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.
Bloomberg – Edward Filippi, previously with Lehman Brothers Holdings Inc., raised $35 million for a hedge fund investing in energy, metals and agricultural derivatives.
The Ground Zero Strategic Commodities Fund may begin trading in the first quarter of next year, according to Filippi, who spent a year selling commodity investment products for Lehman. The fund wants to hire a portfolio manager and an operations officer.
Globe and Mail – When Salida Capital Corp. beat all other bidders in a charity auction last month to score lunch with Warren Buffett, the $1.68-million (U.S.) win sent a signal to Bay Street: Salida is back.
Salida, the once high-flying, resource-focused hedge fund manager known for its appetite for risk, became one of Canada’s high-profile victims of last year’s market meltdown when its flagship Multi Strategy Fund plunged 67 per cent and three of its hedge funds got locked up in the Lehman Brothers Holdings Inc. bankruptcy.
That was followed by a rapid exodus of key staffers and by dwindling assets under management.
Bloomberg – Lehman Brothers Holdings Inc. may return hedge-fund assets as soon as next year that were frozen when the New York-based securities firm collapsed in the largest bankruptcy on record.
PricewaterhouseCoopers, Lehman Brothers International Europe’s administrator, plans today to ask a U.K. court to block any creditor claims for assets after this year, the accounting firm said in a statement. That would allow PwC to return money Lehman had held in trust for fund managers as soon as the first quarter of 2010.
Bloomberg – At last year’s Ira W. Sohn Investment Research Conference, Greenlight Capital Inc.’s David Einhorn told an audience of hedge-fund managers that Lehman Brothers Holdings Inc. wasn’t disclosing the whole truth about its finances.
Four months later, Lehman filed the largest bankruptcy in U.S. history. The conference attendees who followed his advice got a jump on the rest of the industry. They also got a tax write-off since all the registration fees go to cancer research and an art-therapy program for seriously ill children.
Bloomberg – The cost of insuring hedge funds against negligence has risen as much as 20 percent in the past six months after Lehman Brothers Holdings Inc.’s bankruptcy and Bernard Madoff’s Ponzi scheme increased the threat of lawsuits.
A fund manager with $200 million of assets running a “straightforward” strategy is typically paying as much as $60,000 a year for $5 million of coverage, up from $50,000 at the end 2008, said Brian Horwell, director of professional risks at London-based Miller Insurance Services Ltd.
“We’ve had Lehman Brothers, Madoff and the financial downturn, all of which are hitting claims,” said Paul Towler, head of financial and professional insurance at Jardine Lloyd Thompson Group Plc in London. “There’s a lot of worry and concern about what other claims are still to come out.”
Bloomberg – DragonBack Capital Ltd., a Hong Kong-based manager co-founded by a former Lehman Brothers Holdings Inc. executive, reopened its flagship hedge fund to investors after redemptions cut assets in the fund.
Assets in the Asia-Pacific Equity Multistrategy Fund fell 47 percent from the end of October peak, to $310 million, Chief Executive Officer Robert Lance said in an interview yesterday.
The fund’s 3.75 percent gain in 2008 put it among less than a third of hedge funds that made money in the worst year for the global industry. Investors have reduced holdings in some profitable funds after their weightings in portfolios exceeded limits set for specific hedge fund strategies.
Bloomberg – DragonBack Capital Ltd., a Hong Kong-based manager co-founded by a former Lehman Brothers Holdings Inc. executive, reopened its flagship hedge fund to investors after redemptions cut assets in the fund.
Assets in the Asia-Pacific Equity Multistrategy Fund fell 47 percent from the end of October peak, to $310 million, Chief Executive Officer Robert Lance said in an interview yesterday.
New York (HedgeCo.Net) – Lawrence Summers, who is currently serving as Director of President Obama’s National Economic Council, made millions from his days working as a managing director for hedge fund D.E. Shaw & Co.
The New York-based hedge fund, which oversees about $36 billion in capital, paid the former Treasury Secretary about $5.2 million over the course of 16 months starting in 2006. And that’s not including bonuses.
According to a financial disclosure released by the White House on Friday, Summers also raked in around $2.7 million in speaking fees for appearances at banks like Citigroup and Goldman Sachs. Lehman Brothers Holdings Inc., who collapsed last year, paid Summers over $67,000 for one appearance this past July.
For an administration that wants to convey their dedication and support of increased regulation and the all-out war on corruption and excessive executive pay in corporate America, many feel the President may be choosing individuals who don’t necessarily share that view, at least not privately.
Carol Browner, the White House Energy Policy Coordinator, is another member of the administration no stranger to hedge funds. She still holds an interest in Albright Capital Management LLC, a hedge fund founded by former Secretary of State Madeleine Albright. Browner said her holdings were worth between $450,000 and $1 million, and said she earned $450,000 last year by working for Albright Group LLC, a related consulting firm. She is still owed between $350,000 and $750,000 in member distributions.
David Axelrod, former Chief Strategist for the Obama campaign and now the President’s Senior Advisor, was paid a $1.55 million salary when he worked for a public affairs firm. According to those same disclosures, White House Chief of Staff Rahm Emanuel held about 1,000 shares of American International Group, Inc., although he claims he currently does not hold any shares of the company that was bailed out by taxpayer funded government aid.
Despite the big pay days, the conflicts of interest that potentially exist may play a bigger role in public dismay. In addition to his $3.9 million salary at a law firm, Deputy White House National Security Adviser Thomas Donilon represented clients such as Citigroup, Goldman Sachs and hedge fund Apollo Management LLP. He also worked for Fannie Mae from 1999 to 2005.
“It just may be the reason that money keeps being thrown at banks and companies who have proven they are undeserving, is because the administration, like every single other administration, is stacked full of the same, rich people who would rather dole out money to their own than to the Americans who really need it,” said one blogger who remained anonymous.
The White House contends there is no current conflict of interest with any cabinet member. Speaking of Summers, White House spokesman Ben LaBolt said he “has been at the forefront of this administration’s work to shore up our nation’s financial system and to put in place a regulatory framework that will strengthen the financial system.”
Julie Scuderi Senior Editor for HedgeCo.Net Email: julie@hedgeco.net
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Bloomberg – Japan’s attempts to end financial turmoil failed to lure hedge funds back to its swap markets, leaving premiums paid by domestic borrowers near a record, RBS Securities Japan Ltd. said.
Hedge funds, which lost more than $400 billion through withdrawals and market losses since June, pulled out of Japan’s swap markets after the failure of Lehman Brothers Holdings Inc. led to a seizure in global credit, said Tatsuo Ichikawa, a senior strategist at RBS in Tokyo. Japan’s banks were charged record premiums this month to swap London borrowing rates for those set in Tokyo as a slumping economy exacerbated concern about the health of the nation’s companies.
Bloomberg – At the Art Show last year, dealer Richard L. Feigen offered an $8.5 million Pablo Picasso still life. This year, he’s highlighting less expensive art, including a $90,000 purple teapot painting by Georges Braque.
“The guys with the bonuses and hedge funds won’t be throwing money around,” he said. “There are a lot of things at lower price levels than in the past.”
The opening gala for the annual fair at the Park Avenue Armory in Manhattan proceeded last night without its sponsor, the bankrupt Lehman Brothers Holdings Inc., and with the expectation of fewer sales than last year.
Bloomberg - GLG Partners Inc., the hedge-fund firm founded as a unit of Lehman Brothers Holdings Inc., and Och- Ziff Capital Management Group LLC reported lower fourth-quarter profits as their funds posted losses.
GLG’s profit excluding acquisition costs dropped 78 percent to $28.2 million, or 9 cents a share, from $127 million, or 38 cents, a year earlier, the London-based company said in a statement today. That compares with an average estimate of 6 cents a share, according to four analysts surveyed by Bloomberg. Assets fell to $15 billion from $17.3 billion in September and $24.6 billion a year earlier, dragged down by losses.
BloombergThe financial wreckage of 2008 has left no part of our country untouched. It exposed the bankruptcy of business models employed by mortgage companies, investment banks, and rating agencies as well as the flaws of innovations such as structured finance and credit default swaps. It also highlighted regulatory gaps and failures at almost every level of oversight.
In 2008 Bear Stearns Cos. and Lehman Brothers Holdings Inc. imploded, Fannie Mae and Freddie Mac were placed into conservatorship, mainstay Wall Street firms like Merrill Lynch & Co. Inc. were forced to merge with other companies, and giant institutions such as American International Group Inc. clung to existence on federal life support.
More painfully, too many Americans face the twin perils of home foreclosure and job loss as frozen credit markets signal an increasingly deep economic slowdown.
