SAC’s Money Market Lesson (Bloomberg)
Bloomberg News reports that investors in SAC Capital, the $14 billion hedge fund recently indicted for encouraging insider trading, want to get their money out as soon as possible. They are worried that their funds might be seized by the government. However, SAC Capital is under no obligation to return investors’ money before the end of the year because of a common hedge-fund practice known as “gating.” Investors in money-market mutual funds may soon be at risk for similar treatment. At least, that is the plan favored by the industry, which the Securities and Exchange Commission cautiously endorsed as one option in June. If the rule becomes official, a fund facing mass withdrawals could temporarily deny investors their money, or impose steep redemption fees.
Hedge funds: Rock stars to fallen stars (Fosters)
Hedge funds were once the rock stars of the financial industry. The smartest people worked for them. The wealthiest gave them their money. They were an easy path to fortune. But if that get-rich-quick narrative was an exaggeration before the financial crisis, it’s even less true since. The hedge fund industry’s performance has been spotty in recent years; its public image, bruised. SAC Capital Advisors became the latest high-flyer brought low when the Justice Department last week accused it of allowing insider trading and making hundreds of millions of dollars illegally.
NY hedge fund threatens sale of RRMC parent company (VicksburgPost)
A New York hedge fund and minority stakeholder in Health Management Associates Inc. says it has the votes amongst shareholders to replace the health care operator’s entire board of directors and, in the process, stymie the announced buyout of the company by Community Health Systems, which owns River Region Medical Center. Glenview Capital Management LLC, owner of 14.6 percent of HMA stock, said this week it expects to transition to a new board following a vote. The action eyes Steven Shulman, a senior adviser to private equity firm Water Street Healthcare Partners, as new chairman of the board, the firm said. He would replace current chairman William Schoen.
Cohen: A dead man walking? (NYPost)
Steven A Cohen may be walking toward the exit of his fabled hedge-fund empire as another $1 billion in capital redemptions came into play for the third quarter on Friday. Among the storm clouds: Cohen’s SAC Capital Advisors is wrestling with a federal indictment accusing it of running a criminal insider-trading network. The Securities and Exchange Commission is charging Cohen with failing to supervise employees allegedly engaged in insider trading. And $616 million has been extracted from his fund in two regulatory settlements. SAC is certainly on the brink.
Hedge fund linked to RBS collapse backs bid for branches (Telegraph)
Toscafund, the $1.3bn (£830m) fund chaired by ex-RBS chairman Sir George Mathewson, has emerged as a backer of Andy Higginson’s W&G Investments, which hopes to buy the Scottish bank’s “Project Rainbow” unit. W&G Investments is one of three bidders trying to buy the unit — alongside consortiums led by AnaCap and Corsair Capital — which will control 5pc of the SME market and have 2m retail customers. RBS is being forced to sell the 315-branch arm as a result of European state-aid rules following the Government’s £45bn bail-out — a direct consequence of its 2007 purchase of ABN Amro.
I would own physical gold: Dr Doom (MoneyControl)
Stocks are in “bubble territory,” making it a good time to move into gold, Gloom Boom & Doom Report Editor Marc Faber said Friday. “The S&P is down 3 percent from its high, 1,709, and yesterday we had over 400 new 12-month lows on the New York Stock Exchange. That is remarkable,” he said. “That shows that the internal picture of the market is very different than what the indices show. The indices Nasdaq, S&P, Dow are driven by just a few stocks that are very strong. They are in bubble territory.” Stocks closed lower for a third straight day.
Christopher Hohn Turns Up the Heat on EADS (InstitutionalInvestorsAlpha)
Christopher Hohn seems irritated. The founder of the $6.5 billion London-based activist hedge fund firm the Children’s Investment Fund Management has launched a campaign against EADS (European Aeronautic Defence and Space Co.), urging the European aircraft maker best known for its Airbus division to sell a key military airplane unit. However, he doesn’t understand why this public pugilism is not getting much attention in the U.S. even though the target has a $46 billion market capitalization…
Career building 101: Do what you love (PIOnline)
From day one after receiving a law degree from the University of Houston, Clint D. Carlson knew he liked markets. So, armed with the J.D., as well as an MBA from Rice University, Mr. Carlson began building a career that would move from traditional money management to risk arbitrage to managing money for the Bass family in Fort Worth, Texas, and finally, in 1993, to his own hedge fund firm, Carlson Capital LP in Dallas. His aim as a hedge fund manager was to apply a variety of strategies he knew well — risk arbitrage, convertible arbitrage, equity pairs trading — to his hedge funds. And his strategies are getting flows — $1 billion so far this year, mostly from institutional investors like the $139 billion New York City Retirement Systems, which hired Carlson to run $250 million, and the $39.6 billion Teachers’ Retirement System of the State of Illinois, Springfield, $50 million.
