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.
Oregon Live – Oregon won the first round in a $36 million court battle against the former investment manager of its college fund by keeping the lawsuit out of federal court.
U.S. District Judge Michael Hogan ruled that the case be remanded to the Marion County Circuit Court, rejecting an attempt by OppenheimerFunds to avoid the jurisdiction of an Oregon court.
Attorney General John Kroger and Treasurer Ben Westlund have sued OppenheimerFunds for $36 million, saying it falsely promoted a high-risk college investment plan as "conservative." OppenheimerFunds’ Core Bond Fund, valued at $89 million in the state’s College Savings Plan last September, caused big losses in eight of 15 Oregon college investment portfolios, including those labeled conservative or ultraconservative.
Free Internet Press – With the leveraged-buyout business on life support, major private-equity firms such as the Carlyle Group are taking a closer look at the battered banking sector as a way to make money for their clients.
Last September, Washington, D.C.-based Carlyle invested $75 million in Boston Private Financial Holdings. Last month, it was part of a group that injected $900 million into Florida’s BankUnited. Carlyle was part of a group looking to buy Atlanta, Georgia-based Silverton Bank earlier this month, until regulators decided to liquidate the institution instead.
Private-equity firms have long eyed the financial services industry, but the sector took a back seat over the past two decades as private equity pursued fat returns fueled by leveraged-buyout deals. Until recently, those buyouts helped Carlyle generate an annual net return of 26 percent across the firm..
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The CF KB Endeavour Absolute Return fund slipped into negative territory last September as the fallout from the collapse of Lehman Brothers rippled across several major asset classes.
The fund suffered its highest drawdown to date, shedding -16.75%, which effectively wiped out all of the gains it had made since launch in July 2006, and then some.
AP – The Chief financial officer of Freddie Mac, one of the mortgage giants at the heart of the nation’s financial meltdown, was found dead in his basement early Wednesday morning in what police said was an apparent suicide.
David Kellermann, 41, apparently hanged himself in his suburban Washington home, said a law enforcement official familiar with the investigation. He asked not to be identified because the investigation was ongoing.
Kellermann was promoted last September when the government seized the mortgage company and ousted its top two executives. Neighbors said Kellermann had lost a noticeable amount of weight under the strain of the new job. Some neighbors said they suggested to Kellermann should quit to avoid the stress, but Kellermann responded that he wanted to help the company through its problems. The neighbors did not want to be quoted by name because they didn’t want to upset the family.
New York (HedgeCo.Net) – Australian regulators have extended the ban on short-selling, saying the move was in the “national interest” of the country.
As large national banks prepare to release their profits in the wake of more write-downs and rising debt, regulators wanted to avoid the effects that short-selling by aggressive hedge funds would have on the market.
"We welcome any additional steps that further boost stability in these difficult conditions," said Senator Nick Sherry. "This is a decision made firmly in the national interest and regardless of any sectoral interests."
The Alternative Investment Management Association was disappointed with the decision, saying the ban reduces liquidity in the market. Both the Federal Government and the Australian Bankers Association agreed with the extension of the ban, while others disagree with the reasons outlined by the regulators.
The Australian Securities and Investment Commission said they would “not hesitate to act” should it be discovered that individuals or companies were skirting the ban.
The ASIC originally enacted the ban last September amidst the market collapse and crumbling financial institutions. The United States and Great Britain enacted bans on short-selling as well, which were lifted shortly thereafter.
The Australian government said they are hoping to lift the ban eventually, after the completion of their new short-selling disclosure requirements.
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. www.hedgefundlounge.com, www.hedgefundtools.com, and www.hedgefundemployment.com
New York (HedgeCo.Net) – Hedge fund manager William Ackman of Pershing Square Capital Management is in talks with discount retailer Target to nominate some potential members to their board of directors, according to a recent Securities and Exchange Commission filing.
The hedge fund currently holds a 9.7 percent stake in the Minneapolis-based company, but has been vocal about its disappointment relating to plummeting share prices and lagging sales.
Earlier this week, Target confirmed their fourth-quarter profit fell 41 percent. Shares closed at $27.82 yesterday, a 50 percent tumble since its peak last September.
Ackman did not state how many board members he wished to nominate, or who they were. He also said he may decide to up or reduce his stake in the company, although he still believes there is plenty of potential in the retailer.
Ackman made a bold move earlier this year, when he allowed investors to withdraw as much of their capital as they liked in his Pershing Square IV Fund. The fund, which was heavily invested in Target, plunged 90 percent this year, prompting an apology to investors and a green light to clear their cash out. Ackman contributed $25 million of his personal funds to help pay back clients of the fund.
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. www.hedgefundlounge.com, www.hedgefundtools.com, and www.hedgefundemployment.com
New York (HedgeCo.Net) – Billionaire and hedge fund manager extraordinaire John Paulson has reportedly pocketed $139 million by betting against the Royal Bank of Scotland, further fueling cynicism that shorting aids in driving down share prices.
Paulson is no stranger at predicting trends and shorting companies that he feels fit. Late last year, his New York-based Paulson & Co. disclosed short positions in the British mortgage lender HBOS, Barclays and Lloyds TSB.
Investors turn to Paulson because he seems to have a knack for placing bets that he feels will turn out in his favor. Paulson infamously bet against the U.S. housing market in 2007, which garnered himself a $3 billion paycheck while returns on his hedge funds continued to rise. In 2008, when most hedge funds lost an average of 15 percent on the year, Paulson’s funds kept steady, with his Advantage Plus fund up 20 percent.
While some argue that the practice of shorting is responsible for driving down share prices, many feel that is an unfair assumption. The ban on short selling that was enacted last September in the UK was finally lifted earlier this month, although short positions are still required to be disclosed. The Financial Services authority has said they would reinstate the ban if it proved to be needed.
Julie Scuderi Senior Editor for HedgeCo.Net Email: julie@hedgeco.net
WalesOnline – Last week saw the return of the credit crunch’s bogey product: short selling.
The practice was banned by the Financial Services Authority last September after it was blamed for wiping millions off the value of bank shares, betting as it did that prices would fall as the recession bit deeper.
At the end of Friday last week, on the day of its re-introduction, a familiar pattern had re-emerged. Barclays closed down some 25% (although the bank reported that its profits would be “well ahead” of the £5.3bn predicted by some forecasts), while RBS fell by 13%.
Reuters- One year after Jeffrey Larson lost about $1.5 billion in one of the hedge fund industry’s most spectacular collapses, he is trying to raise fresh capital for a new fund, people familiar with his plans said.
"Larson is back and he has been calling virtually everyone in town, leaving no stone unturned," said a Boston-based investor who was contacted by Larson but declined to be identified so he could speak candidly about the new fund.
Larson’s $3 billion hedge fund firm, Sowood Capital Management, lost half of its capital a year ago following heavy losses on his bond market investments.
