Billionaire Icahn Says No Respect for Ackman After Herbalife Bet (SFGate) Carl Icahn, reviving a decade-old feud with hedge-fund manager William Ackman, said the founder of Pershing Square Capital Management LP acted inappropriately when publicly announcing his wager against Herbalife Ltd. (NYSE:HLF) late last year at an investor conference. Icahn, who spent more than seven years wrangling with Ackman in court over $4.5 million, said Ackman’s assertion that he was shining a spotlight on Herbalife, the marketer of weight- loss and nutritional supplements, was “disingenuous.” In an interview yesterday with Trish Regan on Bloomberg Television, Icahn said he doesn’t “like” or “respect” Ackman and questioned his motives for publicizing the trade, a short-sale of more than 20 million Herbalife shares.
Apex opens Uruguay office (AutomatedTrader) Apex Fund Services, the independent fund administration company, has announced its continued expansion into the LatAm markets with the opening of its new office in Montevideo, Uruguay. The opening re-affirms Apex's commitment to LatAm where the hedge fund sector is expanding rapidly in line with the growth of the region's economies. Investors are seeking fund managers to provide them with entry to the region and to enable them to take advantage of the trade free zones for foreign direct investment.
FSA bans fund manager and two traders for market abuse (FundWeb) The FSA has banned a Swiss fund manager and two traders for market abuse and hit them with fines totalling more than £1.5m. Stefan Chaligné, a Swiss-based hedge fund manager, has been fined £900,000 plus £308,005 of extra financial benefit he gained. Patrick Sejean, a former senior salesman on Cantor Fitzgerald Europe’s London-based French desk, has been fined £650,000. Both individuals have also been banned. The third man, Cheickh Tidiane Diallo, a junior trader, has been also banned from performing any role in regulated financial services.
The great hedge fund con (MoneyWeek) According to The Economist, the average hedge fund recorded a gain of 3% last year - miles below the 13% rise in the global equity market. Not very impressive! But the long-term statistics gathered by Hedge Fund Research are even worse. They show that the total return delivered by hedge funds over the past decade is a feeble 17%, equivalent to barely 1.5% per year. As the Economist points out, this compares to the 90% return that a ‘simple-minded investment portfolio’ of 60% shares and 40% sovereign bonds would have produced. For that matter it is also less than would have been produced by simply plonking the money in the bank and forgetting about it.
Whitman Capital Founder Gets 2 Years for Insider Trading (BusinessWeek) Whitman Capital LLC hedge fund founder Doug Whitman was given two years in prison for trading on illegal tips about Polycom Inc (NASDAQ:PLCM), Google Inc (NASDAQ:GOOG) and Marvell Technology Group Ltd. (NASDAQ:MRVL) U.S. District Judge Jed Rakoff pronounced sentence yesterday in Manhattan federal court, also imposing one year of supervised release and a $250,000 fine. Whitman was convicted in August after a jury trial in which he spent more than two days on the witness stand proclaiming his innocence.
Hertfordshire Pension Makes First Allocation to Hedge Funds (BusinessWeek) The public pension for employees of the Hertfordshire County Council, in the commuter belt north of London, is making its first hedge-fund investments to reduce its weighting in equities and boost returns. The 2.5 billion-pound ($3.9 billion) fund hired LGT Capital Partners Ltd. to manage 280 million pounds across several alternative asset classes, including placing as much as 70 million pounds in hedge funds, said David Lloyd, chairman of its pensions committee and the investment subcommittee.
Citigroup's private bank pulling money from SAC Capital: WSJ (BayouBuzz) Citigroup Inc. (NYSE:C)'s private bank is withdrawing its $187 million investment from SAC Capital Advisors LP, the latest of several client redemptions at the hedge fund firm, the Wall Street Journal reported on Thursday, citing people familiar with the matter. The question of investor redemptions from Steven A. Cohen 's SAC Capital has come up in the wake of charges brought last month by U.S. authorities against a former SAC Capital portfolio manager , Mathew Martoma. He is accused of using inside information to generate profits and avoid losses totaling $276 million in shares of two drug stocks, Elan Corp PLC and Wyeth. The deadline for submitting redemptions to Cohen's $14 billion hedge fund is February 15.
Pensions Bet Big With Private Equity (WSJ) On the 13th floor of a sleek downtown office building here, the trading desks are manned overnight. The chief investment officer favors cowboy boots made of elephant skin. And when a bet pays off, even the secretaries can be entitled to bonuses. The office’s occupant isn’t a highflying hedge fund but the Teacher Retirement System of Texas, a public pension fund with 1.3 million members including schoolteachers, bus drivers and cafeteria workers across the state.
FSA bans Swiss fund manager and two traders (CityWire) The Financial Services Authority (FSA) has confirmed bans on a hedge fund manager and two traders for engaging in market abuse. The three men received final notices from the FSA in December 2010 on the grounds they were not fit and proper persons. The three men appealed and the case was referred to the Upper Tribunal. On 28 September 2012 the Upper Tribunal directed the FSA to ban Swiss-based fund manager Stefan Chaligné and traders Patrick Sejean and Cheickh Diallo from performing any major role in regulated financial services.
Illarramendi still going to jail, despite sentencing delay (StamfordAdvocate) Former Stamford hedge fund manager Francisco Illarramendi won't face sentencing Friday but he will be going to jail. Illarramendi, who pleaded guilty on March 7, 2011, to wire, securities and investment advisor fraud in federal court, was scheduled to be sentenced on Friday. But his new attorney, hired in November of 2012, filed a motion to delay sentencing so he can go over the mountains of documents from the court proceedings.
Warren Buffett now winning $1m bet against Wall Street (MoneyControl) For the first time in the five-year history of his "Million-Dollar Bet" against the "experts" of Wall Street, Warren Buffett is now in the lead. Back in 2008, the Berkshire Hathaway chairman made a 10-year wager with Protege partner Ted Seides. Buffett put his money on a low-cost S&P stock index fund from Vanguard. Seides backed five funds of hedge funds. ...The strategy with the best return at the end of 2017, including the costs associated with the funds, will be the winner, with a guaranteed $1 million going to either Buffett's designated charity (Girls Inc of Omaha) or Seides' (Absolute Returns for Kids.)
Bill Ackman Fires Back at Icahn: 'He Does Not Keep His Word' (StreetInsider) In response to comments made today by Carl Icahn on Bloomberg Television, William A. Ackman, CEO of Pershing Square Capital Management, L.P. (“Pershing Square”) today issued the following statement. "On March 1, 2003, on behalf of my former fund, Gotham Partners, I entered into a contract with Carl Icahn, signed by him, to sell him a 15% stake in Hallwood Realty Partners. He paid my investors $80 per share and agreed to what he called 'schmuck insurance.' The agreement provided that he would pay my investors an earnout equal to 50% of his profit on Hallwood after he received a 10% annual return if he "sold or otherwise transferred" his shares for value within three years. Fewer than 13 months later on April 14, 2004, HRPT Property Trust acquired Hallwood. As a result, Carl and the other Hallwood shareholders received $136.16 per share in cash for their shares.
It's Official: Women Are Better With Money (Cosmopolitan) Women are awesome: We can rock the boardroom and the bedroom—and still have time to watch The Bachelor on Monday nights. Our ability to multi-task and assess risk is exactly the reason why female-managed hedge funds are earning more than funds run by men. Just how much more? Funds owned or managed by women earned—on average—8.95 percent through September 2012, compared with 2.69 percent average for all hedge funds, according to a study by consulting firm Rothstein Kass. Pretty impressive, huh?
Mortgage Assets Still Good Buy: Hedge Fund Manager (CNBC) Deepak Narula, who runs a group of real estate hedge funds, told CNBC Thursday that mortgage-related assets provide the best value right now. "The mortgage hedge fund group has posted very good performance," Narula, who runs New York based Metacapital Management, said on Squawk on the Street. On average, he said, this type of fund was up over 20% last year—"and it's not the first year." One of Narula's funds, the Metacapital Mortgage Opportunities Fund, which invests primarily in residential and commercial mortgages, was up 41.25% last year, with $1.46 billion in assets as of Jan. 1.
Ferro Corp. targeted by hedge funds; groups ask to place members on board of directors (Cleveland) Calling Ferro Corporation (NYSE:FOE)'s management "ill-equipped" to lead the company, a group of hedge funds is asking shareholders to appoint new members to the Mayfield Heights company's board of directors. "Management's articulated strategy and its lackluster execution on that strategy have consistently failed to deliver results," hedge funds FrontFour Capital Group and Quinpario Partners said in a letter to Ferro's shareholders. "Ferro's portfolio of assets is haphazard and illogically structured, the company's operating margins trail its specialty chemical peers."
'Raw deal' for Ireland on bank debt (IrishTimes) Ireland got a 'raw deal' in the euro crisis, global investor George Soros has said, drawing comparisons with Iceland. Speaking on RTÉ Radio One, Mr Soros said Iceland had fared better with its banking troubles. "If you compare the fate of Ireland with the fate of Iceland, Iceland is actually flourishing, although it had a bigger banking crisis than ireland in relation to its population, because it simply did not accept the liabilities of the banks," he said. "But Ireland was not so lucky." He said the "minimum" of demands on Irish debt would probably be met.
Roubini: Financial Tensions Could Lead To Protectionism (HereIsTheCity) Roubini said that 'problems are global, but policies are national" and that "coordinating among different countries is going to become increasingly difficult. Political tensions, economic and financial tensions, like currency wars, can lead eventually to protectionism'. ...It was never G-7. We pretend it's G-10. It was always G-1. The leader, Germany, was to provide the global public goods, security, free trade. Now this power is declining in terms of relative terms of the United States.
Pennsylvania Employees shifts Arden to custom strategy (PIOnline) Pennsylvania State Employees' Retirement System, Harrisburg, hired hedge funds-of-funds manager Arden Asset Management to run $150 million in a custom, event-driven equity investment, confirmed spokeswoman Pamela Hile. The hire, part of the $25 billion pension fund's new diversifying assets portfolio, is funded by about $100 million held by Arden in a legacy absolute-return portfolio and $50 million in cash. The pension fund originally hired Arden in July 2006 to run $650 million in low-volatility, non-directional hedge funds as part of its now-defunct portable-alpha program.
Swiss beat: As Cohen parties in Davos, legal eagles circle at home (NYPost) Hedge-fund titan Steve Cohen took a break from battling investor redemptions to hob-knob with other heavyweights at the World Economic Forum in Davos Switzerland. But Cohen, who runs $14 billion Stamford, Conn., hedge-fund giant SAC Capital, could be facing more trouble when he gets home. At least one class-action law firm is trying to rustle up investors to sue SAC for its ties to an alleged insider-trading scheme that led to the arrest of a former portfolio manager. Wilmington, Del.-based Chimicles & Tikellis posted a notice on its website saying it is seeking SAC investors and limited partners and is “actively investigating a proposed investor lawsuit against SAC Capital.”
Woman-owned New Sky Capital Hires 2 (Finalternatives) New Sky Capital—a woman-owned, inflation-focused investment and advisory firm—has made two senior hires. Stephanie Payne has joined the firm as director of marketing and sales and Sean Cort as chief operating officer/chief compliance officer. Prior to joining New Sky, Payne was director of investor relations at Suranya Capital Partners, an emerging global macro hedge fund. Before that, she spent five years at Credit Suisse where she marketed both traditional and alternative strategies to private and institutional investors. Payne began her career at JPMorgan Chase.