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Seattle Times – Bill Fleckenstein, a well-known Seattle investor who bets exclusively on falling stocks, is shutting his 12-year-old fund and starting a new one that will buy equities, too.
Fleckenstein said he doesn’t think the worse is over in the U.S. stock market. Yet he no longer wants to limit himself to so-called short bets.
"I’m not wildly bullish right now," he said. "The market hasn’t reached its ultimate lows, but we might be in a trading range for a long time."
Short sellers have been the best-performing hedge funds this year, up 32 percent through November, according to Chicago-based Hedge Fund Research, whose data show an industry average decline of 18 percent during that period. Fleckenstein, founder and president of Fleckenstein Capital, declined to comment on the fund’s size or its returns.
Seattle Times – Five years ago, the mutual- fund world was rocked by the biggest scandal in its 80-year history.
Fund companies gave some customers trading privileges that weren’t open to everyone; those special interests — notably some hedge funds — engaged in rapid trading that netted quick profits at the expense of the average shareholder.
Headlines called it a "market-timing scandal," a misnomer since there’s nothing illegal about trying to time the market. The problem wasn’t even so much the quick-fire trades as it was the special privileges that let traders play games that the ordinary shareholder couldn’t engage in and actually paid for.
Now shareholders in scandal-tainted funds are starting to receive payments to compensate for their losses. The SEC just sent checks worth a total of $40 million to 600,000 Putnam investors. Another $18 million was distributed to some 325,000 Janus shareholders.
Seattle Times- The House on Wednesday approved a plan to protect more than 20 million families from an expensive levy called the alternative minimum tax (AMT) while raising taxes on hedge-fund managers and oil companies. But the measure has little hope of Senate passage, Senate leaders said.
The House voted 233-189 to prevent the AMT from expanding next April to ensnare millions of middle-class taxpayers, adding thousands of dollars to their tax bills.
To replace the lost revenue, more than $61.5 billion, the House agreed to more than double the tax rate on income from investment-services partnerships such as hedge funds, to deny oil and gas companies a lucrative deduction for domestic production, and to require credit-card companies to report their transactions with retailers to the Internal Revenue Service, among other provisions.
New York (HedgeCo.Net) – A $7.2 billion bailout package was approved Tuesday by 94% of Washington Mutual Shareholders in a move that gives private equity firm TPG control of over 50% of the company, says the Seattle Times.
Not that there was much of an alternative. The other option would come in the form of a $792 million dividend that WaMu would have to pay the company, with increasing payments ahead. Though that didn’t stop protesters led by the Service Employees International Union to emphasize that this was a “toxic deal.”
The Union also stated that the private equity firm would seek high profits in the short term and “squeeze these returns from troubled banks through higher fees for bank customers, unfair lending practices and exorbitant interest rates on credit cards and other consumer products.”
In April, TPG bought 176 million shares of WaMu at $8.75 each, a 33% discount at the time.
Julie Scuderi Senior Editor for HedgeCo.Net Email: julie@hedgeco.net
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Seattle Times- Lehman Brothers on Tuesday denied that it was forced to tap the Federal Reserve’s discount window to stave off cash problems, and maintains that its books remain liquid.
The nation’s fourth-biggest investment bank was battered Tuesday amid reports it needs to raise up to $4 billion of capital because of steep losses linked to the ongoing credit crisis. The securities firm is set to report its first loss later this month since splitting off from American Express in 1994.
Shares of the company tumbled 15 percent Tuesday after market rumors surfaced that it was forced to borrow from the Federal Reserve’s discount window to maintain operations.
