Exclusive: Angelides to lead distressed mortgage firm
New York (Reuters) – Phil Angelides, formerly the chairman of a federal commission who led investigations into why the financial markets collapsed, is heading an investment group that hopes to “do a good thing” for America while turning a profit from the wreckage of the housing market.
The startup company, of which Angelides is executive chairman, seeks to raise money from investors to purchase troubled mortgages from banks and other financial institutions in order to help keep homeowners from being foreclosed upon, according to a January 4 letter reviewed by Reuters.
The company, Mortgage Resolution Partners, claims its strategy of using “legal and political leverage” to acquire the loans could generate a 20 percent annual return for investors. The company intends to purchase mortgages at a steep discount and re-work them to enable the homeowners to continue making payments, with the firm collecting the proceeds.
“We just might do a good thing for America, and along the way get a great return on investment,” says the letter to prospective investors. “If our hopes do not pan out, the amount wagered should be a deductible loss.”
In the letter, the mortgage company refers to its political connections as its “secret formula.”
Angelides, a former California state treasurer, Democratic politician and land developer, was head of the Financial Crisis Inquiry Commission until last February.
Planning for the Mortgage Resolution Partners began last summer, less than five months after the Commission wrapped up its work in Washington, D.C. In January 2011, the Commission issued a 662-page report that highlighted Wall Street’s role in the collapse of the U.S. housing market. ( here )
Financial crisis chair Angelides to lead distressed mortgage firm
New York, Jan 13 (Reuters) – Phil Angelides, formerly the chairman of a federal commission who led investigations into why the financial markets collapsed, is heading an investment group that hopes to “do a good thing” for America while turning a profit from the wreckage of the housing market.
The startup company, of which Angelides is executive chairman, seeks to raise money from investors to purchase troubled mortgages from banks and other financial institutions in order to help keep homeowners from being foreclosed upon, according to a Jan. 4 letter reviewed by Reuters.
The company, Mortgage Resolution Partners, claims its strategy of using “legal and political leverage” to acquire the loans could generate a 20 percent annual return for investors. The company intends to purchase mortgages at a steep discount and re-work them to enable the homeowners to continue making payments, with the firm collecting the proceeds.
“We just might do a good thing for America, and along the way get a great return on investment,” says the letter to prospective investors. “If our hopes do not pan out, the amount wagered should be a deductible loss.”
In the letter, the mortgage company refers to its political connections as its “secret formula.”
Angelides, a former California state treasurer, Democratic politician and land developer, was head of the Financial Crisis Inquiry Commission until last February.
Planning for the Mortgage Resolution Partners began last summer, less than five months after the Commission wrapped up its work in Washington, D.C. In January 2011, the Commission issued a 662-page report that highlighted Wall Street’s role in the collapse of the U.S. housing market. ( here )
MF Global’s aborted fruit salad solution to capital woes
(Reuters) – A few months before MF Global collapsed in bankruptcy, some top executives at the futures firm were talking about a plan code-named “Project Honeydew” as a way of freeing-up badly needed capital and cash.
Reuters has learned that in early September, MF Global reached out to Bank of New York Mellon Corp to inquire whether the big custodial bank would be interested in entering into a joint venture for processing and clearing certain customer transactions, according to four people familiar with the situation.
The idea was to effectively merge MF Global’s clearing operation with Bank of New York’s and to enable the futures firm to maintain less regulatory capital on its balance sheet, these people say.
The negotiations were preliminary and did not advance far largely because Bank of New York did not seem particularly interested in the idea advanced by MF Global, sources say. By the time MF Global filed for bankruptcy on October 31, any talks with Bank of New York had long ended.
Kevin Heine, a Bank of New York spokesman, said, “We don’t comment on market rumor or speculation.”
A person close the company says the potential joint venture with Bank of New York was just one of several arrangements that companies were considering, and discussions about broadening their business relationship had been going on for many months.
The new guy sitting at Steve Cohen’s side
By Matthew Goldstein
SAC Capital industrials trader Charles Simonian is getting a new job–one that’s very close to Steve Cohen.
The SAC Capital founder is moving Simonian onto his own small team of traders and analysts at the $14 billion firm, say sources. Simonian will work with Chandler Blockage in overseeing trading in industrial sector stocks for the so-called Cohen Account–a portfolio that manages between $2 billion and $3 billion in gross exposure to the market. (Gross exposure includes the value of long and short positions).
The move comes as SAC Capital ended 2011 posting an 8 percent gain.
As previously reported on Reuters’ Unstructured Finance, the top performer at Cohen’s fund was consumer products portfolio manager Gabriel Plotkin. His team of half-dozen traders and analysts manages about $1.2 billion of the firm’s money and has generated between $150 million and $200 million in trading profits.
People familiar with SAC Capital say the other 90 some odd portfolio teams, including the Cohen account, produced smaller trading profits in 2011.
In bringing Simonian onto his team–sometimes referred to as simply “COHE” within the firm, it appears Cohen is trying to add some trading muscle to his squad.
The taxman cometh for MF Global
By Matthew Goldstein
You can add the U.S. Internal Revenue Service to the long list of creditors and customers looking to get their money back from MF Global, the failed futures brokerage firm.
The IRS slapped a lien on what’s left of MF Global, seeking to recoup some $395,000 in unpaid taxes stemming from 2006 and 2007. The tax lien was filed with New York State’s division of corporations on Nov. 16, about three weeks after MF Global filed for bankruptcy.
The unpaid tax bill predates the period during which former New Jersey Governor Jon Corzine took over the helm of MF Global.
It was Corzine’s decision to make a big wager on European sovereign debt that ultimately sank the firm amid a series of margin calls from banks and lenders.
Earlier this year, we reported that in a last ditch bid to raise cash to meet those margin calls and return money to customers, MF Global sold hundred of millions of securities to Goldman Sachs on Oct. 27. But the proceeds from that transaction never made it into MF Global’s coffers and instead was claimed by its primary clearing firm, JPMorgan Chase.
Federal authorities believe that in a bid to save the firm from collapse, MF Global may have dipped into some of the $6 billion in customer money it kept in segregated accounts at Harris Bank in Chicago and other institutions.
PIMCO flagship had Dec outflows of $1.4 bln
By Matthew Goldstein and Jennifer Ablan
(Reuters) – The PIMCO Total Return Fund, the world’s largest bond fund, had $1.4 billion (897 million pounds) in outflows in December, according to fund analytics firm Morningstar.
The fund PTTRX.O, operated by Bill Gross, co-chief investment officer of Pacific Investment Management Co, suffered total redemptions of $5 billion in 2011, a year in which the fund underperformed benchmarks after betting heavily against U.S. Treasuries, which rallied on the year.
The fund, which has about $244 billion in assets under management, has had investor redemptions on and off for more than a year. Morningstar estimates total redemptions have exceeded $13 billion since November 2010.
Still, December was kinder to Gross than the previous year. In December 2010, Morningstar estimates investors withdrew $6.7 billion from the fund, PIMCO’s flagship.
A spokesman for PIMCO, which is based in Newport Beach, California, and oversees more than $1.35 trillion in assets, was not immediately available to comment
Last year was a humbling one for Gross. His bad call on Treasuries led him to issue an unusual “mea culpa” letter to his investors.
PIMCO flagship had December outflows of $1.4 bln – Morningstar
By Matthew Goldstein and Jennifer Ablan
(Reuters) – The PIMCO Total Return Fund, the world’s largest bond fund, had $1.4 billion in outflows in December, according to fund analytics firm Morningstar.
The fund, operated by Bill Gross, co-chief investment officer of Pacific Investment Management Co, suffered total redemptions of $5 billion in 2011, a year in which the fund underperformed benchmarks after betting heavily against U.S. Treasuries, which rallied on the year.
The fund, which has about $244 billion in assets under management, has had investor redemptions on and off for more than a year. Morningstar estimates total redemptions have exceeded $13 billion since November 2010.
Still, December was kinder to Gross than the previous year. In December 2010, Morningstar estimates investors withdrew $6.7 billion from the fund, PIMCO’s flagship.
A spokesman for PIMCO, which is based in Newport Beach, California, and oversees more than $1.35 trillion in assets, was not immediately available to comment
Last year was a humbling one for Gross. His bad call on Treasuries led him to issue an unusual “mea culpa” letter to his investors.
MF Global sold assets to Goldman before collapse: sources
By Lauren Tara LaCapra and Matthew Goldstein
(Reuters) – MF Global unloaded hundreds of millions of dollars’ worth of securities to Goldman Sachs in the days leading up to its collapse, according to two former MF Global employees with direct knowledge of the transactions. But it did not immediately receive payment from its clearing firm and lender, JPMorgan Chase & Co (JPM.N: Quote, Profile, Research, Stock Buzz), one of the sources said.
The sale of securities to Goldman occurred on October 27, just days before MF Global Holdings Ltd (MFGLQ.PK: Quote, Profile, Research, Stock Buzz) filed for bankruptcy on October 31, the ex-employees said. One of the employees said the transaction was cleared with JPMorgan Chase.
At the same time MF Global, which was run by former Goldman Sachs head Jon Corzine, was selling securities to Goldman to raise badly needed cash, the futures firm was also drawing down a $1.2 billion revolving line of credit it had with JPMorgan, according to one of the former MF Global employees.
JPMorgan spokeswoman Mary Sedarat said the bank did not withold money because of the line of credit. She declined further comment on details of the transactions.
JPMorgan has fought aggressively in bankruptcy court to protect its interests, and received a lien on some of MF Global’s assets in exchange for granting the firm $8 million to fund its bankruptcy costs. The lien puts JPMorgan’s interests ahead of MF Global customers who have not yet received an estimated $900 million worth of money from their accounts, which remain frozen as regulators search for missing funds.
The hastily crafted transactions and the seeming inability of MF Global to recoup some of the money in the sale to Goldman may start to explain why so much money remains unaccounted for at the futures firm.
Gross’s bond fund bleeds $1.4 billion in December: Morningstar
By Matthew Goldstein and Jennifer Ablan
(Reuters) – The PIMCO Total Return Fund, the world’s largest bond fund, had $1.4 billion in outflows in December, according to fund analytics firm Morningstar.
The fund, operated by Bill Gross, co-chief investment officer of Pacific Investment Management Co, suffered total redemptions of $5 billion in 2011, a year in which the fund underperformed benchmarks after betting heavily against U.S. Treasuries, which rallied on the year.
The fund, which has about $244 billion in assets under management, has had investor redemptions on and off for more than a year. Morningstar estimates total redemptions have exceeded $13 billion since November 2010.
Still, December was kinder to Gross than the previous year. In December 2010, Morningstar estimates investors withdrew $6.7 billion from the fund, PIMCO’s flagship.
A spokesman for PIMCO, which is based in Newport Beach, California, and oversees more than $1.35 trillion in assets, was not immediately available to comment
Last year was a humbling one for Gross. His bad call on Treasuries led him to issue an unusual “mea culpa” letter to his investors.
The guy who is killing it at SAC Capital
By Matthew Goldstein
Move over Steve Cohen. The trader who is killing it at Cohen’s $14 billion SAC Capital Advisors this year is Gabriel Plotkin.
The portfolio manager, who specializes in consumer products and the gaming and lodging industry, is one of the top producers this year at Cohen’s hedge fund, say several people familiar with the Stamford, Conn. hedge fund. Plotkin, who joined SAC Capital in late 2006 from North Sound Capital, is emerging as on Cohen’s most reliable money men.
At SAC Capital, where most portfolio managers run books that range from as little as $250 million to $500 million, Plotkin manages one of the largest. His team of half-dozen traders and analysts manages about $1.2 billion of the firm’s money, say sources.
And this year, Plotkin has delivered, producing a return of about $150 million from his trades.
In October, Plotkin was a featured panelist at a Wharton Investment Management Conference along with Adam Cohen of Caspian Capital, BlackRock’s Rick Rieder and Michael Karsch of Karsch Capital. Plotkin works with SAC Capital’s Sigma Capital division.
Overall, it’s been a generally strong year for SAC Capital. As of the end of November, the firm is telling investors its flagship fund is up about 8 percent after fees. By comparison, the average hedge fund is down 4 percent for the year.
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