Hedge Fund News: David Einhorn, Carl Icahn, Citigroup

GREENLIGHT CAPITALGreenlight’s Einhorn questions Fed “spending spree” (Reuters)
Hedge fund manager David Einhorn raised concerns about the U.S. central bank’s latest round of stimulus, saying Federal Reserve Chairman Ben Bernanke “announced desperate measures in non-desperate times.” “What once looked like a purchasing spree of unimaginable proportions is now just the monthly budget,” Einhorn said in a quarterly letter to investors dated Tuesday. He runs the $7.7 billion Greenlight Capital hedge fund firm and is one of the industry’s best-known managers.

Navistar to offer 10 million shares (SunTimes)
Navistar International Corp (NYSE:NAV) is making a public offering of about 10 million shares of its stock. The heavy truck and engine company said Wednesday it is giving the underwriters a 30-day option to buy up to 1.5 million shares. Earlier this month Lisle-based Navistar added a colleague of activist investor Carl Icahn and a former protege of his to its board in order to head off a proxy war. Vincent Intrieri works for Icahn Capital LP, while Mark Rachesky runs MHR Fund Management LLC. Icahn and MHR both hold nearly 15 percent stakes in the company. And last week Navistar named John Pope, chairman of PFI Group LLC, to its board to replace the retiring David Harrison. The board’s total remains at 10 members.

Swedish princess to marry hedge fund partner (TheStandard)
Sweden’s Princess Madeleine, the youngest child of King Carl XVI Gustaf and Queen Silvia, is engaged to marry US-British businessman Chris O’Neill, the palace announced. “We are both extremely happy and delighted. It is a very special day for us,” the 30-year-old princess said on the palace website, AFP reports. A wedding date has not been set, but it will take place sometime next summer, she said. The couple met in New York, where the princess has been living since April 2010 after a broken engagement to a Stockholm lawyer alleged by media to have cheated on her. She has been working there with the World Childhood Foundation, a charity for marginalized children set up in 1999 by her mother.

Hedge Fund Boxers Tame Animal Instincts in H.K. Fight Night (BusinessWeek)
Like son, like father. Steve Taw, the oldest competitor at age 53 in the history of Hong Kong’s sixth annual Hedge Fund Fight Nite, is competing four years after his son’s victory in the same charity event. “I’m the only one ever following in his son’s footsteps,” said the white-haired Taw, known in the ring as “The Wizard of Wanchai” after the commercial area of bars and clubs made popular in “The World of Suzie Wong,” the 1960 William Holden movie. “Hopefully he’ll be there to carry me home after the party — I’ve done it for him enough times.” His son Thomas, 27, who sports the same square jawline and broad wry smile, works in electronic trading at Macquarie Group Ltd. He first competed amid the depths of the financial crisis in 2008. His father, a director at South Ocean Management Ltd., will fight at tonight’s event at the Indian Recreation Club in Happy Valley as Asian hedge funds seek to stage a comeback.

Cantor Fitzgerald Investment Advisors to manage Coast’s fund of hedge funds business (HedgeWeek)
CFIA is currently performing investment management services pursuant to a sub-advisory arrangement with Coast Asset Management. Upon completion of the process of transitioning client service and portfolio management responsibilities and customary closing conditions, including receipt of all necessary consents and approvals, CFIA will become investment advisor to the Coast Diversified Funds and other Coast multi-manager fund of hedge fund products.

Lyxor research finds reduced tail risk and a bumpy landing lie ahead for financial markets (Opalesque)
A research flash report from Lyxor Cross Asset Research Study for the fourth quarter of 2012, entitled ‘Central Banks Buy More Time’ finds that hedge fund managers will benefit from stock selection. The firm writes: “We believe the ECB’s “whatever it takes” promise substantially reduced tail risks. Risk premiums that have remained abnormally high since the outset of the financial crisis, should diminish over time.” However, the firm warns that the road to normalization will probably be long and bumpy. “While policy uncertainties persist in the Eurozone, they are mounting in the U.S. which is facing the so-called “fiscal cliff”. But the aggressive monetary policies across the world mean that the trough in the economic cycle could occur earlier than we previously had in mind”.

Rajat Gupta says sorry, his fall is called tragedy (HindustanTimes)
Disgraced Wall Street titan and philanthropist Rajat Gupta was sentenced to two years in prison on Wednesday, a much lighter sentence than US prosecutors had demanded, by a judge who called his insider trading crimes “disgusting” and “a terrible breach of trust.” Gupta was also ordered to pay a $5 million fine. He was convicted in Manhattan federal court last June for leaking Goldman Sachs Group, Inc.(NYSE:GS) boardroom secrets to Raj Rajaratnam, the hedge fund manager at the center of a US government crackdown on insider trading over the past four years. Some legal experts said Wednesday’s sentence came as a surprise, while others said the judge struck a fine balance. US District Judge Jed Rakoff told a somber courtroom audience, including Gupta’s wife and four adult daughters, that the illegal sharing of corporate secrets at the height of the 2008 financial crisis “was the functional equivalent of stabbing Goldman in the back.”

Citi Named Best Prime Broker for Consulting Services and Best Hedge Fund Administrator by HFMWeek (BusinessWire)
Citi received two coveted accolades at the 2012 HFMWeek Hedge Fund Services Awards. Citi Prime Finance’s US Business Advisory unit was named Best Prime Broker – Consulting Services and Citi’s Hedge Fund Services unit was named Best Single Manager Hedge Fund Administrator. “Administration is just one of our comprehensive middle and back office offerings, and we’re pleased that our team has been rewarded for its hard work.” “These awards are a testament to the differentiated offerings we have across our advisory and consulting services,” said Alan Pace, Global Head of Sales and Client Experience for Citi Prime Finance. “Our highly talented team works closely with our clients at every stage of their development.” Citi Prime Finance provides capital raising, financing, comprehensive custody and consulting services to hedge funds across asset classes and geographies.

Hedge Fund Havens Weigh Taxes as Caribbean’s Debt Rivals Greece (BusinessWeek)
From the Cayman Islands to the Bahamas, hedge fund havens are considering a surprising remedy for widening deficits — higher taxes. The Bahamas is planning a town hall to debate a tax overhaul that may include the nation’s first income and sales tax. In the Cayman Islands, which has the highest number of hedge funds in the Caribbean, Premier McKeeva Bush vowed to increase registration fees for the industry after foreign workers balked at a tax on their earnings. Antigua & Barbuda is targeting self-employed workers for tax evasion, with the Finance Ministry calling it “high time” to go after cheats. Hedge funds and other financial companies such as Bain Capital LLC, co-founded by U.S. presidential candidate Mitt Romney, have invested in the region to help themselves and their clients lower their taxes. Yet widening deficits and debt burdens that rival Greece are causing some Caribbean governments to reconsider the strategy they used to lure investors in the first place.

Tennebaums’ $10 Million Aids Smithsonian Sea Plan: Scene (BusinessWeek)
Hedge-fund manager Michael Tennenbaum showed a photograph of his encounter with an eagle ray with a 15-foor tail while discussing the $10 million gift he and his wife, Suzanne, have made to the Smithsonian Institution. The donation, which the institute is announcing today, will launch the Smithsonian’s Tennenbaum Marine Observatories initiative. The project aims to create the first global database for scientists studying the ocean’s coastal ecosystems and their impact on the planet’s health.

Millions in Dueling Donations Flow From Hedge-Fund Firm (TheLedger)
Renaissance Technologies, a specialized hedge fund company based in East Seatauket, N.Y., is home to two of the biggest political donors in the 2012 elections — and they are on opposite sides. James H. Simons, a theoretical mathematician who founded the $15 billion firm, has given at least $7.5 million to a variety of groups backing President Barack Obama and other Democrats. Renaissance co-chief executive Robert L. Mercer, meanwhile, has given more than $3.5 million to super PACs supporting Republicans and also has helped raise money for presidential nominee Mitt Romney.

Hedge Fund Seeks $78M From Citigroup Over CDO Losses (Law360)
An Australian hedge fund that lost big after it bet on collateralized debt obligations Citigroup Global Markets Inc. built out of high-risk mortgages filed notice Wednesday that it planned to sue the giant investment bank to recoup nearly $78 million. Basis Yield Alpha Fund, an investment vehicle managed by Australia-based Basis Capital Funds Management Ltd., alleges in a notice filed in New York state court that for two years prior to the housing bubble’s burst, Citigroup fraudulently marketed as a solid investment several series of CDOs…

BlueCrest’s Platt Says Draghi Bond Purchases to Buy Time (BusinessWeek)
Michael Platt, founder of hedge fund BlueCrest Capital Management LLP, said European Central Bank President Mario Draghi’s plan to buy government bonds fails to address the underlying problems in the region. Draghi’s proposal for so-called Outright Monetary Transactions will buy time for the region, though it won’t strengthen the region’s economy, Platt said today in an interview on Bloomberg Television’s “Market Makers” with Stephanie Ruhle. “We need to not be confused between liquidity fixes and insolvency problems,” Platt said. “Europe has no credible plan for growth.”

Lehman Brokerage Payout Awaits Approval of Affiliate Pact (BusinessWeek)
Defunct brokerage Lehman Brothers Inc., which hasn’t paid hedge funds after four years in liquidation, has brought institutional customer claims “to the brink of a 100 distribution” that must await court approval of settlements struck with affiliates, the trustee said. Trustee James Giddens, who is facing payment demands by New York hedge fund Elliott Management Corp., controls $13.5 billion in cash and $12.5 billion in securities, he said in a report filed today in bankruptcy court in Manhattan. The brokerage has spent $812.5 million liquidating since its parent filed the biggest bankruptcy in U.S. history in September 2008, including fees to lawyers and consultants of more than $704 million.

Soros winner (NYPost)
Here’s a big opportunity to live like a billionaire heiress. Andrea Soros Colombel and her husband, Eric Colombel, have put their Greenwich Village townhouse at 10 W. 10th St. on the market for $29.5 million. The fully renovated, seven-bedroom home is a four-story Greek revival-style townhouse that dates back to 1844. It comes with an elevator, three wood-burning fireplaces and a state-of-the-art sound system. Andrea, daughter of George Soros, also has a sprawling house on 60 acres in Rhinebeck where Hillary and Chelsea Clinton have stayed. Her real estate holdings also include a three-story residential building on West Fourth Street that partially collapsed last January. There were no reports of injuries.

Don’t see Sensex going beyond 21,000: Marc Faber (EconomicTimes)
Faber does not see the Sensex going beyond 21,000 anytime soon and even predicts an easing in the markets from here. Asked about the recent slew of economic reforms announced by the government, Faber said that there is a huge risk of execution. Stating that global markets have peaked out, Faber said that they may drift lower in 2013 and slide by 20%. Even though Faber did not rule out the possibility of a year-end rally, he doesn’t expect the markets to touch new highs. “The markets have peaked out recently and are currently in a downtrend,” Faber said.

Sciens Alternative Investments chooses CIO (PIOnline)
Farhang Mehregani was named chief investment officer of Sciens Alternative Investments, confirmed spokeswoman Miranda Barham. It is a new position. Mr. Mehregani will report to Stavros Siokos, CEO of the hedge fund-of-funds division of Sciens Capital Management Group. Mr. Mehregani was head of the Central and Eastern Europe, Middle East and Africa equities business at Citigroup from 2008 to 2011, according to the news release.

Baupost Group co-portfolio manager to leave (PIOnline)
Herb Wagner, the Baupost Group executive appointed as Seth Klarman‘s co-portfolio manager two years ago, will leave the firm at the end of 2012, according to a letter sent to the hedge fund’s investors. Mr. Wagner plans to start his own family office, according to the letter, portions of which were obtained by Bloomberg News. Mr. Wagner had been at Baupost for more than 13 years. Mr. Klarman, who started the hedge fund firm in 1983, doesn’t plan to replace Mr. Wagner in the near future, according to the letter. Jim Mooney, co-head of Baupost’s public investments along with Mr. Wagner, will become sole head on Jan. 1, Mr. Klarman wrote.

Boeing’s pension investments soar above assumed rate (PIOnline)

The Boeing Company (NYSE:BA)’s pension plan investments have returned about 10% so far in 2012, exceeding its 7.75% assumed rate of return on pension assets, said Gregory D. Smith, executive vice president and CFO, in a conference call Wednesday on the company’s third-quarter financial results. Mr. Smith didn’t specify the ending date of the period for this year. “Our liability-driven investing continues to pay off,” Mr. Smith said in attributing the investment performance. ”We have been proactive in changing our investment strategy some time ago, and fortunately we did, (moving) to really match our investment strategy with our liability.”

Sturgeon Capital launches first Central Asia-focused UCITS hedge fund (Opalesque)

Sturgeon Capital is an alternative investment manager focused on Central Asian markets. Founded in 2006 with the launch of the flagship Sturgeon Central Asia Fund, the Firm has been managing public equities, fixed income and private equity investments in Central Asia for 6 years. Sturgeon Capital now also manages Tau Capital, a London AIM-listed closed end fund investing in public and private equities in Kazakhstan and the surrounding markets. Although a long-bias strategy, Sturgeon’s experience in investing in regional equities and understanding of the specific macro influences affecting regional markets will be leveraged to maximise returns.

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