Hedge Fund News: Paul Singer, George Soros & Warren Buffett

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Hedge fund Elliott lifts stake in Celesio (Reuters)
Hedge fund Elliott International has lifted its stake in German drugs distributor Celesio, bringing it close to a position where it could block the $8.3 billion takeover bid by McKesson Corporation (NYSE:MCK). Celesio said on Tuesday that Elliott gained control of 25.16 percent of the voting rights in the company. However, when additional shares from Celesio’s two convertible bonds are taken into account, Elliott’s voting stake stands at 21.05 percent. …Elliott, run by U.S. investor Paul E. Singer, is known for building up stakes in takeover targets with the aim of extracting a better price, such as with Kabel Deutschland in September.


Hedge Funds See Repeat of Yen Slide That Paid Soros (Bloomberg)
Hedge funds are betting on another run of yen weakness, a trade that made money earlier this year for billionaire George Soros, putting them in opposition to economists who see Japan’s currency little changed into 2014. Futures traders pushed net shorts, or wagers the yen will fall versus the dollar, to the highest since July 2007, according to the Commodity Futures Trading Commission. That contrasts with the median estimate of more than 50 analysts surveyed by Bloomberg, which puts the currency at 102 per dollar at the end of the first quarter of 2014, from 101.43 today.

U.S. regulator fines, partially bans poker player from trading (Reuters)
A small hedge fund manager turned professional card player who came to fame for a mammoth gold trade two years ago, was fined and banned from some trading for attempting to manipulate oil markets in 2008, the U.S. futures market regulator said on Monday. Daniel Shak, 54, and his fund, SHK Management LLC, must pay a total of $400,000 in civil penalties for violating the Commodity Exchange Act, through a trading gambit known as “banging the close”. The method involves a trader flooding the market with orders in the final minutes before the day’s close to sway prices, according to a settlement from the Commodity Futures Trading Commission (CFTC).

Carlyle to buy firm that invests in hedge funds (eFinancialNews)
The deal is valued at $33 million, plus a possible $70 million if the hedge-fund firm achieves a certain level of performance. Carlyle is a private-equity powerhouse but until recently hadn’t developed a big presence in other businesses as some rivals have, including The Blackstone Group L.P. (NYSE:BX), which runs a large real-estate operation. In 2011, Carlyle began to focus on advising institutional investors on so-called alternative investments, which include everything from real estate to timber. That year, Carlyle purchased AlpInvest Partners, an adviser to investors on private equity. Earlier this month, Carlyle acquired Metropolitan Real Estate Equity Management, which invests in global real estate.

Small FoHF proves experience and nimbleness produce performance (Risk)
Size and experience are critical factors in the risk-adjusted return potential of funds of hedge funds (FoHFs). In most cases one does not exist without the other. As with single hedge funds, the greater a company’s experience, the greater its size and as a result the lower its potential returns. A sweet spot exists in the middle, however, where funds with longstanding experience remain small and nimble enough to outperform. This happy medium sits at the heart of Headstart Advisers’ offering. Headstart Advisers was established more than two decades ago and currently manages or advises on $104 million. “Investors are acutely aware of the direct correlation between increasing assets and decreasing returns in single hedge funds,” says Najy Nasser, chief investment officer.

Hedge-Fund Fight Club Traded Illegal Tips Instead of Punches (SFGate)
The hedge-fund analysts vacationed together in the Hamptons, gambled in Las Vegas and adopted a creed that parodied the rules in the Brad Pitt film “Fight Club.” Instead of trading punches, they traded illegal tips that allowed their portfolio managers to reap tens of millions of dollars in profit. Having pleaded guilty to insider trading, four of the men are now set to be witnesses against SAC Capital Advisors LP fund manager Michael Steinberg. Ex-SAC analyst Jon Horvath could take the stand as early as today in Manhattan federal court against his former boss after ex-Diamondback Capital Management LLC analyst Jesse Tortora concludes his testimony.

Culling ‘giant green hedge fund’ will hit Abbott budget, body says (Eco-Business)
Scrapping the $10 billion Clean Energy Finance Corp will strip between $110 million and $171 million a year from the federal budget rather than save the government money, the fund will tell a Senate inquiry today. The fund uses cheap government borrowing rates to lend money for clean energy and energy saving projects. It was set up as part of the Gillard government’s climate change policies. The costs to the budget’s cash balance of abolishing the fund are based on assumptions that only half of its investment base – or $5 billion – is deployed, according to a submission by the corporation to the one-day inquiry.

In a market where people don’t care: Greenberg (CNBC)

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