Unstructured Finance

Hedge funds try to hook up with pension funds

by Svea Herbst-Bayliss and Katya Wachtel

In investing, as in life,  it is critical to find the right partner.

On Tuesday in Boca Raton, big hedge funds including Tudor Investment Corp., Marathon Asset Management and York Capital, as well as smaller rivals like Voltan Capital Management and Titan Capital Group crowded into a large conference room for the hedge fund industry’s version of speed dating.

Seated at tiny round tables, the managers (who are in Florida for the GAIM USA investor conference) eagerly awaited visits from potential investors like state pension funds from Wisconsin and North Carolina, and fund of funds firms like Rock Creek Group.

Every few minutes a bell tolled telling the roughly 50 investors there to move on to the next date. The ratio was about two managers for every investor. Time was of the essence as managers rattled off their skills.

The conferences organizers had advice for participants: “Drink plenty of water, and have something to write with.”

GAIM USA, the first major event on the hedge fund conference calendar, follows one of the industry’s worst annual performances in its history. Despite losses of about 5 percent for the average hedge fund last year, pension funds and other big investors are still looking to put money in.

Hedge fund faithful descend on Boca Raton

By Svea Herbst-Bayliss and Katya Wachtel

Balmy temperatures and sunny skies greeted hedge fund industry managers, investors and lawyers as they gathered in Boca Raton, Florida, for 2012′s first prominent industry conference.

Despite clear skies overhead, the mood was decidedly grimmer at the GAIM 2012 USA meeting, held at the swanky Boca Raton Resort and Club, as the industry faces dramatic regulatory changes after having ended 2011 on a losing note.

As managers drifted between sessions that promised “unique insights” from top traders about where to make money to how regulation will affect the industry, many quietly shared tales of woe about last year’s losses, when the average fund lost 5 percent. Top investors conceded that times would be tough in the months ahead but that hedge funds are still the way to go for pension funds and others that need to boost investment returns with strong performance.

For one Level Global founder, the party is over

By Katya Wachtel

For the two founders of FBI-raided and since-shuttered hedge fund firm Level Global, life could not be more different.

In early January, one co-founder, David Ganek,  sat court-side at Madison Square Garden as the Charlotte Bobcats pummeled the New York Knicks. Ganek appeared relaxed and jovial as he greeted familiar faces in the front row. The Knicks lost, but Ganek could still enjoy the Knicks home-base party.

For Level Global’s other founder, Anthony Chiasson, life is not as sweet.

On Wednesday Chiasson (who launched Level Global with Ganek in 2003) was charged with insider trading as part of the FBI’s sweeping “Operation Perfect Hedge” investigation. Ganek has not been accused of any wrongdoing.

When (and where) the 1% talk about 99%

By Jennifer Ablan and Matthew Goldstein

The last place you’d think a group of Wall Street financiers and ex-politicians would convene to come up with a master plan for fixing the housing crisis is a luxury lodge overlooking the Golden Gate Bridge. But in November, during the height of the Occupy Wall Street protests, that’s where 30 rich and powerful people assembled to “do a good thing” for America.

The meeting at Cavallo Point in Sausalito, Calif., aimed to “hammer out a business plan and chart a course through 2012″ for an investment vehicle that intends to buy up troubled mortgages and help out the homeowners all the while making a 20 percent annual return. You can read the details here

The group is led by Phil Angelides, the California politician, land developer and most recently, the chairman of a federal commission who led investigations into why the financial markets collapsed. The Federal Crisis Inquiry Commission was criticized for failing to come up with any real proposals preventing another crisis. Yet it seems to have inspired Angelides (his tenure at the FCIC ended last February) and others to come up with a market-based solution to the housing debacle.

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 Bocklage 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.

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.

SAC Capital: a look back in time

By Matthew Goldstein

The full year numbers aren’t in, but it appears Steve Cohen’s SAC Capital had a pretty good year–especially compared to most other long/short equity hedge funds which lost money. But how does this year’s 8% gain stack-up against other strong years posted by the Stamford, Conn. hedge fund?

As we reported previously on UF, a good chunk of SAC Capital’s trading prowess in 2011 is being credited by sources to a single team led by Gabe Plotkin. His $1.2 billion book is one of the largest at SAC Capital and has generated between $150 million and $200 million in profits.

Indeed, only Cohen’s own 2 billion book–called the “big book,” the “Cohen account,” or simply “COHE”–is believed to manage more money at the $14 billion fund.

Another black eye for Bruce Berkowitz

By Katya Wachtel

This year has been cruel to many money managers, and one stock-picker giving John Paulson a run for his money as the worst performing manager of 2011, is Fairholme Capital Management’s Bruce Berkowitz.

Berkowitz’s flagship Fairholme Fund has suffered huge losses on AIG, The St. Joe Company, Bank of America and Regions Financial. His bet on Sears can now be added to that laundry list of losers.

Today the struggling retailer announced plans to close up to 120 stores, the share-price tanked, and as one of Sears’ largest shareholders, Berkowitz is likely nursing some ugly wounds.

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.

John Thaler’s JAT thaws some more in December

By Katya Wachtel

John Thaler’s hedge fund, JAT Capital, had a meteoric rise through much of 2011, generating a 38 percent return at its peak in early September.  Since then, Shumway Capital alum has ebbed, though he’s still beating a ton of his competitors.

Through December 16, JAT fell 1.2 percent, according to an investor.

The fund remains up 14 percent year-to-date though, and given the average hedge fund was down about 4.4 percent through November, JAT investors have something to smile about. Though they have less to smile about than they did a few months ago.

Others are grimacing, since many of the industry’s heavy-hitters have taken a beating this year. It’s no secret that stars like John Paulson,  Mark Kingdon and Lee Ainsle are sustaining double-digit losses. Through December 16,  Paulson’s Advantage Plus fund is down 52 percent year-to-date; Kingdon’s Offshore fund is down about 19 percent; and Ainslie’s Maverick Fund is off about 15 percent.

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