Paulson Funds Said to Further Cut 2012 Losses

John Paulson, the billionaire hedge- fund manager coming off record losses in 2011, further pared declines in his Gold and Advantage funds last month,  two people familiar with the matter.told Bloomberg.

Paulson’s Gold Fund, which can buy derivatives and other gold-related investments, rose 13 percent in September as bullion rallied, cutting losses this year to 3.9 percent, said the people, who asked not to be named because the information is private. The Advantage Plus Fund, which seeks to profit from corporate events such as takeovers and bankruptcies and uses leverage to amplify returns, gained 3.6 percent last month, reducing losses since the start of the year to 14 percent….

Read more at http://www.bloomberg.com/news/2012-10-04/paulson-s-gold-advantage-said-to-pare-losses-in-september-1-.html

How to Run Your Hedge Fund From a Prison Cell

Bloomberg’s Jonathan Weil writes: As if America’s hedge-fund elite didn’t have enough crises to worry about -- riots in Spain, the fiscal cliff, Lindsay Lohan’s hotel brawl -- the parade of underlings copping pleas to insider-trading crimes just keeps growing. Every week it seems another one flips, promising to turn state’s evidence.

Time is money, as they say. And it would take a true genius to make money out of the kind of time some of these people are facing. Still, you don’t get to work at a $14 billion hedge fund like SAC Capital Advisors without abundant self-confidence and inner drive. So if you are someone like Jon Horvath, now isn’t the time to give up on your dreams, just because you face the prospect of years in the slammer.

Horvath, 42, is the former SAC analyst who pleaded guilty last week to securities-fraud charges after admitting to participating in an insider-trading ring. Soon he will probably join former Galleon Group kingpin Raj Rajaratnam and dozens of other recently convicted hedge-fund masters and tipsters now populating America’s minimum-security prisons….

More?  Check out http://www.bloomberg.com/news/2012-10-04/how-to-run-your-hedge-fund-from-a-prison-cell.html

Hedgies: Boo$t Ally’s ResCap tab

The restructuring of Ally Financial’s bankrupt ResCap mortgage unit may be much more expensive than the Treasury Department thought — and according to the NY Post that could ultimately cost taxpayers.

A group of hedge funds are preparing to push Ally, which is owned by US Treasury, to quadruple its contribution to the ResCap reorganization from the $750 million now on the table to $3 billion, several sources said.

“Ally can afford to pay $3 billion to $4 billion without impacting regulatory capital,” and satisfy all claims, according to a source close to the situation.

While that may or may not be true, every additional dollar contributed by Ally to the ResCap reorganization is a dollar less in value taxpayer-owned Ally has to pay back Treasury….

More?  Go to http://www.nypost.com/p/news/business/hedgies_boo_ally_rescap_tab_8LCCbaNg0fNCsXXFsj9VSO

Third Point's Loeb bets big, and wins, on Greek debt

Hedge fund manager Daniel Loeb built a major position in distressed Greek government bonds in September, according to a monthly report and quarterly letter he sent to his investors, according to Reuters.

Loeb's nearly $5 billion Third Point Offshore Fund gained 3.4 percent last month, helped by a bullish position in Greek debt, said the Sept. 30 monthly note, which was reviewed by Reuters.  The hedge fund increased its exposure to European credit through July and August, including Greek bonds, in anticipation of "a strong reaction from the ECB" to markets in turmoil from worsening debt troubles in Spain and a European Union summit that failed to calm anxious investors, Loeb said in a more detailed quarterly letter released on Wednesday and obtained by Reuters.

The hedge fund scooped up certain Greek government bonds for about 17 cents on the dollar, which were part of a so-called "strip" of 20 newly issued bonds that mostly trade bundled together, Loeb said in the October 3 letter. The individual bonds have an average maturity of about 20 years….

Read all about it at http://www.reuters.com/article/2012/10/03/hedgefund-thirdpoint-loeb-idUSL1E8L3D8O20121003?type=marketsNews

Hedge Fund Seizes Argentine Navy Ship

In its ongoing war with Argentina, Elliott Associates has taken an Argentine navy ship.

The hedge fund has not launched its own military force nor adopted piracy as its latest strategy. Instead, its NML Capital affiliate convinced a court in Ghana, where the ARA Libertad was docked on a West African tour, to detain the training vessel.

Elliott and Argentina have sparred for more than a decade over the country's 2001 default on $95 billion in debt. Both sides have traded victories and defeats in the U.S. courts, including the freezing of Argentina assets in the U.S., as the hedge fund fights to be paid at par, rejected the huge haircut taken by most investors in the Argentine debt.

Argentina was predictably furious about the new front opened by Elliott.

"The vulture funds have crossed a new line in their attacks on Argentina," the country's Foreign Ministry said. "The Foreign Ministry has already approached the African nation to clarify the stunt pulled by the unscrupulous financiers."

http://www.finalternatives.com/node/21769

Wow! Hedge fund Tiger Global up 22.4 pct in first 9 mos!!!

Holy Hannah!  Tiger Global, one of the world's best-performing hedge funds, ended the third quarter with strong gains, leaving the fund up 22.4 percent for the year, two people familiar with the numbers told Reuters..

The roughly $6 billion fund, run by Chase Coleman and Feroz Dewan, has been the darling of the investment community for its string of strong returns at a time when the average hedge fund is delivering only low single-digit returns.

In 2011, when most funds nursed losses, Tiger Global captured headlines with a 45 percent gain for the year after having made a good chunk of money on the short side, people familiar with the portfolio said.

Read all about it at http://www.reuters.com/article/2012/10/03/hedgefunds-tigerglobal-idUSL1E8L3DMB20121003?type=marketsNews

Feds charge hedge fund managers with defrauding investors

The Securities and Exchange Commission today separately charged a pair of hedge fund managers and their firms with lying to investors about how they were handling the money invested in their respective hedge funds. According to a report in futuresmag the charges are the latest in a series of actions taken by the SEC Enforcement Division and its Asset Management Unit against hedge fund-related misconduct in the markets.

In one case, the SEC alleges that San Francisco-based hedge fund manager Hausmann-Alain Banet and his firm Lion Capital Management stole more than a half-million dollars from a retired schoolteacher who thought she was investing her retirement savings in Banet’s hedge fund. In the other case, the SEC charged Chicago-based hedge fund managers Norman Goldstein and Laurie Gatherum and their firm GEI Financial Services with fraudulently siphoning at least $147,000 in excessive fees and capital withdrawals from a hedge fund they managed….

Wait...wait...there's more at http://www.futuresmag.com/2012/10/03/sec-charges-hedge-fund-managers-with-defrauding-in

Apple iSqueezed

Apple’s expected debut next month of an iPad mini is likely to cause a frenzy among its fanboys — but could also put a squeeze on its top-shelf profits, analysts told the NY Post..

Last quarter, margins at the Cupertino, Calif., company shrank to 42.8 percent from a record 47.4 percent in the previous three-month period — as sales of the iPhone, its most profitable gadget, slowed ahead of the iPhone 5 launch in the current period.

With the iPad mini expected to be priced considerably below the 10.1-inch iPad, Wall Street analysts see the possibility of margins shrinking even more.

“The iPad mini is unlikely to have the same margin profile as the iPhone or even the current iPad,” said BGC Partners analyst Colin Gillis....

 

Read all about it at http://www.nypost.com/p/news/business/apple_isqueezed_URxTsWxtKfp0XpbjSEf3gJ

In 'JOBS' Act Land Rush, Hedge Funds Poised to Win Big….But

From Businessweek: The firms most likely to benefit first from new rules that would allow hedge funds to conduct wide advertising campaigns aren’t hedge funds.

The Jumpstart Our Business Startups Act, signed into law by President Barack Obama in April, ended a ban on the advertising of non-registered securities as part of an effort to expand funding options for startup companies. The law may give the biggest advantage to firms with trillions of dollars in assets and create a divide between asset managers that offer hedge funds, private equity and other alternatives and those that don’t, such as traditional mutual-fund companies.

“The JOBS Act is something where the advantage is for hedge funds, but they don’t have the skills for it and the traditional managers that have alternatives have the capabilities to take advantage of it,” Benjamin Phillips, a partner at consulting firm Casey, Quirk & Associates in Darien, Connecticut, said in a telephone interview…….

Find out more at http://www.businessweek.com/news/2012-10-03/blackrock-leads-firms-poised-to-win-from-hedge-fund-ads#r=bloomberg

Washington has view to a ‘kill’

In an effort to control the machines on Wall Street, “kill switches” are getting closer to a reality as a way to tap the brakes on frenzied trading powered by high-tech computers. That was at least one of the broad themes that emerged from a day-long round table hosted by the Securities and Exchange Commission in Washington, DC, yesterday, according to a NY Post report..

Wall Street heavyweights including market makers, exchange operators and other industry experts offered up their best suggestions during the six-hour-long confab.  But the concept of a so-called kill switch, which would either shut down errant trades or trigger approvals for certain types of trades, became a consistent refrain....

Read all about it at http://www.nypost.com/p/news/business/dc_has_view_to_kill_5RIgLxXCKfXa3ib1xBdaSI

IMF Chief Economist Says Crisis Will Last a Decade

The world economy will take at least (sob!) 10 years to emerge from the financial crisis that began in 2008, the International Monetary Fund's Chief Economist Olivier Blanchard said in an interview published on Wednesday.

Blanchard told Hungarian website Portfolio.hu, in an interview conducted on September 18, that Germany would have to accept higher inflation and a real strengthening of its purchasing power as part of the solution to Europe's problems.

But even though the focus was on Europe's troubles now, he said, the United States also had a fiscal problem which it had to resolve.

"It's not yet a lost decade... But it will surely take at least a decade from the beginning of the crisis for the world economy to get back to decent shape," Blanchard said….

More?  Grab a hankie and go to http://www.cnbc.com/id/49269025

PIMCO’s Gross: US Is Hooked on 'Budgetary Crystal Meth':

From CNBC: Stocks and bonds will be virtually worthless and gold and hard assets will be the only investments worth having unless the U.S. tames its addiction to debt and deficits, Pimco's Bill Gross said Tuesday.

In his widely followed monthly Pimco investor newsletter, the CEO of the company that runs the largest bond fund in the world paints a stark picture of the domestic financial picture.  He said the nation has lost the trust of financial entities including the Congressional Budget Office, International Monetary Fund and the Bank of International Settlements, each of which lately has published critiques of international finance.,…

http://www.cnbc.com/id/49256805

Hedgie Einhorn says, No quiero Chipotle

The Ny Post writes: maybe David Einhorn should add grill master to his résumé.  The famed short-seller, who famously struck out in his bid for a majority stake in the New York Mets, sent shares of Chipotle Mexican Grill down as much as 9 percent yesterday after warning of trouble ahead for the popular restaurant chain.

In a packed conference room in Times Square yesterday, Einhorn joked that thanks to its new Cantina Bell menu, which boasts healthier options, Yum Brands’ Taco Bell is starting to “eat Chipotle’s lunch.”

Don't stop now.  Go to http://www.nypost.com/p/news/business/hedgie_einhorn_says_no_quiero_chipotle_JdcJHvSf9i3CdXF2SsJJLJ

Wall Street Equities Traders Face Suckiest Year Since 2006

From Bloomberg: Wall Street banks’ equities-trading units aren’t getting much relief from the strongest stock rally since 2009, as sinking volume and already thin margins threaten to make their annual performance the worst in six years.  Third-quarter equities-trading revenue probably fell 14 percent from the same period in 2011, the fifth straight drop of more than 8 percent, according to estimates by Kian Abouhossein, a JPMorgan Chase & Co. analyst. .

More?  If you can strand it check out http://www.bloomberg.com/news/2012-10-02/wall-street-equities-traders-face-worst-year-since-2006.html

Ex- SAC Manager to FBI: Fund Used Inside Info

From BI: A former SAC Capital Advisors LP portfolio manager told the FBI it was “understood” that those assigned to give their best trading ideas to founder Steven A. Cohen would provide him with insider information, according to an agent’s notes of the conversation.

The former fund manager, Noah Freeman, pleaded guilty to securities fraud in February 2011 after speaking to Federal Bureau of Investigation agents and federal prosecutors in New York in late 2010, in a so-called proffer session. Defendants use such sessions to determine whether to cooperate with the government against others....

Freeman, one of five current or former SAC portfolio managers or analysts implicated in insider trading, isn’t quoted as saying Cohen, 56, knew the information came from illegally obtained tips, ordered him to provide them or traded on the data. Neither Cohen nor Stamford, Connecticut-based SAC Capital, which manages $14 billion in assets, has been accused of criminal or civil wrongdoing…..

Read more: http://www.businessinsider.com/ex-sac-capital-manager-tells-fbi-fund-used-insider-information-2012-10#ixzz28ABzePsG

Stoned Broker Sent Oil to 8-Month High in 2009

Is anyone's belief system shattered?  On June 30, 2009, oil mysteriously jumped by more than $1.50 a barrel during the night, to reach its highest price in eight months, the kind of swing that is caused by a major geopolitical event according to cnbc.

The amazing, true cause of this price spike has now been released by a Financial Services Authority investigation (FSA). Although not authorized to invest company cash in trades, Steve Perkins, a long standing, senior broker at PVM Oil Futures, had managed to spend $520 million on oil futures contracts throughout the night, the FSA said.

On the morning of the 30th, an admin clerk called Perkins to ask why he had bought 7 million barrels of crude during the night. Perkins had no recollection of the transactions, and it turned out that he had made the trades during a “drunken blackout," according to the FSA.  By the time PVM realized the transactions had not been authorized by a client, they had incurred losses of $9,763,252….

Read all about it at http://www.cnbc.com/id/49197769

Apple Subsidiary is 'World's Largest Hedge Fund'!!!

Not content with being the world's most valuable company, Apple subsidiary Braeburn Capital has become "the world's largest hedge fund."  At the end of June, Braeburn, headquartered in Reno, Nevada had $117.2 billion in assets. Bridgewater, which is widely recognized as the top hedge in the world, had around $100 billion in assets.

Braeburn's existence is simple: to manage Apple's massive and continuously growing cash pile. The firm reportedly keeps its enormous amount of funds in a series of investment vehicles, which includes the likes of stocks and bonds.

Apple's Braeburn division will be shrouded in mystery for the foreseeable future, though, as is the case with hedge funds, they don't have to divulge information pertaining to its holdings....

Read all about it at http://www.tomshardware.com/news/Apple-Braeburn-Hedge-Fund,18040.html

Soft Returns?, Hedge Funds Return to Roots

From the WSJ: The hedge-fund industry has become less fun than it used to be, but some observers are seeing the makings of a return to the higher-risk, higher-reward days of yore.  The industry looks set to lag behind stock markets for the fourth consecutive year. Over the three years to the end of August, the average hedge fund has gained 3.21% a year, according to Hedge Fund Research.

Behind the diminished returns? The kind of staid institutions that hedgies once tried to be an alternative to. Two-thirds of assets in the $2.1 trillion hedge-fund industry are now owned by institutional investors, compared with less than a fifth 10 years ago, according to Deutsche Bank DBK.XE +0.98% prime brokerage.  This shift has changed the fabric of the industry….

Find out more at http://online.wsj.com/article/SB10000872396390444004704578030252979962918.html?mod=googlenews_wsj

Hedge Fund looks for an edge

Jana Partners has a long way to go before persuading Agrium Inc. shareholders that the fertilizer maker needs to be broken up, but the hedge fund may turn a few heads with its analysis that there is about 50-per-cent upside in the stock, the Globe abnd Mail reports.

Jana has been working behind the scenes pitching its plan to investors and management for months. On Monday, it unveiled its analysis publicly for the first time. Jana founder Barry Rosenstein laid out his argument at the Value Investing Congress in New York City, a marquee event for value investors to present their best ideas. His 41-page presentation built up to one big number in the finale: $50 a share.

That is how much the hedge fund suggests is there for the taking in Agrium stock if management agrees to carve up the company…..

Read all about it at http://www.theglobeandmail.com/globe-investor/investment-ideas/streetwise/jana-probes-for-weakness-in-agriums-armour/article4580699/

Four Fingered in U.K. Insider-Trading Probe

According to Businessweek former Deutsche Bank AG managing director Martyn Dodgson was among four people charged with insider trading by U.K. authorities after an investigation spanning two-and-a-half years.

Dodgson, who was employed by Deutsche Bank at the time of his arrest in March 2010, as well as Andrew Hind, Benjamin Anderson and Iraj Parvizi were charged with “conspiracy to insider deal” between Nov. 1, 2006, and March 23, 2010, the Financial Services Authority said today in an e-mailed statement. The agency alleges the men made more than 3 million pounds ($4.8 million) on improper trades.

The charges stem from an investigation into the front- running of block trades, known as Operation Tabernula, Latin for little tavern. The FSA arrested seven people and raided 16 addresses in London and southeast England in March 2010 as part of the crackdown. Two more arrests came later....

http://www.businessweek.com/news/2012-10-01/four-charged-for-in-u-dot-k-dot-fsa-insider-trading-probe

Hedge Funds Lag S&P 500, Add 3.04% YTD

According to Finalternatives: Hedge funds were up 3.04% year-to-date as of September 26, according to a Bank of America Merrill Lynch estimate, compared to a 13.97% YTD gain by the S&P 500...

Based on investable hedge fund indices, BofAML says convertible arbitrage and event driven funds were the best performers over the monitored period, up 5.58% and 4.99%, respectively. Market neutral strategies were the worst performers, shedding 5.31%....

Trust me there’s more….much more at http://www.finalternatives.com/node/21727

Oops! A Technical Glitch Halts Trading On A Major Exchange

UPDATE: Trading has resumed, Bloomberg's Rudy Ruitenberg reports.

EARLIER: NYSE has announced it has halted trading in all London and Paris Commodities and London Futures.

Bloomberg TV reports it was because of a technical fault.

Trading will resume at 16:42 GMT (11:42 Eastern) for futures, and 16:44 (11:44 Eastern) for commodities, NYSE says.

Read more at http://www.businessinsider.com/nyse-liffe-technical-glitch-2012-10

Geeks cash in on their Street appeal

They studied advanced algorithms instead of art history, and now it’s paying off.  The hottest commodities on Wall Street aren’t silver and gold, but new graduates with degrees in computer science, recent data shows  the gurus at the NYPost..

New York, which ranks third on a list of cities sweeping up the young talent, has become an increasingly competitive hiring market, as banks like Morgan Stanley and Goldman Sachs square off with Google and Facebook for the best recruits.

While some land jobs earning upward of $100,000 a year at large tech companies, many are entering the financial sector, designing and operating the black boxes that perform high-frequency trades.

Need to know more?  Check out http://www.nypost.com/p/news/business/geeks_cash_in_on_their_street_appeal_iFFAP5CNSDQ36mdGxB1GtN

Falcone to Seek Case's Dismissal

Hedge-fund manager Philip Falcone and his firm, Harbinger Capital Partners LLC, formally signaled their intent to seek the dismissal of fraud charges filed against them earlier this year by securities regulators, people familiar with the case told the WSJ

In June, the Securities and Exchange Commission filed civil charges accusing Mr. Falcone of putting his own interests, including maintaining a "lavish lifestyle," ahead of those of Harbinger's investors.

The agency accused Mr. Falcone, Harbinger and Harbinger's former operating chief, Peter Jenson, of misleading investors and an outside law firm when Mr. Falcone took out a $113.2 million loan in 2009 from a Harbinger fund to pay his personal taxes, even as other investors in the fund were prevented from pulling their money….

Want to know more?  Go to http://online.wsj.com/article/SB10000872396390443862604578028891334211364.html

MIT economist pitches cancer megafund

Andrew W. Lo, the MIT finance professor and hedge fund manager, wants to bring Wall Street-style financial­ engineering to a crucial social need: curing cancer, the Boston Globe reports.

Named this year as one of Time magazine’s 100 most influential people in the world, Lo runs an investment firm in Cambridge called AlphaSimplex Group, with $3 billion in assets. He is known for his “adaptive markets” financial theory, which maintains that prices and investors are not always rational.

Now he is proposing an idea that would go beyond his own firm, creating a “megafund” that would flood early-stage research in cancer drugs with $30 billion. By supporting as many as 150 experimental compounds at any one time and bringing in large numbers of investors, he argues, the risk would be spread over a much larger base. Even if just a few of the treatments prove effective, Lo estimates the fund would be profitable, earning equity investors annual returns of 7 to 10 percent.

More?  Check out http://bostonglobe.com/business/2012/09/30/mit-professor-andrew-proposes-cancer-megafund-billion-speed-cures/iHLdtvRa0ZfqH9FuxjQ7mJ/story.html

Shocker! Hedge funds did not cause the financial crisis

That's the conclusion of a new monograph — “Hedge Funds and Systemic Risk”— from RAND Corp., a non-profit research and policy organization. The report's authors analyzed the extent to which hedge funds create or contribute to systemic risk. In the the context of the 2008 global market crash, their conclusion was that hedge funds did not play as significant a role in the crisis as credit-rating agencies, mortgage lenders and credit default swaps issuers.

“We found little evidence that hedge funds contributed to the housing bubble” or that their short selling of financial stocks was “a major contributing factor,” said Lloyd Dixon, lead author of the study and a RAND senior economist,…

Trust us.  Or else check out http://www.pionline.com/article/20121001/PRINTSUB/310019982/hedge-funds-didnt-cause-financial-crisis-rand-says

Charm School for Sharks? In Battle for Dominance, Traders Turn to Life Coaches

In the take-no-prisoners world of foreign exchange dealing, asking traders to look inside themselves and confront their inner demons may seem a forlorn endeavor.  Yet some banks are turning to performance coaches to give their traders an edge in the battle to make money in the $4.5 trillion dollar a day FX market.

But while some dismiss techniques to develop a "clear-headed space" in which to trade as touchy-feely gimmickry, many are keen to embrace any tactic to outwit other market participants, whether human or machine.

"I talk about performance enhancement rather than psychology. It makes it a bit more approachable for guys who have still got a bit too much testosterone and ego," said trader performance coach Steve Ward.  With trading margins squeezed and banks cutting jobs, former physical education teacher and sports performance coach Ward had expected business to dry up.  In fact, the last year has been one of his busiest ever….

Don't stop now.  Check out http://www.cnbc.com/id/49236193