Hedge Fund Gossip Has A Bad Effect (FT)
According to a study by Charles Baden-Fuller, professor of strategy at London’s Cass Business School, the nosier a hedge fund manager is about the affairs of their rivals, the worse his or her investment returns will be. Prof Baden-Fuller’s hypothesis is that there is a sinister side to the relationships that bind hedge funds. Spying on the neighbours is damaging, he says, as it can lead to poor investment performance and increased risk. And in some cases, the information that passes from one hedge fund manager to a prime broker, who executes trades, and back to a rival hedge fund tends to be gossip – the meaning of which often gets lost in translation, his research suggests.
Bondholders Challenge Government Attempt To Share Pain (Irish Times)
TWO INVESTMENT funds holding subordinated debt at AIB last week stepped into the High Court to challenge the Government’s first plan to burn bondholders and raise about €2 billion. New York based funds Abadi & Co Securities and Aurelius Capital Management, which are not connected, have sought to stop a Government order aimed at forcing losses on their debt investment. The previous week Minister for Finance Michael Noonan had secured a Subordinated Liability Order under the powerful bank restructuring law, the Credit Institutions Stabilisation Act, introduced late last year. It was the first such order obtained under the legislation. Under the order, bondholders had just five days to file objections.
E-Trade’s Stock Drops 3% As Citadel Cuts Stake To Less Than 10% (Barron’s)
Shares of E-Trade (ETFC) are down nearly 3% today after the online broker said late Monday that Citadel Equity Fund will sell 27.5 million more shares of the company. In February, Citadel dropped its stake to around 20%. The latest move likely reduces that total to around 9.5% of E-Trade’s fully diluted shares, says Sandler O’Neill analyst Richard Repetto….It also might be worth noting that Citadel’s Ken Griffin remains on ETFC’s board, at least for now. The huge hedge fund company’s investment in ETFC dates back to 2007′s $2.6 billion infusion into the discount broker and financial services player.
Former Citadel, Balyasny man Cowley to launch MC² (HF Intelligence)
Former Citadel and Balyasny man Michael Cowley is preparing to go live with his own long/short industrials-focused global equity hedge fund.