Hedge Fund Exchange

Bigger, safer but duller

The Economist, August 26, 2010

FOR much of the past two years hedge-fund managers have tried to convince queasy investors not to give up on them. Now it seems that some of the industry’s biggest names have given up on themselves. Stanley Druckenmiller, a celebrated hedge-fund manager and protégé of George Soros, announced on August 18th that he would close his fund, Duquesne Capital Management, because he was “dissatisfied” with its performance. Two days later it emerged that another well-known manager, Paolo Pellegrini, plans to hand back investors their remaining money by the end of September, after making losses.

Continue to full article. 

Pershing Square Capital Wagers Against BP Debt With Credit-Default Swaps

Above: Bill Ackman.

Christine Richard and Shannon D. Harrington, Bloomberg, August 26, 2010

Bill Ackman's Pershing Square Capital Management LP is betting against the debt of BP Plc through credit-default swaps, saying the energy company’s creditworthiness will be dented for years by the biggest offshore oil spill in U.S. history.

The accident has “likely permanently impaired the ability of BP to operate effectively in the U.S.,” Ackman wrote today in a letter to investors obtained by Bloomberg News. “The clean-up costs, penalties, and legal liabilities of the spill will continue to impair the company’s credit for many years."

Continue to full article. 

Ernst & Young sued by hedge fund investors

Joanne Harris, Hedge Funds Review, August 26, 2010

A group of US hedge fund investors have filed a lawsuit against Ernst & Young (E&Y), accusing the audit company of fraud, negligent misrepresentation, securities fraud and conspiracy.

The case was filed in Houston, Texas, by five investors against hedge fund Parkcentral Global. The disgruntled investors claim they lost over $17 million following the fund's collapse. Parkcentral Global closed in November 2008 after assets fell from $2.6 billion to nearly zero, according to media reports.

Continue to full article

$800 Million Hedge Fund Discloses SEC Scrutiny

Nathan Vardi, Forbes.com, August 25, 2010

Yorkville Advisors, the Jersey City, N.J. hedge fund firm that recently reported $864 million of assets under management, has disclosed to investors that it provided information to the Securities & Exchange Commission at the direction of securities regulators.

According to the 2009 audited financials for YA Global Investments, Yorkville Advisors’ main fund, the SEC directed the hedge fund firm in August 2009 to “supply certain information” regarding Yorkville Advisors and YA Global Investments. Yorkville Advisors has complied with the request, the audited financials that Forbes obtained say.

Continue to full article. 

Global Hedge Fund Body To Meet US Policymakers In September

Amy Or, The Wall Street Journal, August 26, 2010

The Alternative Investment Management Association, a global body representing hedge funds, said Thursday it will meet U.S. policymakers and supervisors in September over the implementation of the Dodd-Frank Act.

"Many of the measures that feature in the Dodd-Frank Act are being discussed in other jurisdictions, and it is desirable that there is a large degree of consistency in terms of approach and implementation," said AIMA Chairman Todd Groome (Above) in a statement. "If that consistency is not achieved it could lead to unnecessary duplication and increased costs."

The London-based association, which represents over 1,000 corporate members in 40 countries managing over 75% of global hedge fund assets, didn't specify which organizations it will meet with in September.

Continue to full article. 

U.S. ends probe of hedge fund "idea dinner"

Reuters, August 20, 2010

Hedge fund managers can go back to eating, drinking and sharing trading ideas now that sources say federal investigators have dropped an inquiry into whether a group of money-managers conspired at a so-called "idea dinner" to drive down the value of the euro.

Officials with the U.S. Justice Department's antitrust division recently told representatives of several hedge funds that the six-month inquiry had been closed, said three people close to some of the funds.

Continue to full article. 

U.S. ends probe of hedge fund "idea dinner"

Svea Herbst-Bayliss, Matthew Goldstein and Jennifer Ablan, Reuters, August 20, 2010

(Reuters) - Hedge fund managers can go back to eating, drinking and sharing trading ideas now that sources say federal investigators have dropped an inquiry into whether a group of money-managers conspired at a so-called "idea dinner" to drive down the value of the euro.

Officials with the U.S. Justice Department's antitrust division recently told representatives of several hedge funds that the six-month inquiry had been closed, said three people close to some of the funds.

Continue to full article

Paulson Protégé Pellegrini To Return Outside Money

Paolo Pellegrini (above)

FinAlternatives.com, August 20, 2010

Paolo Pellegrini, the former Paulson & Co. portfolio manager credited with the hugely successful subprime mortgage investment strategy that put that firm on the map, plans to return outside capital in his hedge fund, just 10 months after opening that vehicle to investors.

Pellegrini told investors that he would return their money by the end of next month. The PSQR Capital founder, who opened the PSQR Master Fund to investors in December building up an impressive two-year track record, said he would continue to manage his own money through the fund, AR magazine reports.

Continue to full article

Wild Trading in Metals Puts Fund Manager in Cross Hairs

Susan Pulliam, The Wall Street Journal, August 19, 2010

Christopher Pia (Above) was the quintessential hedge-fund success story: a hard-charger from a working-class New York City neighborhood whose trading prowess earned him a top job at fund giant Moore Capital Management. He bought a sprawling house in Armonk, N.Y., and tooled around town in an orange Lamborghini.

But his 18-year relationship with Moore Capital and its founder, hedge-fund tycoon Louis Bacon, came to an abrupt end in late 2008. Mr. Bacon forced out his onetime head trader, friend and protégé, and Mr. Pia launched his own fund.

The story behind the rupture is only now surfacing, and it involves allegations of a kind of improper trading that regulators worry is becoming more widespread. The Commodity Futures Trading Commission is investigating whether Mr. Pia's trading at Moore involved market manipulation, according to a person close to the situation. Specifically, CFTC investigators are looking into whether Mr. Pia improperly tried to push up prices of platinum and palladium, possibly to boost Moore's returns and his own compensation, this person says.

Continue to full article. 

Elliott fund goes to court to keep results secret

Emily Chasan, Reuters, August 19, 2010

Hedge fund Elliott Management Corp sought an emergency court order on Thursday to allow it to investigate who leaked its latest investor report to industry magazine Absolute Return + Alpha, and said publication of its results would hurt its competitive edge.

In court papers, filed in the Supreme Court of the State of New York in Manhattan, Elliott said its June 30 letter to investors had been leaked to the magazine, and that it wanted the court to give it emergency authority to investigate the magazine and find out who had violated Elliott's confidentiality agreement and leaked the letter.

Continue to full article.