The SAC Case: A Classic Dilemma

The New York Times’ James B Stewart writes: “Imagine the pressure on Mathew Martoma, the 38-year-old former portfolio manager at SAC Capital Advisors charged with insider trading who may — or may not — be in a position to implicate Steven A. Cohen, the hedge fund’s billionaire founder and owner.

“So far, Mr. Martoma has defiantly asserted his innocence and refused to cooperate with prosecutors. He could change his mind, but the clock is ticking. The government faces a mid-July deadline when it must decide whether to seek criminal charges against Mr. Cohen relating to the trades at the center of Mr. Martoma’s case.

For all concerned, the stakes are huge….With a net worth estimated by Forbes at $9.3 billion, Mr. Cohen could be the marquee name that would lend the investigation a new level of public awareness and potential deterrence.  Mr. Martoma could face decades in prison if convicted. His potential prison term is especially severe because the federal sentencing guidelines are based on the amount of the illegal profit, which in Mr. Martoma’s case are said to be huge. Prosecutors have called the case the most lucrative insider trading scheme ever….

More?  Check out http://www.nytimes.com/2013/06/01/business/sac-case-tests-a-classic-dilemma.html?ref=business&_r=1&

100 largest hedge funds manage 61% of industry assets

Shocker?  You haven't been paying attention friends.  The 100 largest hedge funds manage $1.4 trillion, or 61% of all industry AuM in what is further evidence of the flight to size among investors, according to data providers Preqin.

The 100 biggest hedge funds had a median AuM of $9.9 billion, according to the study, while 17 of these managers run over $20 billion.  The 176 investors allocating $1 billion or more to hedge funds often require average AuM at their hedge funds to stand at $818 million compared to other investors which require an average of $474 million.

Pension funds are rapidly embracing hedge funds as liabilities continue to grow, and now account for 44% of investors writing $1 billion plus tickets.  Many of these institutions will write significant ticket sizes, which in turn means they have binding concentration and risk criteria when allocating.

Read all about it at http://cooconnect.com/news/100-largest-hedge-funds-manage-61-industry-assets

How Fear of Risk Puts Hedge Funds Behind S&P 500

From Bloomberg: Hedge funds are paying a price for being too hesitant to buy stocks in the midst of a four-year bull market, according to Barry Ritholtz, FusionIQ’s CEO.

Hedge Fund Research Inc.’s broadest fund index fell out of sync with the Standard & Poor’s 500 Index in 2011 and has yet to recover. The HFRX Global Hedge Fund Index had a 4.8 percent advance for the year through last week, while the S&P 500 was 16 percent higher.

Many fund managers have been “overly timid and suffering from risk aversion” because of the magnitude of the losses that preceded the current advance, Ritholtz said yesterday during an interview. The S&P 500 tumbled 57 percent from its October 2007 high to its March 2009 low. Federal Reserve policy has worked against managers with a macro strategy, which focuses on political and economic events, he said…

More?  Check out http://www.bloomberg.com/news/2013-05-30/risk-aversion-puts-hedge-funds-behind-s-p-500-chart-of-the-day.html

Two Things You Should Know If You Want To Get Real About Hedge Funds

From BI: This morning, two snippets of information about hedge funds caught our eye. If you think about them at all, you should know these facts about their performance and who's behind it....

1. 61% of all the money in hedge funds is managed by the 100 largest hedge funds, according to research firm Prequin. So if you're tracking them you're really tracking the industry.

2. Hedge fund performance has been abysmal since the financial crisis. This year they're up an average of 5% compared to the S&P's 15% gain. Investors have kept putting their money in funds, though. That is, until now, according to Bloomberg:  Hedge Fund Research said in April that funds saw inflows in 14 of the last 15 quarters—but now there is evidence that substandard returns may finally be having an effect….

Find out more at http://www.businessinsider.com/2-facts-about-hedge-funds-2013-5

XTreme credit crunch casualty plots hedge fund reincarnation

As comebacks go, it's one of the more ambitious, according to Reuters..  Fred Eckert - the hedge fund manager who lost $250 million of his own money, saw his firm go bankrupt in the credit crisis, went through a divorce and spent two months in a coma - is back with the launch of his new firm.

The 65-year-old former Goldman exec, who once lived in one of the most expensive houses in New Jersey, has launched a new firm called Phoenix Star Capital.  Eckert believes he has spotted an opportunity in complex debt securities, based on loans which banks are having to sell to boost their capital positions under the Basel III regulations.  He has already an initial $100 million from investors to pursue the strategy….

More?  Check out http://www.reuters.com/article/2013/05/30/us-eckert-phoenixstar-idUSBRE94T0ME20130530

Goldman: Keep Calm and Carry On Buying

From CNBC: Global stocks may have been on a wild ride of late, but the world's biggest investment bank has told investors they should see rising U.S. Treasury yields as positive and should continue to buy equities.

"While there are certainly risks around QE (quantitative easing) being withdrawn we continue to view rising bond yields as relatively benign for European equities," Goldman Sachs' European research team said in a report released on Thursday. "Indeed provided it is better growth that is driving yields upwards (which is what we expect) we would argue it is supportive. We find a positive relationship between real yields in the U.S. and European equities."

There’s more at http://www.cnbc.com/id/100775620

Sleaze Street: Former hedge fund titan bares all in titillating Wall Street memoir

According to the NY Post Turney Duff went from an innocent 7-year-old in his first New York trip (right) to a hot-shot trader (right bottom in 2000) under crooked Galleon Group founder Raj Rajaratnam (middle) and a life of money, sex and drugs, as chronicled in his memoir.

“…The trading desk is surrounded by glass. I work in a fish bowl. I’m in the middle of a newly renovated office on Park Avenue . . . As the opening bell rings, every muscle in my body clenches. I sit upright and try to focus on the eight computer screens in front of me. There are 25 orders on my desk, each from five to 10 million dollars and involving some sort of investment decision. My head throbs.

"...If I can just make it to lunch, I tell myself. A cheeseburger with a fried egg will help. I try to see how many minutes I can go without looking at the clock — 16 is the record for the day. I can’t keep my eyes open. I just need to make it to the closing bell.. .

"...Forty-five minutes later: There’s an ounce of cocaine piled in the microwave. An additional few thousand dollars’ worth of blow sits on a single plate in the kitchen. The place is littered with Grey Goose bottles, ice, cups, and straws for snorting. We call this East Side apartment the White House for obvious reasons, but it’s more like a Wall Street crack house. Randy and James [two sell side traders] live here. Everything is provided and paid for, compliments of the sell side ... They like to please their clients. Tonight they were kind enough to order in: Chinese and Mexican escorts…"

Wait…wait…there’s more at http://www.nypost.com/p/news/local/manhattan/baring_bulls_sleazy_treet_oAAKmnI2uajZaGDSNcnZIJ

“The General” Petraeus Reboots With Private-Equity Giant

From WSJ: David Petraeus, the former U.S. Army general who resigned last year as Central Intelligence Agency chief over a hot affair with a biographer, is rebooting his career with KKR & Co., the giant private-equity firm. KKR, known for large debt-fueled corporate takeovers, hopes Mr. Petraeus’s experience and Rolodex will help the firm seek and size up deals, said people familiar with the move. The former general will be chairman of a new internal “institute” focused on macroeconomic forecasts, communications, public policy and advice on investments in emerging markets, they said. …

Ken Mehlman, a former Republican National Committee chairman who now serves as KKR’s global head of public affairs, said Mr. Petraeus is “someone who has served in an incredibly effective and in some ways heroic way….

Read all about it at http://online.wsj.com/article/SB10001424127887324682204578513663485449922.html?mod=WSJ_hps_LEFTTopStories

Ex-Janus Managers Join Pals at Hedge Fund

From Bloomberg: Brian Schaub and Chad Meade, stock pickers who quit Janus Capital this month, have joined Arrowpoint Partners, a Denver-based hedge-fund firm co-founded by their former colleague David Corkins.

The pair will focus on investing in small and medium-sized companies, which is their area of expertise, Corkins said today in a telephone interview. Schaub and Meade managed two of Janus’s best-performing equity funds, the $4.9 billion Triton Fund and the $2.3 billion Venture Fund, until the firm, also based in Denver, announced their departure May 13…

http://www.bloomberg.com/news/2013-05-29/ex-janus-managers-join-former-colleagues-at-hedge-fund.html

Double or Nothing: HSBC Asia Prime-Finance Team to Double Hedge-Fund Assets

HSBC Holdings, the largest European bank by assets, plans to double its Asia-Pacific prime finance team’s cut of hedge-fund assets in the coming year, Melvyn Ford, regional head of the business told Bloomberg.

It is part of a target to improve its standing by two places to the region’s sixth-largest prime broker over the 12 months, Ford said in an interview in Hong Kong yesterday. HSBC was ranked eighth in its first full year in a survey by trade journal AsiaHedge released this month….

More?  Turn to http://www.bloomberg.com/news/2013-05-30/hsbc-asia-prime-finance-team-seeks-to-double-hedge-fund-assets.html

Harvard Grads Are So Over Wall Street

From HuffPo: Hey dudes, the Wall Street brain drain appears to be over, according to a recent study.  Of Harvard graduates this year who already have jobs, about a third of graduating seniors plan to take jobs in finance, with 15 percent working on Wall Street and another 16 percent taking consulting jobs, according to a survey run by student newspaper The Harvard Crimson. Only about 20 percent of the class of 2012 went into finance and consulting.

Before the recession in 2007, 47 percent of Harvard graduates took jobs in finance and consulting, the Crimson previously reported. That number fell to 39 percent in 2008.  The reason for the decline depends on who you ask. Some suspect the financial crisis may have played a role in changing the aspirations of the nation's best and brightest. Now, millennials say they'd prefer to work in industries where they’re able to help people, such as health care….

More?  Check out http://www.huffingtonpost.com/2013/05/28/wall-street-harvard_n_3349046.html?utm_hp_ref=business

Former Goldman partner to hit the comeback trail

From Dealbook: On Wall Street, the wheel of fortune can spin around and around, from enormous cash bonuses and luxurious perks one year to the unemployment line the next.

Then there is Fred Eckert, a onetime Goldman Sachs partner who soared as a star in “vulture” investing in ailing companies. But in the turmoil of the financial crisis, his business and wealth came crashing down. By 2011, he was bankrupt, divorced and, for two months, in a coma.

Today, he is in better shape, earning $1 million a year from a consulting job, although that expires next year. But most of his income is dedicated to paying leftover debts — he says he is running at “break-even at best” after expenses.  Now Eckert, 65, is planning to return to the arena. He says he has shed 25 pounds from his peak of 220 and has given up drinking. His cashmere overcoat may be rumpled, but his confidence is high. Eckert is trying to start a new money management business by raising up to $100 million. The new company’s name — Phoenix Star Capital.

Wait…wait…there’s more soul-stirring stuff at http://dealbook.nytimes.com/2013/05/16/aiming-for-the-top-again/

…And Another SAC exec bites the dust?

Another exec at SAC Capital Advisors has been subpoenaed to testify before a grand jury as part of the government’s investigation of insider trading at the Stamford (Conn.) hedge fund firm. The exec, the fifth SAC employee to receive a subpoena in the case, is portfolio manager Anthony Vaccarino, according to a person familiar with the matter, who asked not to be identified because the information is private. Vaccarino joins SAC President Tom Conheeney, Chief Operating Officer Solomon Kumin, Compliance head Steve Kessler, head of trading Phillipp Villhauer, and SAC founder Steven Cohen, who have all received grand jury subpoenas, the person says.

Some of the information the government is seeking pertains to two sets of trades at the heart of other ongoing insider-trading cases, according to the person, while some of it is more general information about SAC…..

More?  Check out http://www.businessweek.com/articles/2013-05-24/fifth-executive-at-sac-capital-receives-subpoena

KPMG Ex-Partner to Plead Guilty of Insider Trading

From WSJ: A former senior partner at KPMG LLP agreed to plead guilty to securities fraud for providing confidential information about KPMG clients to a friend as part of an insider-trading scheme, the Justice Department said in court filings Tuesday.

Scott London, 50 years old, agreed to plead guilty to one count of securities fraud. The move was expected. London admitted wrongdoing almost as soon as the insider-trading scheme became known in April. His attorney, Harland W. Braun, has previously said London intended to plead guilty. Mr. Braun couldn't be reached for comment Tuesday.  London faces up to 20 years in prison, though he is likely to receive a lesser sentence under federal sentencing guidelines….

Read all about it at http://online.wsj.com/article/SB10001424127887324809804578511852795963178.html

SAC Investor wants $100 Million back

According to Bloomberg Ironwood Capital Management Corp., a firm that invests in hedge funds, plans to pull the $100 million it has in Steven Cohen’s SAC Capital Advisors LP, according to a person with knowledge of the matter.

The decision was made after Stamford, Connecticut-based SAC said May 17 it would no longer unconditionally cooperate with the U.S. government in its multiyear insider-trading investigation, said the person, who asked not to be named because the information is private.

Investors in Cohen’s $15 billion hedge-fund firm have until June 3 to put in their redemption requests for the second quarter. Clients asked to redeem $1.68 billion in the first quarter, a person familiar with the firm said at the time…..

Wait...wait...there's more at http://www.bloomberg.com/news/2013-05-28/sac-said-to-get-100-million-ironwood-withdrawal-request.html

How to Build a Hedge Fund

From Barrons:  Launching a new hedge fund has always been difficult, and even more so since the financial crisis. More funds are closing down than starting up these days, and most of the failures are small operations with short histories, says Daniel Celeghin, a partner at Casey, Quirk and Associates, which advises asset managers. Because investors have become "more educated and more paranoid" since the 2008 crash, he notes, they gravitate toward "the perception of safety" in large hedge funds that boast long track records. Of the $15.3 billion that investors poured into hedge funds during the first three months of this year, firms that managed more than $5 billion soaked up $10.1 billion; firms managing less than $100 million got just $1.14 billion, according to analysts at Hedge Fund Research….

Wait, wait...there's more at http://online.barrons.com/article/SB50001424052748704895304578495150683406038.html?mod=BOL_twm_col

Wheat price revival questions hedge fund selling

Hedge funds returned to taking a more negative stance on agricultural commodities, largely through increasing bets on falling values of sugar, which have paid off, and of wheat, in which they have been caught out.

Managed money, a proxy for speculators, decreased its net long position in US traded agricultural commodity futures and options by more than 47,000 contracts in the week to last Tuesday, regulatory data show.  The decrease, the first in six weeks, reflected in part a return to taking a more negative stance on corn, after a week in which US farmers planted the grain at a record pace, easing concerns over a yield penalty from sowings which had been running at a historically slow level….

Read all about it at http://www.agrimoney.com/news/wheat-price-revival-questions-hedge-fund-selling--5881.html

Citi: Retail hedge fund assets to top $1 trillion by 2017

From Hedgefund Intelligence:  Analysis from Citi suggests that that total demand for liquid alternatives from the retail investor audience could reach $939 billion by 2017 and $1.3 trillion when additional demand from a small sub-set of institutions is factored in, according to a new report called The Rise of Liquid Alternatives & the Changing Dynamics of Alternative Product Manufacturing & Distribution.

More?  Check out http://www.hedgefundintelligence.com/Article/3210539/News/Retail-hedge-fund-assets-to-top-1-trillion-by-2017-says-Citi.html?ls=683

Is Japan The New Apple?

Forbes opines: "Many big hedge fund investors have in recent years had a very hard time keeping up with the U.S. stock market and other financial benchmarks against which they are judged. The big market drop in Japan will probably make things even harder for some of them….

“….Prominent hedge fund investors have bet big on Japan this year, often investing in Japanese stocks and shorting the Japanese yen—the so-called Abe trade, named after Japanese Prime Minister Shinzo Abe, who is promoting aggressive fiscal policies to revive Japan’s long-stagnant economy. Billionaire macro investors like Louis Bacon and stock pickers like billionaire Dan Loeb have made big investments in Japan and have enjoyed strong returns as the Japanese stock market soared and the yen fell in 2013.

"But the sharp reversal on Thursday of the Japanese stock market is a reminder of the risks that have long been involved in trying to hit home runs in Japan….

Read all about it at http://www.forbes.com/sites/nathanvardi/2013/05/23/is-japan-the-new-apple/

Beware of that hedge fund in the window

When hedge fund managers advertise, performance dips, according to Fortune’s Dan Primack.

Hedge funds soon will be allowed to advertise their wares to potential clients, thanks to a provision in last year's JOBS Act (which had no direct relation to actual jobs). As will private equity funds, venture capital funds and other alternative investment vehicles that heretofore were prohibited from general solicitation.

Former SEC Commissioner Mary Shapiro opposed the change, so she basically sat on it (apparently believing her personal opinion trumped the directive of federal legislation). New SEC Commissioner Mary Jo White has suggested that she'll move this and other JOBS Act provisions along shortly.

So in a few months expect the pages of your favorite financial rag and website to contain advertisements for investment opportunities that you probably can't afford (since you'll still need to be an "accredited investor" to actually participate). For the 1%, however, a word of warning: Future performance is likely to be worse than past performance. That's the finding of a new academic paper…

Find out more at http://finance.fortune.cnn.com/2013/05/23/beware-of-that-hedge-fund-in-the-window/?iid=SF_F_River

Only in NY: You Can Already See All Of The Hedge Funders Flying Out To The Hamptons Today

Who’s minding the markets?  Don't ask.  Accordng to BI a bunch of hedge funders are already heading out to the Hamptons, but don't expect them to all drive there or take public transportation. 

If you check out the East Hampton airport (KHTO) on FlightAware.com, there's been an uptick in flight traffic today.  We've monitoring this situation all week and have noticed flights departing from Westchester and Danbury landing at KHTO.

Read more: http://www.businessinsider.com/hamptons-airport-traffic-2013-5

Hedge hog: No mamas!

Hedge funds may be the last bastion of white male privilege — and that’s just the way these Neanderthals like it.

“I don’t think you’ll ever see as many great women investors or traders as men, period,” said billionaire Tudor Investment Corp. founder Paul Tudor Jones, adding that children are the kiss of death for an investment career.  “As soon as that baby’s lips touch that girl’s bosom, forget it.”

In reality, the small minority of funds run by women — about 16 percent — outperformed those of men last year, a study by accounting firm Rothstein Kass found.  But Jones — the father of three daughters — apparently didn’t get that memo….

Read all about it at http://www.nypost.com/p/news/local/hedge_hog_no_mamas_vr1UflJ3RtbSKj5bdXWiWM

Hedge Fund Legend: If One Of My Managers Is Getting Divorced, I'll Pull My Money Out

The Washington Post has obtained footage of hedge funder Paul Tudor Jones from a panel discussion at the University of Virginia last month with fellow fund managers John Griffin and Julian Robertson.

PTJ made some comments that the biggest killers to trading success are divorce and women having babies. 

Here's what he does when on of his manager's is going through a divorce:

"... Like, one of my No. 1 rules as an investor is as soon as my manager, if I find out that manager is going through divorce, redeem immediately.  Because the emotional distraction that comes from divorce is so overwhelming. The idea that you could think straight for 60 seconds and be able to make a rational decision is impossible, particularly when their kids are involved. You can automatically subtract 10 to 20% from any manager if he is going through divorce."

Read more: http://www.businessinsider.com/paul-tudor-jones-on-managers-divorce-2013-5

Three Top SAC Executives Receive Subpoenas

The Wall Street Journal is reporting that three senior SAC Capital executives received subpoenas as part of the insider trading investigation of the hedge fund.

Those who received subpoenas were Thomas Conheeney, SAC's president; Steven Kessler, the chief compliance officer; and Phillipp Villhauer, the head of trading, unnamed sources told the Journal.

They are all viewed as part of Steve Cohen's inner circle, the report said. They have not been accused or charged with any wrongdoing…. 

More?  Check out http://www.businessinsider.com/three-sac-execs-get-subpoenas-2013-5

Under Arrest, Now Museum Quality: Bernie Madoff

In cooperation with the FBI, his victims and members of the Madoff family, the National Museum of Crime & Punishment this week opened a permanent exhibition devoted to one of the headlining villains of the Great Recession.

"He is the No. 1 public enemy for financial crime," said Janine Vaccarello, the curator of the Madoff exhibit and chief operating officer of the five-year old crime museum in Washington D.C. "He was a serial killer of the financial industry…."

http://www.cnbc.com/id/100762353

Only In New York: What Hamptons Rentals Tell You About the Stock Market

Think we're kidding?  Pulling your leg?  According to CNBC the Hamptons might be more than a summer playground for the rich and famous. It might also be your best clue about what the stock market will do over the next few months.

According to Nicholas Colas, ConvergEx's chief market strategist, a "white-hot" market for Hamptons summer rentals tells us that New York hedge fund managers are feeling confident about the market, and don't expect to see much happen this summer.

"There are some 70 listings in the [$500,000] to $900,000 range for the traditional Memorial Day to Labor Day period in the better parts of the East End," Colas wrote in a Wednesday morning note. "Think a lot of hedgies are anticipating a volatile summer while paying those prices to 'Chill Out East'? Probably not."

Wait...wait...there's more at http://www.cnbc.com/id/100758925

Market Meltdown! Utility Stocks Flash Crash At Opening Bell

This morning, according to BI, when New York markets opened at 9:30 AM, shares of American Electric Power and Nextera Energy, two big electric utilities, briefly plunged 54% and 62% respectively.

Both companies are in the S&P 500, and the flash crash brought the utilities sub-sector of the index down nearly 8% overall.

The massive moves resulted in a trading halt in shares of both companies.

Now, AEP is only down 1.5%, and NEE is down 1.8%.

Read more: http://www.businessinsider.com/utilities-flash-crash-at-opening-bell-2013-5

A Money Manager In Texas Is Upset That He Can't Give SAC Capital More Of His Money

 From BI: As federal prosecutors circle Steven A. Cohen's $15 billion hedge fund in a long-running insider trading probe, one financial adviser in Texas is so devoted to the billionaire investor that he may give him more money.

"I'm thinking about putting more money with him," said Ed Butowsky, managing director at Chapwood Capital Investment Management, who manages $1 billion in client money. The Dallas-based adviser did not say how much his wealthy clients have invested with Cohen's SAC Capital Advisors, but said the figure tallies into the tens of millions.  "Stevie Cohen is the Michael Jordan of hedge fund managers," Butowsky said, comparing the billionaire trader's success in the markets to the feats of the legendary professional basketball star. "I'd be a fool to take out money."

 Wait...wait...there's more at http://www.businessinsider.com/money-managers-stays-with-sac-2013-5

Can Hedge Funds Survive Bernanke?

From Bloomberg: "You have to wonder how long an industry that underperforms the broader market will stay around. Goldman Sachs. published a chart today comparing the performance of hedge funds that invest in equities with the major stock-market indexes. Based on Goldman's research, the average hedge fund is up just 5.4 percent so far this year. During the same period, the Standard & Poor's 500 Index has risen 15.4 percent.

"....Then there's the lack of volatility. Hedge funds often profit from discrepancies in prices between related assets, and these tend to shrink during calm periods in financial markets  The biggest reason for the market tranquility might be the Federal Reserve's repeated assurances that it will maintain zero interest rates and provide monetary stimulus until the economy recovers, and unemployment ebbs.

"That may just account for the recent flurry of stories about how much hedge-fund managers hate Fed Chairman Ben Bernanke. He's putting them out of business…."

Read all about it at http://www.bloomberg.com/news/2013-05-22/can-hedge-funds-survive-bernanke-.html

Hedge Funds Trail S&P 500 by 10 Percentage Points

Hedge funds’ returns have stayed “lackluster” this year, with the $2.3 trillion industry trailing the gains of the Standard & Poor’s 500 Index by about 10 percentage points, according to Goldman Sachs.

Hedge funds gained 5.4 percent on average through May 10, compared with a 15.4 percent rise for the S&P 500 (SPX) and a 14.8 percent increase for the typical mutual fund, a team of Goldman Sachs analysts led by Amanda Sneider and David Kostin told Bloomberg today.

More?  Go to http://www.bloomberg.com/news/2013-05-22/hedge-funds-trail-s-p-500-by-10-percentage-points-goldman-says.html

The Fund of Funds 50: Survival of the Biggest

Funds of hedge funds are finding that bigger is indeed better, as the largest firms have the tools necessary to adapt and survive.  When it comes to funds of hedge funds, one name is practically synonymous with the industry — Blackstone Group. That's in part because of its colossal size: As of year-end 2012, Blackstone Alternative Asset Management, the fund-of-hedge-funds arm of the $218 billion alternative investment firm, had $44 billion in assets. That is almost $20 billion more than each of its two closest competitors, making BAAM the single largest allocator to hedge funds in the world.

But it's also because Blackstone has managed to pull off something rare in the rapidly shrinking fund-of-hedge-funds business: It not only survived the 2008 financial crisis, it has thrived. For the second year running, BAAM is No. 1 on our Fund of Funds 50 list of the world's largest fund-of-hedge-funds firms as ranked by assets under management (the top 50 firms manage a combined $493.5 billion, down from $503 billion one year...

To continue reading please go to http://www.institutionalinvestorsalpha.com/Article/3208274/The-Fund-of-Funds-50-Survival-of-the-Biggest.html?

Google Is The New Hedge Fund Hotel, Boeing The Market Darling, And Apple's Looking Rotten

From Forbes:  "....The 50 largest hedge funds in the world decided to sell Apple in the first quarter, replacing it with Boeing  and, interestingly, Norwegian Cruise Holdings which went public in January, according to a report by FactSet.  The group of hedge fund heavyweights, which includes the likes of Carl Icahn, David Einhorn, and Dan Loeb, bet on consumer discretionary, which appeared as the most overweight sector, while LyndoellBasell was the most overweight equity, compared to its weights in the S&P 500.  They shunned the IT sector, and particularly Apple, which still remains the sixth largest holding by dollar-value.  The hedge fund hotel: Google GOOG -0.6%, held by 62% of the 50 largest hedge funds.

And hedge funds played the market, buying Boeing en masse.  Despite battery fires that forced the Chicago, Illinois company to ground the entire 787 Dreamliner fleet, the stock handily beat the S&P 500, as hedge funders poured in $1.6 billion in inflows, or about 250% of its fourth quarter value in the funds’ aggregate portfolio.

Basking in Apple’s former glory is Google, which is currently held by 62% of the largest funds and is the second largest holding by dollar value, at $6.8 billion….

Read all about it at http://www.forbes.com/sites/afontevecchia/2013/05/21/google-is-the-new-hedge-fund-hotel-boeing-the-market-darling-and-apples-looking-rotten/

SAC Cap to Stem Withdrawal Requests

 According to Dealbook: About $9 billion of the $15 billion invested at SAC Capital belongs to Steven A. Cohen, who could wind down SAC and manage his fortune separately.The embattled hedge fund SAC Capital Advisors is bracing itself for another round of withdrawal requests from investors after disclosing that it would no longer fully cooperate with the government’s scrutiny of its trading practices.

SAC’s investors have two weeks to decide whether to withdraw money from the $15 billion hedge fund, which is owned by Steven A. Cohen. Earlier this year, SAC investors asked to redeem $1.7 billion, and the firm is scrambling to stanch the outflow of more funds as fears rise that the insider trading investigations could further damage Mr. Cohen and his firm.

In the latest blow, SAC’s largest outside investor, the Blackstone Group, is preparing a request to withdraw a portion of its money before the June 3 deadline, according to people briefed on the matter. Blackstone could take out as much as half of its roughly $550 million investment, these people said.

Wait…wait…there’s even more good stuff at http://dealbook.nytimes.com/2013/05/20/sac-capital-aims-to-stem-investors-withdrawal-requests/?ref=business

Wall Street's Giants Try 'Flow Monster' Formula

From the WSJ report: “…..Welcome to the new Wall Street, where back-office work trumps backslapping. For all the talk that "Wall Street is back," bad habits and all, from the ravages of the 2008-2009 crisis, there are signs that the financial industry is undergoing a profound transformation.

It has taken half a decade of denial and trial and error, but some of the world's largest banks seem to be close to figuring out how to make money in an environment of tighter rules, less benign markets and more demanding customers….

The new normal still is a work in progress. But the first glimpses suggest that the global banking sector will be less crowded at the top, more boring and generally less profitable for both shareholders and employees. The hope is that it also will be less prone to regular blow-ups.

Read all about it at http://online.wsj.com/article/SB10001424127887323463704578494740076540374.html

Gupta Challenges U.S. Use of Wiretaps in Insider Appeal

Former Goldman director Rajat Gupta is set to ask a federal appeals court in New York today to overturn his insider-trading conviction by arguing the U.S. shouldn’t have been allowed to use evidence from wiretapped phone calls that didn’t involve him.

Gupta has already been handed one victory from the 2nd Circuit Court of Appeals, which will hear today’s arguments. In December, it allowed him to remain free while he fought his conviction. The court had overturned U.S. District Judge Jed Rakoff’s ruling ordering Gupta to surrender to prison authorities on Jan. 8 and begin serving his two-year sentence.

Gupta, 64, who was a managing partner at McKinsey & Co., and a director at Procter & Gamble Co., was convicted by a jury in June of one count of conspiracy and three counts of securities fraud. He was accused of passing illegal information about New York-based Goldman Sachs to Galleon Group LLC co-founder Raj Rajaratnam, his friend and business partner.

More?  Check out http://www.bloomberg.com/news/2013-05-21/gupta-challenges-u-s-use-of-wiretaps-in-insider-appeal.html

Did This Firm Just Lose Its Title As Top Hedge Fund Darling?

From The Fool.com: One of the big headlines earlier this year involved American International Group's ascension to the top spot among hedge fund holdings. Knocking the reigning darling (Apple) from its top spot, the insurer was put back in the spotlight as it made strong headway in its recovery. But with the most recent quarter's 13F-HR filings showing that some hedge funds have exited their position in the company, is it safe to say that AIG's reign is over?

Every quarter, investment managers with over $100 million in qualifying assets have to report their holdings to the SEC….But the most recent filings show that at least four prominent names on Wall Street have either significantly reduced their holdings or exited their positions in AIG completely…

Read all about it at http://www.fool.com/investing/general/2013/05/20/have-hedge-funds-abandoned-aig.aspx

SAC’s Cohen Mulls Deal That Would Shut Hedge Fund

After five years under investigation for insider trading, Steven Cohen is considering proposing a deal to prosecutors that would shut his $15 billion hedge-fund firm to outside investors, a person familiar with his thinking told Bloomberg..

Cohen has discussed an agreement under which his SAC Capital Advisors LP would admit wrongdoing but wouldn’t be prosecuted unless it broke the law again, said the person, who asked not to be named because the talks are private. As part of the deal, known as a deferred prosecution agreement, Cohen would close the Stamford, Connecticut-based firm to outside investors and make it a family office that manages his personal fortune. SAC Capital probably would also pay a fine….

Find out more at http://www.bloomberg.com/news/2013-05-20/sac-s-cohen-said-to-mull-deal-that-would-shut-hedge-fund.html

High speed trading a stiff challenge for U.S. regulators

Reuters reports: Financial trading in world markets has grown so lightning-fast that effective regulation is growing tougher by the second, increasing the threat of crashes sparked by hoaxes, electronic glitches or yet-unknown causes.

The latest alarm was triggered by a fake tweet saying that the White House was bombed, prompting a U.S. market nosedive that ended minutes later when the Associated Press said its Twitter account had been hacked. In 2010 U.S. stocks plunged in a "flash crash" following aggressive sales of stock-index futures by a mutual fund….

Wait..wait…there’s more at http://www.reuters.com/article/2013/05/19/us-futures-hft-idUSBRE94I0DG20130519

Hedge Funds Shift to Bearish Bets on 10-Year Treasurys

Hedge-fund managers and other large speculators held a net-short position in 10-year note futures for the first time in almost two months amid speculation Federal Reserve officials may taper the pace of asset purchases, Bloomberg reports.

They moved to the bearish wagers in the week ending May 14 for the first time since March 22, according to U.S. Commodity Futures Trading Commission data. Speculative short positions, or bets prices will fall, outnumbered long positions by 11,153 contracts on the Chicago Board of Trade. The previous week, traders were net-long 37,956 contracts….

More?  Check out http://www.bloomberg.com/news/2013-05-17/hedge-funds-shift-to-bearish-bets-on-treasury-10-year-notes.html

Hedge funds bet $1.6 billion on Boeing in first quarter

Boeing Corp. was the stock du jour among the 50 largest hedge funds during the first quarter.

Hedge funds moved $1.6 billion into Boeing shares, FactSet said in a report Friday that compiles data from 13F-HR filings that show quarterly stock holdings of large investors as of March 31.  Viking Global Investors was a huge buyer in the quarter, accumulating a fresh stake of 12.375 million shares. Jana Partners was a new buyer of Boeing’s stock as well, purchasing 1.55 million shares….

http://blogs.marketwatch.com/thetell/2013/05/17/hedge-funds-bet-1-6-billion-on-boeing-in-first-quarter-google-replaces-apple-as-tech-favorite/

Who Got Rich This Week: Hedge fund legend Michael Steinhardt.

From Forbes: "When we last checked in with Michael Steinhardt in October 2012, shares of WisdomTree Investments, where Steinhardt serves as chairman, were up 12.4% on the week, netting the investor a $24.3 million paper gain.   I focused Steinhardt’s October entry on the recent success of WisdomTree, and on the merits of ETFs in general as investment tools for retail and professional investors alike. But Steinhardt himself is, simply put, a legend in his own right.

"Worthy of mention alongside greats such as Soros and Robertson, he was a pioneer of the hedge fund industry and he was one of the best. His firm, Steinhardt Partners, achieved a compound average annual return of 24% from 1967 through 1995, more than doubling up the S&P 500 over that 28 year period.

"And Steinhardt’s personal narrative is as intriguing as his investment record….."

Read all about it at http://www.forbes.com/sites/edwindurgy/2013/05/18/who-got-rich-this-week-hedge-fund-legend-michael-steinhardt-a-supplement-salesman-and-more/

Hedge Fund Owner Gets Subpoena to Testify

Steven A. Cohen has received a subpoena to testify before a grand jury in the government’s insider trading investigation into his hedge fund, SAC Capital Advisors, a development that signals a newly aggressive phase in the multiyear inquiry, according to lawyers and executives briefed on the case.

Issued last week, the grand jury subpoena came as part of a broader round of requests from criminal authorities. Other SAC executives were also named in the subpoenas, the lawyers and executives said, and the fund itself received requests for information about its activities. The subpoenas suggested that federal prosecutors and the F.B.I. are intensifying their efforts to build a case, not only against SAC executives, but also the fund itself….

http://dealbook.nytimes.com/2013/05/19/cohen-gets-subpoena-in-sac-capital-trading-inquiry/

The 7 Big Stories That Traders Are Talking About This Weekend

Dave Lutz of Stifel, Nicolaus passes along the top stories that traders are talking about this weekend. Here are the big ones:

Hedge fund managers have gone short Treasuries for the first time in 2 months

http://www.bloomberg.com/news/2013-05-17/hedge-funds-shift-to-bearish-bets-on-treasury-10-year-notes.html

Chinese home prices rise at a slower pace in April (China Daily)

http://usa.chinadaily.com.cn/business/2013-05/18/content_16509398.htm

Investors poured money like crazy into equity funds this week

http://www.ft.com/intl/cms/s/3ba3c110-bf10-11e2-87ff-00144feab7de,Authorised=false.html?_i_location=http%3A%2F%2Fwww.ft.com%2Fcms%2Fs%2F0%2F3ba3c110-bf10-11e2-87ff-00144feab7de.html&_i_referer=http%3A%2F%2Fwww.businessinsider.com%2Fwhat-traders-are-reading-this-weekend-may-19-2013-5

There was another insane amount of gold selling this week, probably associated with ETF liquidations  http://online.barrons.com/article/SB50001424052748704551504578481043764806974.html?mod=BOL_hps_mag%22%20\l%20%22articleTabs_article%3D1

Inflation is still non-existent around the world

http://www.bloomberg.com/news/2013-05-17/canada-inflation-falls-to-slowest-since-2009-on-gasoline.html

Obama approves more liquid natural gas exports

http://www.washingtonpost.com/business/economy/energy-department-approves-expanded-lng-exports/2013/05/17/3bd3ff04-bf21-11e2-97d4-a479289a31f9_story.html

Read more: http://www.businessinsider.com/what-traders-are-reading-this-weekend-may-19-2013-5#ixzz2TkkHmngp

Barrons’ Best 100 Hedge Funds

"Hedge-fund manager Christian Zugel has made a mint in mortgage-backed securities, and he has also been wheeling and dealing in a lot of real estate. He has had to figure out how to fit a growing staff of 73 into a renovated garment factory, originally built by a grandfather of former Disney Chairman Michael Eisner near the Jersey shore in the town of Red Bank. Zugel also has moved into bigger quarters in London's Hanover Square, and is in the process of doubling his space in Shanghai, so his firm, Zais Group, can broaden its research and investor base around the world.

"Zugel's flagship fund, the $462 million Zais Opportunity fund, is No. 1 on Barron's Hedge Fund 100 ranking for the second consecutive year, the first time any fund has posted back-to-back wins in the eight-year history of our tally. Playing a variety of mortgage- and asset-backed securities as well as collateralized loans, the Stuttgart, Germany, native, 53, posted remarkable three-year annualized returns north of 50% through Dec. 31, 2012, nearly five times better than the Standard & Poor's 500 and 13 times better than the average hedge-fund return in that time. His firm oversees $5.4 billion in all…..

You can’t stop reading now…Go to http://online.barrons.com/article/SB50001424052748704253204578469283806191260.html?mod=BOL_hpp_mag#articleTabs_article%3D1

When Mere Millions Aren’t Enough: Rajat Gupta’s Lust for Zeros

From the NY Times Magazine: "Late one Friday morning, Rajat Gupta was rushing through security at Philadelphia International Airport, carry-on in tow, when his cellphone rang. When Gupta heard from Goldman Sachs, on whose board he sat, it was often from its chief executive, Lloyd Blankfein. But on this morning, it was Gregory K. Palm, his old Harvard Business School classmate and the bank’s general counsel, on the line. Palm sounded unusually serious. So Gupta asked if he could call him back from the other side of security.

"When he did, Palm quickly made two odd disclosures. First, he told Gupta that he had arranged for a colleague to listen in on their conversation. Then he said, “We are representing the corporation, and not you.” Palm wanted to make sure that there was no doubt that this was not a privileged conversation. If the matter evolved into something bigger, their discussion could be handed over to law-enforcement officers.

As Gupta listened, Palm stuck to the script that he worked out beforehand. “What can you tell me about Raj Rajaratnam, and have you ever provided him with information about what we do?” he asked.  Of course Gupta knew Raj Rajaratnam, the billionaire head of the Galleon Group hedge fund and No. 236 on the Forbes 400 list.

“What are you talking about?” Gupta asked, seemingly taken aback…"

Wait…wait…there’s more at . http://www.nytimes.com/2013/05/19/magazine/rajat-guptas-lust-for-zeros.html?ref=global

SAC Balks Over Fed's Insider Trading Inquiry

From Dealbook: The government’s insider trading investigation of the giant hedge fund SAC Capital Advisors entered a more contentious phase this week, with criminal authorities issuing a new round of subpoenas requesting information about the firm’s activities, according to lawyers briefed on the case.

The requests, which numbered more than a dozen, indicate that federal prosecutors and the F.B.I. are intensifying their efforts to build a case against the firm and its executives, including its billionaire founder, Steven A. Cohen, 56.  The government’s newly aggressive posture led to an unusual response from the hedge fund. On Friday, SAC told its investors in a letter that it was no longer fully cooperating with the investigation.

“While we have in the past told you of our cooperation with the government’s investigation, our cooperation is no longer unconditional,” the letter said…..

More?  Check out http://dealbook.nytimes.com/2013/05/17/sac-says-it-is-no-longer-cooperating-with-insider-trading-investigation/?ref=global-home

Boeing is the new hedge fund favorite

From Money.CNN: Hedge fund managers are finally boarding Boeing.  It's unclear whether the top hedge fund managers would bet on riding one of Boeing's troubled Dreamliners, but Boeing (BA, Fortune 500) was the favorite stock of the top 50 hedge fund managers in the world in the first quarter of 2013, according to FactSet.

Hedge funds poured roughly $1.6 billion into Boeing, helping push the airplane manufacturer's stock up 31% so far this year….

Wait…wait…there’s more info at http://money.cnn.com/2013/05/17/investing/hedge-funds-boeing/

UBS hedge fund traders go to Millennium, BlueCrest and Tudor

According to Bloomberg: UBS O'Connor, the $5.7 billion hedge-fund unit within Switzerland's biggest bank, has lost at least six equity traders this year to Millennium Management, BlueCrest Capital Management and Tudor Investment, three people with knowledge of the matter said.

Felipe Cruz, Arnaud Langlois and Mark Napp have left to join the U.K. unit of Millennium, a New York hedge-fund firm with $17.8 billion of assets, said the people, who asked not to be identified because the departures haven't been publicly announced. Bernard Ahkong and Rabin Tambyraja will join BlueCrest, which oversees $35 billion, the people said. Jason Randolph started working at Greenwich-based Tudor this week, one of the people said….

More?  Check out http://www.ctpost.com/news/article/UBS-hedge-fund-traders-go-to-Millennium-4523912.php

The Next Hot Hedge Fund Strategy? Think Stocks

Finally, long-short equity funds have something to brag about: performance. After five years of disappointing results, the sector is showing signs of life. The main reason for the optimism lies in the markets. Stocks are displaying greater dispersion when it comes to changes in share prices between one company and another. As a result, good old-fashioned stock picking based on company fundamentals is back in vogue. Investors who have pulled out of long-short equity in the past few years are starting to take a second look....

Don't take our word for it.  Read all about it at http://www.institutionalinvestorsalpha.com/

Apple is the hedge fund king once again?

Is the glass half full? It depends on what/who you’re reading.  Case in point:  this marketwatch piece.

For the first quarter of 2013, 148 top-tier hedge funds held shares of the Cupertino-based Apple in their equity portfolios, the same number that were long at the end of 2012. While the hedge fund industry is over 8,000 funds large in its entirety, we at Insider Monkey track the best of the best: 500 funds in total .

This aggregate vote of confidence comes one day after many members of the media—and investors—reacted prematurely to individual hedge fund managers' 13F filings, which indicate large investors' stock picks on a quarterly basis….

Read more at http://www.marketwatch.com/story/apple-is-the-hedge-fund-king-once-again-2013-05-16?link=MW_latest_news

Citi spurned by big time hedge funds

According to fool.com Citigroup has been on a tear the past two days, rising 5% after hedge fund manager David Tepper spoke out about his confidence in stocks earlier in the week. Dubbed the "Tepper Rally," the bull market following his comments, especially within the financial sector, really boosted Citigroup -- which is Tepper's largest holding in his Appaloosa Management fund.

But the bank is having a hard time holding on this morning, as news of Appaloosa's most recent 13F filing shows the fund reduced it's position in Citi during the first quarter. Cut by 7.3%, Appaloosa's stake in Citi is still its largest holding at 8.5 million shares, but the fund also reported options that would allow it to further reduce its share count in the future….

Read all about it at http://www.fool.com/investing/general/2013/05/16/citigroup-spurned-by-big-name-hedge-funds.aspx

Riches to Rags: Investor Aiming for the Top, Again

From NY Times: On Wall Street, the wheel of fortune can spin around and around, from enormous cash bonuses and luxurious perks one year to the unemployment line the next.  Then there is Fred Eckert, a onetime Goldman Sachs partner who soared as a star in "vulture" investing in ailing companies. But in the turmoil of the financial crisis, his business and wealth came crashing down. By 2011, he was bankrupt, divorced and, for two months, in a coma.

Today, he is in better shape, earning $1 million a year from a consulting job, although that expires next year. But most of his income is dedicated to paying leftover debts — he says he is running at "break-even at best" after expenses…

More?  Check out http://www.cnbc.com/id/100745326

Goldman Offers Hedge Funds to the 99%

Goldman and the great unwashed?  From the Street: Goldman Sachs said Thursday it is bringing the sophisticated trading strategies of Wall Street hedge funds to individual investors with investment portfolio's and retirement accounts as small as $1000.

The bank's investment management unit, Goldman Sachs Asset Management, is launching its Goldman Sachs Multi-Manager Alternatives Fund, which will give ordinary investors the ability to put their savings and retirements in Wall Street's riskiest products such as convertible bonds, junk bonds, bank loans, mortgage backed securities, credit default swaps, structured products, swaptions, total return swaps, swaps on futures, variance swaps and contracts for difference, among other arcane financial instruments.

Notably, the Goldman fund will give ordinary investors a taste of Wall Street trading by allocating assets to actual hedge fund managers, who appear to have the discretion to invest in just about every market and in any way which they chose to….

Find out all about it at http://www.thestreet.com/story/11925829/1/goldman-offers-hedge-funds-to-the-99.html?

Goldman slashes investment fund pledges in half

Reuters reports that Goldman Sachs  has slashed its capital pledges to investment funds by nearly half since the Volcker rule was signed into law in 2010, as it prepares its principal investment business for restrictions on investing its own money, according to regulatory filings.

The Wall Street bank has reduced future commitments to hedge funds and funds that invest in private equity, credit and real estate, by $5.8 billion since June 2010, the last period before the Volcker rule was included in the Dodd-Frank financial reform act. That represents a reduction of 48 percent, according to data in filings with the U.S. Securities and Exchange Commission….

Wait, wait…there’s more at http://www.reuters.com/article/2013/05/09/us-goldman-funds-idUSBRE9480V120130509

‘Marijuana Hedge Fund’ Not Actually A Marijuana Hedge Fund

HedgeCo.Net today offers the exciting prospect of a very, very specialized alternative investments product in one hell of a headline. Alas, as becomes clear as one reaches the end of this press release-ish piece, a pot hedge fund is simply too stupid an idea to be true. But investing in a weed-laced munchies manufacturer? Some think that is a less stupid idea.

Latteno has been approached by several small cap hedge funds and boutique investment houses about a near term private placement and cash infusion to fund its growth and acquisitions.

And what has these hedge funds and boutique I-banks so excited?

“Latteno Food Corp.’s wholly-owned subsidiary Green Cannabis, has rolled-out it’s first set of medical marijuana edible products consisting of Peanut Butter Cups, Chocolate Bars and Chocolate Chip Cookies all made out of Cannabutter. The peanut butter cups consist 200mg of THC, Indica, the chocolate bars contain a full gram of hash and the chocolate chip cookies contain 105THC, 1.3 CBD and 1.1 CBN….”

http://dealbreaker.com/2013/05/marijuana-hedge-fund-not-actually-a-marijuana-hedge-fund/

Forget Apple. Google’s Going to $1,000

It’s official: Google has replaced Apple as America’s favorite stock. Shares of the internet giant have crossed the $900 per share threshold. The online giant is up nearly 28% year-to-date. This comes as Google announces today that it will launch its own online music-streaming service in an effort compete with Spotify, the Swedish music upstart that has over 20 million users. According to reports, the company has inked deals with music major labels such as Sony, Warner, and Universal in anticipation of the launch.

.

“I think we’re in the final stages of a speculative blow-off top,” Richard Ross, Global Technical Strategist with Auerbach Grayson and Talking Numbers contributor, told Yahoo. Looking at a long-term chart, Ross sees a well-defined upwards trend line beginning in the middle of 2012. Every time the stock touched the trend line, it has moved higher afterwards. “I think we have another 10% to 12%. That gets us comfortably to that $1,000 level,” says Ross…..

Read all about it at http://finance.yahoo.com/blogs/talking-numbers/forget-apple-google-going-1-000-says-pro-174912373.html?vp=1