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.
First Post – German prosecutors are investigating executives at the sportscar firm over allegations of share-manipulation.
Porsche denied any disclosure irregularities but many hedge funds and investment management firms were left wrong-footed after it made a shock announcement that it held more than 50 per cent of VW’s shares. German regulator BaFin dropped its initial investigation but re-opened it after claims that the incident was bringing the entire German stock market into disrepute.
Ex-chief executive Wendelin Wiedeking is among the Porsche figures being investigated by the German authorities over share manipulation claims. Yesterday Porsche’s headquarters were raided in the course of investigations into recent trading activities.The allegations revolve around the failed takeover of Volkswagen, during which Porsche took large positions in VW stock. Prosecutors allege that inside information was leaked in pursuit of the failed bid.
Reuters – Hedge fund firm Perry Corp will pay $150,000 to settle accusations that it failed to report a substantial stake in Mylan Inc, purchased to support a proposed 2004 takeover of King Pharmaceuticals, the U.S. Securities and Exchange Commission said on Tuesday.
The New York-based firm, led by Richard Perry and with $8.8 billion under management at the end of March, settled without admitting or denying the allegations.
Reuters – Hedge funds that provided bankrupt U.S. auto parts maker Delphi with debtor-in-possession (DIP) financing are not getting access to the firm’s books, hindering their ability to make a takeover offer, the New York Post reported, citing a person familiar with the situation.
The lenders are led by hedge fund Elliott Associates, the paper said.
In case they do not get access to Delphi’s books soon, the lenders may approach the judge handling the bankruptcy case to intervene, a source told the paper.
Reuters – Nicola Horlick’s boutique fund manager Bramdean Alternatives said on Thursday it has received an approach for a possible takeover by an unnamed bidder.
The manager said in a statement: "The Board announces that it has received an approach which may or may not lead to an offer being made for the entire issued share capital of the Company."
At the end of last year Bramdean, headed by well-known fund manager Horlick, said it had an exposure to Bernard L. Madoff Investment Securities representing 9.5 percent of its net asset value at the end of October.
Globe and Mail – The hedge fund crowd jumped on Nova Chemicals yesterday, thrilled to invest in a takeover, but pessimistic that a bidding war will begin for the chemical company.
Despite heavy trading yesterday, the price of shares in Nova never came close to the $6 (U.S.) a share cash offer from Abu Dhabi state-owned oil company International Petroleum Investment Co. (IPIC).
Bloomberg – Paulson & Co., the hedge fund run by billionaire John Paulson, urged Dow Chemical Co. to slash its dividend, sell new stock and issue bonds to pay for the stalled $15.4 billion takeover of Rohm & Haas Co.
Dow should tap its committed $13 billion bridge loan and $4 billion of equity financing to complete the deal, which was supposed to close Jan. 27, Paulson said today in a statement. Dow could then repay the bridge financing with $4 billion of new equity and $5 billion of new bonds. Paulson, which manages $29 billion, is Rohm & Haas’s second-largest shareholder.
Bloomberg – Mario Gabelli is buying Wyeth to book a 13 percent profit from its takeover by Pfizer Inc. Managers at Cohen & Steers Inc. are scooping up closed-end funds trading at a 16 percent discount to the value of their holdings. Huntington Asset Advisors Inc. is betting the widest gap between silver and gold prices in 14 years will narrow.
A year ago, these so-called arbitrage strategies would have been favorites of hedge funds whose debt-fueled trading squeezed out other investors. Since then, the credit-market seizure wiped out about 920 of the 10,096 funds in business at the start of 2008, according to Hedge Fund Research Inc. The survivors have reduced borrowing to close to nothing, according to Rasini & C., a London-based investment adviser.
Bloomberg – Mario Gabelli is buying Wyeth to book a 13 percent profit from its takeover by Pfizer Inc. Managers at Cohen & Steers Inc. are scooping up closed-end funds trading at a 16 percent discount to the value of their holdings. Huntington Asset Advisors Inc. is betting the widest gap between silver and gold prices in 14 years will narrow.
A year ago, these so-called arbitrage strategies would have been favorites of hedge funds whose debt-fueled trading squeezed out other investors. Since then, the credit-market seizure wiped out about 920 of the 10,096 funds in business at the start of 2008, according to Hedge Fund Research Inc. The survivors have reduced borrowing to close to nothing, according to Rasini & C., a London-based investment adviser.
Guardian Unlimited – Billionaire hedge fund manager John Paulson has made a £100m profit by betting that the Royal Bank of Scotland’s share price would fall dramatically, according to calculations by the Guardian, adding fuel to the debate about the impact of short-selling on bank stocks.
New York-based Paulson, who made more than $3bn by betting against the US housing market, now appears to be profiting from positions placed on the assumption that bank shares would tumble in the aftermath of the market chaos caused by the demise of the sub-prime mortgage industry.
His hedge fund, Paulson & Co, was one of the few to trade through the ban imposed on short-selling by the Financial Services Authority in September to protect the rescue takeover of HBOS by Lloyds TSB.
Reuters – Dow Chemical is scrambling to keep its $15 billion takeover of rival Rohm & Haas alive after a surprise decision by the Kuwaiti government to scrap a joint venture with Dow, the Financial Times reported on Tuesday.
The Kuwaiti decision deprived the U.S. group of about $9 billion in planned financing which it would have used for the Rohm deal, but unidentified people close to the situation told the FT that Dow could still tap a $13 billion bridge loan to pay for the takeover.
The sources also said Dow was likely to try to renegotiate the price of the deal to reflect the recent drop in Rohm’s share price, the newspaper said, adding that both Dow and Rohm declined to comment.
Midland, Michigan-based Dow agreed in July to buy Rohm & Haas for $78 a share to broaden its specialty product offerings. The deal carries a termination fee of $750 million payable to Rohm & Haas.
Bloomberg – Hedge-fund managers including George Soros and Philip Falcone, in an unprecedented appearance before Congress, defended their practices and profits while splitting over whether the U.S. should impose stricter regulations.
"This is not a case where management takes huge bonuses or stock options while the company is failing,” said Falcone, one of five billionaire investors who testified today before the House Committee on Oversight and Government Reform in Washington.
Falcone, senior managing director of New York-based Harbinger Capital Partners, urged Congress to require more disclosure by hedge funds, which oversee $1.7 trillion of investments. Soros, founder of Soros Fund Management LLC, cautioned against “ill-considered” rules because this industry is reeling from market losses and client defections.
Bloomberg – Lehman Brothers Holdings Inc., the U.S. investment bank holding company that filed the largest bankruptcy in history, faces objections to a proposed $1.75 billion sale of its broker-dealer unit to Barclays Plc.
Hedge fund Harbinger Capital Partners asked a U.S. bankruptcy judge to block the sale unless Lehman immediately discloses cash transfers it made just prior to its bankruptcy, including an alleged $5 billion transfer of cash from Lehman’s London office. Another two hedge funds, Bay Harbour Management LC and Amber Capital, filed papers alleging $8 billion was moved.
The objections continued to roll in as a hearing to approve the sale, scheduled for 4 p.m., was delayed as hundreds of participants and onlookers overcrowded a courtroom in U.S. Bankruptcy Court in Manhattan.
Lehman “must provide adequate information, and certify its accuracy, as to what cash has moved in and out of Lehman Brothers Inc. and debtor Lehman Brothers Holdings Inc.,” Harbinger said in court documents filed today with U.S. Bankruptcy Judge James Peck.
