Hedge Fund News: Philip Falcone, Nelson Peltz, Carl Icahn

HARBINGERFalcone’s Harbinger Capital Turns to Dell’s MSD for Loan (Businessweek)
Philip Falcone’s hedge fund, having taken out a loan earlier this year at an effective annual interest rate of 24 percent, has found a new source of financing: the money-management arm of billionaire Michael Dell. Harbinger Capital Partners Master Fund I Ltd. entered into a note purchase agreement on June 14 with a credit fund run by MSDC Management LP, according to a June 18 regulatory filing. MSDC Management is an investment adviser backed by MSD Capital LP, the private investment firm for Dell and his family.

Crisis has barely begun, says GLG hedge fund manager (Reuters)
The global financial crisis has barely started and is likely to last for at least another 15 to 20 years as major economies cut debt levels, according to Jamil Baz, one of Europe’s most prominent hedge fund managers. Baz, chief investment strategist at GLG Partners, told the GAIM 2012 conference in Monaco that total debt levels in a number of major economies had actually risen since 2007 and had much further to fall before reaching “a semblance of equilibrium”.

Hedge fund managers shorting German debt (FXStreet)
Interesting story in the FT (Hedge funds bet on big Bunds sell-off) saying that more than 50% of fund managers at a conference in Monaco said they expect German bund yields to double within a year. “Bunds are attractive to short because they are at historical lows in spite of the fact that the German fiscal position can only deteriorate,” said one hedge fund manager of a large top-tier global macro firm.

Hedge fund firm Man Group names Peach Asia head (Reuters)
Man Group Plc has named Tim Peach as managing director and head of its operations in Asia Pacific, a spokeswoman for the $59 billion hedge fund firm told Reuters on Wednesday. Peach Replaces Tim Rainsford, Man’s previous managing director for the region. Rainsford has moved to London from Hong Kong as head of European sales for the firm.

Hedge funds bet on big Bunds sell-off (FT)
Leading hedge fund managers are betting on a significant sell-off in German government bonds in the coming months after a sharp fall in yields on the debt paper driven by a flight to safety in the eurozone. More than 50 per cent of managers polled at an industry conference in Monaco on Tuesday said they expect Gavyn Davies, the founder of hedge fund Fulcrum Asset Management, told the Gaim conference that every hedge fund’s analytical model was signalling that the German bond market was too expensive.

Barclay Hedge Fund Index drops 2.98% in May (HedgeWeek)
Hedge funds lost 2.98% in May, according to the Barclay Hedge Fund Index compiled by BarclayHedge. The Index remains up 1.77% in 2012. “Falling equity prices worldwide weighed heavily on hedge fund performance in May,” says Sol Waksman (pictured), founder and president of BarclayHedge. “Funds trading in companies within the energy and natural resource sectors were hit particularly hard, as fears of slowing growth in China and a recession in Europe put investors back into risk-off mode.

Michaelcheck’s Mariner Plans To Back Statup Hedge Funds (Bloomberg)
Mariner Investment Group LLC, William Michaelcheck’s $4.7 billion multistrategy hedge fund focused on fixed income and credit arbitrage, is starting a pool to invest in new hedge funds, according to a letter to investors. The firm will hire people to manage capital allocations to startups, spinouts and new Mariner-advised or Mariner supported funds, Chairman and Chief Investment Officer Michaelcheck said in the firm’s first-quarter letter to investors, a copy of which was obtained by Bloomberg News. Mariner received a $500 million investment from the state-owned Alaska Permanent Fund Corp., according to a person familiar with the matter.

HFRX Global Hedge Fund Index posts a decline of -0.54% in mid-June (Opalesque)
Extending many of the trends from May, global financial markets traded in a volatile range through mid-June, responding to weak US employment data, new and continuing concerns about European financial institution stability and in anticipation of the results of political elections in Greece. Despite this global equity markets posted broad-based gains for the month, with Spain, Italy and Russian equity markets posting June gains following steep May losses; US, Asian and Emerging Markets generally posted gains. US and German yields rose through mid-month after touching historical lows in early June, while yields in Spain, Italy and France rose significantly as investors remained concerned about Euro sovereign credit risk. The US dollar declined against the Euro and British Pound, while strengthening against the Japanese Yen; energy commodities generally declined, while Metals rose through mid-month. Hedge funds posted declines through mid-June, with the HFRX Global Hedge Fund Index posting a decline of -0.54 percent. The HFRX Absolute Return Index posted a more narrow decline of -0.14 percent.

Structured Portfolio Plans Fund To Purchase Homes To Rent (Bloomberg)
Structured Portfolio Management LLC, Don Brownstein’s $3.2 billion Stamford, Connecticut-based mortgage hedge fund, plans to start a pool to buy and rent out homes. The firm may introduce the fund to investors within weeks, Brownstein said in a letter to clients dated June 12, a copy of which was obtained by Bloomberg News. He didn’t say how much capital has been raised or targeted.

Peter Thiel and Ajay Royan Launch $1B Venture Growth Fund Mithril Capital Management (Pehub)
Venture capitalist and hedge fund investor Peter Thiel announced Tuesday that he has co-founded a growth stage venture fund named Mithril Capital Management with longtime business associate Ajay Royan…Royan is the San Francisco-based fund’s managing general partner and a member of its investment committee, while Thiel is chairman of Mithril’s investment committee, according to a press release. Rounding out the team is Partner Jim O’Neill, a former managing director of Clarium Capital Management, a hedge fund headed by Thiel. Mithril’s “long-term approach, global focus and emphasis on technology-driven growth potential complements the strategies of Thiel’s venture capital group Founders Fund and global macro fund Clarium,” the press release states.

Activist hedge fund takes stake in Lazard (Fiercefinance)
For years, people have been extolling the virtues of boutique banks and trading outfits. The standard view is that these firms are less encumbered by new regulations and stand to benefit greatly from an exodus of talent from bulge bracket banks. But executing on the promise has been hard for several of the big-name boutiques. Lazard, one of the biggest names, has just picked up vote of confidence so to speak from activist investment fund Trian, led by Nelson Peltz, who’s known for tussling with management of underperforming companies. This time, the dealings were cordial on the surface.

New UCITS hedge fund platform (IFAOnline)
Geneva-based investment company Alix Capital has upgraded its global financial data management platform, FDM, to offer a more robust and speedier UCITS hedge funds data management and index calculation function to the market. Alix Capital provides the UCITS Alternatives Index (UAI) family of indices and has been tracking UCITS hedge funds since 2009. With the growth of the UCITS hedge funds universe, along with the expansion of the UAI family of benchmarks, the company says it’s become necessary to further automate the data management and index calculation processes.

Did Greenwich tycoons take down a major university president? (GreenwichTime)
A Greenwich crony of Paul Tudor Jones II who helped raise $20 million last year for their University of Virginia alma mater denies he was part of a clandestine plot promoted by the hedge fund giant that led to the controversial removal of the school’s president. “I had absolutely no role in the Board of Visitors’ decisions regarding the departure of Teresa Sullivan,” Peter Kiernan said in a statement Tuesday to Greenwich Time, his first public remarks since resigning as chairman of the Darden School Foundation, the main fundraising conduit for the MBA program at U.Va.

AIFMD & the Co-domiciliation question (HFMWeek)
Now that the European Alternative Investment Fund Managers Directive (AIFMD) is moving towards its final form, one of the main issues affecting the hedge fund industry is what to do about domiciliation. With the existing ‘private placement’ regime finishing in 2018, what will happen to non-EU-based managers who want to market and sell their funds inside the EU? To date the legislation has taken an inside or outside of Europe view, i.e. that the hedge fund either operated fully within the EU or fully outside it. This view also applies to hedge fund investors, service providers and Managers. In reality there is no such clear division. Funds (and their service providers) operate across multiple jurisdictions, just like organisations in any other global industry.

Chicago transit employees pension fund seeks hedge fund of funds (Pionline)
Chicago Transit Authority Employees Retirement Plan is searching for a low-volatility hedge fund-of-funds manager to run about $30 million, according to an RFI posted on the $1.8 billion pension fund’s website. More than one manager could be hired, but the total allocation will be $30 million, according to the RFP.

Odey Odessey Fund Down 9% in May (ValueWalk)
Odey Asset Management was founded in 1991. The London based hedge fund, now manages over $4 billion. George soros was one of the early investors. The firm launched the Odyssey fund in October, 2011. The Odey Odessey Fund was down 9% in May. Most of the drop was due to its equitiy exposure. It has 50% exposure to US equities which contributed to 4.3% of the loss, and 30% exposure to Japanese equities which cost the firm another 3.3%.

Markets Force Asset Allocation Changes—and Reexamination (Ai-Cio)
Although alternatives may be the only asset class that can offer robust returns in today’s marketplace, hedge fund investing is no simple panacea and must be fully understood to be used effectively, a report and an interview released by consultancy bfinance demonstrate. Sushil Wadhwani, a former member of the Bank of England’s monetary policy committee, asserts in the interview that pension funds and other institutional investors will be forced into alternatives because returns from fixed-income are so weak.

Report: HF Managers Frustrated with Insurance Settlements (HedgeFund)
A new survey from financial insurance firm Baronsmead indicates that poor management and settlement of insurance claims remains one of the biggest concerns for hedge fund managers. According to the London-based firm’s second annual “Hedge Fund Insurance Survey,” 83% of managers who have had a claim said there is a lack of quality of the claims handling.

Dutch courage (HFMWeek)
With a solid pedigree of alternatives investing, The Netherlands’ pension industry is a big draw for hedge funds looking to magnetise institutional capital. But with a growing demand for governance and control from pension committees, only the boldest and most innovative managers will make the grade. Home to some of Europe’s biggest and most innovative hedge fund investors, the Netherlands is considered to have fostered one of the financial world’s most sophisticated pensions systems. All public pensions and 80% of occupational pensions (organised as company funds or industry-wide funds) are contributed to on a mandatory basis, meaning the country doesn’t face a savings crisis akin to that in the UK or the dire deficits which plague some US public pensions.

Comment: Siddhya Mukerjee and Michael Schmieder (HFMWeek)
With the passage of the Dodd-Frank Act, many hedge fund managers who were previously exempt from registration under the Investment Advisers Act had to register with the SEC. These managers, along with managers who were already registered, had to file Form ADVs by 30 March 2012. Well ahead of the deadline, Form ADV’s disclosure requirements were changed – ostensibly to incorporate Dodd Frank’s many new requirements. As hedge fund managers raced to understand the new disclosure requirements, investors waited in anticipation to see what new information would be revealed. Over two months have passed since the 30 March deadline and it is clear from an investor standpoint that the new Form ADV is a mixed bag of good and bad in terms of transparency.

Stride To Seed 2 More Hedge Funds In 2012 (Finalternatives)
New York-based hedge fund seeder Stride Capital Group is looking to give a helping hand to two additional hedge funds this year. The firm, founded by Managing Partner Don Rogers, generally makes three investments per year and has already made one in 2012. Rogers told Bloomberg News the successful candidates for the remaining two allocations will be fundamental asset managers trading various assets globally, have up to $500 million AUM and a strategy that gives them a distinct and sustainable advantage.

Service provider scrutiny brings opportunities too (HFMWeek)
The influence of service providers has shifted in recent years. Between institutional investors demanding more from their underlying hedge fund managers and changes on Capitol Hill and in Brussels, vendors have been forced to step up to the plate. At the second annual New York-based AmbroseConnects client conference, a seven-strong panel of financial services industry experts addressed how best to utilise vendors.

Institutional investors changing hedge funds (Benefitscanada)
Institutional investors are spurring hedge funds to grow operations and increase transparency, according to a report by KPMG and the Alternative Investment Management Association (AIMA). Since the beginning of the financial crisis, the hedge fund industry has undergone significant change, says the report, The Evolution of an Industry. Prior to the crisis, the primary source of capital came from non-institutional investors such as high-net worth individuals and family businesses; however institutional investors are now the leading allocators to hedge funds.

New report uncovers notable differences between views of Asian institutional investors and those of rest of the world (Opalesque)
Global ARC (Global Absolute Return Congress) together with Preqin, the world’s leading research firm covering the alternative investment sector, produced a report entitled “Preqin/Global ARC Study of Asian Institutional Hedge Fund Investments.” Using in-depth surveys with key members of the Asian institutional community, Preqin assesses several aspects of the Asia-Pacific hedge fund industry today. The resulting report examines how hedge funds have performed for their Asian investors over the past 12 months and how those investors expect them to perform in 2012.

Lone Pine Raises Esprit Stake After Chief Executive Quits (Bloomberg)
Esprit Holdings Ltd. (330)’s largest shareholder, hedge fund Lone Pine Capital LLC, increased its stake as the shares plunged after the apparel company’s chief executive officer and chairman quit last week. Lone Pine bought 1.39 million Esprit shares on June 13 following Chief Executive Officer Ronald Van der Vis’s resignation and 14.1 million shares on June 15 after the chairman had quit as well, according to Hong Kong Stock Exchange data.

There Are Too Many Hedge Funds (BusinessInsider)
Last week I gave the second in a series of presentations I’ve been invited to make to the Tiger 21 group. Tiger 21 is a group of wealthy entrepreneurs that engage in “peer-to-peer” learning on issues that they have in common. Criteria for membership include a minimum investable assets of $30 million and payment of $30K in annual dues. Membership is by invitation only. The members have diverse backgrounds and sources of wealth, but one thing that brings them together is the search for unbiased investment advice. Most if not all members are regularly subject to marketing pitches from well-intentioned bankers seeking their investment in hedge funds, private equity and other illiquid, long-lived investments with their promise of recurring fee revenue for the banks over many years.

Looking back on Elliott’s post-Paul Singer plans and Bill Ackman’s billion-dollar IPO (Absolutereturn-Alpha)
Paul Singer introduced a board of directors at then-$17.1 billion Elliott Management Corporation, a group that would take control should Singer no longer run the firm, “whether by death, incapacity, or otherwise,” according to a letter sent to investors. Changes in control of the firm, including the loss of Singer and co-CIO Jonathan Pollock or the introduction of a new management team, would also allow investors to redeem any or all of their investments. None of those scenarios have come to pass in the past year. Singer and Pollack are still alive and kicking—the former gave a rousing speech last month at the SALT conference in Las Vegas—and the firm continues to accumulate assets. It is up to $19.2 billion according to the latest AR Billion Dollar Club. The offshore Elliott International fund has returned 3.10% this year through the end of May, according to an investor, compared with a 2.48% gain for the AR Composite Index.

Whitebox’s Andy Redleaf has ‘oh my god’ reaction to new research from UPenn, UChicago professors (Absolutereturn-Alpha)
If you’d taken a random walk this Tuesday afternoon to a dark, wood lined boardroom at New York’s Palace Hotel, you would have seen Whitebox Advisors’ Andy Redleaf getting very worked up. “I had a really ‘oh my god’ reaction,” he recalled of his initial response to new research showing that—contrary to common belief—stocks…

Koris to market Lyxor Map in Europe (HFMWeek)
Paris-based Lyxor Asset Management, a subsidiary of Societe Generale Group, and Koris International, an investment advisory focused on quantitative allocation models, have partnered to market the funds on the former’s $12bn Managed Account Platform (Map) to European investors, it has been announced. In the venture, Lyxor will manage the portfolios while Koris will act as an independent advisor, focusing on small institutions, family offices and private banks.

Bridgewater hires Plural CCO Sharma (HFMWeek)
Rick Sharma has joined $125bn hedge fund giant Bridgewater Associates as deputy chief compliance officer, in the latest senior departure from Plural Investments, the New York-based long/short equity firm. The switch, completed in April and revealed here for the first time by HFMWeek, sees Plural’s ex-chief compliance officer move on, as former risk chief Jeff Hurwitz joins Davidson Kempner Capital Management as managing director.

Pyxis Capital hires former Ivy Funds pro as president (HFMWeek)
Pyxis Capital, a $2.4bn Dallas-based registered investment advisor, has hired J. Bradley Ross, most recently with Ivy Funds, as president, the firm announced Tuesday. Ross, who arrives following the resignation of former president Joe Dougherty, was most recently executive vice president and national sales director at Ivy. Prior to that, he was senior vice president, national sales manager, independent channel for ING Funds.

Penney doing damage control (NYPost)
Hey, you! Under the bus! JCPenney CEO Ron Johnson cast his former No. 2 exec as the fall guy yesterday, laying the blame for the retailer’s flopped pricing strategy on marketing blunders by the ousted president, Michael Francis. Johnson — a former Apple exec hired last year to spruce up the aging department-store chain — shocked investors on Monday with a terse announcement that Francis, a former Target exec, was leaving after just eight months on the job.

Icahn Nominates Four For Forest Board In Second Fight (Bloomberg)
Investor Carl Icahn nominated four directors to the board of Forest Laboratories Inc. (FRX) in a second proxy fight against the drugmaker. Icahn nominated Eric Ende, president of Ende BioMedical Consulting Group and a former biotechnology analyst at Merrill Lynch; Andrew Fromkin, the former chief executive officer of Clinical Data Inc., acquired last year by Forest; Pierre Legault, president and CEO of Stone Management LLC and a former chief financial officer for OSI Pharmaceuticals Inc.; and Daniel Ninivaggi, president of Icahn Enterprises, according to regulatory filing today.

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