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.
Journalism.co.uk – The Financial Times has appointed Sam Jones as hedge fund correspondent. In his new role, Jones will be in charge of covering the global hedge fund industry.
"Hedge funds are in a state of crisis: they are hugely secretive and facing extremely tough times as governments move in with new regulation and banks pull back their lending operations," he told Journalism.co.uk.
Journalism.co.uk – Laura Stavro-Beauchamp has been appointed as a reporter for Financial Times service, dealReporter.
Previously employed as deputy news editor on weekly title Mortgage Strategy, Canadian-born Stavro-Beauchamp will put her global and financial background to good use by providing intelligence to hedge funds through market analysis.
Her advice to anyone hoping to follow in her footsteps is to embrace the early positions in your career.
Wall Street Journal - If you thought the collapse of one of the biggest leveraged buyouts in history would be devastating for merger-arbitrage hedge funds, you’d be right. But pure merger arbitragers weren’t the only hedge funds hurt.
The $41 billion buyout of Canadian telephone company BCE Inc. (BCE) has been officially nixed, sending the stock down to its lowest levels in six years. Even investors who don’t typically play merger deals have gotten hurt.
That’s because starting in mid-September, the spread between the deal price and BCE’s share price had widened considerably, thanks to what turned out to be legitimate
Mail on Sunday – From movie director Steven Spielberg to to Uma Thurman’s fiance Arpad Busson, the list of billionaire businessmen and Hollywood A-listers sucked into the world’s biggest financial fraud is growing.
Some of the best-known names in banking and business have been forced to admit failing to spot the outrageous deception which culminated in the arrest of Wall Street giant Bernard Madoff in a global con which could cost its victims £33billion.
British-based firms have lost at least £3.5billion – and it is feared that families will pay the price.
Post Chronicle – The SEC’s inability to uncover the scandal until Madoff’s sons went to authorities last week comes at a particularly bad time for the SEC and its Chairman, Christopher Cox. They have already been accused by some lawmakers and market experts of being asleep at the wheel while the credit crisis exploded on Wall Street.
The agency’s future existence as a separate agency is already under threat as Washington looks at overhauling the regulation of the financial services industry.
"This will be profoundly embarrassing for the SEC," said Columbia University law school professor John Coffee, who has been critical of the agency for failing to properly regulate the failed investments banks. "Congress will predictably give them little mercy."
Sify – Bernard Madoff, the long time Wall Street executive accused of cheating investors worldwide out of $50 billion, scrambled to find relatives or friends to guarantee his bond on Tuesday and keep him of jail.
In Massachusetts, where the disgraced investor long cultivated a loyal group of wealthy individuals, the state’s chief securities regulator subpoenaed Bernard L. Madoff Investment Securities and Cohmad Securities Corp, a firm that marketed Madoff investment products.
The two firms must hand over the names and addresses of all local residents who let Madoff invest their money by December 29. They must also deliver notes, emails, meeting agendas related to investments made since 2000, William Galvin, the state’s Secretary of the Commonwealth, said on Tuesday.
In New York, Madoff, who was arrested last week, has not yet fully met the conditions of his $10 million bond, according to court papers. He must find three co-signers to guarantee the bond.
Ananova - Royal Bank of Scotland says it is facing a potential loss of £400m after a Wall Street banker was charged with a massive alleged fraud.
US prosecutors say Bernard Madoff has confessed to defrauding investors of $50bn (£33bn) in a giant pyramid scheme that collapsed in the global financial crisis.
RBS, in which the British government now has a majority stake, says it has exposure through investments in hedge funds that invested with Mr Madoff.
It is one of a number of banks that face big losses in the suspected fraud.
Santander, the Spanish bank that owns Abbey and Alliance and Leicester, said it had more than 2.3bn euros (£2.08bn) worth of exposure.
SF Gate – There probably won’t be many tears for Larkspur’s Copper River Management LLC. The $1 billion hedge fund’s partiality to short selling earned it obloquy, lawsuits and, ultimately, death.
No trace of company personnel could be found for comment Wednesday, after the Wall Street Journal reported that the fund is "liquidating and returning funds to investors." The only sign of life was a forlorn logo on the company’s Web site. The cause of demise? Some observers predicted it after the company, formerly known as Rocker Partners, got caught on the wrong side of derivative trades with the going-bankrupt Lehman Bros. Others pronounced the patient terminal when the feds banned short selling of financial stocks in September.
Reuters – Merrill Lynch & Co Chief ExecutiveJohn Thain has suggested to directors that he get a 2008 bonus of as much as $10 million, but the battered company’s compensation committee is resisting his request, the Wall Street Journal said, citing people familiar with the situation.
The compensation committee has not reached a decision, but is leaning toward denying Thain and other senior executives bonuses for this year, the people told the paper.
Merrill could not be immediately reached for comment.
Shareholders on Friday approved Bank of America Corp’s takeover of Merrill, a deal fraught with risk but one that would create a banking giant with a leading position in almost every major area of the financial system.
New York (HedgeCo.Net) – Chicago-based Citadel Investment Group lost 13 percent in November, according to a report published by the Wall Street Journal. This brings the hedge fund firm’s total losses to 47 percent for the year.
The losses stem in part from the company’s two largest funds, the Kensington and Wellington, which together manage about $10 billion in assets. Investor redemption requests totaling around $1 billion and plummeting values of bonds were the catalysts behind the losses.
This is the first year since 1994 that Citadel will post a loss. It is only their second loss since CEO Kenneth Griffin launched the firm in 1990. All is not grim, however. Bloomberg News reports that three other Citadel funds, who together manage about $3 billion, have climbed about 40 percent this year.
Hedge funds as a whole have posted their worst record to date this year. According to data by Chicago-based Hedge Fund Research, hedge funds have lost an average of 22 percent this year.
Julie Scuderi Senior Editor for HedgeCo.Net Email: julie@hedgeco.net
New York (HedgeCo.Net) – At a time when most hedge funds are posting their worst year to date, John Paulson somehow manages to stay afloat. The founder of Paulson & Co. has informed investors that his funds are in fact up in November and furthermore, posting double-digit gains.
Paulson’s Advantage Plus Fund, which manages around $10 billion, climbed 3.19 percent in November, with a 33.5 percent gain for the year. His $5 billion Advantage Fund followed suit, posting gains of just over 2 percent in November and 21 percent for the year.
John Paulson bet infamously against the housing market, predicting the subprime fallout that ensued. His insight allowed him to rake in $3.5 billion virtually overnight, giving him the most lucrative Wall Street payday to date. It also landed him on the Forbres Richest List at number 78, with a net worth estimated at $4.5 billion.
Paulson & Co. currently manages approximately $35 billion through several hedge funds.
Julie Scuderi Senior Editor for HedgeCo.Net Email: julie@hedgeco.net
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.
