Gazing into 'dark pools,' the tool that enables anonymous insider trading (NBCNews) While federal authorities aggressively pursue individual insider stock trading cases – including an ongoing investigation of Wall Street titan Steven A. Cohen’s SAC Capital hedge fund – financial regulators remain years away from being able to peer into “dark pools,” the high-tech mechanism that insiders use to conduct secret, advantageous transactions. Federal prosecutors have been circling Cohen, 56, the founder and owner of one of the largest and most profitable U.S. hedge funds and one of the richest men in America, since at least late last year, when an indictment was unsealed against former SAC employee Mathew Martoma. He was the fifth SAC employee accused of insider trading while at the firm; four others have pleaded guilty.
Simple Alternatives seeking 6th manager for hedge fund of funds (PIOnline) Simple Alternatives is searching for a long/short equity manager with a fundamental approach as the sixth hedge fund manager to manage $10 million to $15 million for its S1 Fund. Simple Alternatives manages about $70 million in a hedge fund-of-funds strategy in a mutual fund structure for small institutional and retail clients, said Josh Kernan, founding partner. “We like small- and midcap managers that manage between $100 million and $500 million,” Mr. Kernan said. “We are convinced that smaller hedge fund managers have better performance potential. We also aren't afraid to be a 'day one' investor if it's in a fund managed by a portfolio manager with a good track record elsewhere.”
Paulson, Rubin Divided on Economic Outlook (TheEpochTimes) Famous hedge fund manager John Paulson and former Treasury Secretary Robert Rubin could not agree on a uniform outlook for the U.S. economy. Paulson and Rubin discussed their views at an event hosted by 92Y in New York City, Jan. 22. “I think the U.S. economy is doing better,” said Paulson, who is particularly optimistic about the housing market. “It is well off the bottom and is showing a relatively strong recovery,” he said. Paulson is the president and founder of Paulson & Co., a New York based hedge fund. Paulson is most famous for making $3.7 billion betting against the U.S. subprime mortgage market in 2008.
Herakles Unveils Trend-Following Hedge Fund (Finalternatives) Herakles Capital Management has launched a new trend-following equity hedge fund. The Herakles Trend Fund I debuted on Jan. 4, the firm said. The fund's proprietary model will focus initially on three indices—the Standard & Poor's 100, German DAX and German MDAX—putting its money in large- and mid-cap stocks that offer liquidity. The model returned 20.74% in simulated trading last year.
Fund Manager Doug Whitman, Prosecutors Spar Over Sentencing (WSJ) A war of words has broken out between federal prosecutors and lawyers for hedge-fund manager Doug Whitman as he prepares for sentencing following his insider-trading conviction last year. In a series of court filings, lawyers for Mr. Whitman, the founder of Whitman Capital say their client should be sentenced to no more than six months in prison and he “has been punished enough.” Prosecutors say he should receive a sentence of up to five years and three months in prison. . .
Why Do Rich People Love Hedge Funds? (NYMag) Carl Richards has a post over at the New York Times' Bucks blog in which he puzzles over the enduring appeal of hedge funds, despite the fact that they have historically underperformed the S&P 500. Why, he asks, are people paying exorbitant fees to hedge-fund managers who don't even make money for them? Richards takes a stab at the answer in a few ways. First, he implies that there's an element of groupthink in Hedgistan, with investors all chasing increasingly complex hedge-fund strategies because "the more complicated and secretive and exclusive it is, the better." He also gets at the false correlation between exclusivity and superior returns: "People want to believe there’s a better way of investing that’s only available to a select few."
Are the Big Banks Too Opaque to Invest In? (Dailyfinance) Opaque or not opaque, that is the question. At least that's how JPMorgan Chase CEO Jamie Dimon and hotshot hedge-fund investor Paul Singer of Elliot Capital Management see it at the World Economic Forum, currently taking place in Davos, Switzerland. Singer called the big banks' financial disclosures "too big, too leveraged, [and] too opaque," to which an energetic Dimon retorted: "Our 10K (S.E.C. filing) is 400 pages long. What would you like to know?"