Hedge Fund News: Whitney Tilson, Marc Lasry, BlackRock Inc.

T2 PARTNERSWhitney Tilson Wins as Disney (DIS) Gives Netflix (NFLX) its Stamp of Approval (StreetInsider)
Hedge fund investor Whitney Tilson is standing a little taller tonight after shares of Netflix, Inc. (NASDAQ:NFLX) surged 14 percent on it exclusive content deal with The Walt Disney Company (NYSE:DIS). Tilson has been with Netflix through ups and downs, short and long. His initial short beat on Netflix promoted a rare public response from CEO Reed Hastings. Shortly after Tilson covered the trade… at a loss. Tilson was so convinced that Netflix wouldn’t go down, he did a complete 180 and went long in a big way. His initial long bet proved rocky from the start. However, his fortunes have now changed. With the recent surge in the stock from today’s news and Carl Icahn’s recent stake, he appears to be sitting pretty. While it is not known Tilson’s cost basis on the stock, putting together bits and pieces of information it is estimated to be around $70/share. This would suggest he is up about 24%.

Deer Park readies second credit fund as STS Partners reaches capacity (HedgeFundsReview)
Deer Park Road Corporation is closing its STS Partners Fund to new investors as assets under management have risen to more than $600 million. The fund, named best fixed income/credit hedge fund at the Hedge Funds Review Americas Awards 2012 in July, invests in distressed mortgage and asset-backed securities. Launched in May 2008, the fund returned nearly 30% annually for the three years through May 2012 with volatility of less than 5%. The fund’s assets shot up from $341 million after it achieved a three-year track record.

Lawyers Withdraw in Suit Against Dakota – Wall Street Journal (Bayoubuzz)
A New York state judge allowed the two law firms representing a hedge-fund manager to withdraw from his lawsuit alleging discrimination by the Dakota co-op in Manhattan. The fund manager, Alphonse Fletcher Jr., filed the suit last year against the gabled Dakota, the 19th-century building where many celebrities have lived over the years. Fund manager Alphonse Fletcher Jr. is in a legal fight with the Dakota co-op on Central Park West over his effort to buy a second apartment. One law firm asked to withdraw from the case in October, after it said Mr. Fletcher had stopped paying bills in April. Soon after, the other firm asked to withdraw as well because of “irreconcilable differences” with Mr. Fletcher, it said in court papers. The firm declined to provide details, citing attorney-client privilege.

Average South African Hedge Fund is Up More Than Double The Global Average YTD (Opalesque)
A number of South Africa based hedge funds have received significant foreign interest and sizable inflows from European multi-family offices. There is also interest from US endowments and fund of funds. Similar to multinational corporations that are looking for business opportunities in Africa, astute investors are moving into Africa as well. South African managers have the skill and experience to deal with emerging markets and frontier investing, in particular Sub-Saharan Africa. Initially South Africa was perceived as only a mining-rich resources economy and so the country got predominantly categorized within the resources cycle. Other investors believe there are good investment opportunities in South Africa itself outside of just resources and mining.

Swiss managers fear over-regulation could kill hedge fund industry (Opalesque)
Hedge fund managers who took part in the latest Opalesque 2012 Zurich Roundtable have voiced concern that new regulations have made it very difficult for new managers to build their business. …Speaking during the Roundtable, Dr. Urs Ramseier, chairman of Twelve Capital, an investment manager specializing in insurance related investments, said, “Today, an asset manager needs a risk manager, a portfolio manager, compliance officer, and so on. The barriers of entry are now much higher. The worry is that these developments will in the end kill the single fund management industry in Switzerland. Just look from where the innovation in our industry is coming from. It is not coming from places like UBS or Credit Suisse, but rather from the smaller asset managers who set out on their own. They have a good idea, create their fund and if they are successful they will raise assets and grow. This is how the innovation is happening.”

MST secures mystery super fund investment (BusinesssSectator)
MST Capital, the hedge fund headed by former UBS trader Gerard Satur, has secured a $100 million mandate from an anonymous Australian superannuation fund, The Australian Financial Review reports. According to the newspaper, it signals the fund’s first major investment and takes its total funds under management to $130 million. MST was started by ex-UBS proprietary traders as a prop trading business inside UBS under the guidance of Australian boss Matthew Grounds.

Marshall Wace boosts profits on fund returns (CityAM)
LONDON-BASED hedge fund Marshall Wace yesterday posted a 20 per cent jump in pre-tax profits led by a surge in income from improved fund performance. The company, set up by Paul Marshall and Ian Wace, improved profits from £39.4m to £47.3m for the year ending February 2012 with income from performance fees up ten per cent to £60.6m from £55m. The firm’s operating entity, Marshall Wace Asset Management – which incurs the costs for the 100 or so staff based at its Adelphi office on the Strand ­– saw an increase in costs of 19 per cent, mainly due to increasing fund manager performance fees. Staff costs for the firm increased from £20.3m in 2011 to £28.4m.

Hedge-Fund Ads Might Spawn Frauds Unless SEC Takes Action (Bloomberg)
Congress probably didn’t mean to turn the $2.3 trillion hedge-fund industry into a breeding ground for fraud when it passed a law designed to make it easier for small companies to raise capital. That may well be the result unless the Securities and Exchange Commission steps in with new rules. Congress passed the Jumpstart Our Business Startups (JOBS) Act with bipartisan support, and President Barack Obama signed it into law in April. Among its provisions, this misguided piece of legislation allows so-called private placements and hedge funds, lightly regulated private investment pools that serve the wealthy and institutions, to advertise their wares to the public for the first time.

BlackRock cuts stake in Man Group below 5 percent (Reuters)
BlackRock, Inc. (NYSE:BLK) has cut its stake in Man Group by almost half to below 5 percent, regulatory statements showed on Tuesday, just as the embattled hedge fund firm tries to reverse its fortunes. BlackRock’s selling of shares through 2012 mean it is no longer the biggest shareholder in Man. Hedge fund Odey Asset Management has meanwhile made a bold bet on a recovery in Man shares by increasing its stake to 5.15 percent.

Tradex shifts focus to sector FoHFs and single-manager hedge funds (HedgeFundsReview)
Tradex is winding down its Original Segregated Portfolio (OSP), established in 2005, after its assets declined from a peak of more than $500 million to less than $200 million. Michael Beattie, Tradex’s chief investment officer, says the plan is to replace the OSP with a range of sector-specific fund of hedge funds (FoHFs) with three to six underlying managers focused on specific asset classes, sectors and investment strategies. The first of these is the Tradex Liquid Real Estate Portfolio, a spin-out of the OSP’s investments in mortgage strategies. The fund has exposure to six managers running derivatives, distressed and relative value strategies in the mortgage sector.

Citi Awarded Expanded Mandate to Provide Hedge Fund Administration Services to Kayne Anderson Capital Advisors (BusinessWire)
Citi has been awarded an expanded mandate from Kayne Anderson Capital Advisors (“Kayne Anderson”) to provide administration services for five additional hedge funds. Citi’s total hedge fund mandate with Kayne Anderson now includes seven funds and over $2 billion in assets under administration. Kayne Anderson is a Los Angeles-based alternative investment firm focusing in the energy, infrastructure, growth capital, real estate and middle market credit sectors. “We are pleased to continue to demonstrate the value of our operational team,” said Bob Wallace, North America Head of Securities and Fund Services, Citi. “We look forward to continuing to support Kayne Anderson’s growth by delivering leading technology that assists our client’s ability to provide transparency.”

Ex-Soros Manager to Start Distressed Fund for Europe (Bloomberg)
William Seibold, a former founding member of Soros Fund Management LLC’s distressed unit, plans to start a fund to invest in troubled European companies. Recipero Capital will provide capital to middle-market businesses, primarily in Germany, France, Italy and the U.K., starting in the second half of next year, Seibold said in a telephone interview. He expects to have seven people working with him when the fund opens. Seibold, 50, is currently in discussions with potential investors for early allocations, he said. He is seeking 800 million euros ($1 billion). The firm will be based in Europe.

Hedge fund co-founder drops Dilitas suit (FT)
Elena Ambrosiadou, one of the hedge fund industry’s wealthiest women, has dropped a legal case against the security company Dilitas, after accusing it of carrying out surveillance and phone hacking under instructions from her estranged husband, Martin Coward. Mr Coward and Ms Ambrosiadou remain embroiled in a bitter divorce battle centred on the hedge fund they created two decades ago, Ikos, and control of the huge wealth it has generated. Their split has led to dozens of legal actions across Europe and two wide-ranging injunctions that prohibit Mr Coward or other former Ikos employees disclosing information about the company’s affairs.

Swedish Energy Hedge Fund Drops Oil, Emissions (Finalternatives)
Sweden’s Shepherd Energy is quitting oil and emissions trading, which have cut into its returns this year. The firm’s energy hedge fund boasted gains of 8.6% on its electricity book. But that figure fell to 1.22% when losses on oil and emissions are factored in. The firm plans to focus its attention on the Nordic power market. “Our best performance comes from trading power,” fund manager Arne Oesterlind told Bloomberg News. “Excessive price movements have prompted us to withdraw from trading oil, while narrow price ranges and too little volatility for emission permits have caused us to pull out.”

The people who give the prize to the world’s smartest economists have turned to hedge funds for help (QZ)
After averaging returns of 1.5% to 2% annually over the last decade, the foundation that awards for the Nobel Prizes is looking for a few good hedge funds to help it boost returns. The decision comes after the Nobel Foundation decided to cut the size of the cash prizes it bestows on winners down from 10 million to 8 million kroner, or about $1.2 million. The fund finds itself in a situation faced by plenty of investors dealing with low interest rates. Of course there are also pitfalls in handing over your money to some of the “smart guys” that run hedge funds. For one thing, their performance on the whole hasn’t been much better than the Nobel Foundation’s in recent years.

Och-Ziff fund assets rose to $32 bln in November (MarketWatch)
Hedge-fund manager Och-Ziff Capital Management Group LLC OZM -0.11% said its four main funds rose modestly last month, increasing assets it manages to $32 billion as of Dec. 1. The net increase of $200 million since Nov. 1, which takes into account both price appreciation, capital inflows and redemptions, brings Och-Ziff’s assets closer to its 2007 peak of $33.4 billion. The hedge-fund manager suffered hefty redemptions during the financial crisis since it didn’t limit investor withdrawals, as some other funds did.

Lasry ‘Shocked’ By Hedge Fund Industry’s Antipathy For Obama (Finalternatives)
Nearly a month after the U.S. presidential election, Avenue Capital Group’s Marc Lasry remains mystified that most of his colleagues didn’t join him in backing the winner. While the majority of hedge fund managers backed President Barack Obama four years ago, most of them switched sides this year, including Third Point’s Dan Loeb, whose enthusiasm for the president in 2008 was matched by his antipathy for him this time around. But in spite of widespread financial backing from hedge funds for Obama’s rival, former Bain Capital chief Mitt Romney, the president won reelection rather comfortably.

Hedge fund ODD best practices launched by Rothstein Kass (HedgeWeek)
Designed to improve the ODD process for both managers and investors, the guidelines are the result of a two-day working group where investment managers, institutional investors and a team of Rothstein Kass experts engaged in open discussions to identify the inefficiencies in the ODD process and create best practice guidelines for the industry. The ODD guidelines are the first formal publication from the Rothstein Kass Institute, a thought leadership “think tank” designed to provide actionable information and insights to the alternative investment and broader financial services communities.

Icahn gives up bid for truck maker Oshkosh (Postcrescent)
Billionaire investor Carl Icahn is giving up his bid to buy truck maker Oshkosh after less than 25 percent of the company’s shares were tendered before his offer expired. Oshkosh Corp. shares fell more than 4 percent in Tuesday trading. Last week, Icahn made it clear that he would walk away from his bid that valued the company at about $3 billion if the threshold wasn’t met. The tender offer expired on Monday, with about 22 percent of the shares tendered.

No payback for Singer this year (NYPost)
Paul Singer’s last-ditch attempt to get cash from Argentina this year has failed. A motion by Singer’s hedge fund, Elliott Management, requesting that the South American country put up a security deposit of $250 million by Dec. 10 was denied by a federal appeals court yesterday. “Since we will not have a big payment for ages (if ever), this looks like a huge blow to [Elliott’s] strategy,” said sovereign-debt expert Anna Gelpern.

Prosecutor wants Ganek, too (NYPost)
Another hedge-fund heavyweight may get slimed in Uncle Sam’s long-running insider-trading probe. The government is seeking permission to name Level Global co-founder David Ganek a co-conspirator in the unfolding insider-trading trial against his former partner, Anthony Chiasson. Prosecutor Antonia Apps, in a memo to Judge Richard Sullivan yesterday, said there is “substantial circumstantial evidence” showing that Ganek “did in fact know that [information on tech companies] came from sources inside those companies.”