Hedge Fund News: Eddie Lampert, Phil Falcone, The Blackstone Group L.P. (BX)

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Editor’s Note: Related tickers: The Blackstone Group L.P. (NYSE:BX), Sears Holdings Corporation (NASDAQ:SHLD), Morgan Stanley (NYSE:MS), Fortress Investment Group LLC (NYSE:FIG)

ESL INVESTMENTSPaul Krugman Tells Hedge Fund Manager Eddie Lampert How A Business Is Supposed To Work (BusinessInsider)
Rather than having his various divisions work together for the mutual benefit of the company, Sears Holdings Corporation (NASDAQ:SHLD) CEO Eddie Lampert turned the company into a series of warring fiefdoms fighting for money and attention, inspired in part by his fondness for libertarian icon Ayn Rand. In a blog post, Paul Krugman points out the major issue with the strategy: “If the different divisions of Sears Holdings Corporation (NASDAQ:SHLD) have no common interests, if the best model is competition red in tooth and claw, why should Sears Holdings Corporation (NASDAQ:SHLD) exist at all? Why not just break it up into units that have no reason not to compete?”

Falcone L’Squared option flits away (NYPost)
It’s official: Bankrupt LightSquared is up for grabs. As The Post predicted last week, hedge fund billionaire Phil Falcone — LightSquared’s founder and largest investor — missed a deadline yesterday to file a reorganization plan for the wireless venture. In court papers, Falcone has asked the bankruptcy court to give his Harbinger Capital hedge fund more time to get a plan together. He had until July 15 to exclusively hash out a deal with LightSquared’s creditors. The first of several hearings on the issue is slated for tomorrow.

Blackstone selects Nephila Capital as a sub-advisor for new mutual fund (Artemis)
Insurance-linked securities and reinsurance-linked investment manager Nephila Capital, the largest asset manager in the space with just over $7.89 billion of insurance-linked assets under management at the firm, has been selected as one of the sub-advisors for a new mutual multi-manager fund offering from The Blackstone Group L.P. (NYSE:BX) Alternative Asset Management. The Blackstone Group L.P. (NYSE:BX) Alternative Asset Management, the hedge fund solutions group of The Blackstone Group L.P. (NYSE:BX), is launching its first alternative investments focused mutual fund which offers daily liquidity to investors. BAAM has $49 billion under management and has developed this new mutual fund offering by partnering with some of the best managers in the alternative asset class space.

Kazarian Emerges After 20 Years With Bid for 10% of Greek Debt (Bloomberg)
Millionaire investor Paul Kazarian is ready to be noticed again. Days after his Japonica Partners & Co. announced on June 3 an offer to buy as much as 2.9 billion euros ($3.8 billion) of Greek government debt, about 10 percent of all outstanding bonds, Kazarian sat on a bike in the gym at the Grande Bretagne in Athens, a hotel favored by hedge-fund managers and overseas investors scouring Europe’s worst-performing economy for distressed assets. Kazarian, 57, wore a t-shirt plastered with the Japonica logo and slogans including “delta force” and “catalyst to create extraordinary value,” according to people who saw him. He put an inch-wide spiral bound presentation covered with the same logo on the bike next to his, placed beside the gym entrance in full view of anyone walking in.

Bayou Hedge Fund Victims Get $31 Million in Forfeited Assets (Lawfuel)
Preet Bharara, the United States Attorney for the Southern District of New York announced that today the Clerk of the Court distributed $31,788,917.44 in proceeds from forfeited assets to victims of the fraud committed at the Bayou hedge funds. The forfeited assets include approximately $2 million seized from a bank account in Singapore and $1 million seized from a bank account in the United Kingdom. This brings the total value of the forfeited assets distributed to Bayou fraud victims to over $128 million. U.S. Attorney Bharara stated: “We are dedicated to using forfeiture to compensate victims for their losses whenever possible. This return of money to Bayou fraud victims underscores the power and flexibility of forfeiture as a tool to help victims of major financial crimes.

Sunofia Capital Readies Market Neutral Hedge Fund Strategy (Finalternatives)
Asset management firm Sunofia Capital Management is gearing up to launch a market neutral hedge fund strategy. The strategy, which will be managed by Moustapha Awada, will initially invest in European and Japanese liquid equities and will subsequently add liquid North American and global stocks. Awada has over 17 years of trading, portfolio and risk management experience. Previously, he was a managing director and global head of the multi-asset systematic trading group at Dresdner Bank.

Asia – China big bears attracting more hedge fund shortsellers (Opalesque)
Among hedge funds, Chinese growth outlook and its ramifications has been a consistent theme. From prescient investors like Jim Chanos to newbies like Patrick Wolff of Grandmaster Capital, a doom in China has been predicted over and over again. The best bets against Chinese equities would be those that took shape when most of the market players were in denial of the dark times that laid ahead and valuations remained high. When it comes to China, the interesting thing is that while every hedge fund manager will say that China is on the road to hit rock-bottom, there are very few who have established direct shorts in the country or very few who share their portfolio exposure.

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