Pfizer-J&J Drop Alzheimer’s Drug Studies After Failure (Bloomberg)
Pfizer (PFE) Inc., Johnson & Johnson (JNJ) and Elan Corp. ended most plans to develop an Alzheimer’s drug after a second trial failure, a blow to the companies’ efforts to market the first product to slow progress of the disease. Bapineuzumab, designed to attack the brain plaques that serve as a hallmark of Alzheimer’s, failed to improve symptoms of dementia in the second of four final-stage trials of the drug, Pfizer and J&J said yesterday in statements. Elan shares fell as much as 11 percent in Dublin today, the biggest intraday decline since July 24.
Lawsuit Could Undo Sale That Created New GM, Company Says (Bloomberg)
The new General Motors Co. (GM) could be undone by a lawsuit that pits general creditors against hedge funds including Appaloosa Management LP, Elliott Management Corp. and Fortress Investment Group LLC (FIG) over $3 billion, the car company said in a lawsuit that goes to trial today. A trust for creditors of the old, bankrupt part of the auto-maker now known as Motors Liquidation Co. sued the hedge funds in Manhattan bankruptcy court in March, alleging that while GM was preparing its bankruptcy filing on June 1, 2009, the funds, which held notes in a Canadian unit of GM, “saw an eleventh-hour opportunity for profit and pounced.”
Beware Hedge Fund Traders Bearing Gifts (BaconsRebellion)
As noted in previous postings, I have always been curious as to the role in the Teresa Sullivan flap of big money hedge fund traders who are University of Virginia alumni and live in a world beyond most of us. Of special curiosity is the role allegedly played by billionaire Paul Tudor Jones II, who has given $100 million to the school and who created the John Paul Jones Arena, now a major destination for rock concerts and other events. In the midst of the putsch led by Rector Helen Dragas against Sullivan, Jones penned an opinion piece in the local Charlottesville newspaper that U.Va. needed a “stakeholder-driven” strategic planning and ”transformative change in attitude and vision” to compete with the best schools in the country.
Gov’t witness tells NY jury: Job offer behind passing inside info to hedge fund boss in 1990s (WashingtonPost)
A notorious cooperator in the biggest insider trading prosecution in history took the witness stand for the first time on Monday, revealing at the trial of a San Francisco hedge fund boss that she began feeding secrets 15 years ago to another man, an eventual billionaire hedge fund founder who had offered her a job. Roomy Khan, of Fort Lauderdale, Fla., told a Manhattan jury hearing the trial of Doug Whitman that she was living in California and working at Intel Corp. in marketing when she telephoned a “very friendly” Manhattan-based senior analyst, Raj Rajaratnam, for the first time in the mid-1990s.
Paulson Advantage Plus Hedge Fund Declines 2% Last Month (Bloomberg)
John Paulson, the billionaire hedge- fund manager coming off record losses in 2011, posted a 2 percent loss last month in his Advantage Plus Fund, according to a monthly update to investors obtained by Bloomberg News. The fund, which seeks to profit from corporate events such as takeovers and bankruptcies and uses leverage to amplify returns, is down 18 percent this year with the July loss. Paulson’s Gold Fund, which can buy derivatives and other gold- related investments, rose 0.2 percent in July and has declined 23 percent this year. Slumping gold-mining stocks have contributed to declines in the Advantage funds and Gold Fund this year.
Scranton Council pursues hedge fund financing (TheTimes-Tribune)
Scranton City Council is pursuing a plan to borrow up to $18 million from a hedge fund to cover this year’s budget gap, council officials have said. The financially strapped city has been struggling for months to craft a recovery plan that would be acceptable to lending institutions so they would again provide financing to the city, as well as pass muster of the city’s state-appointed Act 47 recovery coordinator, Pennsylvania Economy League, Mayor Chris Doherty has said.
SNB: Central bank or hedge fund? (MenaFN)
Switzerland is rapidly turning into a large hedge fund with a small country attached. Switzerland last week 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.
AAPL: Hedge Fund Darling Led Mega-Cap Triumph in July, Says Morgan Stanley (Barrons)
Morgan Stanley‘s quant gurus want you to know that mega-cap stocks dominated in July, with tech leading the way, as Apple (AAPL) and Google (GOOG) led the way in market capitalization gains in July, out of 1,500 U.S. stocks, according to Morgan’s Adam Parker. Apple gained $25.1 billion of market cap in July, while Google gained $17.3 billion. Wal-Mart Stores (WMT) shares gained $15.99 billion.
Hedge Fund Marketing Implications From New Survey Findings On Investment Beliefs (Finalternatives)
The recently published Pensions & Investments/Oxford University survey on long-term investment beliefs has implications for how hedge fund firms market their strategies and get buy-in from institutional investors. Relevant Findings For Hedge Fund Firm Owners In offering conclusions from their survey results Gordon L. Clark, professor at Oxford University’s Centre for the Environment, who led the survey, offered the key observation that managers will increasingly be differentiated by “their strong belief systems and a rigorous investment process that matches those beliefs.”
City Garbage Collectors Become Sophisticated Hedge Fund Investors (Forbes)
According to the American Federation of State, County and Municipal Employees, the average AFSCME member earns $45,000 per year and receives a pension of about $19,000 upon retirement. The notion that these workers are “sophisticated investors” who can understand the risks and merits of complex investment products that may not be legally offered to the general public, such as private equity and hedge funds, seems ludicrous. Under the SEC’s more restrictive “accredited investor” standard, individuals with a net worth of more than $1 million, or an income above $200,000 for individuals and $300,000 for couples, can be sold a variety of unregistered investments, such as hedge funds and private placements of shares in a company. These one-percenters are presumed by regulators (rightly or wrongly) to have enough financial knowledge and wherewithal to dance with the wolves on Wall Street.
Fake BlueCrest Hawking Fake Hedge Fund (Finalternatives)
It seems there are two BlueCrest Capital Managements in the U.K. right now: the real one and a fake one. The latter appears to running a boiler-room scam, offering British investors a BlueCrest hedge fund that doesn’t exist. The Financial Services Authority published a alert on the matter in June.
Kawa Capital Management: Symbols of changing business world are young, Brazilian-bred (MiamiHerald)
If you wanted to build a powerhouse hedge fund on the QT, here’s a great place to hide: directly above a popular Lincoln Road pub. That’s precisely where Daniel Ades, the 32-year-old investment wiz kid, chose to put Kawa Capital Management, his boutique firm staffed — like much of changing Miami — by Brazilian-bred rising stars. But if Ades makes it a point to avoid the limelight, his founding partner — Alexandre Saverin — acts like he’s allergic to it.
German bank has CDO case against a US fund -court (Reuters)
Germany’s Bayerische Landesbank has a case to make against Aladdin Capital Management LLC, a U.S.-based hedge fund the bank sued to try to recover $60 million in losses from a mortgage-backed securities derivative, a U.S. appeals court ruled on Monday. The opinion by the 2nd U.S. Court of Appeals stems from a lawsuit filed in January 2011 by the German bank accusing Aladdin of gross negligence and recklessness in managing a collateralized debt obligation. It reversed a lower court ruling.
What makes a good hedge fund manager? (eFinancialNews)
The chief executive of a multi-billion dollar global macro fund said that it piques his interest when he hears about a trader who has just blown up. He said: “We should interview that guy. The main thing that makes a good trader is a very high risk tolerance. There are only a limited number of people who have the mental fortitude to run a lot of risk. Most people we hire only run about a third of the maximum risk we allocate them.” Nine times out of 10, the manager has blown up (industry parlance for losing a lot of money) because they made a mistake, said the chief executive, but that 10th time they discover a great trader.
Hedge fund limited partners want assurances on Libor (FierceFinance)
I’ve noted that a sea change has taken place in the hedge fund industry since the financial crisis. The power pendulum has swung in favor of limited partners, who have had the upper hand when it comes to gating policies, compliance, third-party administration and the like. That relatively new influence is being felt again in the wake of the Libor scandal.
Emails Give Glimpse Into Deals That Helped Fuel Financial Meltdown (HuffingtonPost)
As ProPublica has been detailing for two years, Wall Street banks and the hedge fund Magnetar worked together to build mortgage-backed deals that the hedge fund also bet against. The more than $40 billion of deals helped fuel the crash of 2008. Now, recently collected emails from bankers and a Magnetar executive involved in some of the deals appear to shed new light on how they did it.
Arbitrage Specialist Talks Strategy, Starting Firm (HedgeFund)
Veteran hedge fund manager David Simon has a thing or two to say about being in the business for nearly a quarter-century, as evident from the recent interview that the founder of New York-based Twin Capital Management did with eVestment|HFN. …I originally started my professional career as a lawyer for Paul, Weiss, Rifkind, Wharton & Garrison and Rogers & Wells. In 1985, I joined the Risk Arbitrage Department of Spear, Leeds & Kellogg as head of risk arbitrage research, and in early 1987 moved to Mercury Securities as head of their risk arbitrage research department. In 1988, I decided to go out on my own and launch Twin Capital Management, initially with capital from myself and from my friends and family.
Thames River moves to close Kinsey-Quick’s hedge fund (InvestmentWeek)
Thames River is set to close Ken Kinsey-Quick’s £54m Multi Hedge fund, returning the cash to shareholders next month. Thames River said shareholders have sanctioned an EGM on September 11 to wind-down the company, following a year of underperformance in 2011 which has pushed the fund onto a discount of 12%.
Further M&A activity hits global funds of hedge funds (Opalesque)
The wave of consolidation that has recently hit the funds of hedge funds industry continues across the world, with news this morning, from Asian Investor that the $1.4bn investment group Signet Capital Management is in talks with two financial firms for a “possible collaboration” in Asia, following the departure of its managing director for the Asian region. Asian Investor reports that the move comes after François Hora, who headed the Asian headquarters of Signet in Hong Kong, joined hedge fund Complus Asset Management in June as head of business development. Complus, set up last year by ex-Fortress Investment Group Hong Kong head Stanley Ku, is a macro strategy that focuses on Asian interest rate, foreign exchange and equities markets.
GoldenTree Hedge Fund Hires Goldman Sachs Trader in Mortgage Push (AmericanBanker)
GoldenTree Asset Management LP, the $15.7 billion hedge fund specializing in corporate credit, hired Goldman Sachs Group Inc. trader Deeb Salem as the firm expands its mortgage-bond team. Salem started at New York-based GoldenTree this week, Chief Investment Officer Steven Tananbaum said today in an interview.
Icahn Offers to Buy Remaining CVR Shares at $29 Each (WSJ)
Activist investor Carl Icahn offered to buy the remaining shares of CVR Energy Inc. (CVI) that he doesn’t already own for $29 a share and said he is willing to negotiate the price, but wouldn’t consider paying more than the $30 a share he paid in his tender offer earlier this year. The offer represents about a 0.9% discount to Monday’s closing price and values the petroleum company at $2.52 billion. A representation from CVR wasn’t immediately available for comment. Mr. Icahn earlier this year bought an 80% stake of the Sugarland, Texas, company at $30 a share with plans to immediately resell the entire business for at least $35 a share. Despite hefty refining margins at the company’s Midwestern plants in the past few quarters, analysts predicted that the price tag would attract few buyers.
Wall Street divided over fate of Duke CEO Rogers (CharlotteObserver)
A month after Duke Energy’s abrupt ouster of CEO Bill Johnson, Wall Street remains divided over how much of a threat the controversy poses to the Charlotte-based power company and longtime CEO Jim Rogers. Some analysts and investors are beginning to talk openly about the urgency for Rogers, who was reinstated after Johnson’s forced exit, to step down so the company can rebuild trust with regulators and employees in North Carolina. But despite the commotion that one analyst has dubbed “CEO-gate,” many on Wall Street remain confident Duke is on firm legal ground and that Rogers will emerge unscathed.
Richest Family Offices Seeing Fastest Growth As Firms Oust Banks (Bloomberg)
They call it “money camp.” Twice a week, 6- to 11-year-old scions of wealthy families take classes on being rich. They compete to corner commodities markets in Pit, the raucous Parker Brothers card game, and take part in a workshop called “business in a box,” examining products that aren’t obvious gold mines, such as the packaging on Apple Inc.’s iPhone rather than the phone itself. It’s all part of managing money for the wealthiest families, says Katherine Lintz, founder of Clayton, Missouri- based Financial Management Partners, which runs the camp for the children of clients. Supplying the families with good stock picks and a wily tax strategy isn’t enough anymore. These days, it’s about applying the human touch, she says.
HTC lost more than $1B in market value this week (MarketWatch)
More than $1 billion was wiped out of HTC Corp.’s market capitalization Monday and Tuesday combined, after the Taiwanese smartphone maker warned of weaker third-quarter earnings and reported a 45% plunge in July revenue, highlighting the intense competition in the fast-growing smartphone market where Apple Inc. AAPL +1.11% and Samsung Electronics Co. have a lead. …HTC’s operations “will likely deteriorate further as we don’t expect to see any catalyst or new killer product this year. The market now expects HTC’s fourth-quarter revenue and profit margins could be even weaker than the already very bad third quarter,” said a fund manager at a U.S. hedge fund, who declined to be named.
Blackheath Volatility Arbitrage up +13.90% in first half 2012 (Opalesque)
Blackheath, a Canadian managed futures advisory firm, posted strong returns in its volatility arbitrage strategy fund for July, the fund was up +6.48% and is up +13.90% year-to-date, according to sources familiar with the firm. The fund was launched in 2009, and has yet to have a down year. It is up +85.68% since its inception in 2009. Over 2012, the fund has mostly posted positive returns, with the exception of May and June, when the fund was down -1.32% and -4.49% respectively. The fund currently has $10m in assets under management (AUM). The firm itself, which manages several programs has $40.4m in AUM.
Best Buy Founder Makes Bid for a Takeover (NYTimes)
Best Buy has been troubled by declining sales and growing competition from the likes of Wal-Mart Stores and Amazon.com. Now, with a preliminary takeover proposal from the company’s founder, many are considering whether it has more of a future with executives who led it in the past. Richard M. Schulze, who founded the company with a single audio equipment store in 1966, announced on Monday a proposal that would give the company a market value of $8.8 billion. Mr. Schulze, 71, who is Best Buy’s biggest shareholder with a 20 percent stake, is betting that he and a handful of longtime lieutenants can breathe new life into the company.
BlackRock hires Goldman Sachs PM for leveraged finance expansion (Absolutereturn-Alpha)
BlackRock is planning an expansion of its leveraged finance group, and has brought aboard a senior portfolio manager from Goldman Sach Asset Management’s $6 billion Liberty Harbor hedge fund to help lead the charge, according to a person familiar with the plans. David Frechette, a five year Goldman veteran, resigned last week from Greenwich, Conn.-based Liberty Harbor to make the move to BlackRock in Manhattan. At the New York asset management firm, he will be head…
Visium’s Founder In Major Makeover (InstitutionalInvestor)
FOR MOST HEDGE FUND MANAGERS, POKER is a high-stakes, high-risk opportunity to show off their smarts. For Jacob Gottlieb the game is something altogether different. Gottlieb, 40, gathers once a month in Manhattan with a small group of fellow hedge fund managers for a poker game that’s less about cutthroat competition and more about good friends catching up over a leisurely evening of cards. Gottlieb and his poker buddies, who include Marc Lasry and Boaz Weinstein, meet in one another’s homes for loose, informal games that last for hours and include a rotating cast of drop-in players.
Why Are Investors Fleeing Equities? Hint: It’s Not the Computers (NYTimes)
Let’s stop with the excuses. You’ve no doubt been reading a lot about a “crisis of confidence” on Wall Street in recent days after software problems at a big trading firm sent the stock market, briefly, into a tizzy. Everyone is hyperventilating at the errant trades at the Knight Capital Group — suggesting, in the words of Arthur Levitt, that these malfunctions “have scared the hell out of investors.” The problems at the firm were immediately lumped together with Facebook’s glitch-filled initial public offering, the flash crash of 2010 and the rescinded public offering of BATS Global Markets, among others.
Church of England pulls News Corp investment over phone hacking scandal (Telegraph)
The investment is relatively small in the context of News Corp’s $57.49bn market capitalisation, but it will comes as a significant blow to the media group’s standing as an investment vehicle. The Church Commissioners and the Church of England Pensions Board, who together hold more than £8bn of assets, sold all their shares, after the Church’s Ethical Investment Advisory Group raised “serious concerns” about their holding in the firm.
Rose takes over at 70 Pine St. (NYPost)
Venerable New York real estate dynasty Rose Associates has taken the lead role at 70 Pine St., the vacant landmark skyscraper still awaiting conversion to apartments after two disappointing false starts. Rose Associates quietly bought the widely reported stake previously held at 70 Pine by Nathan Berman’s Metro Loft Management, Realty Check has learned. AIG’s former headquarters will have up to 1,000 rental apartments in 750,000 square feet and 40,000 square feet of retail. Completion is slated for late next year or early 2014.
The AIG success story (WashingtonPost)
Of all the Wall Street bailouts amid the Panic of 2008, none was more despised than the $182 billion lifeline for American International Group. A global insurer hungry for profits, AIG staked its reputation for financial strength on a risky derivatives business that Federal Reserve Chairman Ben S. Bernanke likened in 2009 to a gigantic hedge fund. The firm sold credit protection to the buyers of shaky mortgage-backed securities, and when those securities tanked, so did AIG.
Canadian Companies Shop for European Assets (BusinessWeek)
Canadian companies and pension funds are on a European acquisition binge, even as U.S. and Chinese buyers slash spending on takeovers there. Europe’s low valuations and the robust Canadian dollar are spurring deals by Canadian companies such as Brookfield Asset Management (BAM) and Alimentation Couche-Tard. “Canadian companies are basically punching above their weight in the European market,” says Julian Brown, head of corporate finance for Canada at Pricewaterhouse-Coopers in Toronto. The transatlantic dealmaking is part of a shift in Canada’s outward focus away from the U.S. in favor of other foreign markets. America’s economic recovery has lifted stock prices, making assets more expensive, and cash-rich Canadian buyers are looking for new markets outside North America to deploy resources.
Distressed Debt Emerging Manager Series: Castle Union (Distressed-Debt-Investing)
In the past on Distressed Debt Investing, I have taken the time to interview emerging hedge fund managers – those managers just getting started running their books and who I personally think will be remarkable successes. I am pleased to bring you another such interview: Toan Tran and Steve White of Castle Union Partners. Castle Union will be focused on distressed opportunities and special situations – Toan and Steve’s areas of expertise. The fund’s goal is to generate strong absolute returns, uncorrelated with the market. For more information on Castle Union, please visit their website: Castle Union Partners. Enjoy the interview!