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Bloomberg – Massachusetts will cut investments in hedge funds after its public pension plan lost a record 24 percent on all assets in the fiscal year ended June 30.
The state pension plan’s board of trustees voted today to lower the amount of money invested in hedge funds to 8 percent, or about $3 billion of the $37.7 billion it oversaw at the end of June, from 12 percent, which is about $4.5 billion. The vote reversed a five-year effort by the pension system to boost returns by expanding such alternative investments.
”We all have to understand we’re making a bet on what assets will do well,” said state Treasurer Timothy Cahill, chairman of Massachusetts’s pension reserve investment management board. “Ultimately, we don’t make decisions based on the short-term, but we get measured on the short-term.”
Opalesque – In the newly released research report by Massachusetts-based firm Finadium "Trends in US Equity Finance Costs for Hedge Funds and Other Borrowers" author Josh Galper notes that the current cost of securities borrowing has many funds looking at their financing costs with fresh eyes.
"Firms just looking into the situation are behind the game, but not all is lost; there will be many opportunities to make, and lose, money in equity finance in the years to come," says Galper.
The growth of various fund fees such as equity borrowing comes at a time when many funds have seen decreases in budget resources due to investor redemptions and/or negative performance.
Bizjournals.com – A Massachusetts federal court has ordered a British man to pay $2.78 million in restitution, interest and penalties for orchestrating a scheme to defraud more than 60 investors who invested in his phony hedge fund operation based in Boston.
TheSecurities and Exchange Commission said Wednesday that Glenn Manterfield, a principal at Lydia Capital LLC, was originally charged in April 2007 for allegedly defrauding clients who had invested $34 million in a Lydia Capital fund — the so-called Lydia Capital Alternative Investment Fund.
Gainesville Sun – As Bernard L. Madoff waits in jail to be sentenced, legal problems are accumulating for some of the hedge fund managers who helped him raise billions of dollars from around the world for what he now admits was a vast Ponzi scheme.
Massachusetts regulators have sued the Fairfield Greenwich Group, one of the earliest of these so-called feeder fund managers, for fraud, saying it had repeatedly misled investors about how diligently it checked out Mr. Madoff’s operations over the years.
Bizjournals.com – After watching Sonesta International Hotels Corp. lose roughly 70 percent of its stock market value over the past 18 months, a Connecticut hedge fund has shed roughly a third of its holdings in the Massachusetts-based hotel operator.
In a recent regulatory filing, Mercury Real Estate Advisors, based in Greenwich, Conn., said it sold around 23,400 shares of Sonesta stock (Nasdaq: SNSTA) between Jan. 20 and Feb. 10, bringing its total ownership in the company to 206,048 shares. Those holdings equate to around 5.6 percent of Sonesta’s common stock outstanding.
Mercury’s ownership stake was more than 9 percent in mid 2007, when Sonesta’s stock traded above $30 a share. Sonesta’s stock opened Monday at $9.50 a share.
Grand Forks Herald – The wife of disgraced money manager Bernard Madoff withdrew more than $15 million from a firm co-owned by her husband – including $10 million on the day their children turned her husband over to authorities for overseeing an alleged $50 billion Ponzi scheme, the top securities regulator in Massachusetts said Wednesday.
