Dane Hamilton

The New York Post can finally drop its Carl Icahn blog-watch timer. The long-delayed Icahn Report blog is going live on Thursday, the financier and corporate agitator told Reuters on Wednesday.

The billionaire investor first disclosed that he will join the blogosphere in February, offering up anecdotes and a running commentary on what he describes as the desultory state of corporate governance in America.

But since then, the blog, http://icahnreport.com, hasn't contained any content, prompting the New York Post website to publish a daily "Carl 'I Can't' Blog Counter," with a live timer showing how many days, hours, minutes and seconds the blog has been quiet.

(On Wednesday at 4:42 PM EDT, that was 138 days, 23 hours, 10 minutes and 22 seconds).

Icahn, who has been embroiled in various high-profile proxy battles of late, including seeking a board change at Yahoo Inc , said previously his lawyers stopped him from writing anything. Now those concerns have been swept aside.

"We're hoping for a grass-roots response to this down the road," said Icahn in an interview. "We want to get shareholders to realize they should be doing something."

"Corporate democracy is a myth in America and its a problem in this economy and one reason we don't compete in many areas," said Icahn. "With many exceptions, there really is no accountability."

The launch of the Icahn Report has been delayed before. In April, the 72-year-old takeover veteran said his blog would go live "in a week or two." Or three, or four....

Jim Chanos has a knack for finding companies and industries that are poised to hit the skids, winning him equal measure of praise and vilification on Wall Street, the standard treatment for big short-sellers. (for further evidence, see also "David Einhorn").

Most famously, Chanos' now-$5 billion hedge fund Kynikos Associates shorted Enron before its collapse. But he also won big on other former Wall Street fallen angels like Sunbeam, Conseco, Tyco International and Boston Chicken.

Now Chanos is taking aim at another train wreck: the financial media. In a speech yesterday, Chanos trashed the broadcast and on-line media for breathlessly reporting rumor as legitimate news and called for more regulatory investigations into whose who feed the gullible or nefarious media rabble.

Chanos cited recent travails at a well-known New York investment bank that's still around (yes, that one) that was the subject of repeated unsourced reports on a certain well-known business television channel (guess). The reports hammered the bank's share price.

Chanos said he happened to be on his firm's trading desk on that particular day, right in the thick of trader-land, where rumors are as rife as market positions.

"I run the world's largest short-selling fund," Chanos told the SIFMA conference. "We hear everything. That day we didn't hear any rumors (about the bank)."

"Some of our financial journalists are MAKING the news," said Chanos. "And blogs are saying things and reporters are reporting it as news."

Chanos is calling for more government investigations into where journalists are getting phony tips that they foist on the market as news. "There are IM messages, email records, taped phone calls. This is not hard. Inspector Clouseau could do it."

"A lot of this is just being manufactured to sell stories and get ratings."

Time to short media stocks?

Give Tom Brown credit for his convictions.

The financial stocks maven and head of hedge fund Second Curve Capital LLC is hanging on to names the market is pummeling. We're talking such train wrecks as First Marblehead and CompuCredit. And in recent months, Second Curve has picked up bond insurers including Ambac Financial Group and MBIA Inc that have done nothing but fall.

Brown, who regularly appears on CNBC (including Monday night) to talk about the coming turnaround in financial stocks, has seen the value of his holdings fall from $852.7 million as of Dec. 31, 2006, to $139.3 million as of March 31, 2008, according to regulatory filings.

Now Wall Street admires investors who stick to their convictions, particularly if they turn out to be right. But how much do you have to lose of your investors' and your own money before you decide that the financial stocks rout of the last year might -- just might -- be more than just a temporary blip?

Yet Brown, the high-profile commentator who operates the Web site Bankstocks.com, sticks to his guns. The market, he says, is wrong. The mortgage credit crisis that brutalized financial stocks seems close to being resolved, says Brown.

"We'll keep saying it until we're blue in the face," said Brown in a June 4 post on Bankstocks.com. "Subprime mortgage loss estimates are too high.... The reason why they're too high is simple, too. They assume that last year's credit performance will persist far into the future. Only it won't."

Let's see: the economy is slipping, energy prices are skyrocketing, U.S. government and trade deficits are ballooning, inflation and unemployment is rising, housing prices are falling, consumers are spending less, residential and corporate credit defaults are rising. And Brown is saying that the mortgage credit markets are poised for a turnaround? Defaults have washed through the system?

I don't know, but if I were a Second Curve investor, I'd vote with my feet.

Brown did not return requests for comment.

Question: How big is the hedge fund industry, by assets under management?

1. $1.87 trillion
2. $2.65 trillion
3. $2.9 trillion
4. unknown

If you chose 4., you would be right, because no one really knows how much money is in hedge funds. That's because hedge funds are private and clustered around the globe and mostly aren't required to report much of anything, except funds with various kinds of public listings in the US, the UK and elsewhere. And even then, the information is sketchy. The above - rather wide - estimates are from various industry data compilers (see below).

Determining the exact size of the industry is like counting smokers: people start smoking and stop daily, sometimes by dying. Similarly, new funds are always forming and liquidating, and investors regularly allocate and redeem interests without public disclosure. And assets rise and fall daily in individual hedge funds on performance gains or losses.

Furthermore, there is a definitional aspect here: some funds that call themselves hedge funds really aren't, because they don't sell short, use leverage or buy derivatives, but are basically long-only funds with lucrative hedge fund fee structures aimed at wealthy investors.

But the question is hardly academic. It is of interest to tax authorities, policy makers, consultants, journalists and others, and now at least one government agency is making a big stab at it.

The Cayman Islands Monetary Authority (CIMA) in a few years ago began requiring electronic reporting of various data points for hedge funds which are domiciled there, virtually all of which are offshore branches of hedge funds based in North America, London, Asia and elsewhere.

Hedge funds establish offshore branches mainly to attract international money, which gives non-domestic (and even domestic) investors tax advantages. Cayman Islands has the lead in this, with over 9,000 funds listed, although the British Virgin Islands, Bermuda and other jurisdictions are pushing to get hedge funds to list in their countries.

Just last week, CIMA disclosed the first aggregated data reported by the limited pool of 5,052 hedge funds and came to a few interesting conclusions:

1. Gross assets under management (AUM) from these 5,052 funds was $2.3 trillion as of Jan., 2007.
2. New York has the biggest portion of AUM: $388 billion or 28 percent, with the UK second at $250 billion or 18 percent.
3. The funds were leveraged, on average, at 0.67 percent.
4. Return on gross assets was 6 percent.
5. Return on net assets was 10 percent.

Now, besides AUM, there is also a range of opinions on how many hedge funds there are, with most industry estimates weighing in at around the 8,000 to 12,000 range. So, given that 5,000 of them reported AUM of $2.3 trillion to CIMA, it stands to reason that the total AUM figure for the industry is likely higher, making at least two of the above estimates probably wrong. And the CIMA conclusions related to only a portion of the 9,413 funds listed there, with more aggregate data expected over the next year.

But then, the CIMA figures are more than a year old. And who knows how many hedge funds have liquidated with the market turmoil of 2007-8? Similarly, who knows how many have formed since then, since a lot of hedge funds are growing new distressed investing strategies to take advantage of that?

Conclusion: next time you read that the hedge fund industry is $X or $Y trilllion, make sure you read that as "estimated." Such numbers may make headlines, including on Thomson Reuters, but they have caveats.

Figures above are from:

1. $1.87 trillion: Hedge Fund Research
2. $2.65 trillion: Hedge Fund Intelligence
3. $2.9 trillion: Hedge Fund Manager Week

When David Einhorn speaks, people listen. Sometimes even before he speaks, as in the case of Lehman Brothers this week.

The boy-wunderkind founder of Greenlight Capital, whose harsh opinions of Allied Capital and other short investments have thrust him into a small pantheon of hedge fund traders whose utterances move stocks, spoke Wednesday afternoon to a well-heeled crowd of 1,000 or so investors.

But even before he spoke, Lehman stock sunk 5 percent on rumors that he would eviscerate the bank.

Now, Einhorn had previously disclosed that he was short Lehman, so it was plausible that he would discuss it that day, which he did. And Lehman's alleged issues aren't exactly news. Furthermore, there were several pessimistic analyst reports out that day.

But Einhorn's speech raises the question of whether a new trade has emerged on Wall Street called "Beat the Short."

In this case the game was complicated by a embargo on release of information from Einhorn's speech for almost a day. The embargo, introduced by the conference organizers, meant that those attending the event got the benefit of Einhorn's wisdom well before Reuters and other news organizations could report it to the wider market.

We'll see what happens before uber-shortseller Jim Chanos speaks at the Securities Industry and Financial Markets Association meeting on June 16 in New York. His recent targets have included some cable companies, student lenders and infrastructure companies.

Democratic presidential contender Barack Obama continues to be a fundraising juggernaut, having raised nearly $31 million in April alone. But it's safe to say none of that campaign money came from billionaire financier Carl Icahn.

"I personally think he'd be a terrible president," groused the 72-year-old corporate agitator to a well-heeled crowd of hedge fund managers and investors in New York yesterday.

Not known for restraint in expressing his opinions, Icahn warned listeners that a Democratic-controlled Congress and White House could wreak havoc in the economy, with "instant inflation, higher taxes and much higher interest rates."

"I think what would be devastating is that you get a Democrat as president coupled with over 60 senators that are Democratic," said Icahn, who has previously thrown his support behind Republican John McCain, who is 71. "They will legislate a huge spending spree."

A huge spending spree? Budget deficits? Didn't the U.S. have a budget surplus at the end of the the tax-and-spend Democratic Clinton years? And now we have record deficits after seven years of a Republican Bush presidency? And everyone is worried about inflation.

Of course, that's all academic. The view from some on Wall Street: Republicans are fiscal conservatives and Democrats are tax-and-spenders.

Forgive Wes Edens, CEO of Fortress Investment Group, for being a bit tetchy these days.

His publicly traded investment group posted a first quarter net loss of $69 million, compared to gains of $62.1 million a year earlier, as the markets pummeled its public stock holdings, among other factors. And its share price has fallen by half since it listed just over a year ago on the New York Stock Exchange.

So when an analyst pointed out on last week's first-quarter earnings call that FIG's public portfolio holdings fell from $7.8 billion just over a year ago to $765 million now - a $7 billion decline - Edens struggled to avoid using the dreaded "L" word, for loss. Most of the decline, he said, was "a reduction of market value," or maybe an "unrealized" loss, since it continues to hold most of the assets, having sold only around $1.5 billion of them.

"I think that the use of the word loss in this case is pejorative and actually not at all accurate," sniffed Edens to Rashad Fonti, analyst from Citigroup, whose bank - like most others - has used the word "loss" all too often in recent months in describing its performance.

Edens, a hedge fund guy who has evidently not gotten used to running a public company and being subjected to pesky analyst questions (or worse, media questions), took umbrage when Fonti basically said the company had failed its investors by not selling the stock holdings before the market turned last year. (Underlying message: how smart are you overcompensated hedge fund guys anyway?)

"You were almost $8 billion, (and now) you're down to less than a billion dollars," said Fonti, according to a transcript of the call. "You didn't take the gains. The money was lost."

That was all a bit much for Edens, who basically said the market is wrong in its valuations. "It's actually not a loss as long as we still own the investment, right? And since we have investments in companies that we think have a tremendous amount of value, it's a mark-to-market issue."

Right. Those markets have a way of getting it all wrong. And hey, while we're at it, who needs this quarterly numbers stuff anyway? We're a long-term business. Get it?? LONG-TERM. And you analysts should be happy we give you any insight at all. Now go back and rework your models...

"We don't really measure our company on a quarterly basis," Edens told the analysts, as part of a discussion over whether it may change its dividend to adjust for ups and downs in performance. "We have quarterly conference calls like this to give you insight into how the company is doing, but we really look at the company in the aggregate in the long term."

"Having some sort of knee jerk reaction to a quarter is not the right thing to do."

Well, that settles that.

Hedge fund managers can make astronomical salaries far beyond the hopes and dreams of the average American. But as they say, you can't take all those piles of money with you when you die.

Still, in case anyone had doubts, one hedge fund apparently felt compelled to clarify exactly what employees can expect if they happen to die, an event that might affect their ability to show up for work and contribute to the essential work of making partners stratospherically wealthy.

In their latest 10-Q regulatory filing hot off the presses today, hedge fund giant GLG Partners disclosed that it included the following stipulation in an employment contract for its CFO Jeffrey Rojek:

"The Employee's employment with GLG will automatically terminate upon his death."

Well that settles that. Don't die or you'll get fired. At least they warned him.

Greg Fleming, co-head of investment banking for Merrill Lynch, told the Reuters Investment Banking Summit that he forsees a larger role for cash-rich hedge funds in mergers and acquisitions, particularly in buyouts led by private equity funds. Fleming said hedge funds are "hugely important" in helping to finance such deals, since they increasingly making a market for deal bonds and bank debt.