Hedge Fund News: Bill Ackman, David Shaw & Steve Cohen’s Trial

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Hedge Fund Helmed By Ex-South Korea SWF Chief Shuts (FINalternatives)
The hedge fund run by former Korea Investment Corp. chief Guan Ong will close its doors, rather than face increased market volatility, it said today. Ong told Reuters that he would shut his Blue Rice Investment Management and return client capital by the end of the year. The Singapore-based credit specialist currently manages less than US$100 million across two funds. “The world is going to be a bit more volatile,” Ong told Reuters. “The way our funds are structured, we kind of feel that it’s best for us to return investors’ [capital] when investors are still up.”

Jewish Tycoons William Ackman and Dan Loeb in Vicious Feud Over Herbalife (Jewish Daily Forward)
It’s a financial dogfight for the ages. When billionaire investor and CEO of Pershing Square Capital hedge fund William Ackman short-sold $1 billion in stock of Herbalife Ltd. (NYSE:HLF), the Los Angeles-based nutrition company, he drew the ire not just of the company, but of other fellow hedge funders who saw Ackman as taking his legendary arrogance too far. Herbalife’s CEO Michael Johnson has taken particular issue with these claims, calling it a “bogus accusation” while accusing Ackman of manipulating the market, Bloomberg Businessweek reported. Ackman has made himself a string of enemies, including Dan Loeb, the founder of Third Point LLC Hedge Fund, who has subsequently bought a large position in Herbalife, betting on its long term viability.

Hedge funds bet on Penney turnaround (Fort Worth Business Press)
J.C. Penney Company, Inc. (NYSE:JCP) has attracted the attention of some top hedge funds as the retailer struggles to turn itself around. Shares of the troubled retailer have risen 35% over the past month, bouncing off their lowest levels in 33 years. The rebound comes near the end of a brutal year for the company. J.C. Penney shares are down more than 50% in 2013, making it the worst performing stock in the S&P 500. Bill Ackman, a long-time investor in J.C. Penney and a supporter of ousted CEO Ron Johnson, cut his losses in August. But the company has recently received backing from some other high-profile hedge fund managers, including George Soros and David Tepper of the hedge fund Appaloosa Management.

Ratings Agencies Sued For Bear Hedge Fund Collapse (FINalternatives)
A lawsuit accusing the three major credit-ratings agencies of playing fast-and-loose with their grades for two Bear Stearns hedge funds whose collapse presaged the financial crisis has come more than six years after their fall. The liquidators for the Bear Stearns High-Grade Structured Credit Fund and a more highly-levered sister fund filed their fraud complaint against Fitch Ratings, Moody’s Investors Service and Standard & Poor’s last week. Geoff Varga and Mark Longbottom in July indicated that the lawsuit would be coming with a summons and notice. Those filings came before the six-year anniversary of the funds’ collapse, which cost investors some $1.6 billion and contributed to the bank’s eventual fall, after which such claims would be barred.

Galleon Founder Raj Rajaratnam’s Insider Trading Conviction Stands (IBTimes.co.uk)
A federal appeals court in the US refused to re-examine the conviction of Galleon Group hedge fund founder Raj Rajaratnam, the highest ranking financial executive to be convicted in a multi-year federal crackdown on insider trading. The 2nd US Circuit Court of Appeals in New York rejected Rajaratnam’s request to reconsider his May 2011 conviction by a Manhattan federal jury. The hedge fund manager was found guilty on nine counts of securities fraud and five counts of conspiracy. The 2nd Circuit did not provide a reason for its 18 November decision, reported Reuters. Rajaratnam, serving an 11-year prison sentence, could now request the US Supreme Court to review his conviction.

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