John Paulson Plans to Sells $580M of Delphi Auto Stake After Company’s IPO, Reducig Stake to Roughly 15% from 22% (WSJ)
New York hedge fund manager John Paulson plans to sell as much as $580 million in stock of Delphi Automotive PLC in the auto parts maker’s proposed initial public offering, the only one of its four biggest investors to sell. Paulson & Co., Delphi’s largest shareholder with a 22% stake, would reduce its holdings to as little as 15% under the latest version of Delphi’s IPO plan filed Monday. His hedge fund would account for as much as 24.2 million shares out of up to 27.7 million shares worth $665 million being sold, the same filing said. A spokesman for Mr. Paulson declined to comment.
Horseman, Odey Post Double Digit Returns for October (Reuters)
Big-name managers led a rebound in the performance of European hedge funds in October as financial markets rallied, but many funds saw only meager gains after cutting their bets this summer and now face the prospect of a second year of losses in the last four. Managers such as Crispin Odey and Michael Hintze clocked up hefty gains as financial markets rallied on hopes that euro zone leaders would at last get to grips with their debt crisis. One of the top performers was Horseman Capital‘s Global fund, which rose 18.5 percent in October, taking year-to-date gains to 6.89 percent, thanks to bets on the luxury brands, luxury retailers, luxury autos and Chinese bank sectors. The once high-profile fund, which has shrunk in size from $2.8 billion in assets to $143 million after fund manager John Horseman stepped down in 2009, is now managed by Russell Clark. Odey Asset Management, one of Europe’s biggest hedge fund firms, saw its European fund, run by founder Crispin Odey, gain 9.1 percent in October, according to Thomson Reuters Lipper data.
Michael Hintze’s CQS Directional Opportunities Gained 13.8% in October (Reuters)
TCI Soars In First Half, Still Well Below HWM (FINAlternatives)
The Children’s Investment Fund Management went a long way towards reaching its high-water mark in the first half, but has even longer to go to get to that break-even point. The London-based activist returned 16.53% in the first half, Morningstar data shows. It’s unclear how TCI did during the market doldrums of the third quarter, which cost many hedge funds dearly, but its first-half performance was better than three-times higher than the average stock fund. Now, the bad news: TCI is still at least 22.27% below its high-water mark.
Fugitive Hedge Fund Manager Brian Kim Pleads Not Guilty (FINAlternatives)
Accused hedge fund fraudster Brian Kim is back in the U.S.—and denying allegations that he ran a $6 million Ponzi scheme. Kim returned to the U.S. last month after his capture abroad. At his first court appearance in Manhattan yesterday, he pleaded not guilty to charges that he lied to investors about his Liquid Capital Management, telling them he would put their money into safe investments while actually losing money on futures contracts and stealing some of the rest. Kim also entered pleas on charges that he ripped his Manhattan condominium association off to the tune of $430,000 and bail-jumping.
Commodity Hedge Fund Galena Plans To Double Assets To US$4 Billion (FINAlternatives)
Commodity hedge fund Galena Asset Management hopes to more than double its assets under management over the next two years, increasing the size of its current funds and launching new ones, including its first private equity fund. The US$1.8 billion asset management arm of Trafigura, which moved the hedge fund to Geneva, Switzerland, earlier this year, aims to manage in excess of US$4 billion two years from now. “At the moment, liquidity is transferring from banks to others such as commodity traders and hedge funds,” Galena CEO Jeremy Weir told the Financial Times. “If the banks are in a distressed situation and need to sell assets, then there will be some opportunities.”
LibreMax’s Lippmann Pushes To Cut Mortgage Balances (FINAlternatives)
Proponents of mortgage-debt forgiveness have a new backer: Hedge fund manager Greg Lippmann. Lippmann, who made his name at Deutsche Bank betting against subprime mortgages, told investors in his LibreMax Capital that the majority of mortgage modifications are missing the mark, Bloomberg News reports. “Principal reductions are necessary to help ameliorate the housing crisis,” Lippmann told LibreMax clients in an Oct. 31 letter. Lippmann added that “prominent economists from both the left and the right” back cutting mortgage balances, and noted that mortgage modifications that don’t cut principal—such as those that only reduce interest rates—actually make borrowers 1.7 times more likely to default. Less than 6% of mortgage renegotiations in the second quarter included principal reductions, and more than 10 million defaults could occur without them.
Calpers Says May Invest More in Hedge Funds After Review (Businessweek)
California Public Employees’ Retirement System, the largest U.S. public pension fund, is likely to increase or maintain hedge fund investments next year after a review, Chief Investment Officer Joseph Dear said. Calpers staff is scheduled to make recommendations to the board in late spring of 2012 regarding the benchmarks, objectives, capital source and strategies for its hedge fund investments, Dear said in an interview in Hong Kong today. “The outcome of that could be a decision to increase the size of the program,” said Dear. “It could be to leave it where it is. I doubt it will result in a recommendation to shrink the size.”
Ex-New Star Manager Sues Over Bullying, Being Called Moron (Businessweek)
Patrick Evershed, a former New Star Asset Management Holdings Inc. fund manager, was bullied by company founder John Duffield and called a “criminal” and a “moron,” Evershed’s lawyer said. Evershed is suing New Star for unfair dismissal at a London employment tribunal. His lawyer, Daphne Romney, said at the first day of the trial today that he was subjected to “a very unpleasant environment.” Duffield “called the fund managers morons and criminals,” including Evershed, Romney said. He “asked if they were ashamed of themselves when their funds performed poorly” and was “angry, antagonistic and unpleasant.” Evershed was suspended by the fund’s chief executive officer, Howard Covington, in 2008, shortly after writing a letter to New Star’s human resources department complaining about Duffield’s conduct. In the letter, Evershed said Duffield “has been most vile to most of the fund managers for several years and bullying us.” Evershed later resigned and sued the fund in October 2008.
J. Kyle Bass Buys 4.9% Stake in MGIC Investment Corp (InsiderMonkey)
A closely followed hedge fund manager known for correctly betting on the housing market’s collapse four years ago purchased a small stake in the nation’s largest mortgage insurance company in a bet that the housing market has neared bottom. J. Kyle Bass, portfolio manager at Dallas-based Hayman Capital Management LP, bought the 4.9% stake in MGIC Investment Corp, according to federal filings. He said on Monday the bet reflected his view that the housing market’s losses had largely been absorbed. “You can see that the pig has moved through the python in terms of U.S. housing losses,” he said.
DragonBack Adds Double Haven Funds To Platform (FINAlternatives)
Hong Kong-based DragonBack Capital Limited has added Darryl Flint and his Double Haven Credit team to its fund platform. Flint and his six-person team will continue to manage their stable of funds—now renamed as the Double Haven Credit Opportunities Fund and the Double Haven Temple Fund—as well as an Asian Liquid Credit Strategy. DragonBack, a former equity multi-strategy and volatility hedge fund manager which managed as much as $600 million at its peak, reinvented itself last year as a hedge fund platform. Led by Rob Lance and Phil Tye, the 10-person team provides senior management and marketing representation, full operational infrastructure and independent risk control.