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.
Reuters – Two activist hedge funds of Dillard’s Inc are demanding access to inspect the retailer’s books and records, seeking greater transparency from the department store chain’s executives and family members.
Dillard’s shares jumped 18 percent in Monday morning trading.
Barington Capital has been calling on the Little Rock, Arkansas retailer to take steps to improve financial results and governance practices since at least June 2007.
The hedge funds own around 5 percent of Dillard’s class A stock. The Dillard family own most of the company’s class B stock, which allows them to nominate eight of the company’s 12 directors.
Reuters – General Motors Corp and Chrysler LLC are considering accepting a pre-arranged bankruptcy as the last-resort price of getting a multi billion dollar government bailout, Bloomberg reported, citing a person familiar with internal discussions.
In response to automakers’ bailout plea, staff for three members of Congress have asked restructuring experts if a pre-arranged bankruptcy — negotiated with workers, creditors and lenders — could be used to reorganize the sector without liquidation, Bloomberg said.
General Motors and Chrysler could not be immediately reached for comment by Reuters.
Industry executives and analysts say the immediate carnage from a bankruptcy of General Motors Corp, Ford Motor Co or Chrysler would spread throughout an industry that is bleeding cash in a global slowdown.
Newark Star-Ledger – Managers of New Jersey’s embattled pension fund, criticized by lawmakers for bailing out a struggling BlackRock hedge fund in October, secretly gave two other hedge funds the same deal, records from the state investment council show.
The Canyon Special Opportunities Fund and GoldenTree Credit Opportunities Fund were each awarded $49.5 million in state funds on the same day the controversial $49.5 million bailout of a BlackRock Inc. fund took place, according to a memo released by the investment council this week.
The cash infusions were a shade below the $50 million threshold that triggers public scrutiny. The BlackRock deal riled prominent Statehouse lawmakers. So does the new revelation that there was not just one such deal, but three.
Washington Post – New Jersey’s pension fund is under fire over a series of hedge-fund investments, the Wall Street Journal said.
New Jersey made the investments last month, to funds run by BlackRock Inc <BLK.N>, Canyon Capital Advisors LLC and GoldenTree Asset Management LP, as they were "facing the equivalent of margin calls," William Clark, director of the New Jersey Division of Investment, told the paper in an interview.
In effect, the funds, which had borrowed money for investments, either faced or anticipated facing demands from lenders for cash as the value of those investments fell, the paper said.
State legislators, upon learning of the investments, are questioning both the wisdom of the decisions as well as the process, according to the paper.
Newark Star-Ledger – Prompted by criticism from a prominent state lawmaker, the head of the state’s Division of Investment yesterday defended his decision to invest $144 million in pension funds in a BlackRock Inc.-managed hedge fund in the past two weeks, saying the state needed to act quickly to protect its stake and possibly reap big returns.
Senate President Richard Codey (D-Essex) questioned the transparency of the process, taking issue with the state putting $49.5 million in the hedge fund on Oct. 17 — an amount just shy of the $50 million threshold that requires a review by the state Investment Council. On Friday, the state invested another $94 million in pension funds in the BlackRock venture, following a special meeting of the Investment Council.
New York (HedgeCo.Net) – At least David Findel can never be called a band-wagon fan. The owner of mortgage-lender Financial Resources just agreed to pay a record $400,000 to the rights to two of the best seats at the new Meadowlands stadium. That’s just for the rights. The tickets themselves will cost him another $7000 annually.
The New Jersey native told the New York Post that he probably won’t even use the coveted seats.
“I purchased them for my son, Brandon, 11, and my daughter, Brooke, 7. I will probably continue to sit in my current seats.”
Both Jets and Giants fans were informed this season that they would have to pay money to obtain licenses in order to secure seats in the new stadium, which they will be sharing. Though some fans were outraged, the Jets were hoping to raise $170 million by selling licenses that ranged between $4000 and $25,000 per seat. The Giants, coming off a SuperBowl win and leading the solid NFC East Division, planned to charge between $1000 and $20,000 per seat license. The money from both teams will help to pay for the $1.3 billion in construction costs for the new stadium.
Jets owner Woody Johnson doesn’t see anything wrong with charging such outlandish fees in times of economic turmoil.
"People who buy PSLs and suites are looking over the long term," he said. "I know they realize, because I’ve been talking to a lot of them, that this is kind of a once-in-a-lifetime opportunity to buy something that hasn’t been available ever."
Meadowlands Stadium will hold 82,500 seats, making it the second largest stadium in the NFL next to FedEx Field, home of the Redskins.
Findel won the rights at an October 16 auction, outbidding other millionaires like Nobu owner Drew Nieporent. Instead of slightly raising the $140,000 bid for each of the two seats, he shocked the crowd and shot right up to $200,000 per seat. Not exactly the kind of frivolous purchase you see mortgage lenders making lately.
“Although part of the mortgage business is in turmoil, this is an opportunity to invest in my business and to further demonstrate our loyalty to the New York Jets,” Findel told the Post.
Ummm…a Favre jersey would’ve worked too.
Julie Scuderi Senior Editor for HedgeCo.Net Email: julie@hedgeco.net
The Times of Trenton – Stocks prices fell sharply again yesterday, ending the Standard & Poor’s 500 Index below 1,000 for the first time since 2003 on speculation banks and real-estate companies are running short of money as the credit crisis worsens.
Bank of America tumbled 26 percent after cutting its dividend in half and saying it plans to sell $10 billion in common stock to brace for a recession. Morgan Stanley, KeyCorp and JPMorgan Chase slid more than 10 percent as investors shrugged off signs the Federal Reserve will reduce interest rates. General Growth Properties, a mall owner, plunged 42 percent on concern it won’t be able to repay debt.
"We’ve approached the edge of the cliff," Leon Cooperman, 65, who manages $6 billion at hedge fund Omega Advisors, said at the Value Investing Congress in New York. "Do we go over the cliff or begin to recede? History says we recede, but there’s no guarantee.
Reuters UK – "Does anyone know what is happening with the markets?" former U.S. Treasury Secretary Lawrence Summers asked after stepping out of his car and into a hedge fund industry conference in Connecticut on Tuesday.
And he wasn’t the only one wondering.
As Summers, now a managing director at hedge fund DE Shaw, and hundreds of managers and investors scanned Blackberries for prices and dialled cell phones for updates, the words Morgan Stanley American International Group tripped off dozens of tongues and faces went pale.
Only one day after watching financial markets tumble as Lehman Brothers Holdings hurtled toward liquidation and Merrill Lynch stunned investors with a surprise sale to Bank of America Morgan Stanley’s share price tumbled but its CFO declared that things were getting out of hand.
AIG’s shares sank 48 percent after the market closed as the insurance group struggled to get the funding it needed to survive.
"I would describe the mood here as a little bit wary," said Raj Mohamad, who travelled to the two-day conference from Singapore where he helps U.S. hedge funds find Middle Eastern investors as Managing Director at Five Pillars Pte Ltd.
