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.
City AM – Billionaire investor George Soros at the weekend became the latest high-profile financier to wade into the bonus debate as he claimed the backlash against banking fat cats on lucrative pay deals is justified.
Speaking in an interview about large profits reported in recent weeks by Wall Street’s biggest banks, Soros said: “Those earnings are not the achievement of risk-takers. These are gifts, hidden gifts from the government, so I don’t think that those monies should be used to pay bonuses.”
Bloomberg – Hedge fund managers are trailing benchmark commodity indexes by the widest margin in four years after copper doubled and oil surged 58 percent.
Touradji Capital Management LP, the second-biggest in commodities, earned 7 percent in its largest fund in the first nine months, according to an investor with knowledge of the result. Krom River Trading AG, which has $590 million, lost 8.1 percent in its raw materials fund. Commodity hedge funds lost 3.2 percent through September, according to Hedge Fund Research Inc. of Chicago. All lag behind the 12 percent gain in the S&P GSCI Enhanced Total Return Index.
Telegraph – A single investor – thought to be a hedge fund – is sitting on thousands of tonnes of tin in warehouses across London. According to traders almost the entire stocks of tin on the London Metals Exchange (LME) was bought up by a single, mysterious investor, last week.
One fund has warrants for more than 90pc of all physical tin stocks because the market rules dictate that above this threshold, the buyer must lend out the commodity, if asked, at the cash price with no premium.
Industrial buyers are furious that they are paying up to $730 per tonne for immediate delivery more than it would cost them to buy three-month futures contracts, arguing this stranglehold on the market should not be allowed to happen.
Bloomberg – Touradji Capital Management LP said it acted “professionally and appropriately” in all transactions with Amaranth Advisors LLC, which is suing for at least $350 million over claims that include breach of contract and misappropriation of trade secrets.
“We will fight these scurrilous allegations vigorously,” Chief Executive Officer Gil Caffray wrote in a letter to investors dated yesterday, a copy of which was obtained by Bloomberg News. Armel Leslie, a spokesman for New York-based Touradji Capital, declined to comment today.
New York Post – “Malone’s a hybrid guy,” said one media mergers-and-acquisitions banker. “He operates Liberty with as much of a financial focus as a strategic focus and he looks at deals like a leveraged buyout investor would.”
Indeed, Liberty at one point was close to being classified as a hedge fund instead of an operating company because it owned pieces of so many firms without running any of them.
Plus, Malone is aggressively opportunistic in his practice of building up minority stakes in firms like Time Warner or News Corp., and then swapping the stakes for control of an asset, such as the Atlanta Braves or DirecTV.
Bankrate.com – Alternative assets are a good diversification tool because they’re generally not correlated to the stock market. This means when the market goes down, alternative assets may go up or stay the same and vice versa.
Large investors such as pension and endowment funds have been attracted to hedge funds because of their reputation for producing high returns. But it’s difficult to tell how successful hedge funds are because the historical data leaves much to be desired.
“They are self-reported. Indexes of hedge fund performance are biased by the fact that those that do poorly go out of business and those that do well stay in business,” says Walt Woerheide, Ph.D., CFP, vice president of academic affairs and professor of investments at The American College in Bryn Mawr, Penn. “And so when you look at the index over time, it’s really an index of those that have done well.”
Bloomberg – Och-Ziff Capital Management Group LLC and Bain Capital LLC plan to charge performance fees on hedge funds next year even if they fail to recoup their 2008 investment losses.
Most hedge funds don’t levy the fees, usually 20 percent of profits, until they climb back to their peak value, known as the high-water mark. New York-based Och-Ziff, which oversees $21.5 billion, and Bain’s Brookside Capital LLC of Boston, manager of $10 billion, resume the fees one year after an annual loss, according to investor agreements obtained by Bloomberg News.
Reuters – Shares in Korea Beral soared more than 11 percent after a unit controlled by activist investor Carl Icahn raised its stake in the car parts maker, fanning speculation about a possible unsolicited takeover bid.
F-M International Ltd, which belongs to auto parts maker Federal-Mogul, told South Korean regulators in a disclosure on Monday that it had raised its stake in Korea Beral to 29.20 percent as of Aug 25 from 28.69 percent.
Reuters – Hedge fund manager John Paulson, who bet against financial companies after foreseeing the credit crisis, has been buying Citigroup Inc <C.N> shares over the past few weeks, the New York Post reported, citing sources.
Paulson bought around a 2 percent stake in Citigroup, a source told the paper. An investor with a 5 percent or higher stake in a company would have to make a disclosure with the U.S. Securities and Exchange Commission.
Sources told the paper Paulson believes Citigroup’s assets are undervalued. A spokesman for Paulson declined to comment to the paper on the hedge-fund manager’s investment activities.
Bloomberg – Union Bancaire Privee, the Swiss hedge-fund investor whose clients lost about $700 million with Bernard Madoff, plans to cut 10 percent of its workforce this year after assets under management declined.
“UBP should reduce its staff by 10 percent over the course of the year, from a headcount of 1,372 at the end of December, through redundancies, early retirements and not filling vacant positions,” said Jerome Koechlin, spokesman for the Geneva- based firm.
Herald Tribune – Two investors who lost $750,000 in the implosion of Scoop Management have filed a lawsuit against investment managers Neil and Chris Moody, who ran the Valhalla Investment Partners L.P. hedge fund.
Bruce M. Bell and Richard G. Levine, represented by Sarasota attorney Morgan Bentley, allege that the Moodys knew that the hedge funds were an investment scheme.
The latest lawsuit is along the lines of one Bentley filed on behalf of Fort Lauderdale investor Louis Paolino, who says he lost $6 million in the Moodys’ Viking Fund LLC.
Riverside Press Enterprise – The founder and manager of two Beverly Hills hedge funds has pleaded guilty to federal fraud charges.
Bradley Ruderman pleaded guilty Monday to two counts of wire fraud, two counts of investment adviser fraud and a misdemeanor count of failing to file income taxes in 2007.
Prosecutors say Ruderman admitted to cheating investors, many of them family members, out of $25 million by promising annual returns as high as 60 percent and sending fake account statements.
