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Wall Street Journal - In 2006, Lawrence Summers resigned as president of Harvard University and took a position as a part-time managing director with D.E. Shaw Group, a New York hedge fund with a reputation as one of the most secretive trading outfits in the world.
D.E. Shaw is known for using sophisticated computer-based quantitative strategies to make money on fleeting movements in the stock and bond markets. The fund has been a top performer, returning 15% to 20% a year over the long term, and in two decades has grown into a global powerhouse. But like many funds, it has taken hits in the credit crisis.
Norwalk Advocate - Crisis can create opportunity, and for the smart hedge fund operator, the downturn gripping the global investment community is a chance to build a respected reputation in the industry.
While the financial crisis has been unprecedented, so will be the opportunities for firms that have superior compliance and risk management capabilities, said Walter Zebrowski, chairman of the Regulatory Compliance Association, which co-hosted the Hedge Fund Leadership Thought Summit this week at the Stamford Marriott.
"What it’s going to take is your leadership to act as the brake pedal when people want to take risks," he said, adding that the government plans on putting regulations on the hedge fund industry. "What does this mean for us? Everyone’s going to have to step up their game in terms of risk management."
Zebrowski is also chief investment officer for Hedgemony Partners, a Manhattan-based global private equity firm.
International Herald Tribune - Bernard Drury is a rarity on Wall Street: a hedge fund manager who is making money, rather than losing it.
While most hedge funds are declining this year and unsettling the markets in the process, a handful are posting spectacular gains. Drury’s fund, for instance, is up 60 percent since Jan. 1.
How has he done it? Drury, a former grain trader, is not giving away his secrets. He relies on proprietary computer models to chart tides in the markets and to ride the prevailing currents.
But however smart or lucky the moneymakers have been, a few bad trades can end any hot streak. Despite Wall Street’s reputation as a place of big money and bigger egos, many of the winners are reluctant to boast, particularly given the gaping losses threatening some rivals.
Reuters - Lasair Capital, a hedge fund industry newcomer that boasts General Electric Co as its blue-chip backer, said on Tuesday that it has hired a senior investment officer to help put $180 million to work.
Carrie McCabe, who founded Lasair as a "next generation" hedge fund firm earlier this year, told investors that Jennifer Coffey will now help select hedge funds as well as infrastructure and timber assets for clients.
"Jennifer will report directly to me and I will continue to oversee all investment decisions," McCabe, who cemented her reputation in the hedge fund industry while running Blackstone Alternative Asset Management and FRM Americas, told clients.
Reuters - John Paulson, a U.S. hedge fund manager who gained a superstar reputation with a big bet against the U.S. housing market, was shown holding a 1 billion pound ($1.9 billion) bet against UK banks as short sellers were forced to disclose their positions.
Paulson & Co., run by John Paulson and based in New York, said it had a 1.2 percent short position in Barclays, worth over 350 million pounds, a 1.8 percent short position in Lloyds TSB, and short positions of just under 1 percent in Royal Bank of Scotland and HBOS.
The stakes were unveiled on Wednesday after Britain’s regulator imposed a ban on short-selling financial stocks last Friday, which was followed by similar moves in the United States and elsewhere.
Globe and Mail - Fairfax Financial Holdings Ltd. is claiming a victory in a long-running legal battle with U.S. hedge funds after brokerage firm Morgan Keegan & Co. Inc. revealed on Wednesday it has fired an analyst embroiled in a dispute with Fairfax.
Morgan Keegan confirmed it fired analyst John Gwynn last month for giving a report on Fairfax to some clients before it was published.
Fairfax has sued Morgan Keegan, based in Memphis, Tenn., and a group of U.S. hedge funds, alleging they worked together to damage Fairfax’s reputation and drive down its share price. Fairfax called it a “massive, illegal and continuing scheme that has targeted and severely harmed Fairfax.”
One of Fairfax’s claims in the suit is an allegation that Mr. Gwynn told hedge funds about negative reports before he issued them publicly, allowing hedge funds to short-sell Fairfax’s stock and profit after the news was released.
Toronto-based Fairfax has particularly pointed to Mr. Gwynn’s first report on the company, published Jan. 16, 2003, which said the company had a shortfall in its reserves. The company’s share price fell 28 per cent in the three days after the report was published.
Bloomberg - Citadel Investment Group LLC, the Chicago-based asset-management firm founded by Kenneth Griffin, is seeking about $1 billion for a new global macro hedge fund, according to a person with knowledge of the matter.
The fund is set to be managed in London by Kaveh Alamouti, 54, whom Citadel hired this year from New York-based Moore Capital Management LLC, according to the person, who asked not to be identified because the plans are private. Citadel oversees $20 billion.
Macro funds, which attempt to profit from broad economic trends by trading stocks, bonds, currencies and commodities, gained an average of 3.7 percent this year through July, according to data compiled by Chicago-based Hedge Fund Research Inc. All funds lost an average of 3.4 percent.
"Citadel is as good as they get,” said Tammer Kamel, president of Toronto-based Iluka Consulting Group Ltd., which advises clients on investing in hedge funds. “They have a reputation that will ease the current difficulties that hedge funds face in raising capital.”
New York Post- Phil Falcone’s Harbinger Capital Partners - the hedge fund that won a battle to land board seats at The New York Times Co. - is expanding its size and presence to capitalize on its newfound clout.
Falcone is seeking to use the reputation gained from the Times fight and winning bets against subprime to springboard Harbinger, which now has $25 billion in assets, toward new goals, according to people familiar with the situation.
On the heels of gains this year of close to 30 percent, Falcone is looking to attract $4 billion over the next six months, The Post has learned.