Chirping mad over A ‘SAC’ed $1M nest egg

Ronald Weiland realized he’d made a bad bet in 2008, when he lost his $1 million nest egg trading shares of drug company Elan. What he didn’t know then was that the cards were stacked against him.  Weiland now believes that he and other investors were played by Steve Cohen’s SAC Capital Advisors when the hedge fund giant — acting on information from a former trader accused of insider trading — abruptly dumped its huge long position in Elan and Wyeth and started shorting both stocks.

“They had information that I didn’t have access to,” said Weiland, a 53-year-old former consultant for Arthur Andersen. “It’s totally a matter of seeing very wealthy people being able to game the system.”

The big trading swing that netted $276 million for SAC and led to the arrest of former trader Mathew Martoma has also landed the firm in hot water. Elan investors have filed at least two lawsuits against SAC, accusing the firm of costing them millions, and several class-action law firms are looking to tee up more….

Wait, wait…there’s more at http://www.nypost.com/p/news/business/chirping_mad_over_sac_ed_nest_egg_91JM3dZfP6cwjn2YTojy0L

…And Another Big Banking Scandal May Be On The Way

From Hereisthecity: “….And it's electronic messaging that could cause problems yet again.  Reuters reports that internal reviews by banks in Singapore have found evidence that traders colluded to manipulate rates in the offshore foreign exchange market, according to a source with knowledge of the inquiries.

The probes found evidence showing that traders from several banks communicated with each other over electronic messaging about what rates they were going to submit for the local banking association's fixings for non-deliverable foreign exchange forwards (NDFs), aiming to benefit their trading books….

Read all about it at http://hereisthecity.com/2013/01/28/another-big-banking-scandal-on-the-way/

The funds that saw Apple's nosedive coming

From Yahoo: The slump in Apple Inc's share price from its September high has badly dented the returns of hundreds of mutual funds that had maintained outsized holdings of the stock. But some went sour on the iPhone-maker just in time.

Of the 321 funds that had more than 5 percent of their assets in Apple shares at the beginning of 2012, 53 of them - or slightly more than 16 percent – read  the cards and significantly cut back their weighting of the company before the plunge gained momentum, according to data from Morningstar.

Whether it was a case of simple risk management, concerns that the company's share price had peaked, or a bit of luck, fund managers who drained Apple from their portfolios helped drive down the price of the stock. As a result of their early shift in sentiment, they appear quite prescient now….

Read all about it at http://finance.yahoo.com/news/anlaysis-funds-saw-apples-decline-174717417.html

Crooks: Ex-Jefferies Arrest Shows Market Lacking Transparency

Jesse Litvak, a former Jefferies & Co. mortgage-bond trader, is accused of cheating customers by using unscrupulous sales tactics that the U.S. Securities and Exchange Commission’s deputy director of enforcement called “unfit for a used car lot.” Such practices are widespread in a market lacking transparency, investors and regulators told Bloomberg’s Best.

Litvak was arrested Jan. 28 and charged by the U.S. Attorney’s Office in Connecticut with defrauding firms, including BlackRock Inc., AllianceBernstein Holding LP  and Magnetar Capital LLC, out of more than $2 million by allegedly lying about the origins and prices of securities. Some of the trades involved a federally subsidized program to revive the mortgage-bond market after it froze in 2008. Litvak, 38, pleaded not guilty.

The case shows how even Wall Street’s most sophisticated mortgage investors remain largely at the mercy of middlemen a decade after regulators forced brokers of other types of bonds to publish data…

 http://www.bloomberg.com/news/2013-01-31/ex-jefferies-arrest-shows-market-lacking-transparency.html

Death and the Iowan: Futures Fraudster expects to die in the Slammer

Russell Wasendorf Sr., who admitted looting more than $100 million from futures broker Peregrine Financial Group, expects to die behind bars even if a judge ignores prosecutors and imposes a lenient sentence at a hearing on Thursday he told Reuters.

Prosecutors say the amount Wasendorf stole was closer to $215 million and have asked a federal court in Iowa to sentence the 64-year-old to 50 years in prison for the scam that  affected tens of thousands of customers.

Wasendorf said in July that he had bilked clients over nearly 20 years, faking bank statements and lying to regulators, employees and his closest family members….

Read all about it at http://www.chicagotribune.com/business/breaking/chi-lawyer-says-peregrines-wasendorf-expects-todie-in-jail-20130130,0,7572363.story

Man Group Backs Former Citadel Manager for New Japan Hedge Fund

Man Group Plc, the biggest publicly traded hedge fund manager, is backing a new Japan-focused hedge fund started by Toby Bartlett, a former manager at Citadel LLC and Highbridge Capital Management LLC, according to Bloomberg.

FRM Capital Advisors Ltd., under Man Group, will make an unspecified “significant investment” in the fund run by Hong Kong’s Arena Capital Management Ltd., the London-based provider of startup capital to hedge funds said in the e-mailed statement. The new fund bets on rising and falling Japanese stocks with a focus on domestic demand industries.

It will be FRM Capital Advisors’s first investment since its parent, London-based fund of hedge fund FRM Holdings Ltd., was acquired by Man in May

Read more at http://www.bloomberg.com/news/2013-01-30/man-group-backs-former-citadel-manager-for-new-japan-hedge-fund.html

U.S. hedge fund builds stake in Greek gambling monopoly

U.S. hedge fund Baupost Group has a 5.2 percent stake in Greek gambling firm OPAP, a regulatory filing showed on Tuesday, signaling foreign interest in the country's gambling monopoly before its privatization, Reuters reports..

Boston-based Baupost Group, run by money manager Seth Klarman, unveiled the position after it exceeded a 5 percent reporting threshold under Greek law, OPAP said in the filing.

Baupost is the third investment fund holding a big stake in OPAP, which has a market value of 2.05 billion euros ($2.76 billion) on the Athens Stock Exchange.  Investment funds Silchester Inv. and Fidelity Investments already own about 5 percent each in the company, according to Athens stock market data.

Read all about it at http://www.reuters.com/article/2013/01/29/us-greece-opap-hedgefund-idUSBRE90S0N620130129

Grim News: The Body Of A Missing Portfolio Manager Found Buried Outside Tokyo

Police in Japan discovered the body of a missing portfolio manager and what is believed to be the body of his wife near Tokyo two days ago, Bloomberg News reported.

The deceased man has been identified as Makoto Shimomi, 51, a Japanese fund manager who regularly traveled between Japan and Switzerland.  He and his wife Mie Shimomi, 48, went missing back on December 7…. 

Read more: http://www.businessinsider.com/makoto-shimomi-found-dead-2013-1#ixzz2JTwUaG2b

Argentina on hedgie ‘ship’ list

Billionaire hedge-fund honcho Paul Singer is still riled about losing control of Argentina’s naval training vessel, the Libertad, after a UN court told Ghana to release the ship in December.

“Argentina grabbed its ship and skipped town,” Singer told Elliott Management investors in his latest year-end letter, dated Jan. 28, which The Post has obtained.

Singer’s sour view on the ship episode — which captivated the world community last fall when Ghana detained it to satisfy his claims against Argentina — contrasted with what he wrote earlier….

Read more at http://www.nypost.com/p/news/business/argentina_on_hedgie_ship_list_OM01WSpCuAzuPyjPyLlS2J

Herbalife preps online counterattack against Ackman

Yes folks get ready for... 'therealbillackman.com' 

Bill Ackman has gotten under Herbalife’s skin.  The nutritional supplements company that Ackman dissed as a “pyramid scheme” has purchased three domain names related to the hedge fund tycoon people close to the issue have told the Post.

Herbalife has owned “therealbillackman.com,” “billackman.net” and “therealackman.net” since Jan. 18, according to Go Daddy’s database of registered domain names. So far, the sites are inactive.

The domain names appear to be part of a bigger Internet and social media campaign kicked off after Ackman’s paid search engine ad “factsaboutherbalife.com” topped Google’s search rankings about the company....

Read all about it at http://www.nypost.com/p/news/business/herbalife_preps_web_counterattack_sF840s6jZiS3KEEZ0tp6dK

Hedge Funds Are Selling Stocks As Mom-And-Pop Investors Plunge In To This Market

 Just so you know....BI’s Matthew Boesler reports that  stocks have headed higher without respite to start 2013.

Many strategists are warning that a sell-off is in order, especially given a wide range of indicators that suggest investor sentiment is at historical highs.

See the charts for yourself and read more at : http://www.businessinsider.com/hedge-funds-are-selling-stocks-as-mom-and-pop-investors-plunge-in-to-this-market-2013-1#ixzz2JNw5awmG

SAC Capital still working to hang onto investors

From NY Times’ Dealbook: “At last month’s Hurricane Sandy benefit concert, Steven A. Cohen sat near the Madison Square Garden stage, grooving to performances by Bon Jovi and Billy Joel.  Last week, he flew a private jet to the World Economic Forum in Davos, Switzerland, rubbing shoulders with world leaders and Fortune 500 chieftains. And on Monday, he will show up at the Breakers Resort in Palm Beach, Fla., for one of the year’s biggest hedge fund conferences and, if he can squeeze it in, a round of golf.

“For a man who has emerged as the Justice Department’s great white whale in its insider trading investigation — a Wall Street version of Moby-Dick being pursued by Captain Ahab — Mr. Cohen, the billionaire owner of the hedge fund SAC Capital Advisors, does not appear concerned.  But inside the offices of SAC’s Stamford, Conn., headquarters, and at Midtown Manhattan law firms, Mr. Cohen’s employees and lawyers are working hard to contain the fallout from the investigation.

“His execs have offered financial incentives to Mr. Cohen’s staff members to stay with SAC. Marketing officers are trying to persuade investors to keep their money at the fund. And defense lawyers are working furiously to persuade federal securities regulators not to file a civil fraud lawsuit against the firm.

“This has always been a stressful place to work,” said an SAC employee who requested anonymity because he was unauthorized to speak publicly about the fund. “Now it’s just more stressful….”

http://dealbook.nytimes.com/2013/01/27/beneath-the-calm-sac-works-to-contain-fallout-from-an-inquiry/?hp

Russia To Try Hedge Fund Lawyer Posthumously

According to finalternatives while Russian prosecutors have not tried very hard to win a conviction in the case of the death of Sergei Magnitsky, they are moving forward with a posthumous trial for the hedge fund lawyer.

The trial of Magnitsky, who died in a Russian prison in November 2009 at the age of 37, and of his client, Hermitage Capital Management's William Browder, began today in Moscow. The two are accused of tax fraud.  It is unclear whether the trial, condemned as "Kafkaesque" by Amnesty International, will be open to the public. Magnitsky's mother is boycotting the proceedings and has urged the lawyers appointed to represent her dead son to refuse to serve.

The Magnitsky case has become a major sore spot between Russia and the west. A U.S. law freezing the assets of and denying visas to 60 Russian officials Browder alleges were involved with Magnitsky's death led to a retaliatory law from Russia, barring U.S. citizens from adopting Russian children…..

http://www.finalternatives.com/node/22709

Icahn, Ackman in Epic Billionaire Showdown

             

Bill Ackman and Carl Icahn square-off live and insult each other on CNBC's "Fast Money Halftime" over a past deal gone bad and disagreements about current investments in Herbalife. This is the complete, unedited conversation.  Call them the "Bickering Billionaires," two financial titans who squared off in a breathtaking, unforgettable smackdown Friday on CNBC.

Bill Ackman, the head of Pershing Square Capital Management and its $12 billion in assets, squared off against Carl Icahn, the fellow activist investor and one of the richest men in America with an estimated fortune of nearly $15 billion.

The debate revolved around charges and countercharges, with Icahn calling Ackman dishonest and "a major loser," while Ackman countered that Icahn is a bully "not used to someone standing up to him."

Traders at the New York Stock Exchange punctuated the air with "oohs" and "aahs" during the arguing, while social networks lit up, with financial journalists and market watchers tweeting and posting as fast as their fingers could type….

More?  Check out http://www.cnbc.com/id/100408608

Major Hedge Fund Will Run Two Sets Of Books!

           

According to the good people at Forbes Bridgewater Associates, one of the largest hedge funds in the world with $120 billion in assets, will soon use Northern Trust to shadow the fund administration work it outsourced to BNY Mellon in 2011.

For asset managers, outsourcing middle and back office work to custodians is nothing new; it has been going on for years as the big custodians like JPMorgan, Citi, BNY Mellon, Brown Brothers Harriman and Northern Trust use their skills, plus massive deployments of technology, in the high-volume, low-margin business of fund administration.

The first big fund to outsource was PIMCO back around 2000, said Pete Cherecwich, head of global fund services business unit at Northern Trust. As in-house systems age, funds facing the decision to invest in new technology have often decided to to outsource instead. The big custodians can provide depth of expertise, the latest technology, a large staff of technology experts and career paths for technologists that they wouldn’t find in a bank.

For hedge funds, using outside administrators is a relatively recent development.   Historically a lot of hedge funds did their own fund administration, said Cherecwich.  Spurred by the Madoff scandal, many institutional investors began to insist on third party fund administration. Citadel, the Chicago-based hedge fund, sold its sophisticated fund management system, Omnium, to Northern Trust in 2011 and became a client….

Wait...wait...there's more at http://www.forbes.com/sites/tomgroenfeldt/2013/01/28/major-hedge-fund-will-run-two-sets-of-book/

Why Every Hedge Fund Manager In The World Is Pissed At George Soros Right Now

From BI: Everyone knows that overall hedge fund performance has been lackluster since the financial crisis, but there are differing explanations as to why. Last week, at the World Economic Forum in Davos, George Soros threw in his two cents (but it was obscured by some other news).

Soros' bottom line was that hedge funds can't beat the market, in part, because there are so many of them and they are now a dominant force in the market.

The other reason why Soros says they can't beat (which is sure to make some managers upset) is that the famous hedge fund "2 and 20" compensation scheme is eating into profits (2 and 20 = 2% of the returns go to management fees, 20% returns go to the fund)

Read more: http://www.businessinsider.com/george-soros-on-hedge-fund-fees-2013-1#ixzz2JI40vgei

The World Top 10 Business Schools For Getting Rich

The Financial Times is out with its latest rankings of the world's business schools, with Harvard taking the top spot from Stanford.

As always, these rankings are somewhat idiosyncratic, Bloomberg Businessweek puts Chicago Booth in the top spot, and it barely makes the top 10 in the FT. Our rankings had Stanford at number one.

But of course, salary reigns supreme, and despite recent depressing news about MBA pay, grads from top schools are doing pretty well for themselves.   Here are the top 10 schools ranked by average salary:

1. Havard Business School
2. Univ of Penn,: Wharton
3. Columbia Business School
4. Indian Institute of Management, Ahmedabad
5. University of Chicago: Booth

Read about the rest at http://www.businessinsider.com/10-best-business-schools-for-salary-2013-1

Choice of Mary Jo White to Head SEC Puts Fox In Charge of Hen House

Rollingstone’s Matt Taibbi was shocked when he heard that Mary Jo White, a former U.S. Attorney and a partner for the white-shoe Wall Street defense firm Debevoise and Plimpton, had been named the new head of the SEC.

"I thought to myself: Couldn't they have found someone who wasn't a key figure in one of the most notorious scandals to hit the SEC in the past two decades? And couldn't they have found someone who isn't a perfect symbol of the revolving-door culture under which regulators go soft on suspected Wall Street criminals, knowing they have million-dollar jobs waiting for them at hotshot defense firms as long as they play nice with the banks while still in office?

"I'll leave it to others to chronicle the other highlights and lowlights of Mary Jo White's career, and focus only on the one incident I know very well: her role in the squelching of then-SEC investigator Gary Aguirre's investigation into an insider trading incident involving future Morgan Stanley CEO John Mack. While representing Morgan Stanley at Debevoise and Plimpton, White played a key role in this inexcusable episode….

Don't stop now. Read more at http://www.rollingstone.com/politics/blogs/taibblog/choice-of-mary-jo-white-to-head-sec-puts-fox-in-charge-of-hen-house-20130125

Hedgie Singer’s sewing change

Go figure.  Paul Singer appears to have changed his tune on Argentina.  After a decade of aggressively pursuing $1.44 billion he claims the country owes him and a group of bondholders, including successfully pressing Ghana to seize a locally docked Argentine naval vessel to help pay down the debt, the billionaire New York hedge fund mogul is sounding like Bobby McFerrin in “Don’t Worry, Be Happy.”

Singer’s Elliott Management now feels Argentina will do the right thing, according to recent court filings.

It’s quite a change from last fall’s legal arguments, in which Singer urged a federal judge to hurry up and force Buenos Aires to put some of the monies owed into escrow, citing the country’s president’s plot to avoid the debt payment.  Such a move would have put Argentina into default…...

Read all about it at http://www.nypost.com/p/news/business/singer_sewing_change_CJHP0L1KW5zegZcYpBuTyI

Look Who Owes $2 Billion for Fraud

Credit Suisse Group Inc faces a potential $2 billion of exposure over fraud that occurred a decade ago at National Century Financial Enterprises, a result of a federal judge's determination on how to apportion responsibility.

Friday's decision by U.S. District Judge James Graham could expose the Swiss bank to hundreds of millions of dollars of added liability over the activities of Lance Poulsen, who co-founded National Century in 1990 and was its chief executive. He is now serving a 30-year prison term and is presumed insolvent.

The decision is also a victory for bondholders including the state of Arizona, AllianceBernstein Holding LP, Lloyds TSB Bank Plc, MetLife Inc, Allianz SE's Pimco unit that accused Credit Suisse of deceiving it about the company and missing its estimated $2.9 billion fraud.

Want to know more?  Check out http://www.cnbc.com/id/100411173

Soros: Why Hedge Funds Can’t Beat Market (Hint: Fees)

 “Since hedge funds are now a dominant force in the market, they can’t, as a group, outperform the market,” Soros said today in a Bloomberg Television interview with Erik Schatzker from the World Economic Forum in Davos, Switzerland. The funds’ fees, typically 2 percent of assets and 20 percent of returns, eat into profits, Soros said.

.Hedge-fund performance will also be impeded because managers and investors are reluctant to take risks, Soros said.  “Outperforming the market with low volatility on a consistent basis is an impossibility,” said Soros, 82. “I outperformed the market for 30-odd years, but not with low volatility.”

A little background:  Soros’s hedge fund operated until 2011, when he turned New York-based Soros Fund Management LLC into a family office that now oversees $24 billion. He averaged returns of about 20 percent a year since 1969 at the firm and its predecessor

http://www.bloomberg.com/news/2013-01-25/soros-says-hedge-funds-can-t-beat-market-because-of-fees.html

Soros: Why Hedge Funds Can’t Beat Market (Hint: Fees)

 “Since hedge funds are now a dominant force in the market, they can’t, as a group, outperform the market,” Soros said today in a Bloomberg Television interview with Erik Schatzker from the World Economic Forum in Davos, Switzerland. The funds’ fees, typically 2 percent of assets and 20 percent of returns, eat into profits, Soros said.

.Hedge-fund performance will also be impeded because managers and investors are reluctant to take risks, Soros said.  “Outperforming the market with low volatility on a consistent basis is an impossibility,” said Soros, 82. “I outperformed the market for 30-odd years, but not with low volatility.”

A little background:  Soros’s hedge fund operated until 2011, when he turned New York-based Soros Fund Management LLC into a family office that now oversees $24 billion. He averaged returns of about 20 percent a year since 1969 at the firm and its predecessor

http://www.bloomberg.com/news/2013-01-25/soros-says-hedge-funds-can-t-beat-market-because-of-fees.html

How Two Hedge-Fund Bullies Turned a Schoolyard Fight into a TV Battle Royale

From the Atlantic Wire: The Players: Bill Ackman, founder and CEO of Pershing Square Capital, a hedge fund with about $8 billion in assets; Carl Icahn, another hedge-fund manager, and old school Wall Street "raider," who has led successful takeover of dozens of major corprorations and is personally worth close to $15 billion.

The Opening Serve: Icahn called in to Bloomberg TV on Thursday to criticize Ackman for his very public short selling of the health supplement company Herbalife. (Ackman has called the company "a pyramid scheme" and has a sizable bet riding on his belief that it will soon be exposed for what it is and go under.) On Bloomberg TV, Icahn said Ackman's position was "disingenuous" and that Ackman was taking a "holier than thou" attitude about the company that is built on the multi-level marketing business model.

The Return Volley: On Thursday night, Ackman issued a press release saying that Icahn is a good investor but can't be trusted. He defended his short but also reminded people of a deal the two businessmen once made that ended with a lawsuit and a lot of hurt feelings. He also called into CNBC Friday afternoon to continue his defense on national television.  That's when the fireworks started. Icahn himself called in to the show and the two did battle for a full half-hour on live TV. The billionaires traded barbs, insults, curses—mostly from Icahn, directed at Ackman and anchor Scott Wapner—all while financial journalists on Twitter and stock traders watching on TV exploded with delight…..

Read all about it at http://www.theatlanticwire.com/business/2013/01/bill-ackman-carl-icahn-cnbc/61431/

The Greatest Hedge Fund Brawl In Ages Is Happening Right Now — Here's What You Need To Know

According to BI: Everyone has been talking about the hedge fund war over Herbalife — a multi-level marketing firm that sells weight loss and nutrition products. One one side we have hedge fund titan Bill Ackman, the founder of Pershing Square Capital Management, who is shorting the stock.

After Ackman publicly declared his short, hedge fund heavyweight Daniel Loeb, the founder of Third Point LLC, took out a 8.24% stake in the company on the long side.  Some other fund managers have also gone long Herbalife after disagreeing with Ackman's short case. Ackman's rival Carl Icahn hasn't publicly said if he's long Herbalife or not, but he slammed him on Bloomberg TV for his "holier than thou" short calling him "disingenuous."

It's definitely been a real-life clash of the titans.  The most important thing you have to realize is that Herbalife itself is just the "McGuffin" in this story. It's a plot device that moves the story along, but in itself means very little. A classic McGuffin was the unidentified glowing item in the briefcase in Pulp Fiction, which Marcellus Wallace was so eager to have returned to him. What was it? Nobody knew or cared. But a fabulous story hinged on it. So, if you're just coming into this story, we've put together a comprehensive guide of everything you need to know about the Herbalife hedge fund war……:

Read more: http://www.businessinsider.com/everything-you-need-to-know-about-the-herbalife-hedge-fund-war-2013-1#ixzz2J0zBNEGi

How Apple ate Wall Street

Mutual-fund investors aren’t supposed to have to pay attention to the fate of any particular stock. But according to Marketwatch like so many things with technology giant Apple Inc., the regular rules don’t seem to apply.

While Apple’s AAPL -2.57%  stock has been hit hard in recent months — losing more than third of its value since September, including a 12% drop since missing earnings estimates on Wednesday — the Cupertino, Calif.-based company is still the most valuable name on the stock market. That distinction means it looms unusually large in millions of Americans’ investment portfolios, even if they’ve never glanced at one of its quarterly earnings reports. “We’ve never seen another company have as big an impact” on overall market returns, says Howard Silverblatt, senior index analyst at S&P Dow Jones Indices.

Just how popular has Apple become? It was among the top 10 holdings in more than 1,000 mutual funds last year, according to fund researcher Morningstar Inc. — up from just 11 in 2002, shortly after Apple introduced the device that started the gadget craze, the iPod. Overall, about one in four stock funds owns Apple…..

Read all about it at http://www.marketwatch.com/story/how-apple-ate-wall-street-2013-01-24

Whoa! Triple Dip Recession for Britain?

Britain's economy shrank more than expected at the end of 2012 with a North Sea oil production slump, lower factory output and a hangover from London's Olympics pushing it perilously close to a "triple-dip" recession, Reuters reports..  The country's gross domestic product fell 0.3 percent in the fourth quarter, the Office for National Statistics said on Friday, sharper than a 0.1 percent decline forecast by analysts.

The news is a blow for Britain's Conservative-led government, which a day earlier defended its austerity program against criticism from the International Monetary Fund. It needs solid growth to meet its budget targets, keep a triple-A debt rating and bolster its chances of winning a 2015 election.

Sterling fell to its lowest in 13-1/2 months against the euro and hit a five-month low against the dollar in response to the data. The euro was also buoyed by a stronger-than-expected German Ifo sentiment survey.

More?  Check out http://www.reuters.com/article/2013/01/25/us-uk-gdp-idUSBRE90O0CP20130125

Here's The 'Schmuck Insurance' Contract That Started A Decade-Long Feud Between Carl Icahn And Bill Ackman

From BI: It's all out being put out there now. The feud between hedge fund managers Bill Ackman and Carl Icahn reached a fevered pitch yesterday, when Carl Icahn told Bloomberg TV's Trish Regan that Ackman was "disingenuous" in his short against multi-level marketing firm, Herbalife.

Last night, Ackman responded simply by detailing the root of he and Icahn's animosity, a 2003 deal over Hallwood Realty.  At the time, Ackman's hedge fund, Gotham Partners, was going bust. He needed to do a deal so he called up Carl Icahn and offered to sell him shares of Hallwood for $80 a share. It was trading at $60, but Ackman thought it was worth $140.

The deal was, if Icahn sold the shares within 3 years and made a profit of 10% or more, he and Ackman would split the proceeds. To ensure that the deal went off without a hitch, Ackman and Icahn signed a 10 page agreement they called "schmuck insurance."

Read all about it at: http://www.businessinsider.com/ackman-icahn-hallwood-contract-2013-1#ixzz2J0FtFlnY

Schwarzman Dude, you’re not getting Dell.

That’s the conclusion Blackstone Group reached after weighing a rival takeover bid for the struggling PC maker, The Post has learned.

Blackstone, the buyout firm led by Steve Schwarzman, talked with Citi in recent days about helping finance an offer before deciding it would be too difficult to pull off, sources said.  Ultimately, the executives who gathered at Blackstone’s offices, including Citi’s vice chairman of global banking, Chad Leat, decided that it would be tough to come up with some $5 billion in equity to top an offer from rival buyout firm Silver Lake Partners.

Silver Lake is expected to kick in $1 billion in equity, while CEO Michael Dell is putting in stock valued at $3.6 billion. Microsoft is also said to be mulling throwing in $1 billion to $3 billion.Schwarzman

Need to know more?  Check out http://www.nypost.com/p/news/business/schwarzman_shut_out_of_dell_bidding_eN3PvLWkdDbERqWTo6erLL

The 10 Hedge Funds With The Biggest Stakes In Apple

According to BI’s Julia La Roche tech giant Apple posted disappointed earnings results yesterday and missed analysts' expectations pretty much across the board.  The stock, which has been a hedge fund favorite for quite some time, was last down more than 11.6% today.  Here's a rundown of the ten hedge funds with the largest stake in Apple, according to 13F data for the third quarter ended 9/30/2012 compiled by Bloomberg.

Discovery Capital (Robert Citrone): The 'Tiger Cub' hedge fund held 2,017,052 Apple shares, or a 0.21% stake at the end of Q3.  The fund added 63,100 shares in that quarter, the data shows.

D.E. Shaw (David E. Shaw): At the end of Q3, the fund held 1,529,0777 shares or a 0.16% stake.  D.E. Shaw sold 285,887 shares during the third quarter.

Tiger Global Management (Chase Coleman): Tiger Global held 1,300,000 shares of a 0.14% stake in Apple,  The hedge fund sold 100,000 shares of Apple in the third quarter.

.

Greenlight Capital (David Einhorn): Greenlight owned 1,090,890 shares of Apple or a 0.12% stake.  Greenlight sold 363,630 shares in Q3….

Find out about the rest at http://www.businessinsider.com/hedge-funds-that-own-apple-2013-1

Undercover Mole Has Caught Another Former SAC Insider Trader

Dipak Patel, a former SAC Capital portfolio manager, has been fingered by a mole, the WSJ.tld BI.

The undercover informant has told federal investigators that she passed confidential information to the trader for years.  Patel, who was a technology stock manager for Steve Cohen's hedge fund, has yet to be charged with any wrongdoing. He left SAC Capital in 2010.

Investigators have been concentrating their efforts on SAC Capital in a big way for years. The heat has been especially intense since last November, when Feds wrote that SAC CEO Steve Cohen interacted with alleged insider trader, Mathew Martoma in a complaint. Six former SAC employees have been convicted of or pleaded guilty to insider trading since 2009…..

Read more: http://www.businessinsider.com/sacs-patel-implicated-in-insider-trading-2013-1#ixzz2IuTDqIfi

Triumphant Buffett pulls ahead in wager against hedge funds

According to Fortune It's halfway time in the 10-year stock market wager sometimes called The Million-Dollar Bet—that's Warren Buffett backing the performance of an S&P index fund vs. a New York money manager backing five funds of hedge funds—and there's double-barreled news.

Item One: For the first time since the bet started five years ago, Buffett has moved ahead—by an okay margin to boot. Item Two: For the first time ever as well, both sides have crawled out of the ditch (though the funds of funds barely made it) and are showing positive results.

About that history of bad results, of course, you need to keep in mind that this bet started in the gut-wrenching year of 2008, which left both contenders deep in the red. Buffett, though, was definitely a deeper shade of red:  Vanguard's Admiral shares—the S&P index fund he'd backed—lost 37% in 2008 vs. a 24% drop, on the average, for Protégé's five funds of funds.

So now the tortoise, after crawling four more years, indeed leads. At the five-year mark, the Vanguard index fund backed by Buffett is up by 8.69%. The five funds of funds picked by Protégé Partners to carry its flag in the race are up, on the average, only—"gulp," says Protégé partner Ted Seides—0.13%.

P.S. By the terms of the bet, the identity of those five funds has never been made public. It has always been assumed, however, that one of them is a fund of funds run by Protégé itself.

Find out more at http://finance.fortune.cnn.com/2013/01/24/buffett-hedge-fund-bet/?iid=SF_F_River

KKR to Buy 25% Stake in Hedge Fund Nephila Capital

From Bloomberg: KKR & Co. agreed to buy a 24.9 percent stake in hedge fund Nephila Capital Ltd. as it expands beyond its main private-equity business. Financial terms weren’t disclosed.

Nephila, a Bermuda-based firm with $8 billion in assets that makes reinsurance-related investments, will continue to operate under its own name, New York-based KKR said yesterday in a statement. KKR will acquire its shares from Nephila’s management as well as a portion of the stake owned by Man Group Plc (EMG), the biggest publicly traded hedge-fund manager, according to the statement.

KKR, which is making the purchase through the firm and not its investment funds, has been expanding into hedge funds as a way to broaden its business beyond corporate buyouts. Last year, it bought Prisma Capital Partners LP, a hedge fund of funds, and in 2011 it hired Bob Howard from Goldman Sachs Group Inc. to run an in-house long-short stock fund. Together those two funds manage about $8.5 billion….

Read all about it at http://www.bloomberg.com/news/2013-01-23/kkr-agrees-to-buy-25-stake-in-hedge-fund-nephila-capital.html

The Man Who Helped Save America From Financial Armageddon Is Running For Office

Neel Kashkari, one of the main operatives of the bank rescue TARP (and therefore one of the men who helped save America from financial Armageddon) is leaving PIMCO, and running for office, according to Dealbook.

It's not clear what office he'll run for, except that it will be in California, and it will be as a Republican.

Frankly, if someone at the heart of TARP can entertain a run for office without being totally laughed out of the room, that tells you a lot about how America has gotten over the crisis.

Of course, any run will inevitably bring out a replay of some of his most infamous moments, including when he was asked by a Congressman during a hearing: "Is Kashkari a chump?"

Read more: http://www.businessinsider.com/neel-kashkari-leaves-pimco-and-plans-to-run-for-office-2013-1

How Einhorn got 'Einhorned'

New York investor David Einhorn is known for bringing down stocks with his short calls, but last year that boomeranged.  His short on Green Mountain Roasters — which he announced to great fanfare in 2011 — fell flat last year, according to a copy of Einhorn’s year-end investor letter obtained by The Post.

Einhorn’s hedge fund, Greenlight Capital, ended the year up 7.9 percent, with a big Apple stake also dragging it down. Greenlight lost 4.9 percent during the fourth quarter.

“Our coffee was too hot, our apple was bruised,” Einhorn wrote in the letter.  Einhorn’s usual ability to crush a stock with one of his short calls, a process known as getting “Einhorned,” didn’t help him last year.

Find out more at http://www.nypost.com/p/news/business/einhorn_D04OinRItDylmU7FtaJTuN

How Goldman won a $580M suit over Dragon sale

Go figure.  According to Reuters a federal jury on Wednesday gave Goldman Sachs Group Inc a sweeping legal victory in the $580 million sale of Dragon Systems Inc to Lernout & Hauspie, saying the Wall Street bank was not negligent in arranging a deal that ultimately collapsed 13 years ago.

The jury cleared Goldman of claims of negligence, intentional misrepresentation and breach of fiduciary duty, and others, in the civil case, according to the verdict announced in U.S. District Court in Boston.

Dragon founders Jim and Janet Baker, pioneers in the field of speech recognition software, accused Goldman investment bankers of being negligent in the 2000 sale of their company to Belgium-based Lernout & Hauspie, which collapsed in a massive accounting fraud. The Bakers and two early Dragon employees sought several hundred million dollars in damages.

Read all about it at http://newsandinsight.thomsonreuters.com/Securities/News/2013/01_-_January/Goldman_not_negligent_in_arranging_Dragon_sale_-_jury/

Apple's Revenue Falls Short, Shares Dive

             

Apple reported earnings that edged past Wall Street's estimates on Wednesday but its revenue fell slightly short of forecasts during the crucial holiday quarter.  After the earnings announcement, the company's shares fell in extended-hours trading, according to a cnbc report..

For the fiscal first quarter, it posted net income of $13.07 billion, or $13.81 a diluted share, compared to $13.06 billion, or $13.87 a share, a year earlier. This is the first time in years that Apple didn't post a double-digit earnings increase.  Revenue increased 18 percent to $54.51 billion from $46.33 billion a year ago.

"The revenue number is dismal as far as what the expectations were," said Jeff Sica president and chief investment officer of SICA Wealth Management. But he added that it's an "incredible number" on its own and Apple has "fallen victim to the curse of high expectations."

More?  Go to http://www.cnbc.com/id/100401967  Do Not Pass Go

ROUBINI: Things Still Suck (5 Big Risks Still Facing The Global Economy)

Tired of all this bullishness, and talk about how there's nothing to worry about anymore?

Don't worry. That's why God gave us Nouriel Roubini.  He has a new article at Project Syndicate that could pretty much be titled: Things still suck.  It's actually titled The Economic Fundamentals of 2013 and, spoiler alert, he says the fundamentals aren't good.

Roubini identifies four big risks to the global economy. They are:

The US still hasn't really gotten through its fiscal cliff/debt ceiling stuff.

The Eurozone's problems won't be resolved, and things will re-ignite in the second half of the year.

China has been forced to restimulate its economy. That will fade by the second half of this year.

The BRICs are seeing growth decelerate.

Geopolitical risks (Pakistan, Middle East, etc.)

Read more: http://www.businessinsider.com/roubini-there-are-still-5-big-risks-facing-the-global-economy-and-any-one-of-them-could-result-in-a-recession-2013-1#ixzz2IoxqdsrU

…And Another Hedge Fund Chief Bites The Dust….

Better grab a hankie. Claude Lixi, the head of Galena Asset Management Ltd.’s energy hedge fund, left the London-based company, according to two people with direct knowledge of the departure.

The people didn’t say whether he resigned or was fired, and asked not to be identified because the information is private. Lixi, who was based in Geneva, declined to comment when contacted yesterday on his mobile phone. Duncan Letchford, the company’s chief investment officer in London, didn’t return a message left with his secretary yesterday.

Lixi joined Galena, owned by Trafigura Beheer BV, in May 2009 from Morgan Stanley, where he traded oil options..

Better dry those tears and turn to http://www.bloomberg.com/news/2013-01-23/galena-energy-hedge-fund-chief-claude-lixi-said-to-leave-firm.html

GAIM USA: “Golden age of alpha” is over for hedge funds

According to Cooconnect’s Charles-Gubert  “the golden age of alpha” is at an end while industry experts expressed alarm at the dearth of investors allocating into smaller hedge funds.

Hedge fund figureheads warned that the industry is unlikely to regain its legendary money-making status anytime soon. “There are approximately 8,000 hedge funds and alpha at the average hedge fund will be less going forward. Between the 1980s and 2007, we had a golden age of alpha but the industry is now a crowded field and I do not expect a return to the 1980s,” said William Michaelcheck, chairman and chief investment officer at Mariner Investment Group, speaking at GAIM USA in Boca Raton, Florida.

This comes as the industry delivered negative returns in two out of the last four years whereas 2012’s gains of 6.22% did not excite. The situation has also not been helped by the growing regulation of the industry, which some panellists complained was proving a distraction to managing money…..

Want to know more?  Check out http://cooconnect.com/archives/6339

What Volcker? Goldman Sachs Ignores Rule while Lawmakers Procrastinate

Prohedge’s Nigel Someck reports: ,Goldman Sachs have largely bucked the trend of a mad scramble to comply with the Volcker rule as the bank continues to push ahead with private equity, real-estate and Chinese proprietary investment activity.

It is true that much of Goldman’s proprietary hedge fund businesses “spun-out” of the Wall Street firm over the past 3 years to form independent fund management companies. However, Goldman still pushes ahead with a number of proprietary trading activities that would be in direct breach of Volcker if it were to be enforced…..

Read all about it at http://www.prohedge.co.uk/what-volcker-goldman-sachs-ignores-rule-whilst-lawmakers-procrastinate

Look Who Just Paid $1.6 Million To End A Trading Probe

According to Bloomberg the Federal Energy Regulatory Commission has approved a settlement between its Office of Enforcement and Deutsche Bank Energy Trading LLC to resolve an Order to Show Cause proceeding regarding manipulation of California power markets.

Deutsche Bank stipulates to the facts and neither admits nor denies the violations. It agrees to pay a civil penalty of $1.5 million and disgorge unjust profits of $172,645, plus interest, resulting from its trading in California Independent System Operator (California ISO) markets at the Silver Peak intertie. In a September 2012 order, the Commission directed Deutsche Bank to show cause why its conduct did not merit a proposed $1.5 million penalty….

http://www.bloomberg.com/news/2013-01-22/deutsche-bank-pays-1-6-million-to-end-u-s-trading-probe.html

David Tepper: 'This Country Is On The Verge Of An Explosion Of Greatness'

David Tepper, who runs $12 billion distressed debt hedge fund Appaloosa Management, was on Bloomberg TV "Market Makers" with Stephanie Ruhle moments ago. 

It was a tremendous interview and it showed a very relaxed and funny side of Tepper.

Tepper, who has one of the best long-term track records, told Bloomberg TV that his fund was up 30% in 2012. 

He's said he's "going to come out of the closet" as being bullish in 2013. The reason, he explained, is there are no major negatives and basically nothing to really be bearish about.

"This country is on the verge of an explosion of greatness," he said, "An explosion of greatness." He said the "main thing right now is to be long equities."  He said that if you're long equities, you're going to make money this year.

Read more: http://www.businessinsider.com/david-tepper-on-bloomberg-tv-2013-1#ixzz2ImRi48JF

Wow! Calpers Recoups $95 Billion Recession Loss

Kowabunga!  Bloomberg reports that the California Public Employees’ Retirement System is poised to top a record $260 billion in assets, the market value it held before the global financial crisis wiped out more than a third of its wealth, by sticking with a strategy of buy-and-hold.

The largest U.S. public pension, with half of its money in publicly traded equities, was worth $253.2 billion on Jan. 17, or about 97 percent of the pre-recession high set in October 2007. The fund returned 13 percent in 2012, about the same gain as the Standard & Poor’s 500-stock index achieved.

“A lot of the improvements in portfolio returns is simply reflective of the return of the market,” Chief Investment Officer Joe Dear said in an interview. “But there is still an important lesson there, which is that when the crisis was full on, we didn’t drastically reduce our equity exposure.”

Can’t believe it?  Check out http://www.bloomberg.com/news/2013-01-22/calpers-buy-hold-rule-recoups-95-billion-recession-loss.html

Hedge-Fund Billionaire Lets His Soft Inner Theater Geek Loose

  

From NY Magazine: Appaloosa Management's David Tepper is no ordinary hedge-fund alpha male. I mean, sure, he owns a giant pair of brass testicles and part of the Pittsburgh Steelers, and does Man Things like buys his ex-boss's Hamptons house, tears it down, and builds a house twice as big where it used to stand. Sure, his offices resemble a "high-end sports bar — all polished mahogany and flat-screen TVs and black-and-gold Steelers paraphernalia — or a wealthy frat house."

But Tepper also has a sensitive streak, forged in the crucible of his high school theater troupe, nurtured through a career in the cutthroat financial-services industry, and finally let loose during a virtuoso performance today on Bloomberg TV. Tepper, who played Mr. MacAfee in a high-school production of Bye Bye Birdie, took a sip of water, cleared his throat, and sang out:

Tepper said he would "rather work at McDonald's" than go back to Goldman Sachs, where he spent years of his life before leaving after a tiff with Jon Corzine. But he didn't rule out starring as — oh, I dunno, Professor Harold Hill in a Short Hills Community Theater rendition of The Music Man — so maybe there's hope for the songster inside him after all…..

Fascinated?  Really?  Read all about it at http://nymag.com/daily/intelligencer/2013/01/david-tepper-lets-his-inner-theater-geek-loose.html

Damn! SAC Blows A Big Investment

According to the WSJ’s Jenny Strasburg SAC Capital Advisors late last year lost a potential investment from a Japanese bank that could have landed the hedge-fund giant hundreds of millions of dollars to manage, a setback for a firm under siege from government investigators and facing significant client withdrawals.

Mizuho Financial Group 8411.TO -0.59% had discussed last year making a major investment that could have brought as much as $500 million to SAC, said people briefed on discussions with SAC executives and advisers.  But the bank ultimately notified SAC that it wasn't proceeding. By December, with scrutiny of SAC's trading practices mounting, the firm's executives told advisers and others inside and outside the firm that Mizuho's decision appeared final…..

SAC is preparing for clients to withdraw $1 billion this quarter alone, according to people briefed on the firm's internal conversations. A deal with one of Japan's biggest banks could have offset some of those defections, while also helping SAC attract more clients and increase its investment business in Asia, one person close to the firm said.

Wait…wait…there’s more at http://online.wsj.com/article/SB10001424127887323301104578256091604663254.html

EU States to Get Go-Ahead for Tax On Trading

Germany, France and nine other euro zone countries will get the go-ahead on Tuesday to start work on a financial transactions tax, a measure likely to unsettle banks and trading houses but which will please voters and could raise much-needed revenue.

European Union finance ministers are expected to give their approval at a meeting in Brussels, allowing 11 states - Germany, France, Italy, Spain, Austria, Portugal, Belgium, Estonia, Greece, Slovakia and Slovenia - to start preparations for imposing a tax on all financial market transactions….

Find out more at http://www.cnbc.com/id/100395362

Galena Drops as Commodity Funds Trail for Second Year

Hedge funds lost money for commodity investors for a second straight year as managers from the Galena Metals Fund to Clive Capital LLP trailed benchmark indexes of raw materials, the good folks at Bloomberg told us..

The Newedge Commodity Trading index of 56 hedge funds fell 2.8 percent last year, while the Standard & Poor’s GSCI Total Return Index of energy, metals and agricultural products added 0.1 percent. Galena retreated 8.9 percent, the first annual loss since its inception in 2004, according to a letter to investors obtained by Bloomberg News. The performance was confirmed by the company. Clive, Europe’s biggest commodity hedge fund, declined 8.8 percent after a 9.9 percent slide in 2011.

Commodity funds were whipsawed by markets that fell as China’s economic growth faltered, recovered as European officials calmed the sovereign debt crisis and fluctuated as U.S. President Barack Obama and his Republican opponents battled over the budget deficit. While the GSCI index slid more than 8 percent in the first five months of the year before rebounding 12 percent in the third quarter, it ended the year little changed…..

Read all about it at http://www.bloomberg.com/news/2013-01-22/galena-slides-as-commodity-hedge-funds-trail-index-a-second-year.html

Do It the Greek Way! First Greek-focused hedge fund up 40 per cent in 2012

A Greece focused hedge fund, launched in October 2012 by Dromeus Capital Group, finished 2012 up 40.3 per cent as the Greek debt buyback and improving market sentiment towards the country drove returns.

Dromeus, the emerging markets alternative investment specialist, says the consensus that Greece would have to exit the Euro has turned almost 180 degrees to an acceptance that a Grexit is off the cards.

Achilles Risvas, chief executive of Dromeus, says: “Although the last quarter has seen a profound upwards rerating of Greek bonds we are strong believers that further positive repricing of Greek fixed-income and selected shares is still to come…..

http://www.hedgeweek.com/2013/01/21/178964/first-greece-focused-hedge-fund-40-cent-2012

There’ll Always Be An England: Bankers, Fund Managers Strip for Sub-Zero Swims in London

From Bloomberg: It’s a snowy Saturday morning. A group of seven men sporting woolly caps and backpacks gather at the top of Parliament Hill on London’s Hampstead Heath.  They’ve been meeting every weekend morning like this for the past two years -- never less than two, sometimes as many as 15, and their numbers are growing.

Ranging in age from 44 to 57, they head off shortly after 9 a.m., jogging down the southern side of the hill.

Video:Swimmers Shrug Off Snowy London to Dive in Icy Pond  This is no ordinary running group. In their professional lives they work for banks, hedge funds and private-equity firms. The 25-minute run is just a preamble. Soon they strip to swimming shorts, gloves and swimming caps, not wetsuits -- and dive into a pond, which on this day is at barely 2 degrees Celsius, or 36 degrees Fahrenheit. It can dip well below that.

“That’s Cold in Anybody’s Language,” the chalkboard temperature warning sign outside the lifeguard hut affirms.  While there is a long history in Europe of freezing-water bathing -- the Finns are known for avantouinti, or plunging into ice holes after a sauna -- cold-water swimming has taken off in the U.K.’s capital….

B-r-r-r!  More?  Check out http://www.bloomberg.com/news/2013-01-21/bankers-fund-managers-strip-for-sub-zero-swims-in-london.html

Barclays boinked over role in "mini Madoff" fraud

 Investors who lost money in a Ponzi scheme run by Helmut Kiener, convicted founder of the K1 hedge fund in Germany, are suing Barclays Plc for selling his products to them, their lawyers told Reuters.

The lawyers said they were seeking a total of around 100 million euros ($133.58 million) in damages and had lodged more than 100 suits against Barclays with regional courts in Frankfurt and Munich over warrants issued by the bank that were linked to Kiener portfolios.

Kiener, dubbed a German "mini Madoff" by the media in reference to the jailed U.S. fraudster, was sentenced in July 2011 to more than 10 years in prison for a scam that prosecutors said cost investors 345 million euros.

The lawyers, who said they represent more than 1,000 claimants, have also moved to bundle the claims into a class action suit….

http://www.reuters.com/article/2013/01/18/us-barclays-kiener-suit-idUSBRE90H0RY20130118