Goldman to Invest in City Jail Program, Profiting if Recidivism Falls Sharply (NYTimes)
New York City, embracing an experimental mechanism for financing social services that has excited and worried government reformers around the world, will allow Goldman Sachs to invest nearly $10 million in a jail program, with the pledge that the financial services giant would profit if the program succeeded in significantly reducing recidivism rates. The city will be the first in the United States to test “social impact bonds,” also called pay-for-success bonds, which are an effort to find new ways to finance initiatives that might save governments money over the long term.
SNB-central bank or hedge fund?: James Saft (Reuters)
Switzerland is rapidly turning into a large hedge fund with a small country attached. Switzerland on Tuesday revealed its foreign exchange reserves now total 365 billion francs ($374 billion), a rise of 50 percent in just three months and taking it to a dizzying 62 percent of Swiss annual output. A small Alpine country with a big banking industry is now the world’s sixth-largest reserves holder, behind only much larger or resource-rich countries like China, Japan, Russia and Saudi Arabia.
Ex-Research Consultant Shared Data With Fund Manager in Insider Case (WSJ)
A former independent research consultant said Wednesday that he sought out and shared confidential information about a semiconductor maker with a Northern California hedge-fund manager on trial in New York for insider trading. Federal prosecutors in Manhattan have accused Doug Whitman, of Whitman Capital in Menlo Park, Calif., of making improper trades based on nonpublic information he received about technology companies from Karl Motey, the research consultant, and others. Mr. Whitman has pleaded not guilty to conspiracy and securities-fraud charges.
Shanghai Hedge Fund Association Welcomes New Advisors (HedgeFund)
The Shanghai Hedge Fund Association has brought on two industry veterans as advisors for its International Advisory Council. Opalesque reported that Qi Shou and Ho Ho will be providing assistance to the SHFA to help it understand better the operations and practices of the hedge fund industry.
Top firms liquidate EM Alt Ucits fund (CityWire)
Schroders and Sloane Robinson have chosen to liquidate the Schroder GAIA Sloane Robinson Emerging Markets fund after a sustained period of redemptions, Citywire Global can reveal. The fund was launched as a collaboration between the asset management firm and the renowned hedge fund specialist in June 2010. It was the second Alternative Ucits fund to be added to Schroders’ GAIA platform, which is designed to grant investors easy access to hedge funds within a transparent, regulated structure.
Move to regulate hedge funds in SA (BusinessDay)
HEDGE funds are finally coming out from the shadows, with an industry task group recommending that two regulated products, “lite” and “heavy” versions, be created for the South African market space. The move to regulate hedge funds — previously unregulated and known for high risks and fees yet often surprisingly low returns — forms part of the Treasury’s overall drive to a “twin peaks” regulatory model for South Africa within the next two years. Expanding access to financial services, improving cost transparency and reducing fees and charges are other key planks to the proposals. “A huge task team is working with the Treasury and the Financial Services Board (FSB) on hedge fund regulation,” says Leon Campher, CEO of the Association for Savings and Investment South Africa (Asisa).
Book review: Guide for investment into a range of onshore and offshore fund vehicles (HedgeFundsReview)
Professional and private investors into alternatives will find the Financial Times Guide to Investing in Funds a valuable addition to the library. The book, designed to help individuals select investments, assess managers and protect their wealth, guides readers through the funds market. It highlights the best, and sometimes overlooked, ways to retain capital and ensure a high return. A clear layout gives chapters on topics such as managers, fund structures, service providers, investment processes and risk management. The publication offers a broad picture of the business of asset managers and the funds they run as well as a crash course in business models and investment strategies.
On the Road to Tampa — Willie and the Hedge Fund Managers (Spectator)
Breitbart is reporting that Willie Nelson will be crooning at the Republicans’ national séance in Tampa later this month. Great singer, but a strange selection for the GOP. Willie is a versatile stylist with a well-deserved reputation for connecting with his audiences (I caught the magic one night in the late eighties at a concert in Lakeland, Florida). But while Willie is a musical genius, he’s a political ignoramus. His politics are straight left-populist, made even gauzier by smoke from the weed Willie would like to see made legal. So how well will he connect with the junior bankers, car dealers, marketing majors, and hedge funds managers that will make up a fair fraction of the Republican delegates? It’s hard to imagine Mitt Romney and Willie sharing a drink and a moment. Less likely things have happened. But it would take a while to think of one.
Madoff trustee seeks to block $410 mln Merkin accord (Indiatimes)
The trustee seeking money for victims of Bernard Madoff is trying to block a $410 million settlement resolving New York’s claims against a Wall Street hedge fund manager accused of secretly steering client money to the swindler. Irving Picard, the trustee, on Wednesday asked the US Bankruptcy Court in Manhattan to block the settlement with the financier Ezra Merkin, saying it interferes with his exclusive right to seek money for victims of Madoff’s Ponzi scheme.
Can Sherwin-Williams Keep Up Its Streak? (SeekingAlpha)
Paint and finish company Sherwin-Williams (SHW) is up about 75% over the last year. While some of Sherwin-Williams’ business units tend to be exposed to the broader economy, in general it does not track the S&P very closely with a beta of 0.6. In fact, its recent performance is hardly anomalous: the stock has nearly doubled over the last five years while the S&P 500 index (SPY) is just clawing its way back to that point.
Will Eric Hovde denounce Mitt ‘Mandate’ Romney? (Madison)
Our friend Eric Hovde is hoping to win the Republican U.S. Senate nomination by attacking Tommy Thompson for supporting individual mandates to fund health care reforms. That’s par for the course in Republican primaries these days, as everyone is running against “Obamacare,” the Affordable Care Act reform that includes an individual mandate as an essential financing element.
Weathering the perfect political storm (Malaysiakini)
“We are not victims, but time is running out, why waste it.” Michael Conley, founder of Storm Warnings. A political website recently highlighted the Nouriel Roubini, (better known as “Dr Doom”), prediction that Malaysia will be hit by the Perfect Storm and implied that this time there would be no excuse such as pointing it to external factors. To be more direct, we would have only ourselves to blame and we are “least able to do anything about it”.
Icahn Gets Proxy Adviser Support in Forest Labs Board Battle (BusinessWeek)
Billionaire investor Carl Icahn said he won the support of Institutional Shareholder Services Inc., a proxy adviser, for two of his candidates for the board of Forest Laboratories Inc. (FRX) (FRX) ISS recommended Forest shareholders vote for Daniel Ninivaggi, Icahn Enterprises LP (IEP) (IEP)’s chief executive officer, and Pierre Legault, CEO of Stone Management LLC, Icahn, the New York-based drugmaker’s second-largest shareholder, said today in a statement.
Chef Corrigan Counts The Cost Of Olympics, Hedge-Fund Gloom (Bloomberg)
Richard Corrigan, the Irish-born restaurateur, isn’t having a great Olympics. Upper Grosvenor Street, outside the chef’s flagship London restaurant Corrigan’s Mayfair, is partly closed. He’s also just opened a new venue at Harrods department store, Bentley’s Sea Grill, and he still has to find time for Bentley’s, the seafood restaurant near Piccadilly that he bought in 2005. We spoke at the original Bentley’s.
Credit Suisse Promotes Lee To Asia-Pacific Capital Services Head (Bloomberg)
Credit Suisse Group AG (CSGN), the second- largest Swiss bank, promoted Deborah Lee to head a team that links potential investors with hedge funds in Asia-Pacific. Lee, based in Hong Kong, replaces Ben Happ as head of capital services team in the Zurich-based bank’s prime brokerage department in the region. Happ is moving to Boston and will specializing in connecting North American investors with international hedge funds, with a focus on Asian managers, Lee said in an interview today.
Suzlon Bonds Rally Most In Two Years On Redemption (Bloomberg)
Suzlon Energy Ltd. (SUEL) handed its convertible bondholders the biggest monthly gain in more than two years after India’s largest wind-turbine maker redeemed $360 million of debt and averted default. The company’s $175 million zero-coupon note due July 2014 rallied 8 percent in July, the most since December 2009, pushing yields down to 29.1 percent from 32.7 percent, prices from Elara Capital Plc. show. Its debt due October 2012 gained 2.3 percent. India’s equity-linked notes rose 1 percent last month, underperforming the 2 percent return on South Korean and Hong Kong bonds, Barclays Plc indexes show. Comparable U.S. securities returned 0.8 percent.
Fortress profit up 9 pct as funds make gains (Reuters)
Fortress Investment Group’s profit rose slightly in the second quarter on stronger performance in some of its credit funds, hedge funds and private equity portfolios. New York-based Fortress, one of a handful of publicly traded alternative asset managers, on Thursday reported pre-tax distributable earnings rose 9 percent to $50 million, or 9 cents per share, from $46 million, or 9 cents per share, a year earlier.
Alliance Trust takes on 1.2 billion stg of Aviva assets (Reuters)
Alliance Trust, one of Britain’s largest investment trusts, has signed a deal to acquire a portfolio of “socially responsible” funds from insurance group Aviva as it moves ahead with an overhaul of its businesses. Alliance Trust said on Thursday its Alliance Trust Investments unit will pay 1 million pounds to take on 1.2 billion pounds of assets in Aviva Investors Sustainable and Responsible Investment Funds that will transfer early next year.
Och-Ziff earnings beat estimates (Reuters)
Och-Ziff Capital Management reported a slightly lower quarterly profit on Thursday but beat Wall Street expectations as its investment funds delivered strong returns. New York-based Och-Ziff, one of a small number of publicly traded hedge fund companies, reported distributable earnings of 15 cents per adjusted Class A share, topping analysts’ average forecast by 2 cents.
FRM founder speaks of acquisition, consolidation and seeding in the fund of funds industry (Opalesque)
London’s Opalesque Roundtable participant Blaine Tomlinson, founder of fund of funds group Financial Risk Management commented on their acquisition by Man Group in May, the future for funds of funds generally and the development of their seeding business since 2007. …Tomlinson said that the two key issues of ‘scale and fit’ drove the decision to integrate FRM with Man’s Multi-Manager business, creating a $19bn multi-manager business. “One of the things we are seeing in the fund of funds industry is the importance of scale” Tomlinson said. “Competition is intense, and so firms that can deliver incredible resources and breadth of capability are going to do best”.
NY Hedge Fund Affiliate Accused Of Fraud (HedgeCo)
Platinum Partners, an affiliate of NY hedge fund manager Platinum Management has been accused of fraud by Hartz Solar Hamilton LLC., According to new Jersey website NorthJersey.com. Hartz filed suit in U.S. District Court (Newark), saying that the hedge fund affiliate reneged on a pledge to buy energy credits (Solar Renewable Energy Credits or SRECs) from the company’s South Jersey solar project at a cost of $230,000.
Florida Retirement System ekes out small return (PIOnline)
Florida Retirement System, Tallahassee, returned 0.29% on its investments for the fiscal year ended June 30, outperforming the defined benefit pension plan’s customized benchmark by 77 basis points, according to preliminary figures released Wednesday by the Florida State Board of Administration, which oversees the plan. The plan ended the fiscal year with $122.7 billion in assets, an FSBA statement said. In the 12 months ended June 30, 2011, the plan returned 22%, exceeding its benchmark by 30 basis points.
Knight Capital Says Trading Mishap Cost It $440 Million (NYTimes)
$10 million a minute. That’s about how much the trading mishap that set off turmoil on the stock market on Wednesday morning is already costing the trading firm. Knight Capital Group announced on Thursday that it lost $440 million when it sold all the stocks it accidentally bought Wednesday morning because a computer glitch. The losses are threatening the stability of the Jersey City based firm. In its statement, Knight Capital said its capital base, the money it uses to conduct its business, had been ‘severely impacted’ by the event and that it was ‘actively pursuing its strategic and financing alternatives.’
Apollo’s 2nd-Quarter Profit Falls 66% (NYTimes)
Apollo Global Management said on Thursday that its second-quarter profit tumbled by 66 percent in the second quarter, as its core private equity business grappled with difficult markets. The investment firm said that it earned $18.7 million for the quarter, down from $117.5 million in the same time a year ago. That amounts to about 5 cents a share, still far better than the loss of 17 cents analysts surveyed by Bloomberg had expected.
Tiger Global Dumped 1.62 Million LinkedIn Shares (InstitutionalInvestor)
Tiger Global recently sold more than 1.52 million shares of LinkedIn. The hedge fund and private equity firm said in a regulatory filing it unloaded the shares between June 20 and July 27 for roughly $101 to $106 per share. The stock is down about 2 percent to below $102 in early afternoon trading on Tuesday. More than 371,000 shares were sold by Tiger Global Private Investment Partners V, one of seven private equity funds controlled by Chase Coleman’s firm.
Phil Falcone Would Rather His Creditors Just Believed Him When He Said They’ll Be Repaid (Observer)
LightSquared is the broadband wireless company that filed for Chapter 11 in May. Phil Falcone is the Harbinger Capital founder who owns a majority interest in LightSquared. In June, the Securities and Exchange Commission charged Mr. Falcone with arranging to borrow $113.2 million from Harbinger against the advice of Harbinger’s then-operating chief and two lawyers. In July, The Wall Street Journal reported that Mr. Falcone planned to defend himself by “deflecting blame to a former Harbinger operating chief and two lawyers.” We mention these things because Mr. Falcone is feeling stubborn about a legal matter.
Pershing Square Hires Ben Hakim of BX for SR. Role; Fund Up 3.3% YTD (ValueWalk)
Bill Ackman’s Pershing Square Capital Management LP. is down 7.5% for the period of Apr-June, and up 3.3% year to date, the fund was up 11% in the last quarter that ended on March 2012. The quarterly letter to investors discusses the fund’s decision to let go of its stake in Citigroup Inc. (NYSE:C). Pershing has now added The Procter & Gamble Company (NYSE:PG) to its portfolio. Lets take a look at how Ackman justifies the liquidation and addition of Pershing’s investments in Citi and Procter & Gamble respectively:
HSBC welcomes latest Singaporean hedge fund regulations (MyCOOConnect)
HSBC Securities Services has welcomed new rules aimed at regulating Singapore’s $53 billion hedge fund industry. The Monetary Authority of Singapore (MAS) has proposed fund management companies with more than $250 million in Assets under Management (AuM) obtain a licence while smaller firms will be required to register for the first time. All firms must now have systems monitoring the risks they are running and it will be mandatory to have at least two qualified investment professionals on the management team. MAS is due to announce the rules later this month.