Dirty Hedge Fund Dealings Premier At Sundance
Sundance 12 kicked off over the weekend with the new hedge fund movie Arbitrage playing on day 3 of the festival.
The movie depicts a hedge fund magnate under investigation, desperate to complete the sale of his trading empire to a major bank before his double-dealings are revealed.
Vulture reports:
“An ultra-rich hedge fund magnate (Richard Gere) is trying desperately to cover up some financial misdeeds … and then boom: He accidentally kills his mistress in a car crash. Now he’s got to cover that up, too, and all the while, his wife (Susan Sarandon), daughter (Brit Marling), and a relentless detective (Tim Roth) are closing in on the truth.”
The film is written and directed by Nicholas Jarecki and produced by Infinity Media. The New York Post’s Lou Lumenick called Gere’s performance the best of his career.
Hedge Fund Advisor Gemini Expands With Nine Funds
Hedge fund advisor Gemini Fund Services, LLC., has announced the expansion of the Northern Lights Variable Trust (NLVT) with the addition of nine funds throughout 2011, the NLVT now comprises 14 funds in total, with over $380 million in assets.
“Gemini is committed to providing our advisors with solutions to bring successful investment vehicles to the market and meet the evolving needs of investors,” said Andrew Rogers, President of Gemini Fund Services. “Gemini launched the NLVT to meet the needs of VIT funds, and the growth of the NLVT empowers advisors and funds with a competitive advantage in today’s marketplace.”
The funds comprising the NLVT are part of a variable insurance trust (VIT). A VIT, much like a mutual fund shared trust, is a single registered entity through which a series of funds can be registered with the SEC and the funds within the trust are advised by multiple advisors.
The Worst Footnote of 2011: Leo Apotheker’s Golden Parachute
Footnoted, the business blog that unearths information buried deep in companies’ public filings, named the nominees for its annual “Worst Footnote of the Year” contest.
The votes are in, and Footnoted’s readers selected former Hewlett-Packard CEO Leo Apotheker collecting around $25 million in severance and other benefits, including relocation back to France or Belgium after less than a year on the job, as the winner (or, depending on your viewpoint, loser).
The other nominees include:
· Hedge fund MF Global agreeing to pay then-CEO Jon Corzine a $1.5 million retention bonus months before the company imploded.
· Clear Channel Media Holdings paying $3 million a year to a company controlled by Bob Pittman so that Pittman can fly in a Mystere Falcon 900 that Pittman owns for both business and personal use.
· IBM’s outgoing CEO Samuel Palmisano becoming eligible for as much as $170 million in retirement benefits, just by waiting until he was past 60 to announce his retirement.
· Nabors Industries agreeing to pay outgoing CEO Eugene Isenberg $100 million in severance on his way out the door.
“There were some really crazy disclosures in 2011, but Footnoted readers decided that the more than $25 million that former Hewlett-Packard CEO Leo Apotheker received for 11 months of work, during which HP stock declined by over 40 percent, was worthy of the top prize,” said Michelle Leder, Footnoted founder and editor. “Most of us—not even in our dreams—could never imagine failing in such a big way and still being rewarded so richly.”
US Investor Acquires 2.4 Billion UK Hedge Fund Group
$351.7 billion US investment manager, Federated Investors, Inc., is acquiring Prime Rate Capital Management from UK hedge fund, Matrix Group Limited.
Prime Rate Capital Management’s family of UCITS hedge funds include: Prime Rate Sterling Liquidity Fund, Prime Rate Euro Liquidity Fund and Prime Rate US Dollar Liquidity Fund. Together worth approximately GBP 1.5 billion ($2.4 billion.)
“The agreement will incorporate Prime Rate Capital’s experienced team, insightful processes and excellence in liquidity management into Federated’s money market business – with euro, sterling and dollar-denominated UCITS products positioning us for future growth,” said Gordon J. Ceresino, president of Federated International Management Limited. “After adding an additional sales person in our Frankfurtoffice earlier this year, Federated continues to seek opportunities to expand our global business in Europeand around the world.”
With $189 billion in AAA-rated money market funds, Federated is the second-largest U.S. manager of money funds of the highest credit quality. Federated has 12% of the U.S. market share of AAA-rated money market funds, according to iMoneyNet.
“We opted to join Federated because of the company’s reputation as a premier global liquidity manager since the 1970s,” said Dennis Gepp, managing director and chief investment officer of Prime Rate Capital. “Our clients and shareholders in the funds can be confident in Federated’s stewardship and credit process, as it is one of the world’s largest and most experienced managers of money market products.”
J.P. Morgan Lays Off Three Senior Hedge Fund Execs
AR Magazine reports that J.P. Morgan’s hedge fund, Highbridge Capital Management, has laid off three senior execs, including two portfolio managers, as its long/short fund continues to struggle.
The dismissals were confirmed by two people familiar with the firm who preferred to remain anonymous, AR said.
With its $1.8 billion long/short equity fund down 12.6% this year, $26.1 billion Highbridge has let go of three senior executives and at least three analysts and traders in its New York and Hong Kong offices.
In New York, Highbridge let go portfolio manager Jennifer Failla, who covered the retail sector for the long/short fund and previously worked for Bear Stearns; Chris Storey, an analyst covering financials, and Don Kuzoian, an analyst covering technology. They had reported to longtime Highbridge equities chief Alec McAree. Failla’s positions were quickly liquidated when she left last week.
Layoffs were not contained to New York. In Hong Kong, the firm dismissed portfolio manager Toby Bartlett, who covered the Asian consumer industry, as well as trader Kenson Lau, AR reported.
GlobeOp: Hedge Funds Close 2011 On A Positive Note
Hedge fund flows as measured by the GlobeOp Capital Movement Index advanced 1.55% in December.
“December closes the year on a positive note with net inflows of 1.55 percent, driven primarily by healthy subscriptions,” said Hans Hufschmid, chief executive officer, GlobeOp Financial Services.
The GlobeOp Capital Movement Index represents the monthly net of hedge fund subscriptions and redemptions administered by GlobeOp. This monthly net is divided by the total assets under administration (AuA) for GlobeOp’s fund administration clients.
Cumulatively, the GlobeOp Capital Movement Index for December 2011 stands at 141.01 points, an increase of 1.55 points over November 2011. The Index has advanced 14.40 points over the past 12 months. The next publication date is January 12, 2012.
HFR Emerging Markets Hedge Fund Industry Report for Third Quarter 2011
Emerging markets hedge funds posted strong performance gains in October, reversing sharp losses from September as emerging market (EM) economies and assets continue to experience volatility relating to the European sovereign debt crisis.
The HFRX Total Emerging Markets Index gained +4.1 percent in October following a decline of -5.0 percent in September; while intra-month volatility was even more pronounced in specific regions, including Latin America and Russia. In response to this volatility, investors hesitated on making new allocations to EM hedge funds, which saw a modest net outflow of $197 million (0.17 percent of assets under management in EM funds) for the 3Q11, according to the HFR Emerging Markets Hedge Fund Industry Report, released today by HFR.
As a result of September losses, total EM hedge fund assets declined by $7.2 billion from the record level established at mid-year to end the third quarter at $115.7 billion.
Newly Launched HFRX Korea Hedge Fund Index gains +8.3% in October
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HFR has launched the HFRX Korea Index, comprised of hedge funds investing primarily in Korea and the latest addition to HFR’s comprehensive suite of HFRX EM and Asian hedge fund benchmarks. This new index reflects the increased growth and influence of hedge funds in Asia, and specifically the growth of investors and hedge funds located in Emerging Asia.
“Emerging market asset volatility has accelerated in recent months in response to external factors and internal EM fundamentals, a trend which is likely to continue to present both opportunities and challenges for hedge funds and investors,” said Kenneth J. Heinz, President of HFR. “Emerging market hedge funds offer sophisticated access to strategies which complement existing EM equity and sovereign fixed income positions with Macro and Arbitrage strategies designed to monetize opportunities in currencies, equities and sovereign bonds, while mitigating certain aspects of directional volatility inherent in emerging market investing.”
HFR partnered with Wind Information, the leading provider of data and information to the Asian marketplace, which became effective in October 2011. Wind Information Co., Ltd (Wind Info), headquartered in Lujiazui Financial Center in Shanghai, is a leading integrated service provider of financial data, information and software, Hedge Fund Research The partnership between HFR and Wind Info enables Chinese financial institutions to access the HFR Database with local market support and distribution.
Two Cold-Callers Sentenced To Over 5 Years For $18 Million Hedge Fund Fraud
William Shternfeld and Benjamin Koifman have been sentenced in a NY court to 63 months each in prison for participating in a conspiracy to defraud investors of more than $18 million through a fraudulent hedge fund, the FBI reports.
Both men pled guilty to one count of conspiring to commit mail and wire fraud. Manhattan United States Attorney Preet Bharara said: “William Shternfeld and Benjamin Koifman preyed on the elderly to entice them into investing in their so-called fund.”
The fund in question is the AR. Capital Global Fund, LP. (“ARC Global Fund”), a purported hedge fund. Investor funds were wired to various bank accounts in Eastern Europe. The FBI said that the pair were expert cold-callers who solicited the vast majority of the funds from the ARC Global Fund’s victims, many of whom were elderly and lost most, if not all, of their retirement savings.
The ARC Global Fund received more than $18 million in investments before being shut down in September 2006.
In addition to their prison terms, the Judge sentenced Shternfeld and Koifman, both of Marlboro, New Jersey, to three years of supervised release each. He also ordered each to forfeit $7 million, which constitutes proceeds from their crime.
Five defendants were previously convicted and sentenced for their involvement in the ARC Global Fund fraud. Yevgeny Shvartsshteyn and Igor Levin were each sentenced to 87 months in prison. Daniel Ledven, Edward Veisman, and Alan Fishman were sentenced to 57, 46, and 37 months in prison, respectively.
Hedge Funds Reported up 1.1% to 1.73% in October
The Dow Jones Credit Suisse Hedge Fund Index posted its largest monthly gain since April and finished up 1.73% in October. A new monthly commentary offers insight into hedge fund performance through the month of October.
Some key findings from the report include:
- Equity and credit based strategies such as long/short equity, emerging markets, event driven, and distressed were some of the top performers in October. However, the strategies remain in negative territory year-to-date;
- Tactical trading managers showed a bifurcation in performance as global macro managers posted positive performance while, on the purely systematic side, managed futures funds posted negative performance, largely due to losses from trend-following models; and
- On the relative value front, fixed income arbitrage managers posted a small gain despite the volatile interest-rate environment while convertible arbitrage and multi-strategy managers benefited in part from their equity and credit components.
Morningstar also reported preliminary hedge fund performance for October 2011 as well as asset flows through September. The Morningstar MSCI Composite Hedge Fund Index, an asset-weighted composite of nearly 1,000 hedge funds in the Morningstar database, rose 1.1% for the month of October, significantly lower than the MSCI World NR Stock Index’s surge of 10.3%.
“Though most strategies posted positive figures in October, hedge funds overall failed to fully participate in the equity market’s massive rebound in October,” said Josh Charney, alternative investments analyst at Morningstar. “The abruptness of the market’s reversal, coupled with lingering bearish sentiment, likely caught some defensively positioned managers off guard.”
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