Hedge Fund News: Marc Faber, Carl Icahn, BlackRock

Marc Faber: The Fed will Destroy the World (MoneyMorning)
America’s central bank, the Federal Reserve, will eventually destroy the world economy, says respected Swiss investor Marc Faber. The only consolation is that its crazy policies give investors an easy way to get rich. In an interview with Bloomberg, shortly after the Fed launched its third bout of quantitative easing (QE), the 66-year old Faber warned that ‘eventually we will have a systematic crisis and everything will collapse’.


‘Debt free’ Nine seals deal (HeraldSun)
After a marathon two days of negotiations, which were interrupted by Mr Gyngell rushing from the meeting last night wife Leila McKinnon’s side as she gave birth to their first child, Mr Gyngell this afternoon emerged from the offices to declare the deal had been finalised. Nine’s warring lenders hedge fund senior lenders led by Oaktree Capital and Apollo Global Management on one side and mezzanine debtholders led by Goldman Sachs on the other had been working for the past 12 months on a compromise deal to keep the company from falling into administration.

Beat the hedgies with alternative beta? (CityWire)
Hedge fund replication aims to track the aggregate performance of hedge funds (as represented by a hedge fund index) using liquid, daily tradable instruments, without investing directly in hedge funds and there are several different ways to replicate hedge fund returns. We use the factor replication technique in our ING Alternative Beta Fund, which works on the premise that a substantial part of aggregate hedge fund returns are driven by systematic risk premia, reflected by market factors like equity prices, interest rates, market volatility and Forex rates.

New York court dismisses Madoff claim against investment advisors & fund managers (Lexology)
A New York State trial court recently dismissed claims by the holders of variable life insurance policies, some of whose excess cash value was invested with Bernard Madoff’s securities firm, against various investment advisors and hedge fund managers. The decision is SSR II, LLC v. John Hancock Life Insurance Company, et al., No. 652793/2011 (N.Y. Sup. Ct. – N.Y. Co. – Sept. 28, 2012). A copy is available here. Given the total lack of privity between the plaintiffs, on the one hand, and the investment advisors and fund managers, on the other, the court’s decision appears correct with respect to the claims for negligence and breach of fiduciary duty. The policyholders dealt with the life insurers who issued the variable life policies, and the life insurers in turn dealt the advisers and fund managers, strictly in accordance with directions they received from the policyholders.

Japan Advisory fails to show for Tokyo insider trading hearing (WKZO)
Japan Advisory did not show up for a hearing on Wednesday called to allow the Tokyo-based hedge fund to contest charges of insider trading, increasing the likelihood the securities regulator’s case against it will be upheld. Japan Advisory was fined and had its license revoked in June after the Securities Exchange and Surveillance Commission (SESC) found it had shorted shares in Nippon Sheet Glass <5202.T> in August 2010 based on an inside tip the glassmaker was planning to issue new stock.

3 groups approved by NFL to buy Haslam’s stake in Steelers (Equities)
Movie producer Thomas Tull, hedge fund manager Rob Citrone and the Paul family were approved Tuesday by the NFL to buy the Steelers ownership stake previously controlled by new Browns owner Jimmy Haslam III. The $1 billion sale of the Browns was unanimously approved by NFL owners during a meeting in Chicago at which the Steelers ownership acquisition was allowed. Haslam, who once described himself as a “1,000 percent Steelers fan,” immediately took over running a team that ended an 11-game losing streak Sunday. Haslam owned an estimated 10 percent of the Steelers, but it wasn’t immediately known what percentage of his stake was acquired by each of the three groups, which already were part owners. Dan Rooney and his son own 30 percent of the team.

Agrium evading retail debate, Jana says (TheStarPhoenix)
Agrium Inc. (NYSE:AGU), the agricultural retailer and fertilizer producer, is avoiding a “genuine debate” over the company’s performance, said Jana Partners LLC, the hedge fund pushing for the spinoff of Agrium’s agricultural retail arm. Jana, Agrium’s largest shareholder, has been urging the Calgary-based company since May to break off its network of farm supply stores, the largest farm chain in Canada and the U.S., and to make other changes the fund said may add as much as $50 of value to each Agrium share.

South superstar in a Hollywood film? (BehindWoods)
Malayalam superstar Mohan Lal has been approached to play the role of the infamous hedge fund honcho Raj Rajaratnam. The film is being made by a US based Gujarati film maker Nayan Padrai whose earlier effort was an English film titled ‘When Harry tries to marry’. This project is reportedly called Billion Dollar Raja and will supposedly trace the rise and fall of the businessman accused of insider trading. Mohan Lal did confirm with a certain daily that the project is most certainly in the pipeline but it’s too early to comment on the film now. Raj Rajratnam was a Sri Lankan Tamil who set up a hedge fund firm in New York. He was later arrested and sent to 11 years of imprisonment for allegedly manipulating the stock market to benefit certain parties.

When Private Equity and Hedge Funds Collide (WSJ)
Chinese private equity firm SAIF Partners, which traditionally focuses on growth capital deals across the mainland and India, is considering a move into hedge fund investing – a step that has industry experts questioning whether this is a wise decision. Rod Sutton, chairman of Asia Pacific of FTI Consulting believes that the skill sets needed for both asset classes are complimentary, but the “time horizons are different,” which may prove a sticking point. Likewise, one industry insider points out that between 2005 and 2007 – when hedge funds and private equity previously collided – with the former adopting pre-IPO investments, many, because of liquidity requirements, had to sell off portfolio companies at a loss amid softer public markets.

Bridgewater proposal calls for helipad, recreational barge (StamfordAdvocate)
A plan to transform a gritty, industrial stretch of South End waterfront into a glassy headquarters for the world’s largest hedge fund came into sharper focus this week, following submission of zoning applications from developer Building and Land Technology. In addition to a five-story, 850,000-square-foot office, the campus for Bridgewater Associates calls for a helipad, a floating recreational barge, a restored estuary and a marina. The zoning applications submitted Monday include several renderings and site-plan drawings, providing the first public look at the Bridgewater plan since Gov. Dannel P. Malloy in August announced an incentive deal to keep the Westport-based hedge fund in Connecticut.

Bronx man pleads guilty to embezzling more than $1 million from Westport hedge fund (TheHour)
The former chief financial officer of a Westport hedge fund pleaded guilty Tuesday at U.S. District Court in New Haven to embezzling more than $1 million from his former employer. Darrin Foster, 46, of the Bronx, N.Y., pleaded guilty to one count of wire fraud. He faces up to 20 years in prison, and he is scheduled to be sentenced Jan. 7, 2013. From Sept. 2004 to July 2010, Foster was chief financial officer (CFO) of a Westport-based hedge fund, and he had access to his employer’s American Express account, prosecutors allege. He made thousands of dollars of unauthorized transactions with the card and then paid for the balances with the hedge fund’s bank account, according to prosecutors.

Ex-Goldman Mortgage Trader Said to Post 30% Fund Gain (BusinessWeek)
Josh Birnbaum, the former Goldman Sachs Group, Inc. (NYSE:GS) trader instrumental in the bank’s bet against the U.S subprime mortgage market in 2007, posted a 30 percent gain this year in his hedge fund, according to a person familiar with the matter. Tilden Park Capital Management LP, based in New York with $1.1 billion in assets, rose 6 percent in September, amid winning wagers on securities backed by the loans to borrowers with poor credit, said the person, who asked not to be identified because the fund is private. Steve Bruce, a spokesman for Tilden Park, declined to comment on the returns.

Taters versus craters: mega-quarry pits farmland against industry (Straight)
A billion tonnes of limestone lie beneath the rural countryside in Melancthon Township, 100 kilometres north of Toronto. A plan to remove it spotlights the challenges faced everywhere when the desire to protect valuable and ever-diminishing farmland clashes with efforts to push industrial development. The Highland Companies, backed by a $25-billion Boston hedge fund, hopes to blast a big hole in this fertile land to get at a deposit of 400-million-year-old sedimentary rock. The pit would cover more than 930 hectares and be almost 20 storeys deep—the second-largest quarry operation in North America, and the largest in Canadian history.

BlueMountain’s Siderow Likes Illiquid Bets as Banks Cut Risk (BusinessWeek)
Investors including pension funds are boosting returns by locking up money for longer periods in funds that invest in harder-to-trade and more complex assets, said BlueMountain Capital Management LLC’s Stephen Siderow. BlueMountain, the $11 billion hedge fund manager, raised $1.5 billion in its Credit Opportunities Master Fund I, more than what the firm expected to raise, Siderow, the firm’s president, said today in an interview with Deirdre Bolton on Bloomberg Television’s “Money Moves.” The amount was surprising given “the preference investors have had since 2008 for more liquid investment” where they “can get their money back really quickly,” he said.

Questcor rises after hedge fund discloses stake (Equities)
Share of Questcor Pharmaceuticals Inc. climbed Tuesday after the hedge fund Deerfield Management Co. disclosed a stake in the beleaguered company. THE SPARK: Deerfield President James Flynn disclosed ownership of 3.5 million Questcor shares, or a 5.8 percent stake in the Anaheim, Calif., drugmaker. Deerfield Management, which specializes in health care-related deals, is now one of Questcor’s largest shareholders.

Pandit’s old Canadian partners have a better week (TheGlobeAndMail)
It’s a bad week for Vikram Pandit, who is suddenly the former chief executive officer of Citigroup Inc., but a pretty good one for some of his old Canadian partners. After leaving Morgan Stanley in 2005, Mr. Pandit’s hedge fund firm, Old Lane Capital Management, made a strategic investment in a Toronto money manager called Diversified Global Asset Management. At the time, DGAM had about $1-billion of assets, and was just getting going under the stewardship of a group of Canadian hedge fund veterans. Today, Old Lane is long gone, swallowed by Citi, and Mr. Pandit is out of a job. But DGAM keeps growing. Having long severed the Old Lane connection, DGAM has been steadily adding assets and is now managing and advising on more than $5-billion, with this week’s addition being the wealth management division of the National Australia Bank.

Forward Hires Team In Advance Of Hedge Fund Launch (Finalternatives)
Forward Management has announced the addition of the Asymmetry global healthcare team in advance of the launch of a new hedge fund in early 2013. The new vehicle is slated to be a long/short equity strategy that will invest globally across all healthcare sectors and market capitalizations. Scott Kay is the portfolio manager for the team. A 20-year healthcare industry veteran, Kay was a founding partner at Partner Fund Management, where he was therapeutic sector head. Previously, he was a senior healthcare analyst at Andor Capital Management and at Bank America Securities, where he was ranked among top healthcare analysts by Institutional Investor. Earlier in his career he held various roles in marketing, sales and operations at Pfizer.

U.S. hedge fund fires legal volley at Telus (VancouverSun)
The fight between a U.S. hedge fund and Telus (TSX:T) has taken another turn over the telecom company’s plan to consolidate its shares into a single class. Mason Capital Management says it will appeal decisions in favour of Telus Corp. (TSX:T) issued on Monday by the B.C. Supreme Court. Telus says the court’s rulings mean it can go ahead with a joint shareholder meeting Wednesday to vote on the Telus proposal and Mason Capital’s related resolutions.

Chicago Firm Closes, Blames Lack of Opportunities (HedgeFund)
Hedge fund firm RoundKeep Capital Advisors is reportedly shutting down after telling investors it is doing so due to the shortage of investment opportunities. According to the Wall Street Journal, Chicago-based RoundKeep’s declining assets also played a role in the firm’s closure. The firm’s assets under management, which peaked at more than $1 billion in early 2011, had decreased to about $350 million as of September 19.

BlackRock third-quarter profit rises 8 percent on ETF gains (WTAQ)
BlackRock, Inc. (NYSE:BLK), the world’s largest money manager, said third-quarter profit rose 8 percent as investors poured cash into its iShares line of exchange-traded funds. The New York-based company fired on all cylinders during the quarter, showing strength in bond mutual funds, its Lifepath funds for 401(k)-type retirement accounts, hedge fund performance fees and risk management services. Chief Executive Laurence Fink cited “robust new business generation across each of our channels.” He pointed to record quarterly flows into iShares since BlackRock acquired the business in 2009 and the highest flow into retail bond funds in over 10 years.

Carl Icahn Plans to Offer $3B to Buy Oshkosh (ConstructionEquipmentGuide)
Billionaire investor Carl Icahn plans to make an unsolicited bid for truck maker Oshkosh (OSK) that values the company at almost $3 billion. Icahn said he also plans to nominate his own slate of directors in a bid for control of the company. The activist investor said Oct. 11 that he will make a tender offer worth $32.50 per share in cash, a 21 percent premium over Oshkosh’s latest closing price.

Soros a scary Obama backer … (YourHoustonNews)
Are you ready for a scary, spooky Halloween story? Since Halloween is just around the corner, this is a good time to express my opinion on “Dracula” who has been sucking the blood out of the American people for a long time. Dracula is better known as George Soros. As a young man he studied under Hitler. He is a known atheist and has been the political, financial backer of Mr. Obama. I’m of the opinion America stands at the brink of an abyss, and Mr. Soros is the man who has vigorously and cleverly planned the demise of this great country, using his puppet, Barack Obama.