Hedge Fund News: Jim Rogers, Steve Cohen, Volkswagen AG

Duke CEO Rogers to retire; other execs will shuffle (CharlotteObserver)
Duke Energy Corp (NYSE:DUK) CEO Jim Rogers will retire at the end of 2013 and other key executives will be shuffled under an extraordinary agreement to end regulators’ five-month investigation of Duke Energy’s star-crossed merger with Raleigh-based Progress Energy, Inc. (NYSE:PGN). The proposed agreement goes before the N.C. Utilities Commission for approval on Monday. The commission has suggested that Duke’s directors misled it by sacking former Progress chief Bill Johnson, who was to have led the combined companies, hours after the $32 billion merger closed on July 2.


Northern Trust hires Edwin Parker to support alternative fund administration services (HedgeWeek)
Northern Trust has expanded its alternatives business development team across the UK, Ireland, Luxembourg and Channel Islands with the appointment of Edwin Parker. In this newly created role Parker (pictured) will focus on offering Northern Trust’s hedge fund administration services and its specialist private equity, infrastructure, and real estate fund administration services to fund managers across the region.

Hedge funds feel squeeze of tighter bank curbs (Reuters)
Tighter capital rules being imposed on banks to reduce risk in the financial system are starting to trickle down to hedge funds looking to borrow money to trade. A J.P. Morgan & Chase (JPM.N) executive said Thursday the tougher capital holding requirements for banks mean some hedge fund borrowing costs will rise in the coming years. And that could make some trading strategies that rely on higher levels of leverage, or borrowed money, more costly. Teresa Heitsenrether, JP Morgan’s Global Head of Prime Brokerage, said at the Reuters Global Investment Outlook 2013 Summit that, going forward, Wall Street banks will ask hedge fund clients to put up more collateral in exchange for some borrowings in order to reduce the risk to the banks making the loans.

Fund managers short sell Nokia in belief its stock will plunge (GomoNews)
Finnish manufacturer Nokia is among European tech firms being targeted by hedge fund managers who are selling its stock short in anticipation its price will dive. Research conducted by Markit, which provides securities lending data, reveals 6.7 per cent of such shares are on “loan” to hedge fund managers who believe the tide is turning against Nokia and other big technology names.It has led to a surge in short selling of the stock which is temporarily plucked from the portfolios of wealthy clients, sold and then re-purchased if and when the price plummets. Nokia alone has seen an 8.1 per cent rise in the number of shorts against it, rising to 18.8 per cent of its stocks out on loan, as investors bet against the success of its forthcoming Lumia 920 phone and Windows 8 reliance.

Michigan Professor Linked to SAC Insider Trading Case Resigns (SFGate)
Sid Gilman, the University of Michigan neurologist linked to an insider trading case, has resigned his university position. Gilman, 80 was named by authorities as the person who leaked data to Mathew Martoma, 38, an SAC Capital Advisors LP hedge fund manager charged with insider trading. Gilman quit his university post on Nov. 27, Pete Barkey, a spokesman for the Ann Arbor-based university’s medical school, said in an e-mail.

Porsche Seeks to Reverse Hedge Fund Suit Ruling in New York (BusinessWeek)
Porsche SE (PAH3) is seeking to reverse a ruling that the carmaker must face a lawsuit by hedge funds accusing it of hiding a plan to corner the market in Volkswagen AG (FRA:VOW) shares. Porsche today asked the New York State Supreme Court’s Appellate Division in Manhattan to overturn Justice Charles Ramos’s August decision rejecting its motion to dismiss the 2011 lawsuit by 26 hedge funds including David Einhorn’s Greenlight Capital Inc.

SAC Capital’s biggest holdings include Hyatt Hotels (ChicagoBusiness)
Hyatt Hotels Corp., the Chicago-based hotel chain founded by Jay Pritzker, is among the top holdings of SAC Capital Advisors L.P., the hedge fund that says it could be charged by SEC. Stamford, Conn.-based SAC has a 5.1 percent stake in Hyatt, according to Bloomberg. The hedge fund said it owned more than 2.3 million shares in the hotel company at the end of the third quarter in a recent filing with the SEC, making its stake in Hyatt worth $84.4 million based on Hyatt’s closing price of $36.30 on Thursday.

Hedge Funds Find Tech Stocks in the Bargain Bin (BusinessWeek)
Fans of tech stocks and train wrecks got to combine their interests in 2012, as several high-profile companies endured an awful year: Shares of Facebook are off 31 percent, Zynga is down 73 percent, and Groupon is at negative 79 percent. Yahoo! struggled, Netflix fell, and even Apple had a rough stretch that lopped off a quarter of its value. Along the way, some of these stocks became so battered that they began to look like steals to hedge fund managers. The latest example is a 9.9 percent stake in Groupon announced Nov. 20 by Tiger Global Management, the $8 billion hedge fund run by Chase Coleman and Feroz Dewan.

Hedge funds say shorting Japan will work (FT)
Why would a hedge fund manager be interested in adult diapers? They are a clue to what growing numbers of hedge funds are now seeing as the next big trade: the bursting of Japan’s bond bubble. This year, sales of adult diapers in Japan eclipsed sales of infant ones for the first time; a neat statistic that captures the huge demographic challenge the country faces – one big factor of several that bears believe are behind a crisis set to break in the coming months.

This Hedge Fund Thinks A Turnaround In Coal Is Here (InsiderMonkey)
Maybe Dmitry Balyasny’s Balyasny Asset Management expects Santa to have a long naughty list this year, but more likely it expects steel producers like United States Steel Corporation (X) to start ramping up demand for metallurgical coal. The fund had doubled the size of its position in Walter Energy, Inc. (NYSE:WLT) during the third quarter of 2012 to a total of 2 million shares, which had made the stock one of its five largest holdings by market value at that time (see more of Balyasny’s favorite stocks). Now, according to a 13G filed with the SEC, the fund owns 3.4 million shares of the stock giving it 5.4% of the total shares outstanding.

Emerging hedge fund managers can offer diversification in ‘new normal’ challenging climate (Opalesque)
Jeroen Tielman, chief executive officer and founder of hedge fund seeding platform IMQubator has named the current challenging market scenario as ‘new normal’. Bonds he dismisses as offering return free risk rather than risk free return, and he finds that the uncertainties in the markets make investors react with more of a binary risk on / risk off behaviour. “The consequence is that investors are seeking safe havens including cash” Tielman says in an interview with Opalesque, “So we are saying what does this mean for hedge funds and emerging managers in the hedge fund space?”

Twin Capital Adds Deep Value Analyst (Finalternatives)
Hedge fund Twin Capital Management has hired a new analyst to focus on special situations and deep value opportunities. Richard Fitzgerald was named a vice president and analyst at the New York-based event-driven shop. He joins from Jefferies & Co., where he was an analyst for its long/short equity hedge fund, Dakota Fund. “We’re delighted to add an analyst of Richard’s caliber focused on special situations and deep value,” Twin Capital founder David Simon said. “The addition of Richard to our team gives added depth to the quality of our research capabilities.”

Asian investors targeting London real estate investments, Stratton Street to focus on Asian investors for its RMB Bond Fund… (HedgeWeek)
London-based hedge fund manager, Stratton Street Capital LLP, aims to raise assets from Asian investors with its highly flying renminbi bond hedge fund. As reported by Bloomberg, the USD215million Renminbi Bond Fund has returned an impressive 23 per cent this year. It invests in dollar-denominated investment-grade bonds and uses non-deliverable currency forward to hedge investments to the Chinese currency.

Icahn draws line on Oshkosh tender offer (Postcrescent)
Billionaire investor Carl Icahn said Thursday that he will walk away from his bid to buy truck maker Oshkosh Corp. if at least 25 percent of the company’s shares aren’t tendered before his offer for them is set to expire on Monday. Icahn, who is known for buying stakes in struggling companies and then shaking them up with mixed results, maintains that Oshkosh needs new management and a new strategy. But he said that if he doesn’t get at least 25 percent of the shares by Monday, he will drop out of the tender offer and proxy fight for seats on the board and “move on to other endeavors.”

Energy hedge fund springs from bank alumni (Reuters)
Three natural gas and power traders who had worked for JPMorgan Chase & Co and Barclays Plc have teamed up to start a fund trading in gas and power markets starting in January. Stamford, Connecticut-based Cogent Energy Investment Management LLC has three principals, Fletcher Sturm, Robert Benson and Frank Ermis, all Enron alumni, according to a report in the online publication SparkSpread.com.

US court upholds ruling against Vitro revamp (Reuters)
Vitro SAB de CV lost its bid to enforce its Mexican restructuring plan on U.S. hedge funds on Wednesday in a ruling that legal experts said could shape the how foreign insolvencies are handled by American courts. The case was closely watched by foreign investors in Mexico, who feared Vitro’s reorganization could have undermined U.S. lenders’ willingness to extend credit to Mexican companies. The Fifth Circuit Court of Appeals in New Orleans affirmed a ruling by a Dallas bankruptcy court judge who refused to recognize the $3.4 billion Mexican reorganization plan because it was contrary to U.S. policy.

SEC Names Todd K. Scharf as Chief Information Security Officer and Associate Director in Its Office of Information Technology (SEC)
The Securities and Exchange Commission today announced that it has named Todd K. Scharf, Sr. as Chief Information Security Officer and Associate Director in the agency’s Office of Information Technology. “Todd Scharf has an extensive technical and operational background in information security,” said Thomas A. Bayer, the SEC’s Chief Information Officer. “Todd’s knowledge of market operations, along with his leadership efforts to improve the SEC’s information security operations already have had a significant effect on the agency, and we’re pleased to welcome him to this new position.”

SEC Charges Two Brokers with Insider Trading Ahead of IBM-SPSS Merger for $1 Million Profit (SEC)
The Securities and Exchange Commission today charged two retail brokers who formerly worked at a Connecticut-based broker-dealer with insider trading on nonpublic information ahead of IBM Corporation’s acquisition of SPSS Inc. The SEC alleges that Thomas C. Conradt learned confidential details about the merger from his roommate, a research analyst who got the information from an attorney working on the transaction who discussed it in confidence. Conradt purchased SPSS securities and subsequently tipped his friend and fellow broker David J. Weishaus, who also traded. The insider trading yielded more than $1 million in illicit profits.

Muddy Waters Offers to Pay for Olam Debt Rating (NYTimes)
Short-sellers have a number of tools at their disposal when seeking to profit from a drop in a target company’s share price. But Friday, Muddy Waters Research, the short-seller founded by Carson C. Block, introduced an unusual twist in its battle against the Singapore agricultural commodity company Olam International: an offer to pay for Olam to get its debt rated by Standard & Poor’s. “We hereby make a bona fide offer to pay for Olam to have one of its public debt issues rated by S.&P.,” Muddy Waters said in a statement published on its Web site and circulated via e-mail.

Cohen’s damage control (NYPost)
Beleaguered hedge fund honcho Steve Cohen held a conference call yesterday for his roughly 1,000 employees to explain potential civil charges against his firm, SAC Capital Advisors, sources said. The call with SAC’s employees went over similar talking points as the call with investors the previous day, according to a person familiar with the call. In the latest call, officials notified employees that last week, the $14 billion Stamford, Conn., hedge fund received a Wells Notice from the Securities and Exchange Commission tied to trading by a former portfolio manager who was arrested Nov. 20 on insider trading charges.