Hedge Fund News: Ken Griffin, Bill Ackman, Warren Buffett

CITADEL INVESTMENT GROUPMorningstar reports hedge fund performance for April, asset flows for March (Opalesque)
Opalesque Industry Update: Morningstar, Inc. (NASDAQ: MORN), a leading provider of independent investment research, today reported preliminary hedge fund performance for April as well as estimated asset flows through March 2012. The Morningstar MSCI Composite Hedge Fund Index, an asset-weighted composite of nearly 1,000 hedge funds in the Morningstar database, inched up 0.2% in April, outpacing most major equity indexes during the month. The MSCI World Stock Market Index, by comparison, declined 1.1%. “After a strong first-quarter rally, equity markets across the globe hit a bump in April,” said Mallory Horejs, alternative investments analyst at Morningstar. “Hedge fund performance was mixed, with arbitrage and fixed-income strategies posting the highest gains.”

Canadian hedge funds are trailing the market (Theglobeandmail)
Canadian hedge funds, supposedly run by the Street’s sharpest minds, are falling behind the main North American indices. According to new numbers, compiled in the Scotiabank Canadian Hedge Fund Index, both the asset- and equal-weighted hedge fund indexes are being beat by the S&P/TSX Composite Index and the S&P 500 so far in 2012. As of April 30, the asset-weighted index was down 6.65 per cent since January, while the TSX was down 2.8 per cent.

Kimberly Mounts, Founding Partner, President and CEO of MAP Alternative Asset Management Named One of Institutional Investor Magazine’s 2012 Hedge Fund Rising Stars (Marketwatch)
Kimberly Mounts, Founding Partner, President and CEO of MAP Alternative Asset Management, has been named one of Institutional Investor Magazine’s 2012 Hedge Fund Rising Stars. MAP Alternative Asset is a woman owned SEC registered investment advisor, focused on fixed income hedge funds and risk management with $25 billion in assets under advisory. Selected by Institutional Investor Magazine’s editorial staff, with input from the investment management industry, Hedge Fund Rising Stars are made up of individuals who are playing an increasingly significant role in the hedge fund industry. Special consideration is given to people who have demonstrated a proven ability to deliver in their field, have received recognition by their firms, have demonstrated entrepreneurship, are highly regarded by their peers, and have made a broader contribution to the hedge fund industry. This year’s 2012 Rising Stars of Hedge Funds will be honored at the 10th Anniversary Hedge Fund Industry Awards Dinner & Ceremony at the Mandarin Oriental in New York City on Thursday, June 21, 2012.

Brett Lane Joins Commonfunds Hedge Fund Strategies Group (Hedgeco)
Commonfund, a prominent investment manager for institutional investors, today announced the appointment of Brett Lane as Managing Director, reporting to A. Nicholas (Nick) De Monico, CEO, Commonfund Hedge Fund Strategies Group. “Brett is an integral addition to Commonfund, coming at an important time for the Hedge Fund Strategies Group as we expand market share and consider additional hedge fund solutions to develop,” said Nick De Monico, CEO, Commonfund Hedge Fund Strategies Group.

AMR hedge fund creditors organize to study merger (Reuters)
Hedge funds York Capital Management and King Street Capital are among a handful of AMR Corp AAMRQ.PK bondholders joining forces in hopes of boosting potential paybacks on more than $700 million in unsecured AMR debt, according to people familiar with the matter. The group, which also includes Marathon Capital, Claren Road Asset Management, Pentwater Capital Management and Litespeed Management, is studying a proposal from US Airways Group Inc (LCC.N) to merge with the bankrupt parent of American Airlines, but has yet to pledge support for the idea, the people said.

Tuberville Partner Indicted For Hedge Fund Fraud (Finalternatives)
The hedge fund partner of Texas Tech University football coach Tommy Tuberville has been arrested and charged with fraud. John David Stroud was indicted on May 7 on 21 criminal counts, including unregistered sale of securities, fraud and theft. He was arrested on May 15 and posted bail the following day.

HBK closes flagship to new investors following strong inflows and performance (Hfmweek)
HBK Capital Management, one of Dallas’s largest and oldest hedge fund managers with $6.7bn under management, has closed its flagship multi-strategy hedge fund to new investors after seeing almost half a billion dollars of fresh inflows in Q1, HFMWeek has learned. According to an investor letter obtained by HFMWeek, the firm decided to shut the $6.4bn offering to new allocations effective 1 April based on its current assessment of opportunities and excess capital, after accepting approximately $475m in subscriptions this year.

Canadian hedge funds celebrate a decade of stellar growth (Opalesque)
Speaking at a reception held at the official residence of the Canadian High Commissioner in London this week, James L McGovern, managing director of Arrow Capital Management Inc, outlined the growth of the Canadian hedge fund industry in the last 10 years. The occasion marked a celebration of a decade of ‘stellar growth which has seen Canadas hedge fund numbers as measured by members of the Canadian AIMA chapter – rise to some 80 institutions, while funds under management in the sector have risen from $12 billion five years ago to over $30 billion in 2012.

Goldman blames hedge fund victim in Hudson CDO fraud case (Thomsonreuters)
Remember the case over Goldman Sachs’s Hudson CDOs, in which U.S. District Judge Victor Marrero wrote a scalding opinion in March? Marrero refused to dismiss fraud claims against the bank, in a ruling that detailed Goldman Sachs’s alleged scheme to shed exposure to subprime mortgages by dumping toxic collateralized debt obligations on an unsuspecting public. This week Goldman had a little something to say about the case, and — surprise! — it’s not an apology. On Monday the bank’s lawyers at Sullivan & Cromwell filed Goldman’s answer and counterclaims to the securities fraud suit brought by the Dodona hedge fund. (Hat tip to Brune & Richard’s new must-check website, S.D.N.Y. Blog.) The most interesting part of the filing comes 40 pages in, when the bank outlines why (in its view) Dodona — and not Goldman — is the real wrongdoer in the Hudson CDO scenario.

Citadel Unit Said To Lose $35 Million On Facebook Trading (Bloomberg)
Citadel LLC, the investment firm run by Ken Griffin, said it lost money on Facebook Inc. (FB) trades in its broker-dealer unit. The loss at Citadel Securities may be as much as $35 million, according to a person with knowledge of the firm, who asked not to be named because the information is private. “Citadel Securities was impacted by issues with Nasdaq and the Facebook initial public offering,” Katie Spring, a spokeswoman for the Chicago-based firm, said today in an e-mail.

BlackRock’s Fink Says Buyback Shows Stocks Are Cheap (Bloomberg)
Laurence D. Fink, chairman and chief executive officer of BlackRock Inc. (BLK), said the money manager’s repurchase of stock from Barclays Plc demonstrates his belief that equities are cheap compared with bonds. “These are scary times, I’m not trying to suggest they’re not, but I think because they’re scary times, it’s a good entry level to be a long-term investor,” Fink said today at the company’s annual meeting in New York. BlackRock’s buy back of shares valued at $1 billion from Barclays is “a very good example of the relative cheapness of equities versus interest rates,” he said.

Ackmans Pledge $10 Million To Support Human Rights Watch (Bloomberg)
Bill Ackman, chief executive officer of Pershing Square Capital Management LP, and his wife, Karen, have pledged $10 million to the New York-based Human Rights Watch Inc. The Ackmans’ Pershing Square Foundation will give $2 million a year during the next five years to the nonprofit. The money will be used to expand its advocacy to countries including Brazil, India and South Africa and increase its research capabilities in the 90 nations it currently monitors, said Executive Director Ken Roth in a phone interview.

Buffett’s Idiot Challenge Seized By Jain In Premium Hunt (Bloomberg)
Ajit Jain, who helped build Berkshire Hathaway Inc. (BRK/A) into a $200 billion firm by underwriting risks that others shunned, is hunting for insurance-premium growth that his boss Warren Buffett says may be a thing of the past. The funds that Berkshire holds before paying out claims may decline after swelling to more than $70 billion last year from $39 million in 1970, Buffett said in a February letter to shareholders. The billionaire has used the premiums, called float, for acquisitions and investments to fuel expansion over the past four decades. According to Buffett, Jain took the letter as a challenge.

Bidder’s criminal record raises questions in Winnebago offer (Reuters)
North Street Capital, a little-known private equity firm, has offered to take recreational vehicle maker Winnebago Industries Inc. (WGO.N) private and has plans to raise a first investment fund of $300 million. But the criminal record of one of North Street Capital’s founders raises questions about both efforts. The Greenwich, Conn.-based shop earlier this month offered to buy Winnebago Industries at a revised $11 per share, a 75-cent increase from its initial offer in April. The latest offer would value the RV maker at more than $321 million. At deadline, North Street Capital was trying to supply additional information the company would need before evaluating the offer further.

Dartmouth College Whistleblowers Accuse Trustees Of Funneling Money Into Their Own Hedge Funds (Businessinsider)
We know that Dartmouth students aren’t big fans of hedge funds, but it turns out the university’s faculty aren’t too keen on them either. A group of Dartmouth professors and employees are requesting that New Hampshire state launch an investigation into how the college’s board of directors is funneling Dartmouth’s endowment money into their own hedge funds, venture capital and private equity firms. The group sent a letter to the General Attorney of New Hampshire in February notifying the state of the alleged conflicts, which they assert are in violation non-profit laws in the state.

SEC charges Northern California fund manager in $60 million scheme (Opalesque)
Bailey McCann, Opalesque New York: John A. Geringer a Northern California fund manager was charged by the Securities and Exchange Commission (SEC) with running a $60 million investment fund like a Ponzi scheme and defrauding investors by touting imaginary trading profits instead of reporting the actual trading losses he incurred. According to the complaint, the SEC alleges that Geringer’s GLR Growth Fund, used false and misleading marketing materials to lure investors into believing that the fund was earning double-digit annual returns by investing 75 percent of its assets in investments tied to major stock indices. In reality, Geringer’s trading generated consistent losses and he eventually stopped trading entirely. Geringer initially paid out false returns to original investors with the money from new investments. He also sent investors periodic account statements showing fictitious growth in their investments. According to the SEC’s complaint filed in federal court in San Jose, Geringer raised more than $60 million since 2005, mostly from investors in the Santa Cruz area.

Michael Geismar’s $710,000 blackjack breakfast (Absolutereturn-Alpha)
Michael Geismar’s blackjack run ended just after six o’clock on Friday morning with $410,000 in manila envelopes in cash sitting on a table at Café Bellagio in the namesake Las Vegas luxury hotel, right next to the plates of steak and eggs and glasses of ice water. The co-founder and president of $4.6 billion managed futures firm Quantitative Investment Management couldn’t put the bundled $100 bills in his room upstairs because the safe was already full with about $300,000 in winnings from two nights before. Geismar had a few hours to sleep before taking a private jet home to Charlottesville, Virginia on the final day of the SkyBridge Alternatives Conference. But he made time in the early hours of May 11 to celebrate with the four SALT attendees—marketers from SAC Capital Advisors and G2 Investment Group and two hedge fund consultants–who happened to join Geismar that night for a long, lucky and very lucrative run at the blackjack table.