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.
New York (HedgeCo.Net) – It doesn’t help matters when a company, who is at the forefront of a government bailout, is expected to provide rescue to another faltering company. But that’s exactly what General Motors has found themselves in the middle of, as Delphi is again turning to their former parent company for assistance.
GM is in talks to buy back some parts of the Troy, Michigan-based auto parts supplier, including some unprofitable plants. While this may help Delphi achieve the exit refinancing that they need to emerge from Chapter 11, it certainly doesn’t make things easy on GM, who is already set to receive over $13 billion in government aid. However, some believe that Delphi’s dependence could help GM’s case in requesting more federal funds.
Since Delphi filed for bankruptcy protection in October 2005, they have faced a string of disappointments in trying to secure the needed capital. A $6.1 billion refinancing plan, led by hedge fund Appaloosa Management, was supposed to provide the influx of capital. GM had also promised a $2 billion chunk of the puzzle to ensure Delphi met the minimum requirements. When the hedge fund backed out of the deal at the last minute, Delphi was left without an alternative.
GM has agreed to advance up to $100 million this month to Delphi, to keep the company running for the next few months. Delphi has until Feb 27th to restructure its exit plan, including an amended budget with payouts to creditors and how they plan on becoming profitable following the exit of Chapter 11 protection. They have also requested that the U.S. Bankruptcy Court allow them to halt their retiree medical benefits.
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
New York (HedgeCo.Net) – Wachovia customers who invested in auction rate securities prior to their collapse will most likely get their money back. The SEC announced a settlement yesterday with Wachovia Securities that will provide $7 billion in liquidity to those clients, which resolves the agency’s original charges that the bank misled investors about the risks associated with ARS.
"The goal of the SEC in these matters was to return as much liquidity to investors as quickly as possible, while at the same time avoiding further disruption in the financial markets. Today’s final settlement with Wachovia represents substantial progress toward fulfilling that goal,” said Linda Chatman Thomsen, Director of the SEC’s Division of Enforcement.
The original SEC complaint alleged that Wachovia peddled ARS to clients, while representing them as safe, highly liquid investments, much like cash or money market instruments. In addition, the agency charges that the bank became aware of the mounting risks associated with these investments, yet continued to market them as safe. When the ARS market plummeted, thousands of clients were left with billions of dollars of illiquid investments.
"Wachovia did not ensure that its sales force understood the ARS products it was selling. As a result, Wachovia’s customers were not adequately informed of the nature and risks associated with ARS and were caught holding illiquid securities when the ARS market froze," explained Merri Jo Gillette, Director of the SEC’s Chicago Regional Office.
The settlement has several facets, including buying back ARS from investors who purchased them on or before February 13, 2008. For more information on the matter, or for buyback eligibility, the SEC suggests you contact Wachovia directly at 1-866-283-7943.
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
New York (HedgeCo.Net) – As the Obama administration prepares to distribute the remaining $350 billion in the Troubled Asset Relief Program, a new requirement will ensure that the salaries of top executives be capped at $500,000 a year.
“For top executives to award themselves these kinds of compensation packages in the midst of this economic crisis is not only in bad taste, it’s a bad strategy, and I will not tolerate it as president,” Obama said at a White House press conference.
While last year saw a handful of top financial organizations crumble amidst record write downs and unsustainable losses, companies continued to dole out bonuses to those in high positions. Even as the first half of the TARP funds were distributed by the Bush administration, the public demanded transparency for fear that taxpayer money was being used to pad the paychecks of the ultra wealthy; the individuals whose greed was no doubt responsible for the financial meltdown in the first place. It was estimated that the banks receiving bailouts paid their top officials $1.6 billion in salaries and bonuses last year, according to the Associated Press.
Merrill Lynch CEO John Thain took home a record $83 million in 2008, despite taking $10 billion of taxpayer-funded government aid to keep his company afloat. Lloyd Blankfein, CEO of Goldman Sachs, pocketed $54 million while the company shelled out $242 million to their top five execs. Jamie Dimon of JPMorgan Chase, on the other hand, pocketed a mere $1 million while forgoing any bonus.
Treasury Secretary Tim Geithner was also on board with the new plan, saying that our economic woes were “made worse by a loss in faith,” referring to the gluttony of these top execs. While the plan cannot retroactively take back bonuses that were awarded with the first half of the TARP funds, provisions will likely be set in place that can reclaim compensation from senior executives if they are discovered engaging in any fraudulent practices.
In addition to outlining the plan, Obama urged Congress to finalize the economic stimulus legislation, saying that any delays “will turn crisis into a catastrophe and guarantee a longer recession.”
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
New York (HedgeCo.Net) – Daniel Och, CEO of New York-based hedge fund Och-Ziff Capital Management, is showing his confidence in his company, racking up another 1.6 million shares.
Och shelled out about $7 million between November 13 and February 2, at prices ranging from $3.89 to $4.98 a share according to the most recent filing with the Securities and Exchange Commission.
Och-Ziff, who is one of just a few hedge funds that is traded on the market, went public in November 2007, with their IPO going for $32 a share. The financial turmoil of 2008 caused their stock prices to plummet 80 percent as their hedge funds posted record losses.
However, gains in January have investors talking about a comeback. The company’s OZ Master Fund posted returns of 3.12 percent while their other three hedge funds also enjoyed positive returns.
Och-Ziff regularly files performance reports with the U.S. SEC because they are a publically traded company. Most hedge funds are not required to do so. However, a recent push for greater transparency in the troubled industry has caused many individuals in Washington to act. If a proposed plan brought on by two U.S. Senators gets approved, all hedge funds will be required to register with the SEC.
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
New York (HedgeCo.Net) – After a year when most hedge funds grudgingly reported month after month of losses, Och-Ziff Capital Management was happy to showcase their gains for January in a recent regulatory filing.
The New York-based hedge fund reported positive returns for all four of their funds, sending share prices up and giving investors a jolt of confidence.
The OZ Master Fund saw gains of 3.12 percent while the Asia Master Fund returned 2.49 percent. Also following suit was the Europe Master Fund, which rose 1.05 percent and the Global Special Investments Master Fund which posted returns of 0.84 percent.
Another positive note was the rise in assets under management. Och-Ziff, who once managed nearly $34 billion, took a large hit last year along with many hedge funds. With the economic turmoil and investors pulling out approximately $5 billion in a rush for redemptions, assets under management fell to just over $21 billion in late 2008. According to the filing, that number is steadily climbing, up to $22.3 billion.
Och-Ziff, who unlike most hedge funds is a publically traded company, saw their share prices rally amidst the news. Shares closed yesterday at $5.31, up 3.91 percent.
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
West Palm Beach (HedgeCo.net) – In the last week leading up to today, (Tuesday) hedge funds and other "large speculators" took their largest bullish position (when compared with the number of bearish bets) since early August.
Commercial traders such as refineries, mints, wholesalers and bullion banks, took their smallest bull position in 19 weeks, as they sold the "long" contracts bought by speculative players.
This has returned the balance of bull/bear positions in December to what has been considered the norm for the last four years, with over 85% of speculative position betting on a rise.
Last week also saw the outstanding number of open contracts in Gold Futures and options rise more than 9%, but it remained one-third below the record set in Jan. 2008.
"If gold can close the year above its January 2008 open, it will be one of the few positive asset stories of the year," notes new analysis from Mitsui, the precious metals dealer in London, "from a wealth preservation perspective at least."
"With the Bernanke printing press set to move into overdrive next year," Mitsui said regarding the future of Gold in 2009, "along with the not so pretty reality of negative real interest rates, it is difficult to put together a positive thesis for the US Dollar," Mitsui said, "In such a climate, gold could flourish."
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!
Reuters – Hedge funds are set to return to their roots as niche products for the happy few as they have been unable to deliver the gleaming returns they were promising ever since the start of the credit crisis.
Hedge fund managers have long been flaunting alpha — returns down to their skills to beat markets by using advanced investment techniques — but many were caught short just as any other investor in this year’s protracted downturn.
The industry now faces rapid shrinkage driven by losses of more than 20 percent, as measured by Hedge Fund Research’s daily HFRX index, and redemptions that are predicted at somewhere between "large" and "catastrophic."
"Eighty percent of the hedge fund sector will not be here in three to four months," Robert McAdie, a credit strategist at Barclays Capital, said at a recent briefing. "Levered strategies are dead in this environment."
Funds have delivered worst-ever losses of 17.70 percent in the 11 months to November, according to Hedge Fund Research, as stocks have slumped and volatility has surged.
