Buffett Railroad Boosts Capital Plan to $3.9 Billion in Coal Bet (Businessweek)
Burlington Northern Santa Fe, the railroad controlled by Warren Buffett, plans $3.9 billion in capital spending this year, an increase of 11 percent from 2011, as the company boosts capacity for coal shipments. The 2012 proposal includes $2.1 billion on the core network and $1.1 billion on locomotive, freight car and equipment acquisitions, the company said in a statement today. The Fort Worth, Texas-based railroad is also spending $300 million this year on a U.S. rail-safety mandate.
Newt: Romney is ‘George Soros approved’ candidate (Washington Examiner)
At an event held at Stoney’s Country Bar in Las Vegas today, Newt Gingrich criticized Mitt Romney for being a candidate approved by George Soros. “I do not believe that the Republican party wants to nominate a George Sores approved candidate, I think we want a candidate who represents Americans who work pay taxes and believe in the Declaration of Independence, not someone who is clearly against the American ideal.” Gingrich declared.
SS&C May Scupper TPG’s Bid For Globeop (Reuters)
Financial software provider SS&C Technologies Holdings Inc. (SSNC.O) is eyeing GlobeOp Financial Services SA (GO.L) and has urged the hedge fund administrator’s shareholders not to accept a 508 million pound ($802 million) takeover offer from TPG Capital TPG.UL. GlobeOp’s management said last Wednesday it would recommend TPG’s cash offer to its shareholders, the first step in the U.S. buyout group’s effort to build a presence in the business of servicing the $2 trillion hedge fund industry.
Hintze’s CQS Starts ABS Hedge Fund After Prices Fell Last Year (Bloomberg)
CQS U.K. LLP, the $11.2 billion money-management firm founded by Michael Hintze, is starting a hedge fund to trade mortgage-backed securities after the value of the assets tumbled last year. The CQS ABS Alpha Fund started with $140 million this month, and investors have pledged additional capital to bring the fund to $200 million by April, according to a Feb. 2 letter sent to clients and obtained by Bloomberg News. CQS is limiting additional investments in the fund because “further inflows will be contingent on market opportunity,” the letter said.
Paulson’s Advantage Plus Hedge Fund Said to Rise 5% in January (Bloomberg)
John Paulson, the billionaire money manager who had his worst year on record in 2011, posted a 5 percent gain in January in one of his largest hedge funds as all strategies rose, according to a person briefed on the returns. Paulson & Co., which is based in New York and manages about $24 billion, lost money in what he called an “aberrational year” on investments including Citigroup Inc., Bank of America Corp. and Sino-Forest Corp. (TRE), the Chinese forestry company accused by short-seller Carson Block of overstating timberland holdings. Paulson’s Advantage Plus Fund had a 51 percent loss in 2011.
Falcone’s Harbinger Capital Lost 47% Last Year on LightSquared Venture Bet (Bloomberg)
Phil Falcone’s Harbinger Capital Partners LLC lost 47 percent for investors in his main hedge fund last year as he was forced to slash the value of his troubled wireless venture by more than half, according to a person familiar with the results. Most of the decline in the Harbinger Capital Partners Offshore Fund I came from Falcone’s investment in LightSquared Inc. (SKYT), which plans to offer high-speed data service to as many as 260 million people. The Reston, Virginia-based company is awaiting final clearance from the Federal Communications Commission as regulators weigh test results that show the service’s signals disrupt global-positional system equipment used by cars, tractors, boats and planes.
Hedge Funds Underestimating Policymakers’ Will to Impose Greek Bond Losses (Bloomberg)
Hedge funds seeking to wring profits from a Greek debt restructuring are underestimating the will of policy makers to impose losses on them, according to investors who say trying to beat the politicians is too risky. “It’s hard for us to come up with an investment thesis that makes it interesting,” said Robert Rauch, a partner at New York-based Gramercy Advisors LLC, a $2.7 billion hedge fund that has avoided investments in Greek debt. “It’s not clear to us that out of this process you can make any money.”
Ackman Offers “Risk Free” Justice, While Boaz Weinstein Likes CDS On The Safer Sovereigns (AR)
The Harbor Investment Conference, thrown on February 2 in support of 75-year-old New York City nonprofit , took its fundraising playbook from linking big money investment ideas with charitable donations. The event yesterday, held at JPMorgan Chase’s offices in Manhattan, included a series of investor presentations from such leading hedge and mutual fund managers as Bill Ackman of Pershing Square Capital Management, Boaz Weinstein of Saba Capital Management and William Danoff of the Fidelity Contrafund. Hosted by Ackman and Mark Axelowitz of UBS Private Wealth Management, the Harbor conferences have raised $435,550 so far for the charity. Part of the success is that Ackman promised the roughly 150 attendees that he would match any contribution, including an impromptu $25,000 commitment from Steven Roth, chairman of the…
Finisterre Capital Launches EM Equity Fund (FINalternatives)
London-based Finisterre Capital, responding to what it says is investor demand, has launched an emerging markets equity fund. The Finisterre Equity Fund, launched last November with $25 million in seed capital, is run by the former Newsmith EM equity team, Alistair Candlish and Edward Cole. The two, who joined Finisterre in August, 2011, also manage “a substantial equity allocation” within the $800 million Finisterre Global Opportunity Fund.
GlobeOp Adds Former CIMA Head To Caymans Board (FINalternatives)
GlobeOp Financial Services has appointed Tim Ridley, the former chairman of the Cayman Island Monetary Authority, to its Cayman Islands subsidiary board. Ridley, who served as CIMA chairman from 2004-2008, was also a former senior partner of Maples and Calder. He replaces Gary Linford, who recently resigned his post on the GlobeOp Cayman board.
Lawyer: Hedge Funds Must Heed Foreign Corrupt Practices Act (FINalternatives)
What is the Foreign Corrupt Practices act and why should you be concerned about it? Matthew Reinhard of the Washington, D.C.-based law firm Miller & Chevalier, says FCPA penalties have increased “exponentially” over the past decade and could pose a significant economic risk to investment managers. Reinhard would know—he focuses his practice on white collar crime, internal investigations and complex civil litigation and has conducted internal investigations into allegations of FCPA violations. He spoke to FINalternatives’ recently about the implications of the FCPA for private equity and hedge fund managers.
Edinburgh’s SVM, Level E Capital Join Forces (FINalternatives)
Edinburgh-based investment boutique SVM Asset Management has joined forces with Level E Capital, a hedge fund based in the Scottish capital. SVM, through its SVM Global fund, has made a “significant level of investment” in Level E Capital’s Maya Market Neutral fund, a systematic, long/short absolute return fund launched in early January. The Maya fund employs a “fully automated” process to invest in large cap UK and U.S. equities. The fund has a liquid, diversified portfolio of 400 positions, an average gross exposure of 200% and a target return of 15%, with a market correlation of less than 0.5.
HFR Reports Hedge Funds Up 1.72% In Jan. (FINalternatives)
The HFRX Global Hedge Fund Index gained 1.72% for the month of January, amid strong gains for global equities, glimmers of hope in U.S. economic data and improved sentiment with regard to the European debt crisis.
Boyer Allan Liquidating (FINalternatives)
After 14 years, Boyer Allan Investment Management is closing its doors.
Do Hedge Funds Like Facebook’s IPO? (HFN)
By now, everyone from hedge funds to Facebook’s estimated 845 million monthly users know about the social media behemoth’s long-awaited initial public offering. Now the obvious question: Is there an opportunity for fund managers?
Ader Investment Launches New $1B Fund (HFN)
Institutional asset manager Ader Investment Management has launched a new $1 billion fund. The fund will allocate capital to small and midsize hedge funds to help them increase their assets under management and enhance their distribution into fund of funds, according to a company statement.
Republican Front-Runner Romney Finds Favour With Hedge Funds (HFM Week)
A number of prominent US hedge fund managers have donated money to Republican front-runner Mitt Romney’s campaign to win his party’s nomination to take on Barack Obama in the 2012 presidential elections, including Tiger Management founder Julian Robertson, it has been reported. Three of Robertson’s former fund managers Lee Ainslie of Maverick Capital, John Griffin of Blue Ridge Capital and Chris Shumway, who founded Shumway Capital, have also made donations.
Japanese Hedge Fund Manager Out To Stop The Slump (Financial Times)
Twenty-three years on from founding what was once Asia’s largest hedge fund group, Shuhei Abe is still brimming with ideas. On a visit to disaster zones in Japan’s Miyagi prefecture last June, for example, the chief executive of Sparx Group was struck by the lack of accommodation for the volunteers and relief workers that would soon descend on the area.
Church Of England Doubles Investment With Under-Fire Hedge Funds (Scotsman)
THE Church of England has more than doubled the amount of cash its multi-billion pound endowment has invested in hedge funds, it emerged yesterday. Despite the public anger over corporate excess, the Anglican church’s £5.5 billion portfolio, managed by its commissioners, is now one of the largest UK investors in an industry that has been roundly criticised for its enormous pay packages.
Europe’s Pensions Flee Hedge Funds (Financial Times)
Europe’s hedge fund industry appears to be the big loser from a headlong rush by pension funds into multi-asset “absolute return” funds. In the US, demand for multi-asset funds is playing into the hands of hedge fund groups such as AQR Capital and Bridgewater Associates, which raked in at least $3bn from pension funds during 2011, according to figures from MandateWire, a sister service of FTfm.
Boys and Girls Harbor Conference Performance Data (Value Walk)
Special thanks to Bill Ackman, Maneet Ahuja and Mark Axelowitz for arranged the conference. The conference opened up with the following performance information: 9.5% up from one year ago, seven ideas equally weighted versus ~1% for the S&P500. Last year’s best performing idea was JCP, presented by Bill Ackman and up 34% since then.
FRM Forecasts Outlook For Hedge Funds Over 2012 (Opalesque)
Global hedge fund research and investment specialist Financial Risk Management (FRM) has produced its market summary for January 2012 and its outlook for the rest of the year. Over January, FRM reveals that there was a broad-based rally in equity markets with small caps outperforming large caps and growth stocks rallying more than value stocks. Among global equities, emerging market equities produced particularly strong gains, reversing some of the losses from last year. There were less exciting returns on Government bond markets as risk sentiment turned more positive through the month. The report says: “The US yield curve flattened and 10 year bond yields fell following the dovish statements from the Fed regarding keeping rates low”.
Hedge Fund Manager Sal Naro Launches Coherence Capital Partners LLC (Hedge Co. Net)
Sal Naro, former co-managing partner of hedge fund Sailfish Capital, a $4.4 billion asset management firm with approximately $2 billion in hedge fund assets, is announcing the launch of Coherence Capital Partners LLC. “Coherence will look to capitalize on inefficiencies and thematic trends in the capital markets,” Naro said. “Quality research and experience are cornerstones of our business model. Coherence Capital’s primary thesis is to invest in companies that show strong performance in their balance sheets with earnings that meet and beat expectations while taking short positions in credits that miss earnings expectations and suffer continued weakness in their primary business metrics.”
UCITS Hedge Funds Up 1.37% In January (Hedge Co. Net)
The UCITS Hedge Fund Alternative Index Global is up 1.37% in January, after a performance of -3.64% in 2011. The Fund of Funds Index is up 0.18% after finishing the year 2011 down -5.25%. All strategies are positive this month, with Emerging Markets posting the strongest gains with 4.04%. Long/Short Equity and Macro also start the year on a very positive note, up respectively 1.69% and 1.70%. CTA and Volatility somewhat lag the performance of the Global Index, with respective gains of 0.23% and 0.02%.
Tactics Over Returns For Major Hedge Funds In January (Institutional Investor)
You had to be a huge bear to have lost money in January when the S&P enjoyed its best start in 15 years. Yet a sampling of a number of major hedge funds that have already reported results to investors found that all of their main funds lagged the major indexes for the month when the S&P 500 climbed 4.4 percent, the Dow Industrials rose 3.4 percent and the Nasdaq surged 8 percent. They include…
Fairholme Case Study Presentation on Bank of America (My Investing Notebook)
Bruce Berkowitz updates his case study presentation on Bank of America. He estimates Fair Value at $20+.
Fairholme Case Study Presentation on AIG (My Investing Notebook)
“The seeds of great performance are usually sown in times of intense fear after a disaster.” Bruce Berkowitz updated his case study on AIG. He estimates Fair Value at $45+.
Against Risk Parity (Aleph Blog)
Many investment ideas are promising so long as few do them. Yes, there is an opportunity, but it is limited. “Shh, don’t tell everyone about it.” Thus, the concept of “risk parity.” Lever every asset class up until it has the same volatility as common stocks. Under theoretical conditions, one could make extra money doing this, and with less risk than just a common stock portfolio. That makes sense when few are doing it, but not when many are doing it. When I worked for Hovde Capital Advisors, I highlighted to the group how hedge funds were forcing every asset class to the same level of riskiness. A Grants Interest Rate Observer article on Leveraged Non-prime Commercial Paper is etched on my mind as emblematic of that era.
Surge In Mental Health Illnesses In Financial Services Sector (COO Connect)
There has been a surge in mental health illnesses among hedge fund managers and bankers as the financial crisis continues to take its toll. One mental health practitioner Jacqueline Hurst said she had seen a 40% increase in financial professionals seeking help. “Financial services can be an incredibly alpha male environment and often people do not talk about their issues. With the economy the way it is, a lot of these individuals are suffering from severe anxiety and stress and are simply sinking into depression,” she said.
Funds Of Hedge Funds Fight Their Corner (Financial News)
Consultants have been gradually disintermediating funds-of-hedge-funds managers since the financial crisis. Institutional investors are increasingly choosing to bypass funds of funds and the extra layer of fees they bring, and investing directly in hedge funds, turning to an investment consultant for advice on which to choose. Funds of funds have seen net outflows for the past four years, according to data providers BarclayHedge and Hedge Fund Research. The number of funds of funds decreased from 2,462 at the end of 2007 to 2,003 at the end of last year, said HFR.
Hot Links: Regrets Of The Dying (The Reformed Broker)
Morning News: February 6, 2012 (Crossing Wall Street)
Distressed Debt Weekly Links of Interest (Distressed Debt Investing)
10 Monday AM Reads (The Big Picture)
Trouble in court for Gupta, Greenlight, Paulson, Tiger, Moody’s – and other hedge fund news, Week 5 (Opalesque)
Hedge Funds Up In January, Harbinger Loses On Lightsquared, Boyer Allan To Close And More (Reuters Hedge World)
Frontrunning: February 6 (Zero Hedge)
Monday 7atseven: Looking For The Turn (Abnormal Returns)