Reuters – Private equity investor Thomas H. Lee may shrink or shut down two funds that had $1.5 billion in assets after suffering losses of about 40 percent this year, the Wall Street Journal reported on Thursday, citing people familiar with the situation.

Hard-hit hedge funds run by Lee farmed out investor money to about 110 other funds, including SAC Capital Advisors and D.E. Shaw Group, according to the paper.

While Lee designed the so-called funds-of-funds to have low volatility with steady, consistent returns, he borrowed heavily to multiply the size of his bets, piling up debt of as much as $3.2 billion, the sources told the paper.

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Tags: alan-greenspan, band-aid, bias, cme-co, domino-effect, infrastructure-assets, investment-arm, journalism, losses, orient-express-hotels, shorting-stocks, staffers, trillion

New York (HedgeCo.Net) – A published author and notable hedge fund manager has seen his charade finally come to a halt.  Mark Boucher of Portola Valley, California, who wrote “The Hedge Fund Edge,” has agreed to pay $100,000 in penalties after misleading investors in a $20 million real estate scam.  In addition to the monetary penalties, he is barred from acting as an investment advisor for the next five years. 

According to reports by the SEC, Boucher pushed two investments supposedly backed by real estate onto his investors via his monthly newsletter, garnering around $20 million from 1999 to 2005.  The two companies, however, had little to do with the real estate sector.  One company had no property in its portfolio, while the other company owned a single property that was mired in debt.  Neither firm was known for successfully developing any real estate.

The money was apparently going to Gary P. Johnson and John Brake, owners of the two companies.  The pool of investor money afforded the three men their own home mortgages, luxury cars and start up capital for other business ventures.  Johnson agreed to return $1.8 million from commissions he received, as well as pay over $820,000 in penalties and interest, all while denying the allegations brought against him.  Brake, who has also been accused of securities fraud, has not reached a settlement yet with the SEC.

"Boucher lured clients into these fraudulent real estate deals by exploiting his reputation as a successful hedge fund manager," stated Marc Fagel, Director of the SEC’s San Francisco regional office. "Johnson and Brake failed to develop the projects, instead diverting millions of dollars of investor money to finance their lavish lifestyles." 

An editorial review of his book states, “The Hedge Fund Edge melds market timing, vehicle selection, risk management techniques, economic insight and understanding, and tactical asset allocation into a totally new philosophy and approach that has been proven to produce spectacular gains with relatively low risk.”

Clearly, that formula needs to be reworked.

Julie Scuderi
Senior Editor for HedgeCo.Net
Email: julie@hedgeco.net

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Tags: barclays-bank, due-diligence-service, house-renovations, infrastructure-assets, international-equity-markets, mathur, sun-sentinel

Reuters- Some of the world’s biggest property fund firms could eventually be tempted to trade property derivatives in a material way as long as the young market continues growing.

However, listed property firms such as real estate investment trust (REITs) could be a tougher nut to crack, leading industry figures at the Reuters Global Real Estate Summit said this week.

Matthias Danne, who sits on the board of DekaBank, Germany’s biggest operator of open-ended property funds, said he was interested in putting investor money to work quickly using property derivatives.

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Tags: danne, dekabank, estate-investment-trust, global-real-estate, india, infrastructure-assets, investment-arm, kary, public-offering, real-estate-investment-trust, schiffman, skyworks-solutions

Reuters- Some of the world’s biggest property fund firms could eventually be tempted to trade property derivatives in a material way as long as the young market continues growing.

However, listed property firms such as real estate investment trust (REITs) could be a tougher nut to crack, leading industry figures at the Reuters Global Real Estate Summit said this week.

Matthias Danne, who sits on the board of DekaBank, Germany’s biggest operator of open-ended property funds, said he was interested in putting investor money to work quickly using property derivatives.

"I would use them if the market was liquid enough so I could invest my liquidity and I have a lot of that," Danne said.

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Tags: india, infrastructure-assets, investment-arm, kary, mutual-fund, public-offering, skyworks-solutions