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.
Telegraph.co.uk – The chatter was that Harbinger, a powerful US hedge fund run by Philip Falcone, has built a small stake in African Minerals and has been talking to London brokers in recent days about picking up more stock. Harbinger declined to comment.
If Harbinger has built a stake in the company, it is not clear what the hedge fund’s intentions are for African Minerals. The group runs a variety of strategies. Sometimes the investment fund acts as a passive, long-only investor. However, Harbinger also has a reputation for being activist and occasionally bids for companies. Last year, for example, Harbinger made a takeover approach for blue-chip satellite services group Inmarsat, which slipped 6.3 to 495.2p.
Mr Falcone is well known in City circles. The trader hit the headlines when it emerged that Harbinger was one of the main hedge funds to have shorted HBOS before the Government orchestrated the bank’s emergency merger with Lloyds, now Lloyds Banking Group.
Telegraph.co.uk – The hedge fund, which has $11bn (£6.7bn) of assets under management, will be the cornerstone investor in the new company called Lothian which will buy oil assets around the world and manage them. The plan is for Lothian to have a market value of as much as $500m.
GLG, which is listed on the New York Stock Exchange, is helping to put together a management team for Lothian that includes Tom Hickey, the former finance director of Tullow Oil, John Kennedy, chairman of Wellstream Holdings – the Newcastle-based manufacturer of pipes for the oil and gas industry – and Andrew Knott, a former analyst at Merrill Lynch who joined GLG last year. It is thought they are looking for one more high-profile director before the flotation.
Telegraph.co.uk – The City is staring into the abyss. If the proposed EU directive on hedge funds goes through, London will go the way of Bruges, Venice and Amsterdam: a once dominant financial entrepôt sidelined by more virile cities.
This, of course, is precisely what some in the EU want. I have lost count of how often I’ve heard voices raised in Brussels against London’s “jungle capitalism”. In the eyes of many Continental politicians, the Square Mile is parasitical: a lawless free city, whose lax regulations caused the financial crisis. They deeply resent the fact that 80 per cent of managed equity and hedge funds are based in London.
Telegraph.co.uk – RIT Capital Partners, Lord Rothschild’s investment vehicle, had £36.5m ($58.3m) allocated to Atticus at the end of March 2008, but the company’s latest annual report shows the money has been entirely withdrawn.
The trust had invested in Atticus since 2000, and the holding was its largest single hedge fund investment last year.
Telegraph.co.uk – Mayor Boris Johnson will welcome guests, thought to include Tony Blair, Elton John and Jemima Khan, who have paid up to £100,000-a-table to be at the event at the former Eurostar terminal at Waterloo.
Despite being dubbed Britain’s most extravagant party, the organisers said it will be more low key.
Arpad "Arki" Busson, the French financier and chairman of the dinner’s charity Absolute Return for Kids, said: "We have cut the costs of staging the event by two-thirds and there are two-thirds less luxury lots too. We have to be reflective and respecting of the times."
Whereas in past years, Prince, Elton John and Stevie Wonder have performed, this year the entertainment will be provided by the London Chamber Orchestra.
New York Times Blogs – John Paulson, the hedge fund manager who reaped a windfall betting against the U.S. housing market before the credit crunch, is now hoping to ride to riches on the property industry’s recovery, The Telegraph reported.
Mr. Paulson’s firm, Paulson & Company, is in the early stages of raising money for a new private equity fund, Paulson Real Estate Recovery Fund, the newspaper said.
Telegraph.co.uk – The stockmarket bulls have been very quiet of late, but that might be about to change. The FTSE100, made of up Britain’s biggest companies closed last week at an 11-week high at 4,243 and some fund managers are beginning to talk up a bull market.
One such bull is Anthony Bolton, who is worth listening to. Mr Bolton recently stepped down from running one of the UK’s most popular unit trusts, Fidelity Special Situations. The reason for its popularity was simple. Under Bolton’s stewardship the fund turned an outlay £1,000 into £147,000 over a 28 year period.
Mr Bolton says that "all the things are in place for the bear market to have ended". And "when there’s a strong consensus, a very negative one, and cash positions are very high, as they are at the moment, I’d like to bet against that".
Telegraph.co.uk – When Andy Hornby, the former chief executive of HBOS, was asked by the Treasury Select Committee to detail his banking qualifications he couldn’t. Like his fellow bankers, Sir Fred Goodwin, Sir Tom McKillop and Lord Stevenson, being questioned by the panel, Mr Hornby, had to admit publicly that he held no formal banking qualifications. However unlike his fellow bankers, Mr Hornby’s admission held one important qualification.
"I have an MBA from Harvard," he told the MPs, "where I specialised in all the finance courses including financial services."
With the question about qualifications almost certain to come up, Mr Hornby’s answer was almost certainly prepared. By referring not just to his MBA, but also to where he got it from, Mr Hornby knew he was putting himself firmly at the front of the pedagogical pecking order. Harvard prides itself on consistently being the highest-ranked university; Mr Hornby no doubt prides himself on being the highest-achieving student out of his year, coming top out of 800 peers.
Telegraph.co.uk – Industry sources say private equity and distressed debt specialists have raised about $26bn (£17bn) since the start of October, with some 80pc coming from hedge funds.
Distressed debt funds, which buy debt that is trading at a discount because the borrower is at risk of defaulting, have been around for years but specialists are looking forward to a bonanza year in 2009.
Among the biggest distressed debt fund raisings since October have been Oaktree, which has secured $10.5bn, Towerbrook with $2.75bn, Intermediate Capital with $1.5bn, and Alchemy with $1bn. Hedge funds are also aiming to buy distressed debt directly from banks that are under pressure to offload liabilities to shore up their balance sheets.
Secondary debt, even senior loan notes, often trade below 70p in the pound and yield 25pc over five years if the debt is held – and survives – to maturity. If a company is strugglings with its covenants, debt holders can strike debt-for-equity swaps in return for keeping a company afloat – often a cost effective way of getting a seat at the table or control of a business.
Toledo Blade – President-elect Barack Obama is forming a White House leadership team that combines experienced Washington insiders who can help build a bridge with Congress and trusted associates who share his Chicago roots.
The West Wing appointments that Mr. Obama has announced in recent days stand in contrast to those of President Bush, who relied heavily on fellow Texans for top posts. They had virtually no experience dealing with Congress, nor did the former Texas governor who was their boss.
Mr. Obama comes to the Oval Office with an ambitious list of campaign promises that will require Capitol Hill’s cooperation and approval, and his team is heavy on the legislative experience that Mr. Obama is lacking. He resigned his Illinois Senate seat yesterday after just under four years of service, half of which he spent out on the presidential campaign trail.
Daily Telegraph- The chief executive of the sugar refining group Tate & Lyle has hit out at hedge funds and other commodity speculators, calling for them to face greater regulation in a bid to hold back soaring food prices.
Hedge funds have been blamed for contributing to the rocketing price of commodities including oil, wheat and corn by speculating in the futures market with highly leveraged bets on forward prices.
Tate & Lyle boss Iain Ferguson called for limits to be placed on speculators’ involvement in the futures market and the way hedge funds and others finance their activity.
New York Post- A looming decision in a heated lawsuit brought by railroad giant CSX Corp. could shut down a loophole used by activist hedge funds to hide their stake from the market.
CSX alleges that two big hedge funds – The Children’s Investment Fund (TCI) and 3G Capital Partners – used complex swap agreements with investment banks to secretly hide their 12 percent ownership stake in the rail operator.
TCI boss Christopher Hohn admitted in a bench trial Thursday to buying millions of dollars worth of swaps for CSX shares early last year.
Hohn, the son of working-class Jamaican parents who emigrated to London, disclosed his position in CSX last December and has launched a proxy contest to unseat five of the company’s directors.
