Hedge Funds of the Living Dead (NYTimes)
Jay Eisenhofer and Matthew P. Morris are partners with the shareholder rights law firm Grant & Eisenhofer. Four years after the onset of the financial crisis, tens of billions of dollars remain locked up in illiquid “zombie” hedge funds that suspended their redemptions in the darkest days of the meltdown.
Och-Ziff’s master hedge funds drop in May (Opalesque)
The four ‘most significant’ Och-Ziff master hedge funds reported an estimated decline in May but the firm’s assets remained unchanged since April, data released by institutional alternative asset manager Och-Ziff Capital Management Group on Monday showed. The biggest decline was posted by the OZ Asia Master Fund, Ltd., which suffered-2.17% losses last month (+2.85%), followed by the OZ Europe Master Fund, Ltd., which fell -1.79% (+2.96% YTD), the OZ Global Special Investments Master Fund, L.P., -0.80% (+4.68% YTD), and the OZ Master Fund, Ltd., -0.52% (+4.55% YTD).
Clinton Supports Obama at New York Fund-Raisers (NYTimes)
Days after lauding Mitt Romney for a “sterling business career” as a private investor, former President Bill Clinton said on Monday that as president, Mr. Romney “would be in my opinion calamitous for our country and the world.” And with that blunt denunciation, delivered at President Obama’s side during a fund-raiser in Manhattan at the home of a billionaire hedge-fund executive, Mr. Clinton sought to quash the chatter in the news media and from the Romney campaign that his earlier remarks amounted to an off-message endorsement of Mr. Romney’s qualifications to take Mr. Obama’s job.
Citadel accuses Jump employees of stealing secrets (Reuters)
Citadel, one of the world’s biggest hedge fund manager, has accused employees of a rival Chicago high-frequency trading firm of stealing its trading programs. It said in a court petition that at least one its former employees stole trading algorithms and brought them to Jump Trading, a firm that employs 325 people in Chicago, London and Singapore.
Fund Manager Shareholder Letters: Follow the Smart Money (Investingdaily)
In the realm of the shareholder letter, few are pored over as carefully as Warren Buffett’s annual letter to the shareholders of Berkshire Hathaway (NYSE: BRK-A) (NYSE: BRK-B). Although the shareholder letter is more often practiced as a perfunctory duty than an art, there are other hedge fund managers and mutual fund managers whose efforts are almost at parity with Buffett’s. As such, the following contains a roundup of the more noteworthy missives emanating from the so-called “smart money.” Before proceeding, however, it should be noted that while most mutual funds make such communications public, hedge funds typically limit their audience to the privileged few who pay them the requisite two and 20. So a couple of the forthcoming excerpts are based on shareholder letters that were leaked via third-party, document-sharing websites such as Scribd. Though these shareholder letters appear to be legitimate and the financial media often treats them as if that were the case, their authenticity cannot be verified.
Credit Suisse Liquid Alternative Beta (“LAB”) Index Down 2.32% in May (Marketwatch)
The Credit Suisse LAB Index was down 2.32% in May according to Dr. Jordan Drachman, Head of Research for Alternative Beta Strategies at Credit Suisse. Dr. Drachman noted, “The Credit Suisse Liquid Alternative Beta Index (“CSLAB”), which aims to reflect the performance of the overall hedge fund industry, finished down 2.32% in May as four of the five sectors posted negative performance. Managed Futures, which is typically viewed as an effective tail risk hedging solution during sharp market downturns, was the single positive performer, up 2.50% in May, and had the highest performance year-to-date in 2012, up 0.46%.”
Some claims vs Madoff-linked Santander fund tossed (Reuters)
Banco Santander SA (SAN.MC) on Monday won the dismissal of U.S. federal securities law claims in a lawsuit by investors in a $3.1 billion hedge fund arm that funneled money to the now-imprisoned swindler Bernard Madoff. U.S. District Judge Shira Scheindlin said investors in a feeder fund advised by the Spanish bank’s Optimal Investment Management Services SA unit could not rely on U.S. securities laws to recover losses on investments made outside the United States.
Oregon pension funds commits $250m to second Asia hedge fund (Opalesque)
The State of Oregon’s investment council has announced its commitment to allocate a total of $250m to a second Asian hedge fund managed by U.S. private equity firm KKR, reports indicated. According to AsianInvestor.net, the council will allocate $200m from the $58.4bn Oregon Public Employees Retirement Fund or Operf, and another $50m from the Oregon Common School Fund.
Selerity hires hedge fund veteran as product strategy VP (Automatedtrader)
Real-time event data group Selerity said it had appointed Thomas Chyla, a former executive at asset management group AllianceBernstein, as its vice president of product strategy. Ryan Terpstra, founder and chief executive of Selerity, said Chyla brought extensive knowledge of event-driven trading and capital markets research.
OSC fines Otto Spork $1-million (Theglobeandmail)
The bizarre tale of the Canadian hedge fund manager who falsely inflated returns from investments in companies poised to sell Icelandic glacier water is nearing its sorry end. Otto Spork, a dentist-turned-fund manager who claimed to be earning huge returns in the midst of the 2008 financial crisis, was ordered Monday by the Ontario Securities Commission to pay a $1-million penalty and disgorge $6.4-million in fees he charged investors while perpetrating a fraud in his now-defunct fund.
Angelo, Gordon Fund Gains $100M (Hedgefund)
Alternative investment firm Angelo, Gordon & Co. has raised $100 million in one day in its new hedge fund. According to a filing with the Securities and Exchange Commission on Friday, the diversified income fund opened to investment on the same day, and raked in its initial capital from one investor.
One Crazy Summer: Soros Gives Germany Three Months to Fix Europe (WSJ)
Germany, you’re on the clock. George Soros, the legendary hedge-fund investor, gave the nation three months to avert a breakup of the euro zone. In a speech Saturday at an economic conference in Italy, Mr. Soros implored Germany’s government and Europe’s central bank to undertake “extraordinary policy measures” before the fall. That’s when he said the economic crisis in Greece is likely to peak, and when Germany’s own economy slows.
State, N.O. firefighters pension funds lack oversight, say auditors (Wwltv)
With $100 million potentially at risk in a shaky hedge fund investment in the Cayman Islands, New Orleans and state firefighters’ pension funds have been taken to task by the state Legislative Auditor for inadequate oversight. In a report released today, auditors found that three large pension funds did not document all the risks in investing in an arbitrage fund run by prominent and now-controversial hedge-fund manager Alphonse Fletcher Jr., founder of New York-based Fletcher Asset Management.
Paul Haggis elected as new chairman at Canadian Pacific Railway (Winnipegfreepress)
Three weeks after a bitter proxy battle with an activist hedge fund, Canadian Pacific Railway has elected Paul Haggis as chairman of the company’s board of directors. New York-based Pershing Square Capital Management succeeded in May in its months-long battle to oust now former CEO Fred Green, a 34-year veteran of the railroad.
VelocityCapital Management launches VIX futures based tail risk fund (Opalesque)
In the wake of the 2008 crash, persistently high levels of market volatility and the Eurozone crisis investors have come to realize that diversification alone is not always sufficient to avoid the effects of black swan events or tail risk. A variety of funds offer tail risk hedges and some, as Opalesque reported last week are available to retail investors. Connecticut-based VelocityShares recently launched a new tail-risk hedge product to investors through a new entity – VelocityCapital Management. VelocityShares principals recognized the profitability of volatility – specifically through the CBOE Volatility Index (the VIX) during crashes in developing their existing volatility products. The new entity comes out of the firm’s work providing VIX based volatility exchange traded products to institutional investors.
Don’t demonize the hedge fund industry for political gain (Absolutereturn-Alpha)
On the eve of yet another trip by President Obama to NYC, I feel it is important that the Wall Street community continue to remind him that the nation’s top challenge is the economy. The economy is not producing enough jobs, and that is partially because President Obama is the most anti-business president many of us have ever seen in our lifetime. Hedge fund managers are no strangers to the demonization of their industry and can relate to this statement. In the wake of serious scandals caused by Bernie Madoff, Allen Stanford and Raj Rajaratnam the media and political officials have had numerous examples of “rotten apples” that have done irreparable damage to the reputation of the industry. Hedge funds tend to be pro free markets, pro business and pro capitalism, so in the eyes of some these attributes are another way of saying greedy. Despite these being some of the core principles this country was founded on there continues to be a demonizing effect on an industry whose business model is founded on the pursuit of profits and returns.
Marc Lasry hosts $40K-per-head Obama fundraiser (Absolutereturn-Alpha)
Can Barack Obama take hedge fund money and simultaneously slam Mitt Romney’s private equity past? That’s the question being asked as the president attends a $40,000-per-ticket fundraiser Monday night at the Manhattan home of $13 billion Avenue Capital Group co-founder Marc Lasry. “Obama Derides Private Equity While Fundraising With Its Supporters,” barked a research report posted by the GOP Monday.
Stone Toro Asset Management hires BlackRock pro as analyst (HFMWeek)
Stone Toro Asset Management, a New Jersey-based alternative investment firm, has hired Kathy McKenzie, most recently of BlackRock, as an analyst, HFMWeek has learned. McKenzie, who worked with Stone Toro’s portfolio manager, Jeff Russo at BlackRock, will be responsible for portfolio operations, research and analysis for the firm’s ST Alpha Event Fund.
Crescent Point Group taps former CastleBay manager to launch hedge fund (HFMWeek)
The Crescent Point Group, an emerging markets private equity firm with offices in Shanghai, Chengdu, Singapore, and Jeddah, has partnered with Charles Stone, most recently of CastleBay Capital Management, to launch a hedge fund, HFMWeek has learned. The newly formed firm, Crescent Hill Capital Management, is based in Singapore and will act as the public markets arm of the private equity group. Crescent Hill’s maiden offering, the Crescent Hill Asia Opportunities Fund, will debut 1 July with approximately $50m in commitments from Crescent Point Group partners and their existing clients, along with Stone and new allocators.
Insch Capital Management to relocate to Lugano, hires compliance director (HFMWeek)
Insch Capital Management, a Swiss-based hedge fund management firm, will relocate to Lugano from Zug this month, as it looks to consolidate its business and restructure in advance of new FINMA rules, HFMWeek has learned. In 2010, Insch Capital Management moved to Zug. Simultaneously, Insch founded Insch Quantrend Ltd, a financial research company that was based in Lugano. These two companies will now be amalgamated and will both be based in Lugano.
David Einhorn’s Greenlight Capital Up 2.7 Percent Through May (Institutionalinvestor)
David Einhorn continues to remind investors why he is among the elite of the younger generation of hedge fund managers. In May the 43-year-old founder of Greenlight Capital lost only 1.5 percent compared with a loss of 6.3 percent for the S&P 500 and 7.2 percent for the Nasdaq Composite.
Ellen Pao’s Husband Is Buddy Fletcher, the Guy Who Sued the Dakota Board (NYMag)
Ellen Pao, the woman who’s suing her former employer, venture capital powerhouse Kleiner Perkins, over sexual harassment claims, is also a bit player in a New York City legal drama, it turns out. Buried inside a fascinating weekend Times look at the complications and industry-wide reverberations of her lawsuit was this detail: Pao is married to Alphonse “Buddy” Fletcher, the hedge-funder who last year sued the Dakota for racial discrimination and defamation.
The last days of MF Global (Fortune)
At about 9:30 p.m. on Tuesday, October 25, David Schamis, a director of a once-obscure futures brokerage company called MF Global, placed a call to his friend, Jacob Goldfield. Goldfield, 52, was a former trading superstar who had spent 15 years at Goldman Sachs—brilliant and impeccably connected (Bob Rubin and Larry Summers loved him), but equally quirky and unassuming. Raised in the South Bronx, he’d majored in physics at Harvard before dropping out of law school there to start at Goldman, where he made partner in record time.