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Hedge Fund News: Kodak, Louis Bacon, George Soros

Kodak patent auction to be probed (IndiaTimes)
A New York hedge fund that owns bonds of bankrupt Eastman Kodak has asked the US Trustee to probe the company’s patent auction because it was concerned about the “unusually secretive” bidding process, Bloomberg reported. Kodak, which filed for bankruptcy in January, began selling 1,100 digital patents in early August and extended the auction last week, citing ongoing discussions with bidders. The company would use the proceeds to pay back investors after borrowing nearly $700 million in bankruptcy financing.

setting up a hedge fund

Calif. fund founder convicted of insider trading (WSJ)
A San Francisco hedge fund founder was convicted of insider trading charges Monday by a jury that rejected his claims that he was careful never to trade based on secrets he received about public companies. Doug Whitman, whose hedge fund oversaw roughly $100 million, was convicted of all charges against him. Only days earlier, the Manhattan federal jury heard him testify that he took pains to trade only on legal information gleaned from employees at public companies and from analysts.

Hedge fund exit requests rise in August (Reuters)
Client demands to pull money out of hedge funds rose to their second-highest level this year in August, industry data showed, in a sign some investors may be reassessing these freewheeling portfolios after their performance failed to shine. Hedge fund administrator SS&C GlobeOp’s forward redemption indicator, a monthly snapshot of clients giving notice to withdraw their cash as a percentage of its assets under administration, measured 3.34 percent in August.

Hedge fund wants Spokane’s Clearwater Paper sold in parts (SeattleTimes)
Hedge fund titan Steven A. Cohen wants the board of Clearwater Paper to separate the Spokane-based company’s consumer products from its pulp and paper operations so either or both can be sold off, according to a regulatory filing Friday. Cohen’s SAC Capital Advisors met with Clearwater’s directors Thursday to urge they split the company and “pursue the divestiture of one or both businesses to one or more strategic and/or financial buyers,” the SAC filing says.

How to Start a New Hedge Fund (HedgeCo)
Starting a hedge fund is much different from launching other kinds of companies. Most significantly, there is almost no chance that you will be able to start this business out of a garage. No — to get a hedge fund up and running, you need buckets and buckets of cash. “If you really wanna succeed, and you wanna manage a higher level of assets, out of the gate it takes you eating your own cooking,” said Mitch Ackles, President of the Hedge Fund Association and CEO of Hedge Fund PR. “What that means is you have to have some of your money invested at the outset. We’re not talking $500,000 — it has to be several million.”

Scranton to court hedge funds (TheTimes-Tribune)
Shunned by conventional banks and the municipal bond market, Scranton City Council is looking toward lenders of last resort – hedge funds – for $18.5 million needed to close a budget gap. With a loan default, dubious recovery plan and festering pension crisis staining its credit history, the city is radioactive to most conventional lenders. With few available options, city council plans to court hedge funds. For municipalities, borrowing from a hedge fund is so rare that Jeff Esser, executive director of the Chicago-based Government Financial Officers Association, said he’s not aware of any case of it.

Why hedge funds may not be right for you (MarketWatch)
Ever since the financial crisis broke in 2008, investors have been looking for a magic bullet. They want returns without risk, investment without turmoil, profits without fear. One of the options is mutual funds that look or act like hedge funds. They often have labels such as “absolute return,” “total return” or “market neutral.” In recent years, a whole wave of these has hit the market. Lipper lists about 440 funds in hedge fund-type categories. Only one in four has been around for five years.

UBS Unveils Quant. Hedge Fund Service (Finalternatives)
UBS has launched a new prime-brokerage-and-more service for quantitative hedge funds as it seeks to grow its business. The new unit is called UBS Quant HQ. It combines prime brokerage and capital-raising services with consulting expertise on technology, critical to quantitative strategies. Quant HQ clients can choose from four tiers of execution services, from low latency to ultra-low latency, Bloomberg News reports. Whichever they choose, orders will be sent within 60 microseconds, including time for risk filters and mandatory checks.

Morningstar MSCI Composite Hedge Fund Index up 1.9% in July and 3.7% YTD, sector leaked $6.5bn in June (Opalesque)
Morningstar, Inc., a leading provider of independent investment research, today reported preliminary hedge fund performance for July as well as estimated asset flows through June 2012. The Morningstar MSCI Composite Hedge Fund Index, an asset-weighted composite of nearly 1,000 hedge funds in the Morningstar Hedge Fund database, was up 1.9% in July and 3.7% for the year to date return through July 2012. “Most hedge funds successfully weathered through a volatile July, beating the broad stock market indexes.” said Terry Tian, alternative investments analyst with Morningstar. “Managed futures and currency strategies delivered particularly strong performance.”

Hedge Fund Taking Control Of Young Bcstg. (TVNewsCheck)
A hedge fund that has been buying up stakes of post-Chapter 11 Young Broadcasting and its 11 TV stations in 11 markets has filed with the FCC to become the majority owner. Standard General is a New York-based hedge fund managed by Soohyung Kim and Nicholas Singer. According to a 2011 article in the online Hedge Fund Alert trade publication, the two are money management veterans who founded Standard General in 2007 with $100 million in invested funds and were growing that last year to $1 billion.

Silk Road launches hedge fund to focus on Myanmar, Mongolia and Mozambique (Opalesque)
Investment management firm Silk Road Management announced the launch of its newest hedge fund, the Silk Road M3 Fund that will focus on the so-called M3 resource-rich countries of Myanmar, Mongolia, and Mozambique. Silk Road M3 Fund is an open-ended fund seeking to generate positive returns by gaining early exposure to the world’s fastest growing economies. According to the firm, the fund would primarily invest in equities of internationally listed companies with assets and operations in these three countries as well as high yield fixed income and local currency instruments.

Singapore fund is $1.5 bln bidder for Paulson hotel group (Reuters)
The Government of Singapore Investment Corp has bid $1.5 billion for a group of bankrupt hotels owned by hedge fund Paulson & Co, including the Arizona Biltmore Resort & Spa in Phoenix and La Quinta Resort & Club in La Quinta, California. The MSR Resort hotel group, which also includes Grand Wailea Resorts Hotel & Spa in Hawaii and the Claremont Resort & Spa in Berkeley, California, said it had chosen GIC as the ‘stalking horse’ or low bidder for the hotels, after looking for an initial bidder since May.

Secondary Market Hedge Fund Trading Interests to Grow 125% to $146 Billion (HedgeCo)
A new survey by hedge fund tech provider Simplify LLC., reports that the secondary market, where investors historically went to trade their illiquid holdings in hedge funds, private equity and other alternative investments, is increasingly a source of liquidity in normal times and not just an escape hatch for investors in duress. Simplify surveyed more than 489 institutional investors managing gross assets of $417 billion.

Cargill fund boosts agri firm expansion (Malaya)
Powered by a $34.45-million (P1.3-billion) capital infusion only seven months ago from a Singapore-based hedge fund owned by U.S. agribusiness and trading giant Cargill Inc., the expansion and acquisition binge of local agricultural food products conglomerate AgriNurture Inc. (ANI) has accelerated into a buildup of farm hectarage that will see the company splurging from P560 million to P980 million in Mindanao to buy up some 1,400 hectares of producing banana plantations in the remaining five months of the year. This will give the firm the capability to grow its own banana supply to support robust export shipments hobbled only by what company officials described last week as a chronic lack of supply.

UK court case highlights pitfalls of legal tax avoidance for hedge fund managers (HedgeFundsReview)
A recent UK court decision is a wake-up call to UK hedge funds. Not all tax avoidance schemes are what they promise to be. However, the ruling does not spell the end of legal tax avoidance. Persistent economic woes in the US, UK and Europe have signalled a new era in how tax authorities view the loopholes which have allowed billions of pounds and dollars to slip through the tax net without violating any laws.

RMBS offer attractive opportunities as US housing market shows signs of recovery (HedgeFundsReview)
The US housing market is showing signs of recovery, reports Arbuthnot Latham. This makes RMBS an attractive asset class, it says. Hedge funds trading RMBS have posted good returns so far this year. Evidence that the US housing market has bottomed out and recovery may be in sight makes residential mortgage-backed securities (RMBS) an attractive opportunity, reports UK investment bank Arbuthnot Latham.

Moore Said To Hire Currency Specialist Hull From Brevan Howard (Bloomberg)
Moore Capital Management LLC, the hedge fund founded by Louis Moore Bacon, hired Stephen Hull from Brevan Howard Asset Management LLP, said a person with knowledge of the matter. Hull is based in London, said the person who asked not to be identified because the company is private. Brevan Howard hired Hull last year from Morgan Stanley (MS), where he was head of global foreign exchange strategy in London. He started at Moore’s European unit on Aug. 1, according to the U.K. Financial Services Authority’s register.

Ohio Pension Adds Three Hedge Funds (Finalternatives)
The Ohio Public Employees Retirement System has added $300 million in investments to its $2.18 billion hedge fund portfolio. The $73 billion public pension fund hired Gracie Asset Management, Highline Capital Partners and Third Point. Each hedge fund received $100 million, Pensions & Investments reports.

Sunny outlook for hedge funds in July (HedgeWeek)
All market segments were up in July, extending a positive trend started last month and hedge fund strategies exposed to the equity risk factor logically benefited from the market environment. But according to Edhec Risk’s Alternative Indexes, they captured less than half of its return due to rather low dynamic exposure: equity market neutral (0.35 per cent), event driven (0.59 per cent) and long/short equity (0.43 per cent).

Cheyne’s listed hedge fund builds cashpile as July purchases yield 10% (InvestmentEurope)
Cheyne Capital’s listed Real Estate Credit Investments hedge fund has increased cash holdings to take advantage of market dislocations, as it harvests some attractive profits from a similar strategy it pursued in difficult markets about a year ago. RECI’s cash reserves now stand at £15m. Europe’s real estate bond market, in which the £80m portfolio makes its purchases, has already provided good buying opportunities for the cash.

Andreas Halvorsen’s Largest Second-Quarter Buys (Nasdaq)
Andreas Halvorsen is one of the former prot�g�es of Julian Robertson at his hedge fund Tiger Management, called “Tiger Cubs.” Halvorsen left Tiger Management and, along with several colleagues, founded the long-short equity hedge fund VikingGlobal in 1999. Since then, the low-profile manager’s fund has produced an average annual return of 18.2%, and assets under management have ballooned to $16 billion. Halvorsen said in his first-quarter letter that he possibly had been too cautious during the quarter, according to Reuters. In the second quarter, he bought 21 new stocks, the largest of which are: State Street Corporation ( STT ), Eastman Chemical Company ( EMN ), Pfizer Inc. ( PFE ), Eli Lilly ( LLY ) and W.R. Grace & Co. ( GRA ).

7 Highly Liquid Semiconductors Being Bought Up By Hedge Funds (Kapitall)
Interested in the high-growth prospects of the semiconductors industry? We ran a screen to dig deeper into this sphere. We began by screening the semiconductors industry for stocks with strong liquidity, with current ratios above 3. We then screened for stocks with bullish sentiment from institutional investors, with significant net institutional purchases over the last quarter representing at least 5% of share float. This indicates that institutional investors such as hedge fund managers and mutual fund managers expect these names to outperform in the future.

George Soros holds 1.9 pc in Manchester United (IndiaTimes)
Billionaire money manager George Soros reported a nearly 2 per cent stake in Manchester United Plc on Monday, in one of the first revelations of investors in the British soccer club’s controversial initial public offering earlier this month. The veteran investor’s eponymous hedge fund, Soros Fund Management LLC, owns 7.85 per cent of Manchester United’s Class A shares, or about 1.9 per cent of the entire club, according to a filing with the US Securities and Exchange Commission.

Jim Rogers Says Silver Is A Better Investment Than Gold (SeekingAlpha)
Jim Rogers is easily one of the most famous investors of all time. His astounding track record has led him to become one of the most successful traders ever, earning deep respect throughout the financial world. Better yet, Rogers is not the least bit shy about speaking his mind, whether he is right or wrong. Some of his previous statements included the fact that anyone who doesn’t invest in commodities is a fool, that gold will surely drop 20% from its current levels, and now, Rogers has stated that silver is a better investment than gold.

Jim Rogers on the coming fiscal ‘catastrophe’ (MSN)
Renowned investor Jim Rogers is still worried. As the U.S. heads for the fiscal cliff at the end of the year, the chairman of Rogers Holdings has been outspoken about the consequences of the country’s growing national debt. From his perch in Singapore, he still doesn’t see much reason for real optimism. Rogers rose to investing prominence after starting the Quantum Fund with George Soros in the 1970s, generating an eye-popping and oft-cited return of 4,200 percent over a 10-year span that saw the S&P 500 climb less than 50 percent. Rogers “retired” as a multi-millionaire at age 37.

Duke Energy under pressure to disclose hidden ratepayer costs (SouthernStudies)
An energy watchdog group is pressuring Duke Energy to disclose what could amount to billions of dollars in costs to ratepayers that it kept under wraps until after its takeover of Progress Energy was approved. Durham-based NC WARN has been running full-page ads in newspapers across the state accusing the Charlotte, N.C.-based company of hiding plans to spend over $2 billion in improvements to its nuclear plants until the merger was finalized.

Romney Offers Lukewarm Support for Fed Audit (WSJ)
Speaking at a campaign event in New Hampshire, Mr. Romney said he was for an audit, but he added that he didn’t want to sacrifice the Fed’s independence or hand over control of the central bank to Congress in the process. The qualification puts him closer to the Fed’s own position on subjecting itself to outside scrutiny. “The Federal Reserve should be accountable and we should see what they’re doing,” Mr. Romney said when asked at an event in Goffston, N.H., whether the Fed should be audited. He said yes to the question on audits but later added, “I don’t want to have Congress run the Fed, by the way…I want to keep it independent. There are very few groups that I would not want to give the keys to, one of them is Congress.”

Hedge Funds Pose Limited Risk To Financial Stability, FSA Says (Bloomberg)
Hedge funds pose a limited risk to the stability of the financial system, according to a survey by the U.K.’s Financial Services Authority. Funds have a “strong ability to manage the liquidity of their assets and liabilities,” the FSA said in a report published on its website today. The regulator collected data on funds with a total of more than $380 billion under management.

Facebook Director Stock Sales Top $1 Billion As Lock-Up Ends (Bloomberg)
Facebook Inc. director Peter Thiel sold most of his stake in the operator of the world’s largest social-networking website, bringing his proceeds to more than $1 billion, after restrictions on insider sales ended. Thiel, one of Facebook’s earliest investors, sold about 20.1 million shares in the company on Aug. 16 and Aug. 17, raising $395.8 million, according to a filing yesterday with the U.S. Securities and Exchange Commission. Thiel, a venture capitalist and hedge-fund manager, had already generated $640.1 million in sales during the initial public offering.

Romney Builds Cash Edge Over Obama As Conventions Near (Bloomberg)
Presumptive presidential nominee Mitt Romney and his Republican allies entered August, and the final weeks before the national conventions, with more money to spend than President Barack Obama and the Democrats. Romney, the Republican National Committee and two allied super-political action committees reported a combined bank account balance of $169 million on July 31. That compared with $107 million for the president, the Democratic National Committee and the pro-Obama Priorities USA Action. The figures are based on disclosures filed yesterday with the Federal Election Commission.

Federated’s Donahue Brings Passion To Money-Fund Battle (Bloomberg)
Christopher Donahue, chief executive officer of Federated Investors Inc. (FII), is sticking up for the family business when he defends money-market funds. Donahue, whose family-controlled firm has three-fourths of its assets in the cash-like products, is the most outspoken opponent of an effort to impose new regulations on the $2.6 trillion industry. Donahue, who refers to the funds as “the eighth wonder of the world,” called one of the proposals “totally brain dead” in an interview.

Romney Super PAC taps familiar face for big July donation (Reuters)
The outside fundraising group supporting presumptive Republican presidential nominee Mitt Romney relied on a familiar ally for its largest donation in July – Houston-based home builder Bob Perry. Perry gave $2 million to the pro-Romney “super” political action committee (PAC) Restore Our Future, bringing to $8 million his total contributions to the fund this campaign season, according to Federal Election Commission documents released on Monday.

Greenlight may see $72 mln windfall with bet on insurer (Reuters)
Several big name hedge fund managers opened sizable stakes in health care insurance companies during the second quarter, and David Einhorn’s bet on Coventry Health Care Inc may already be paying huge dividends for the closely watched investor. On Monday Coventry’s shares rose 20 percent after health insurer Aetna Inc announced it would acquire its competitor for $5.6 billion in an effort to bolster its share of the U.S. government-backed Medicare and Medicaid programs.

U.S. Business Groups Oppose ‘Congo’ Rule (WSJ)
U.S. market regulators are targeting violence in central Africa and corruption in oil-rich nations, moving ahead with a vote on rules that businesses say could cost U.S.-listed companies billions of dollars annually. The Securities and Exchange Commission on Wednesday is set to approve a pair of rules, mandated by the 2010 Dodd-Frank financial-overhaul law, that would require U.S.-listed companies to disclose their oil-related payments to foreign governments and to report whether goods such as mobile phones and aircraft contain minerals from war-torn Congo.

A Source Tells The New Yorker That George Soros ‘Feels Hurt’ By Obama (BusinessInsider)
Billionaire hedge fund manager George Soros, who is known for speaking publicly about the economy and making big donations to liberal causes, has been disappointed by Obama “both politically and personally”, an unnamed Soros confidant told The New Yorker’s Jane Mayer.

A new tech ETF for dividend lovers (TheGlobeAndMail)
Many investors know that dividends have become increasingly popular in the last couple of years under the weight of diminished expectations for equity market growth. There are certain sectors of the market, like utilities, that can be relied upon for dividends. Technology has not been one of those sectors until recently. Now, however, investors can access tech dividends in the ETF space through the First Trust Nasdaq Technology Index Fund (TDIV).

Eze Castle advises funds to adopt disaster recovery plans (Opalesque)
Global hedge fund technology provider, Eze Castle, has released a series of materials advising funds to take a more proactive approach to disaster recovery and business continuity plans. The firm created the Disaster Preparedness Knowledge Center in order to help hedge funds prepare for the upcoming hurricane and winter weather seasons, after extreme weather incidents earlier this year caused some funds to be out of business for several days until power was restored. Disaster recovery plans are typically the responsibility of IT shops, as they primarily involve creating data backups and system redundancies in order to ensure that no information is lost in the event of some type of outage or disaster event.

Salient Partners launches Salient Risk Parity Index (Opalesque)
Texas-based asset management and wealth advisory firm, Salient Partners has launched a first-of-its-kind Risk Parity Index. The index is the first and only benchmark that will enable investment managers to measure the performance and effectiveness of their risk-parity strategies against an industry standard, passive index. The index is a composite, USD based, total return index that represents the performance of an equally risk-weighted allocation to global equity, interest rate, credit and commodity exposures. The Index was originally made available through the Salient Partners website in February, and is now available on the Bloomberg terminal. Portfolio weights are rebalanced monthly, with a 10% volatility target.

Elementum announces two new hires to strengthen its legal, compliance and operational structure (Opalesque)
An independent alternative investment manager that specializes in collateralized natural event reinsurance investments announces two new hires to strengthen its legal, compliance and operational infrastructure. Elementum Advisors’ Founding Principal Tony Rettino said that Bobbi Anderson would join the firm as Principal and General Counsel effectively on September 10, 2012, and will transition into the additional role of Chief Compliance Officer on January 1, 2013. Anderson is currently a Partner in the insurance group at Sidley Austin LLP in Chicago where she has been instrumental in shaping the direction of the Insurance Linked Securities asset class through the development of new risk transfer structures and her work with (re)insurance companies on catastrophe bond, collateralized reinsurance and M&A transactions.

Hedge Funds Reach Record High Of $1.2 Trillion (HedgeCo)
Hedge funds in North America are at an all-time peak and assets under management are at the historically high level of $1.2 trillion, according to the August edition of The Eurekahedge Report. Asia-based North America investing managers posted returns of 30.87% and 50.65% over five and three year periods, outperforming managers based in all other regions. Managers that charge higher fees and have a lower redemption frequency have also provided significant outperformance to their peers.

Hedge Fund Storylines Somewhat Successful at Box Office (HedgeFund)
Does the hedge fund industry translate well onto the big screen? This month, there have been mixed results from such offerings as “Cosmopolis” and “$upercapitalist.” “Cosmopolis,” the much-heralded Robert Pattinson-David Cronenberg collaboration, opened this past weekend in limited release, but with great results.

Ex-Deutsche Bank Analyst Joins NY Hedge Fund (HedgeFund)
Hedge fund firm Brigade Capital Management has hired a former Deutsche Bank employee. Bloomberg reported that Scott Hoffman, a distressed-debt analyst, has joined New York-based Brigade this month. The article also said that at least 10 credit traders have left Deutsche since 2011 when the bank “reduced pay and curb risk-taking” in response to new regulations. Hoffman left Deutsche last month.

Hedge Fund Rising Star Anthony Waskiewicz, Mercy Health (InstitutionalInvestor)
Every year, Institutional Investor’s editorial staff — based on extensive research, reporting and observation — selects about thirty up-and-coming members in the hedge fund industry and singles them out as true Rising Stars in the business. Every year the bar to inclusion on the list gets higher. This year’s roster of Stars was no exception. In the first of our series of video interviews with some of this year’s Stars, Institutional Investor Senior Writer Imogen Rose-Smith talks to Anthony Waskiewicz, CIO of Mercy Health.

Glencore Holds Firm on Price for Xstrata (NYTimes)
Ivan Glasenberg, chief executive of the commodities trading company Glencore International, on Tuesday played down speculation that the company would pay a higher price for its proposed $30 billion takeover of the mining company Xstrata. Qatar Holding, the sovereign wealth fund of Qatar, has increased its stake in Xstrata to around 12 percent since the deal was announced this year, and is demanding that Glencore increase its bid.

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