuesday on a report that hedge fund manager John Paulson is considering merging the troubled finance company with failed mortgage lender IndyMac Federal Bank. But they plunged after-hours as a separate report said CIT is preparing a debt swap offer that could wipe out taxpayers’ investment or could file for bankruptcy protection.
CIT Group, one of the nation’s largest lenders to small and midsize businesses, spent the summer trying to stave off a potential collapse amid mounting loan losses and rising funding costs. It has been devastated by the downturn in the credit markets and is attempting to restructure its operations to remain in business. CIT in the past relied heavily on cheap, short-term debt to fund its operations – a type of funding that essentially evaporated during the peak of the credit crisis last year.
New York Times – Ahead of a scheduled trial next month, prosecutors have identified “direct evidence” that they say shows a former hedge fund manager, Ralph Cioffi, used his investment in a fund he controlled to obtain a $4.2 million line of credit for a Florida real estate project.
In a series of filings in Federal District Court in Brooklyn last week, prosecutors said Mr. Cioffi fraudulently pledged assets in the hedge fund he ran as collateral for a real estate loan from Busey Bank. Executives at Bear Stearns Asset Management, the division that housed the fund, told prosecutors they denied Mr. Cioffi’s request to pledge part of his assets for the loan because it could create a conflict of interest with other clients in the fund.
Reuters – Hedge fund manager John Paulson is considering merging troubled U.S. finance company CIT Group Inc with failed mortgage lender IndyMac Federal Bank, the New York Post said, citing people familiar with the matter.
CIT shares rose 9.6 percent, or 16 cents, to $1.83 in morning trading.
According to the paper, the merger, a plan floated by a number of CIT creditors, including Paulson, is not part of any formal discussions between CIT and IndyMac.
New York (HedgeCo.net) – Hedge fund manager Quantum Global Financial Corp. (QGF) reports a 1.86% gain in August for its Holon Fund, bringing the year-to-date return to 25.25% and the rolling 12-month return to 29.18%.
For the same 12 months, the CSFB Managed Futures Index gained 2.45% (correlation -.093) and the Barclay Multi Strategy Hedge Fund index gained 0.05% (correlation .202). Negative or low correlations demonstrate Holon fund’s diversification properties.
The Holon Fund employs proprietary forecasting technology with automated order entry that performed over 7000 market operations over the last 14 months. Using a low average leverage ratio of 1.5, QGF has returned 54.65% since its inception, after commissions and fees.
The development of their own quantitative analysis technology has allowed QGF to deliver absolute performance over the economic cycle, the company said. QGF believes that transparency, liquidity and forming partnerships based upon ethical compliance and global sustainability are essential to the fund’s growth.
Bloomberg – Brevan Howard Asset Management LLP, Europe’s largest hedge-fund manager, said the parent of its offshore unit may open an office in Switzerland.
“The parent company of Brevan Howard’s offshore group continually evaluates global business opportunities and is currently evaluating establishing offices in a number of jurisdictions, including Switzerland,” the company said in an e-mailed statement today.
Bloomberg – The decline in energy demand and drop in German electricity prices may have ended, according to the chief executive officer of hedge-fund manager Energy Capital Management BV.
“The forward prices are at lows, the spot prices are at lows,” CEO Marcel Melis said yesterday at an energy markets and derivatives conference in London. “One thing is for sure — energy consumption will not decrease anymore.”
