Hedge Fund News: Warren Buffett, Phil Falcone & Baupost Group

Warren Buffett betrays America (SLTrib)
It must have been a bitter moment for President Barack Obama when he got the news that his favorite economic guru not only doesn’t like paying taxes but hates America. Warren Buffett, whose eponymous rule was a staple of Obama’s 2012 re-election campaign, is underwriting Burger King Worldwide Inc (NYSE:BKW)’s proposed move to Canada that the left is denouncing as practically the most dastardly plot since the Rosenbergs helped the Soviets get the bomb.

Berkshire Hathaway

Hayman Chief Blasts Elliott Over Argentine Impasse (Finalternatives)
Elliott Management founder Paul Singer is a better hedge-fund manager than he is a person, according to Hayman Capital Management’s Kyle Bass. In an interview with the Buenos Aires Herald, Bass—whose hedge fund holds restructured Argentine debt—criticized Singer for “holding poor countries as hostages.” “I frequently say that if you are an investor, ‘vulture funds’ such as Elliott will be a prudent fiduciary with your money,” he told the newspaper. “They do a good job on that…

Falcone’s tactics in buying steel company draw fire (NYPost)
Phil Falcone couldn’t play by the rules on Wall Street — so now he’s playing where there aren’t any rules. That’s the charge from critics as the hedge-fund tycoon moves to take over a little known but profitable steel fabricator whose shares are traded in the loosely regulated over-the-counter market. Falcone, who last year agreed to an $18 million settlement with federal regulators for misconduct that got him barred from the securities industry for five years, is using ruthless tactics to acquire the company, Phoenix-based Schuff International, on the cheap, according to rankled investors.

Blackstone’s New “Big Bet” Hedge Fund (HedgeCo)
Hedge fund investor The Blackstone Group L.P. (NYSE:BX) is preparing to launch a new hedge fund that will will have to up to 30 teams of seasoned investors with $100 million each to play with, according to a report by The Wall Street Journal. The new fund, Blackstone Senfina Advisors LLC, will invest in private equity, real estate, credit and hedge funds, Blackstone currently has $272 billion in assets for public and corporate pension funds, academic, cultural and charitable organizations. Blackstone already manages $58.3 billion in assets at its BAAM hedge funds solution division.

Dollar General To Continue Family Dollar Push (Finalternatives)
Dollar General Corp. (NYSE:DG) CEO Rick Dreiling said yesterday that his company remains committed to buying rival Family Dollar Stores, Inc. (NYSE:FDO), in spite of its opposition to the merger. Family Dollar last week turned down Dollar General’s $8.9 billion offer, citing antitrust concerns inherent in the marriage of the largest and second-larger discount retailers in the U.S. Family Dollar said it still favors a lower offer from another rival, Dollar Tree, Inc. (NASDAQ:DLTR).

Allergan, Apple top picks for hedge funds: Pro (CNBC)

Hedge Funds Hunting Clues in Treasury Tax-Inversion Limit (Bloomberg)
Tax lawyer Robert Wellen’s telephone keeps ringing with calls from hedge-fund executives he’s never met. They’re desperate for clues about the Treasury Department’s planned crackdown on corporate inversions, overseas mergers that cut companies’ U.S. tax payments. The barrage of out-of-the-blue queries in the past several weeks is unprecedented in his 40-year career, Wellen said.

Hedge Fund Wins Subpoena Fight With Merck (Finalternatives)
Pharmaceutical giant Merck & Co., Inc. (NYSE:MRK) will have to answer a hedge fund’s questions, a federal judge ruled this week. U.S. Magistrate Judge Douglas Arpert in Trenton, N.J., ordered Merck to respond to a subpoena issued by BVF Partners, part of its lawsuit against Celera Corp. Celera has a royalty interest in an osteoporosis drug sold by Merck, Odanacatib. BVF, which runs the Biotechnology Value Fund, has sued Celera for allegedly undervaluing the company as part of its sale to Quest Diagnostics Inc (NYSE:DGX) in 2011…

AM Best argues Hedge Fund Re model can work (Trading-Risk)
AM Best said that the hedge fund reinsurance (HFR) model should succeed if executed properly, albeit with the potential for greater volatility than a traditional reinsurance strategy. The ratings agency said that it does not view such structures as new business models and analyses them using its existing reinsurance methodology. However, it stresses its modelling of investment returns for volatility and drawdowns beyond what the hedge fund sponsors have historically experienced. AM Best added that it monitors investment performance on…

Baupost Sold Out Of Espírito Santo Before Collapse (Finalternatives)
The Baupost Group rid itself of substantially all of its investment in Portugal’s collapsed Banco Espírito Santo before the bank went under earlier this month. The hedge fund had built up a 2.27% stake in BES by the beginning of July. The bank, which had been hit hard last year by news of financial irregularities, went into bankruptcy and was rescued by the European Union in early August, ensuring that shareholders will be wiped out. Baupost has dumped most of its stake days earlier, transferring a 2.15% stake to subsidiary Baros S.a.r.l., which in turn sold all of it on July 31—a day after BES announced a €3.5 billion loss.

Market body revises rules for sovereign defaults after Argentina row (Reuters)
Banks, investors and other users of bond markets have agreed to change how they would deal with defaulting government debt, removing the right of veto from holdouts to avoid a repetition of the fracas over Argentina. …The ICMA move comes a month after Argentina was pushed into default when a small group of U.S. hedge funds rejected the country’s 2005 and 2010 debt restructurings. “Our analysis is that this takes out a lot of the uncertainty surrounding sovereign default,” said Louis Gargour, chief investment officer at London-based hedge fund LNG Capital.

Recommended Reading:

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