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.
President Obama’s harsh attack on hedge funds he blamed for forcing Chrysler into bankruptcy yesterday sparked cries of protest from the secretive financial firms that hold about $1 billion of the automaker’s debt.
Hedge funds and investment managers were irate at Obama’s description of them as "speculators" who were "refusing to sacrifice like everyone else" and who wanted "to hold out for the prospect of an unjustified taxpayer-funded bailout."
"Some of the characterizations that were used today to refer to us as speculators or to say we’re looking for a bailout is really unfair," said one executive who spoke on condition of anonymity because of the sensitivity of the matter. "What we’re looking for is a reasonable payout on the value of the debt . . . more in line with what unions and Fiat were getting."
West Palm Beach (HedgeCo.net) – Carried interest legislation is being considered at the federal, state and local level, raising significant local and international tax issues.
Carried interests, which form an essential element of business in almost every section of the U.S. economy (real estate, private equity, hedge funds and health care), have been subject to significant legislative proposals over the last two years.
Most investment funds (hedge and equity) have a general partner (LLC or LP) which receives a management fee (2%) and a carried interest equal to a percentage (e.g., 20%) of economic income including realized capital gains.
Proposals to reform the taxation of carried interest started in January of 2007 with legislation introduced by Senator Levin (D-MI) that would recharacterize "carried interest" income as ordinary income.
During 2008 New York State proposed and New York City introduced legislation that would change the way carried interest is taxed.
President Obama’s Budget Blueprint released on February 26, 2009 includes a line item related to taxing carried interest as ordinary income.
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!
Time.com – To stop the economy’s deflationary spiral, President Obama and Treasury Secretary Tim Geithner need to get toxic assets off banks’ balance sheets so the banks can start lending again. With much fanfare and after much delay, Geithner on Monday unveiled the details of the government’s "public-private" collaborative plan to make that happen.
There was a lot at stake. When Geithner rolled out an initial version of the plan Feb. 10, the details were missing, the stock market tanked and his image went with it. To give his plan a chance this time, Geithner had to show private investors they could make money partnering with the government to buy troubled loans, and the complex securities based on them, from the banks.
Associated Press – The Obama administration’s latest plan to help banks get credit flowing again is drawing a tepid reaction from investors and academics, who say the proposal comes with too many strings attached and is unlikely to stimulate lending industrywide.
And even if banks are willing to start lending more money, they wonder if many people will be able to take on more credit until the economy gets going again.
"We went on a borrowing binge," said Hugh Johnson, chairman and chief investment officer of Johnson Illington Advisors. "Debt levels, especially in households, are too high or unmanageable."
New York (HedgeCo.Net) – A federal judge has set a July 13 hearing for UBS, in which they may be forced to disclose names associated with 52,000 secret Swiss bank accounts holding more than $14.8 billion in assets. UBS continues to assert that by providing these names, they are compromising overseas privacy laws as well as the reputation of the bank.
”Such violations would expose these employees to substantial prison terms, as well as fines, penalties and other sanctions,” UBS said in a court filing last week. “There is simply no reason to have, nor equity in having, such an expedited process here.”
UBS is feeling the heat from a surge of international pressure to crack down on secret tax havens sought by the wealthy. Estimating the U.S. loses $100 billion a year from offshore tax abuse, President Obama is at the forefront of the campaign to get tough on tax evasion.
While his Stop Tax Haven Abuse Act was aimed at secret financial centers in the Caribbean, Switzerland has long been regarded as a popular place to stash assets without the watchful eye of Uncle Sam to worry about. Switzerland does not believe that tax evasion is a crime.
UBS has already agreed to pay the U.S. $780 million in damages, with $200 million of that going to settle charges brought on by the Securities and Exchange Commission. They have also agreed to exit the U.S. cross-border banking business and close the existing offshore accounts of their American clients.
Offshore banking has also been cast in a bad light thanks to the recent Antigua-based scandal masterminded by Texas financier Robert Allen Stanford. Stanford’s companies, including Stanford International Bank, are estimated to make up about 10% of the country’s economy with billions in deposits coming from all over the world.
In 1999, the U.S. blacklisted Antigua, accusing the country of lax regulation and subpar anti-money laundering laws. The sanctions were lifted in 2001. Still, deposits in the region continued to soar, and the country insists that their regulatory system is strong. Antigua is currently conducting their own investigation in the Stanford matters.
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
Seeking Alpha – If someone was asked to name a fund in the global macro game, undoubtedly Tudor Investment Corp or Moore Capital Management would be among the most frequent responses. The global macro strategy has fared well in the world of hedge funds. Paul Tudor Jones’ Tudor Investment Corp has earned an annualized return of greater than 20% over the span of two decades.
Louis Bacon’s of Moore Capital Management shares the same accolade. And, while they are both down this year, they have fared much better relative to many of their peers and the market indexes in general. Tudor’s flagship fund finds itself -5% for the year, while Moore was -2.9% year-to-date through November as we noted in our November hedge fund performance update.
But, in a never-ending quest for outperformance, Tudor and Bacon want more. And, in order to accomplish that, they see it fit to return to their roots.
Seekingalpha.com - Moore, named after Bacon’s middle name, is a $10 billion global macro set of hedge funds. The next few funds we will be covering are global macro oriented funds, which is a switch from some of the more value oriented funds we’ve been covering, like the ‘Tiger Cub’ funds including Stephen Mandel’s Lone Pine Capital, Lee Ainslie’s Maverick Capital, John Griffin’s Blue Ridge Capital, and Andreas Halvorsen’s Viking Global.
Global macro funds seek to find investments in whatever market they can gain an edge, whether it be equities, bonds, currencies, debt, commodities, and more. So, keep in mind that these equity positions only represent a portion of the fund’s overall holdings. They are not required to disclose holdings outside of equities, notes, and stock options.
Bloomberg – Moore Capital Management LLC, founded by Louis Bacon almost two decades ago, tapped Greg Coffey, former GLG Partners Inc.’s top-performing money manager, to be co-chief investment officer of Moore’s European business.
Coffey, 37, will join London-based Moore Europe Capital Management LLP with a 12-person team. Eric Dannheim, a senior member of that team will become chief operating officer of Moore Europe.
“Greg Coffey is one of the most impressive trading professionals operating anywhere in the world today,” said Bacon in a statement announcing the hires. “I have known Greg for a number of years and we have similar views with respect to markets and investment decisions,” he said.
Bacon, 52, has been the sole chief investment officer for the New York-based firm since he started it in 1990. A so-called macro investor — chasing macroeconomic trends by trading stocks, bonds, currencies and commodities — he’s been adding employees and attracting capital this year even as other funds have been firing personnel and facing client withdrawals in the worst economic crisis since the Great Depression.
Bloomberg – Stanley Shopkorn, a former head of equities trading at Louis Bacon’s Moore Capital Management LLC, plans to open a global stocks hedge fund, according to a person with direct knowledge of the matter.
Hilltop Park Fund LP, based in New York, is scheduled to start trading Oct. 1, said the person, who asked not to be named because the fund is private. Shopkorn declined to comment.
Shopkorn, 65, has managed money for wealthy clients since leaving New York-based Moore Capital in 2002. Bacon hired him in 1996 to build the firm’s equities business. Before that, Shopkorn ran hedge fund Ethos Capital LP and was a vice chairman at Salomon Brothers.
“It’s not the best of times to start a new fund,” said Graziano Lusenti, founder of Nyon, Switzerland-based Lusenti Partners LLC, an investment adviser. “Investors have become more adverse to allocating capital to hedge funds given how their performance hasn’t been overwhelming this year.”
