Hedge Fund Founder Quits After JP Morgan Acquisition

Founder of Highbridge Capital Management, Henry Swieca, revealed plans to leave the firm after JP Morgan moved to purchase the remainder of the giant hedge fund. Highbridge Capital Management is one of the world's largest hedge funds with around $20 billion in AUM (assets under management). In 2008, Henry Swieca ranked in the top 100 on Forbes list of billionaires, with an estimated net worth of $1.3 billion.


Highbridge Capital Management, LLC is a global alternative investment and asset management firm based in New York with offices in London, Hong Kong and Tokyo, with over 310 employees and 100 investment professionals. Highbridge manages approximately $20 billion of capital for financial institutions, corporate pension funds, university endowments and family offices.

DE Shaw Group to Lighten Redemption Restrictions

D.E. Shaw & Co., the $29 billion investment firm founded by David Shaw, will permit investors to withdraw more money from its two biggest funds than previously permitted, according to Bloomberg.

DE Shaw recently limited quarterly redemptions in November to 8.3 percent of investor assets after a surge in withdrawal requests. The NYC-based firm is now offering clients the one-time option to pull 16 percent of their assets from two of its funds, its Oculus and Composite funds, next month. Those who accept won’t be able to make additional withdrawals this year.

Hedge Funds Post Best Performance in Nine Years

Hedge funds returned an average of 5.2% in May, 2009, the best cumulative return since 2000. edge-fund managers are outperforming global benchmarks after posting the worst year on record in 2008. Eurekahedge’s global index slid 12 percent last year, the most since the Singapore-based firm began tracking data in 2000. The MSCI Asia Pacific Index rose for a third month in May, advancing 12 percent in its longest stretch of monthly gains since July 2007.

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I Thought This Fund Was Market Neutral?!?!

Hedge Funds Skeptical of Uncle Sam

According to Reuters, many hedge fund managers are leery of US intervention in the capital markets, from banking bailouts to Chrysler and the automakers.

According to Sean Mathis of New Centurion Capital Partners,"When you have government intervention at the scale we have, you do something the markets abhor: you create uncertainty. We have uncertainty where markets are going and what the rules of the road will be."

Even more drastic are statements like those of Gary Kaminsky, former Managing Director at Neuberger Berman "You have to assume the government will be involved. You have to assume the free market is not as free as it was in the past and won't be for the next 20 years," Kaminsky said.

Of course what is not being said is that hedge funds have benefited from the bailout in countless ways. Many of the prime brokers to hedge funds could have been at risk had large financial institutions not received bailout money. Most hedge funds with a long-bias have also benefited from the massive injection of money into the system and the support of the financial sector.

What if Hedge Funds had Billboards?

I had a dream last night. What if hedge funds had billboards?

Hedge Fund, Satellite Asset Management, to Close

New York based hedge fund Satellite Asset Management is closing its doors six months after suspending redemptions.

The firm, with $2.8 billion in AUM, has begun returning money to investors in its three funds, Bloomberg News reported. The three funds being liquidated are the Satellite Overseas Fund, Satellite Fund II and its largest fund, the Satellite Credit Opportunities fund. In late 2008, Satellite reported its $2billion Credit Opportunities Fund was down as much as 35% and was facinf large redemption requests.

The firm, founded by a trio of Soros Fund Management veterans a decade ago (Lief Rosenblatt, Gabe Nechamkin, and Mark Sonnino) managed as much as $7 billion as recently as the end of 2007. It lost some 35% last year, and was forced to halt withdrawals in November.

Manhattan Lawyer Pleads Guilty to Hedge Fund Fraud

Marc Dreier, 59, has plead guilty to using fake documents and impersonations to defraud hedge funds out of about $400 million. Despite the objections of prosecutors, Dreier was allowed to remain free on bail until his July 13 sentencing.

Dreier had founded Dreier LLC, a law firm employing as many as 250. He also lived a lavish lifestyle including a personal yacht and tens of millions in artwork.

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Obama Slams Hedge Fund Holdouts on Chrysler Deal

Obama was clearly not happy with certain unnamed hedge funds refusal to make sacrafices prior to Chrysler's "orderly" bankruptcy. Though the President did not name which funds were not cooperative, he noted that the vast majority of financial institutions did come to the table to work constructively. Apparently several hedge funds did not.
Below is a direct quote from President Obama's speech this morning:

"While many stakeholders made sacrifices and worked constructively, I have to tell you some did not. In particular, a group of investment firms and hedge funds decided to hold out for the prospect of an unjustified taxpayer-funded bailout. They were hoping that everybody else would make sacrifices, and they would have to make none. Some demanded twice the return that other lenders were getting. I don't stand with them. I stand with Chrysler's employees and their families and communities. I stand with Chrysler's management, its dealers, and its suppliers. I stand with the millions of Americans who own and want to buy Chrysler cars. I don't stand with those who held out when everybody else is making sacrifices."

Obama also praised Robert Nardelli, the now former CEO of Chrysler,

"...Chrysler's management, and in particular, its CEO, Robert Nardelli, have played a positive and constructive role throughout this process."

You can also read the entire speech here:

Fortress to Take Over $2.5b in DB Zwirn & Co. Hedge Fund Assets

Fortress Investment Group will take over the $2.5 billion hedge fund assets of D.B. Zwirn Co., according to people supposedly familiar with the situation. Headquartered in New York, Fortress manages almost $30 billion in assets and is one of the largest US based hedge funds.

Zwirn’s board and some of its biggest investors chose Fortress, a New York-based private equity and hedge-fund manager, to liquidate the assets. Fortress was picked from nine candidates including a group headed by Desmond Dermot.

D.B. Zwirn Special Opportunities Fund fund makes loans to companies including those that have trouble getting financing elsewhere. Zwirn decided to close the fund when investors asked to withdraw more than $2 billion after a delay in the release of the fund’s 2006 financial audit.

Hedge Fund Manager Fined and Banned for Mismarking Positions

UK Hedge Fund Manager Fined and Banned by Financial Services Authority for Mismarking Positions
The U.K.'s financial regulator Wednesday said it had banned and fined hedge fund manager, Loic Montserret of BlueCrest Capital Management, for mismarking trading positions as he tried to hide losses and keep his job. Monteserret is the first individual to be both banned and fined for mismarking trade positions by the Financial Services Authority. At one point, his mismarking resulted in the fund being overvalued by $8.6 million.

Montserret was banned from the securities industry for 15 years and fined GBP35,000.

Monteserret, manager of the BlueCrest Multi Strategy Credit Fund, was responsible for managing about $60 million of BlueCrest Capital Management's $12 billion in assets under management and is one of the UK's largest hedge funds.

Loic Albert Antoine Montserrat, now a former hedge fund manager manager at BlueCrest Capital Management Ltd., is the first individual to be both banned and fined for mismarking trade positions by the Financial Services Authority.

SEC Wants Greater Hedge Fund Authority

Schapiro Seeks Larger Staff, Greater Regulatory Control, for Hedge Funds
SEC Chairman Mary Schapiro said today that the SEC "needs" the authority to require hedge funds to register with the agency. Additionally, Schapiro wants the SEC to have the power to examine hedge funds' book. Schapiro also noted that registration without significant oversight and authority "would not be sufficient". "It would be good to have rulemaking authority," she said. "It's good to have flexibility to respond to crises as they emerge."

Schapiro also wants additional funding to provide adequate hedge fund oversight. "With over 30,000 regulated entities and a staff of 3,600 people, we cannot add a couple thousand more hedge funds and get the job done under any circumstance," she said.