Category Archives: Hedge funds

Gaius Publius: The Rorschach Candidacy of Hillary Clinton

What you can learn from applying the Hillary Clinton Rorschach test to friends and family!

Greece’s Drachma Drama: Why Planning Is Too Important to be Left to Economists

In conference call with hedgies, Yanis Varoufakis claims to have had approval to plan a parallel banking system using the drachma: Plan B.

Wolf Richter: Panicked Hedge Funds Now Praying for a Miracle in Greece

Hedge funds, the ultimate “smart money”, are twisting in the wind.

Time to “Fire” Mary Jo White: SEC Covers Up for Bank Capital Accounting Scam Promoted by Her Former Firm, Debevoise

Pam Martens and Russ Martens published a mind-boggling expose yesterday on how the SEC is refusing to stop an abuse by major banks that increases systemic risk.

Nomi Prins: The Volatility/Quantitative Easing Dance of Doom

The battle between the ‘haves’ and ‘have-nots’ of global financial policy is escalating to the point where the ‘haves’ might start to sweat – a tiny little. This phase of heightened volatility in the markets is a harbinger of the inevitable meltdown that will follow the grand plastering-over of a systemically fraudulent global financial system.

The “Vultures” are Still Circling Argentina

Argentina’s infamous “vulture funds”, as the holdout creditors represented by Paul Singer’s NML Capital are affectionately known, are back at their usual antics of trying to claw back from the Argentine government what they (and the US court system) see as rightfully theirs.

Christie Allies Offer Dubious Defenses for Payments Made to His Wife’s Firm

Increasingly defensive responses from the Christie administration and friendly media outlets show that David Sirota’s relentless reporting on pension fund improprieties is starting to draw blood.

The New York Times ran a story last week that recapped (and cited) the Sirota’s reporting on a new Garden State impropriety: that of Christie’s wife, Mary Pat, being hired by hedge fund Angelo Gordon after the firm had been told by the state to liquidate a $150 million custom fund. That should be uncontroversial except Angelo Gordon has failed to sell a portion of the fund after three years, meaning it is still generating fees from New Jersey even as Christie’s wife works there. This relationship looks to run afoul of New Jersey’s strict pay-to-play rules, which state officials from “being involved” in “any official manner” in which they have direct or indirect personal or financial interest.

The Newark Star Ledger also wrote up the story, with the addendum that Tom Bruno, chairman of the state’s largest pension fund, called for an ethics investigation.

The day after the Times story appeared in print, the Newark Star Ledger in an editorial tried to depict the accounts as off base. The timing of the response, coming so quickly on the heels of the Times’ account, strongly suggests that it was planted. An all-too-consistent feature of the rebuttals to Sirota’s charges is that they play fast and loose with facts. The bone of contention is that the state is still paying fees to Angelo Gordon, when by all normal standards payments should have ceased years ago.

Ilargi: Drilling Our Way Into Oblivion

Lambert here: So the fracking companies have purchased “risk insurance.” I wonder what happens when they all file their claims at the same time. What could go wrong? By Raúl Ilargi Meijer, editor-in-chief of The Automatic Earth. Originally published at Automatic Earth. Oh, that sweet black gold won’t leave us alone, will it? West Texas […]

Hedge Fund Investors Starting to Push Back Against Big Fees for No Performance

Bloomberg reported on Wednesday that hedge fund investors are finally getting serious about reining in hefty fees when investment performance is underwhelming, particularly since that has been the case for the industry as a whole in recent years. But regular readers of this blog can tell how serious this initiative really is from the very first paragraph of the article:

Hedge Funds Closing At High Rates

CalPERS’ decision earlier this year to exit all hedge fund investments turns out to have been a particularly visible manifestation of a trend underway: that of investor dissatisfaction with hedge funds. CalPERS politely attributed its withdrawal to excessive fees, too much complexity, and the difficulty of finding funds where it could put a meaningful amount of money to work. The latter point gets at the real problem: hedge funds have underperformed and investors are less and less willing to pay big fees for lousy results.

A Bloomberg story revealed that a marked uptick in the number of hedge funds closures this year.

SEC Commissioners Kara Stein, Luis Aguilar Hit Bank of America Where it Hurts, in a Revenue Stream

SEC Commissioners Kara Stein and Luis Aguilar have found a weapon that looks to have financial firms more worried than being whacked with one-time fines. They are threatening to hit Bank of America in an ongoing revenue stream.

By way of background, Kara Stein, who joined the SEC in last August, has gone to war with SEC chairman Mary Jo White over lax enforcement and other types of overly-financial-firm-friendly conduct. It’s virtually unheard of for a commissioner to cross swords with a chairman from the same party.

Stein and her fellow Democratic party commissioner Luis Aguilar have joined forces to stymie a Bank of America settlement they saw as too generous by virtue of waving certain sanctions that would otherwise automatically kick in.

SEC Commissioner Kara Stein Fighting for Tougher Bank Sanctions, Stymies Bank of America Settlement

One of the things that continue to be a source of anger in the American public is the way that banks were rescued en masse without the perps, the managers and producers in the businesses that produced toxic product facing much if anything in the way of consequences. Another is that the banks pay fines that are inadequate relative to the amount of damage that they did.

SEC commissioner Kara Stein has been using her post as a surprisingly effective bully pulpit to pressure the agency and other regulators into upping their game. It’s unusual for an SEC commissioner to play that role; the post is typically a runway for becoming either a lobbyist or a director on financial services company boards. Even more rare is that Stein is regularly crossing swords with SEC chairman Mary Jo White, who is taking a much more industry-friendly line than she promised at the time of her confirmation. It’s virtually never done to have a commissioner from the same party buck the chairman.

NJ Pension Fund Scandal: Chris Christie’s Nose is Getting So Long He Needs to Get a Hacksaw

If you see politics as a form of bloodsport, there’s nothing more fun that seeing a politician start attacking a reporter. That almost without exception means the charges have hit a weak spot, that the incumbent has little to no valid defense and instead starts lashing out.

In this case, it’s particularly amusing to see New Jersey governor Chris Christie as the would-be pugilist. We are seeing that while Garden State pols may be great on the offensive in bare-knucle fights, they have a glass jaw when put on the defensive.

Here, the combatants are International Business Times reporter, David Sirota, against various officials with close ties to Christie who administer state pension funds. Sirota has been making a mini-speciality of state pay-to-play scandals.

Investment Bombshell: CalPERS Exiting Hedge Funds

CalPERS, the largest public pension fund in the US, is widely seen as an industry leader and its practices are emulated by other public pension funds. CalPERS has just announced that it is withdrawing from hedge fund investing entirely.

Ironically, the very first post on this website, on December 19, 2006, Fools and Their Money (Hedge Fund Edition), chided CalPERS for its continued loyalty to hedge funds.