Hedge Fund News: Steven Cohen, GLG Partners & Marshall Wace Asset Management

Insider trading trial puts SAC hedge fund under further pressure (The Guardian)
A trial starting this week over what US prosecutors say is the most lucrative insider trading scheme ever is expected to bring further pressure on Steven A Cohen, the founder of the SAC Capital Advisors hedge fund. Mathew Martoma, a former employee of SAC Capital, is accused of orchestrating a $276m (£168m) scam that illegally profited from insider knowledge on a new Alzheimer’s drug. He has pleaded not guilty. Martoma’s trial is part of a larger, multi-year investigation into the fund by federal agencies. Cohen and SAC have previously denied any wrongdoing in the case, and declined to comment further.

Steven Cohen

Richard Desmond sues GLG for £20m over ‘incomprehensible’ derivatives deal (Fundweb)
Northern & Shell Plc Media group founder Richard Desmond is suing Man Group Plc hedge-fund unit GLG Partners for approximately £20m over losses on an “incomprehensible” investment, according to a Bloomberg report. Desmond is said to have originally been advised by GLG Partners LP to undergo a derivatives transaction known as Constant Proportion Portfolio Insurance back in 2007 in which Credit Suisse Group AG (ADR) (NYSE:CS) also featured as a counterparty. A request for the investment to be unwound was later made by Desmond during 2008 that resulted in him losing approximately £20m.

Marshall Wace Tech. Chief Joins Duet (Financial News)
The architect of Marshall Wace Asset Management‘s proprietary-trading platform has left the hedge fund. Simon Goodman’s 15-year tenure at Marshall Wace ended last month. He has joined Duet Group, where he will serve as chief operating officer. “After 15 years at Marshall Wace I wanted to leverage this experience in securing a leadership position in further building out an alternative asset manager,” Goodman told Financial News. “With an impressive track record since 2002 and several world-class products, combined with a desire to focus on institutionalizing its business, Duet provided such an opportunity.”

Hedge fund to lose most of $80M Loehmann’s investment (New York Post)
Hedge fund Whippoorwill Associates is about to get a discount it does not want from Loehmann’s, the bankrupt Bronx retailer. Most of the $80 million Whippoorwill invested in the off-price chain will be lost, a sources close to the situation said Monday. The 92-year old chain filed for bankruptcy in December and is liquidating. Whippoorwill gained a majority stake Loehmann’s in 2011 when it emerged from an earlier bankruptcy. Any proceeds from the bankruptcy sale occurring this week go first to senior lender Wells Fargo & Co (NYSE:WFC), and then to Whippoorwill, if any cash remains, the source said.

Head of trading at booming hedge fund leaves after 14 years (eFinancialCareers)
Despite the hire-and-fire mentality of investment banks, longevity is surprisingly common, with the likes of Goldman Sachs Group Inc (NYSE:GS) and Morgan Stanley (NYSE:MS) boasting plenty of lifers who make it to the senior ranks. In hedge funds, however, it’s a less common trait. Paul Murphy, a partner and head of trading at Egerton Capital, is an example of someone who has staying power at a hedge fund, however. He’s been with the firm since 1999, having previously spent four years with JPMorgan Chase & Co. (NYSE:JPM) as a senior vice president of European and UK sales trading. For the five years prior to that worked as senior manager of UK sales trading at Nomura. However, he left the firm last week, according to the Financial Conduct Authority register and filings on Companies House. He’s no longer listed as part of the investment team on Egerton’s website, but the firm didn’t respond to requests for comment.

The reason rock star investors choose to manage hedge funds over mutual funds (CNBC.com)

Hedge Fund Seeks ‘Bitcoin Execution Trader’ (FINalternatives)
At least one hedge fund is taking the bitcoin seriously. According to an e-mail last week from recruiter Glocap Search, a San Francisco-based hedge fund is seeking a “junior bitcoin execution trader to assist with bitcoin execution, general fund operations and reporting.” The missive did say that “bitcoin and crypto currency knowledge” were “a plus but not required.” Candidates were asked to be “comfortable working with uncertainty” and have a “willingness to work with a brand new product without an ‘industry standard.’”

“Isn’t This Illegal?” (FRONTLINE)
It’s phone calls like the one that Turney Duff took early in his career at the Galleon Group that authorities point to as what’s wrong with the hedge fund industry. The voice on the other end of the line asked for Raj Rajaratnam, the CEO of the hedge fund. Duff explained that Rajaratnam was unavailable. Then suddenly without warning, the voice whispered that investment analysts at the Jefferies Group were going to upgrade Amazon.com, Inc. (NASDAQ:AMZN) in six minutes. “If I don’t buy Amazon and the stock’s upgraded and the stock goes up, they’re going to find out,” he said. “But if I do it, isn’t this illegal?” As Duff would learn, the call was just a hint of what was really going on at Galleon. In 2009, FBI agents raided Rajaratnam’s home and arrested him for insider trading. Two years later, a jury found him guilty on all 14 counts.

Hedge Funds Raise Gold Wagers as Yamada Sees $1,000: Commodities (San Francisco Chronicle)
Hedge funds raised their bullish gold bets to a six-week high, splitting with analysts at Technical Research Advisors LLC and Goldman Sachs Group Inc. who are predicting more declines after last year’s rout. Gold tumbled 28 percent in 2013, the first decline in 13 years and the biggest since 1981, after some investors lost faith in the metal as a store of value. The Federal Reserve on Dec. 18 cut the pace of its monthly bond purchases. Bullion is poised to fall another 19 percent in the coming months to $1,000 an ounce, said Technical Research’s Louise Yamada, who’s the former head of technical research at Citigroup Inc (NYSE:C).

Hedge funds, family offices find higher yield in local Brazilian bonds (Opalesque)
The Brazilian local bond market offers more profits than offshore bond markets, said George Wachsmann, a partner with GPS Investments, the largest independent wealth manager in Latin America, at the recent Opalesque Brazil Roundtable. “Rates are very compressed in Brazil, but last week we bought 10-year paper for our clients at inflation plus 7.5%,” Wachsmann said and added, “The month before we bought inflation plus 6.5% with a tax exemption. That investment gives you almost twice the return you will get with the CDI (the Brazilian benchmark interest rate), so it’s a huge opportunity.” He added that his firm continues to have confidence in the local hedge funds space because they can tactically hedge in challenging times for the Brazilian economy.

Only One Percent Of Hedge Funds Plan To Advertise (ValueWalk)
There has been a lot of hype for the JOBS Act and the changes it could bring to the hedge fund community. Many had high hopes for the act, which would allow hedge funds to advertise. But when the rules were put into place in September 2013, investors could barely tell the difference. At the time, Ron Geffner (whose New York-based law firm, Sadis & Goldberg, represents more than 600 hedge fund managers worldwide) told StreetID that it was too soon to determine the usefulness of the legislation. Fast-forward to January 2014. By now, some had thought that at least one hedge fund would develop a Super Bowl ad. Others disagreed, but the general consensus is that some notable ad campaigns were on the horizon.

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