Loyalty even to Steven Cohen has its limits 20 May 2013 An intensifying legal onslaught at the hedge fund manager’s $15 bln SAC probably will force the remaining outside investors to run. Even Cohen’s legendary 25 pct annual returns at some point aren’t worth the risk. The firm’s most optimistic future looks to be as a family office.
Greek bank recap: Germany please look away 14 May 2013 Warrants awarded to investors, like hedge funds, that help rescue Greek banks could bring 800 percent-plus returns. That reflects massive risk. The troika is so desperate for Greece to recover that it is forgoing the potentially epic upside on its own rescue package.
Fannie/Freddie buyout plan needs killing off 1 May 2013 A few big hedgies, including Paulson & Co and a Carlyle fund, want Uncle Sam to sell Fannie Mae and Freddie Mac into private hands. Getting the bailout twins off the government’s books is appealing. But the plan would privatize short-term gains and leave taxpayers on the hook.
U.S. courts make mark in Argentina creditor spat 22 Apr 2013 Judges have, unusually, tried to broker a deal between the Latam nation and hedge funds still objecting to debt swaps in 2005 and 2010. Ordering Argentina to honor its contracts and pushing others to clarify theirs were also useful moves. The rule of law is coming out ahead.
Fund managers need a risk-culture rethink 8 Apr 2013 Regulation is the chief buy-side risk, a new study has found. That’s bizarre since rules should dilute financial dangers. Asset managers may have to challenge regulatory caution if they are to run balanced investment risks. The high-grade sovereign bond bubble is a case in point.
EU-shaped bonus cap might just fit fund managers 4 Apr 2013 A German MEP wants to impose limits on asset managers’ bonuses. It is hard to see why statutory intervention is required, but reform of pay policies could foster asset allocation behaviour that better serves clients’ long-term interests. Tighter-fitting bonus caps might help.
Maybe SAC should forget about other people’s money 15 Mar 2013 Steve Cohen’s $15 bln hedge fund firm is paying $616 mln to settle SEC insider trading charges. It would be an ignominious time to follow legends like Stan Druckenmiller, but he is already losing a quarter of outside investor funds. It could be time to manage only his own cash.
Hess rejects activist push – by caving to it 4 Mar 2013 The $24 bln oil company’s inefficient sprawl and cozy board made it a ripe target for Elliott Management. Hess claims the hedge fund’s prescriptions are wrongheaded, but is selling assets, nominating new directors and returning capital. That’s much of what Elliott was pushing for.
Man has to run hard to stand still 28 Feb 2013 New Chief Executive Emmanuel Roman faces entrenched threats. The hedge fund manager has delivered strong earnings, good investment performance and tight cost control. But recent share-price strength belies the risk of a political flare-up and falling assets.
Apple’s halo loses shine in investor fight 25 Feb 2013 Greenlight Capital founder David Einhorn won a legal point, but better governance wasn’t his main objective. Apple and its lawyers come off amateurish. Calpers, despite worthy aims, looks careless. The SEC also missed a trick. The result is a distraction for shareholders.
Activist exposes Hess as latest governance villain 29 Jan 2013 Hedge fund Elliott reckons the U.S. oil company could be worth more than double its current $20 bln-plus value. But as at other energy groups, like Chesapeake and SandRidge, a too-cozy board has brought waste and strategic blunders. New broom directors would help change that.
Ackman vs Icahn is an epic but pointless battle 25 Jan 2013 A personal feud between the two New York billionaires has erupted anew. Though it’s emblematic of their approach to investing and escapist fun for financiers, the two men play important roles in the markets. Their aggressions are better directed at supine boards than each other.
Big-shot banker class of 2012 gets back to work 8 Jan 2013 Though it’s not the top job at Barclays, JPMorgan’s Jes Staley is joining hedge fund BlueMountain for what could be a less stressful but lucrative role. He’s not the only Wall Streeter seeking a gig. Diamond, Taubman, Pandit & Co may find power and glory similarly elusive.
Draft obit for 2020: 2-and-20 fee structures 28 Dec 2012 The archetypal hedge fund fee deal survived the 2008 crunch and the euro zone meltdown, but not the industry’s growth. Asset gathering, tight controls and cautious bets by a new generation of fund bosses brought a decade of low returns. Fee gravity was irresistible in the end.
Good timing favours rise of Roman’s empire of Man 10 Dec 2012 Ex-Goldmanite Emmanuel Roman is replacing Peter Clarke as head of the world’s largest listed hedge fund manager. Clarke is paying the price for a disastrous share price collapse. Markets will need to behave, but the timing may suit Roman nicely. Not for the first time.
Hedgies’ star quality is in the eye of investor 21 Nov 2012 Hedge-fund managers can get rich and attract new clients by performing exceptionally well for a small number of early investors. But if they disappoint later, many clients lose money. The real stars are those that leave most investors better off. Sadly, they are hard to spot.
Coffey to go 18 Oct 2012 Greg Coffey can afford to retire from Moore Capital at 41. He made a fortune from his drive, personality and talent, along with luck - plus leverage and high fees. It’s a good time for him to leave. Characters are less welcome in the new era of institutionalised hedge funds.
Since when does a huge hedge fund need subsidies? 16 Aug 2012 Ray Dalio’s Bridgewater, the biggest of them all, may get up to $115 mln in help from Connecticut to build a new $750 mln HQ in Stamford. It’s hard to see how Dalio’s firm, which made him nearly $4 bln last year, is a needy recipient. Yet there are benefits for the U.S. state.
What hedge funds share with rock’n’roll festivals 3 Aug 2012 Not a lot, at first sight. But both are subject to the law of large numbers. Festivals like this weekend’s Pickathon are limiting entry to make the experience less mundane. And the likes of Moore Capital are seeking better-than-average returns by shrinking, too.
Man Group’s new resolve is welcome 24 Jul 2012 Market weakness and own goals have hurt the listed hedge-fund manager. Long-suffering shareholders should greet $100 mln of new cost cuts as evidence that Man really is dealing with its problems. But the future remains murky - hence the huge spread in earnings forecasts.