Paulson’s Bright Spot May Fade As Gold Plunges (Bloomberg)
The hedge-fund titan John Paulson, enduring the worst year in his career, may be facing a final blow from this month’s selloff in gold, an investment that mitigated losses at his $28 billion firm earlier in 2011. Paulson was the largest shareholder of the SPDR Gold Trust (GLD) exchange-traded fund as of Sept. 30. Until this month, gold had been the bright spot for Paulson & Co. clients. However, the ETF fell 10 percent from the end of last month, and all eight of Paulson’s gold stocks slumped with a 9.6 percent decline for bullion. The declines would translate into a $672.1 million paper loss on those securities for Paulson & Co., assuming his holdings haven’t changed since the end of the third quarter, when the firm reported its equity stakes in a regulatory filing.
Falcone’s LightSquared Disrupts Plane Safety Gear In U.S. Tests (Bloomberg)
Philip Falcone’s LightSquared wireless service disrupts safety equipment that use the global- positioning system to help keep airliners from crashing into the ground, U.S. officials said. The signal can cause “interference with a flight safety system designed to warn pilots of approaching terrain” in government tests of the proposed network, according to a statement from the Defense and Transportation departments distributed yesterday.
Old Mutual Hedge Funds Record Stellar 2011 Returns (HFM Week)
Old Mutual Asset Managers, the $380m hedge fund arm of Old Mutual, has avoided the poor returns suffered by much of the hedge fund industry this year and made strong gains in three of its four funds, HFMWeek has learned. Its quant fund, Global Equity Absolute Return, returned a stellar 11.35% in the first 11 months, during which the average fund was down -4.37% according to Hedge Fund Research’s HFRI index.
NJ Men Charged With Hedge Fund Fraud (HFN)
Two New Jersey men were arrested Wednesday on charges of defrauding victims out of more than $3.5 million in a fake hedge fund scam. New Jersey U.S. Attorney Paul J. Fishman announced that George Sepero, 39, of Glen Rock, N.J., and Carmelo Provenzano, 29, of Garfield, N.J., were charged with wire fraud conspiracy. Prosecutors alleged in a complaint that Sepero and Provenzano claimed to have operated several hedge funds using a secret computer program to invest in foreign currency, and achieve returns of more than 170 percent in the prior two years.
November Letter From A Hedge Fund That Has Returned Well Above 1500% In The Past 11 Years (ValueWalk)
… The portfolio gained 2.28% in November. Profits came in roughly equal amounts from gold, equity indices and options, currencies, and interest rate swaps. While we generally avoid short-term trading, the high rate of volatility has presented us with tactical opportunities such as selling some of our gold on price spikes and buying it back on declines. Also, because of the dangers inherent in these highly volatile markets and because we can generally execute our strategy using limited-risk derivatives, we continue to hold substantial cash reserves. The portfolio is currently heavily hedged, although still with enough asymmetry to provide a favorable potential gain-to-loss ratio.
Hedge Fund Marketers See Total Pay Increase 20% (HFN)
A new industry survey finds hedge fund marketers could take home 15-20% more in total pay this year. The survey, “2011 Marketer Compensation Report,” was conducted by human capital advisory firm Alpha Search Advisory Partners, which polled over 166 executive-level marketers across a variety of hedge funds, according to a statement from the firm. According to the report, compensation levels are highly correlated with the firms’ asset flows and amounts under management. For example, marketers at firms with over $650 million in assets earned an average of 36% more than those working at smaller firms.
Most Europe Banks Insolvent If Marked to Market, Platt Says (Bloomberg)
Most European banks would be insolvent if their assets had to be marked to market value like hedge funds, according to Michael Platt, co-founder of BlueCrest Capital Management. Platt said he’s “radically concerned” about counterparty risk, and that the outlook for 2012 is “only going to get worse.” He spoke in an interview on Bloomberg Television.
Greece Made New Proposals In Private Sectors (Bloomberg)
Greece made new proposals on the structure of a debt swap agreement with private creditors, while disagreement remains on key issues, a person on the lenders’ negotiating committee said this week. Under one plan, Greece would give 15 cents in cash and 35 cents in new bonds for every euro of existing debt that will be swapped, said the person. “Most banks, insurance companies and hedge funds will behave in a sensible way because if private-sector involvement is not successful, their other assets will be at risk,” said Alexandros Manos, managing director of Piraeus Bank SA (TPEIR). “I believe we will come close to the haircut target.”
Philanthropic Network: ‘A Giving Circle On Steroids’ (WSJ)
Boaz Weinstein, the founder of the hedge fund Saba Capital, was inspired to get involved with the Natan Fund after attending a “salon” the organization was throwing. “I was very impressed with the speakers,” Mr. Weinstein explained. Several years later, Mr. Weinstein is an active board member at Natan, a philanthropic network that supports startups and other entrepreneurial organizations “demonstrating an innovative approach to addressing the challenges facing the Jewish people,” said Felicia Herman, executive director of Natan. The network is made up of entrepreneurs, young Wall Street professionals, and “self-made people who want a hands-on experience with philanthropy,” Ms. Herman said. “They’re risk-tolerant, and they want to do something more than write a check and attend social events.” This year, the Natan Fund will distribute approximately $1 million to 45 organizations the members have selected.