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.
Guardian.co.uk - MEPs will call tomorrow for EU legislation to force private equity groups and hedge funds to disclose unprecedented amounts of information about their activities.
The demand for tougher regulation comes as private equity groups are warning that the enduring credit crunch will reduce new money inflows into their funds by up to 30% over the next two years, and mirrors a call from the UK’s largest trade union, Unite, for hedge funds to be forced to demonstrate that their investment strategies are not perpetuating the current market turmoil.
The union, which has put forward an emergency motion to the Labour party conference on the Lloyds TSB takeover of HBOS, is demanding that hedge funds be more transparent, give greater disclosure and must be subject to risk management.
New York (HedgeCo.Net) - Foreclosed properties present an opportunity, to some, of finding an otherwise unattainable home at a deeply discounted rate. For hedge funds, foreclosures could mean massive returns in the near future. That’s why dozens of hedge funds are quietly building their stake in the decimated U.S. mortgage market.
According to a report published by Philippines News, tens of thousands of distressed loans and foreclosed properties have been sold to hedge funds and other private equity groups.
Lone Star Funds, a Dallas based company that invests in distressed debt, snatched up a string of mortgage-linked investments from Merrill Lynch once valued at $30.6 billion, for $6.7 billion. It’s no surprise Merrill was quick to sell, seeing as how they were one of the biggest financial institutions to get hit by the subprime fallout last summer, writing down an estimated $25 billion.
"We’re much easier to deal with than a bank," said Jacob Benaroya, Managing Partner of Biltmore Capital Group, a hedge fund in New Jersey that has allotted $100 million a year to acquire mortgage debt. "We’ve bought [the loan] at enough of a discount that we can make special arrangements with the borrower."
Hedge funds stress they are more lenient than the banks and in turn, better to deal with. They may make special arrangements with the borrower, or have them turn in their house keys in exchange for forgiving the outstanding balance on the mortgage. The hedge funds then may then turn around and try to sell the property as soon as possible, or hold on to it for a while until market conditions are ideal.
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
Star News Online- Dozens of hedge funds, private equity groups and other investors have plunged into the beaten-down mortgage market in recent months, buying tens of thousands of distressed loans and foreclosed properties around the country. They hope to profit from the woes of banks and other investors holding mortgages that have plummeted in value as home values sink and defaults soar.
They are buying them from Wall Street investment banks eager to rid themselves of bad assets. Merrill Lynch & Co., for example, said this week it would sell mortgage-linked investments once valued at $30.6 billion for just $6.7 billion to Lone Star Funds, a distressed-debt investor in Dallas.
Many of the hedge funds, run by former Wall Street and lending industry executives, claim they can do a better job than banks or other investors of modifying mortgages at terms that consumers can afford.
The Independent - Hedge funds have given a voluntary code for the industry a collective thumbs-down – not a single firm has signed up to the compliance standards since they were launched in January.
Nearly five months ago the Hedge Fund Working Group (HFWG) published a raft of recommendations for the sector that were intended to raise governance levels across the traditionally secretive sphere. But a spokesman confirmed last week that no hedge funds had signed up to abide by the proposals beyond the original 14 signatories, including Man Group, Brevan Howard, Och-Ziff Capital Management and CQS.
An HFWG spokesman said the body’s priority was the appointment of a permanent chair, adding that it was speaking to a number of groups that could possibly sign up to the standards.
At the publication of the guidelines in January, Sir Andrew Large, chairman of the body, said: "Now it is up to investors to help take this forward. This is a voluntary, market-led initiative based on disclosure. It is investors who can provide the market discipline to ensure these standards are widely adopted."
In April a survey by the accountants KPMG revealed that eight out of 10 pension funds favour investing with a hedge fund manager that has complied with the 28 principles of the standards set out by the HFWG. More than 50 per cent of funds surveyed said they would require hedge fund managers to comply with the standards within three years.
News of the response to the voluntary code comes as the European Parliament assesses proposals to toughen up legislation linked to the industry. The former Danish prime minister, Poult Nyrup Rasmussen, is leading a group of MEPs calling for greater openness and scrutiny of hedge funds and private equity groups.
Forbes.com - The UK government is advising China on its private equity industry, with the Treasury passing papers on tax and regulation to Beijing, the Financial Times reported.
The newspaper said the move reflects London’s desire to gain a strategic advantage over the US in China, where private equity groups are eyeing investment opportunities.
‘We have pointed them in the right direction by passing on papers about a range of fiscal and regulation policies for private equity,’ the newspaper quoted a senior Treasury official as saying.
New York (HedgeCo.Net) - Soft-drink maker Cott Corp. has gotten a vote of confidence from hedge fund Crescendo Partners, along with a boost in share value.
Crescendo has raised its stake to 8.7% in the struggling company, and will meet with company executives to discuss performance and “potential changes in the composition of the management team and the board of directors.”
After years of lagging stock prices, shares of Cott rose almost 14% to $3.61 yesterday with the news.
Crescendo, along with other hedge funds and private equity groups, often seek seats on the board and positions in management in order to bring about strategic change and to garner higher returns.
Crescendo was recently involved in a bitter proxy battle with Charming Shoppes Inc. after wanting to place members of their team on the board of the plus size women’s clothing manufacturer. The two companies eventually reached a settlement, with Crescendo receiving two spots on the board.
In a recent filing with the SEC, Crescendo stated that they have “engaged in and intends to continue to engage in discussions with management and the board of directors of the issuer concerning the business, operations and future plans."
Cott, who’s best known for their RC Cola product, has recently lost some shelf space at Wal-Mart, their biggest client. Mario Pilozzi, the former CEO of Wal-Mart Canada Corp., has agreed to work as an executive should Crescendo attain their board seats. Cott is currently run by CEO David Gibbons.
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
