Investors not pestering hedge funds to cut fees MatlinPatterson launches $500 mln hedge fund US hedge funds face new guidelines The Bankruptcy Development That Has Wall St. Worried Hedge Funds Pay More Trading Commissions in Asia, Study Shows Nymex Plans Stock Offering
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Tokyo set to announce tie-up with LSE JPMorgan’s Wallace Quits, Leaves Investment Banking Credit Suisse’s Lydon leaves for U.S. hedge fund Dorman in talks to join Deutsche Bank unit HSBC U.S. Head Mehta Resigns After Loan Losses Jump Microsoft Hit With $1.52 Billion Verdict in MP3 Suit Private equity groups show interest in Chrysler Coles Puts Itself Up for Sale; KKR, Cerberus May Bid
Investors not pestering hedge funds to cut fees – Reuters
Investors may dislike paying hedge funds’ notoriously high management and performance fees, but they are not not badgering firms to cut their prices, a top executive at one of the world’s most prominent funds said on Thursday.
"This is not a fee-sensitive business," Byron Wien, chief investment strategist at Pequot Capital Management, said at a conference. "People are not putting pressure on you to reduce your fees," said the well-known strategist who spent most of his career with Morgan Stanley (MS.N: Quote, Profile, Research).
Hedge funds, unlike mutual funds, charge a performance fee on top of their management fee, something that drives the prices up quickly and often leaves managers with huge paychecks….
MatlinPatterson launches $500 mln hedge fund - Reuters
MatlinPatterson LLC, a private equity fund that specializes in taking controlling positions in distressed companies, has launched a $500 million hedge fund in the latest example of industry diversification, a source familiar with the matter said on Thursday.
The new Distressed Opportunities Fund is the first hedge fund founded by investors David Matlin and Mark Patterson, former distressed debt specialists at Credit Suisse Group , whose fund family now approaches $4 billion in assets under management.
The fund comes as more private equity firms are branching out into hedge funds and vice versa, aiming to become diversified "alternative asset" managers to better appeal to institutional investors….
US hedge funds face new guidelines – Financial Times
Top US regulators on Thursday unveiled the first new guidelines for hedge fund oversight in eight years, urging investors and creditors to tighten up on due diligence in the rapidly-growing industry.
The move, immediately welcomed by the hedge fund and securities industry, appeared designed to be a high-level effort to head off any further calls for government action to tighten control of hedge funds.
One senior Treasury official said: “We’ve chosen a path here. We think there are direct examples of regulation in place – anti-fraud, market procedure and accredited investor thresholds for hedge funds. So there are rules in place….
The Bankruptcy Development That Has Wall St. Worried – New York Times
LAST week, Burton R. Lifland, a judge in the Federal Bankruptcy Court in Manhattan, ordered Bear Stearns to pay almost $160 million to investors in a hedge fund for doing business with that fund but failing to detect that it was a fraud.
The case has been received with true fear on Wall Street, where servicing hedge funds is a business so lucrative that it makes the go-go years of bringing technology companies public look quaint. For one, hedge funds do billions of dollars of business in multiple parts of the bank, while many technology companies promptly evaporated after going public.
“Every prime broker has taken note,” said the head of prime brokerage at a top Wall Street firm. “It raises the bar in what we need to know about a client and escalation when there is cause for concern.”….
Hedge Funds Pay More Trading Commissions in Asia, Study Shows – Bloomberg
Hedge funds paid more brokerage commissions in Asia last year as the region’s rising stock prices boosted trading, according to a study by Greenwich Associates.
Hedge funds accounted for 22 percent of commissions paid for trading equities in Asia excluding Japan, up from less than 5 percent in 2004, the study found. Total commissions rose to $1.2 billion last year from $766 million in 2004.
Hedge funds are switching attention to Asia, generating more profits for investment banks such as Goldman Sachs Group Inc. and Morgan Stanley as the region’s stock markets rally. Hong Kong’s benchmark Hang Seng Index surged 39 percent last year, while the Straits Times Index in Singapore jumped 32 percent….
Nymex Plans Stock Offering – Wall Street Journal
Energy exchange Nymex Holdings Inc. is planning a stock offering that could be valued in excess of $1 billion as its owners attempt to take advantage of the healthy rise in the company’s stock price since its 2006 initial public offering, according to people familiar with the matter.
The offering by the owner of the New York Mercantile Exchange, which could be announced as early as Friday and take place as early as next month, is possible because exchange management has agreed to allow members of the exchange to sell sooner than previously agreed to. Before the exchange went public in November members were the sole owners of the market and had trading privileges that they could use to buy the company’s energy contracts tied to commodities like natural gas, crude oil and gasoline.
Nymex members initially were to have been allowed to sell part of their stakes later this spring, but the company’s board decided today to allow a sale to take place sooner. Part of the decision is driven by valuation: Nymex shares soared on its opening day, closing at $132.99, up more than 100% from its initial price of $59 a share….
Tokyo set to announce tie-up with LSE – Financial Times
The Tokyo Stock Exchange is set to announce a business alliance with the London Stock Exchange on Friday, just weeks after Asia’s largest bourse unveiled a similar tie-up with the New York Stock Exchange
The tie-up, confirmed on Thursday by the TSE, represents another step in the Tokyo exchange’s plan to turn itself from the dominant figure in its own national market into a truly international bourse. The TSE declined to give details on Thursday.
The LSE, which earlier this month fought off a hostile bid from US rival Nasdaq, also declined to comment on the suggestion of a tie-up with its Asian rival….
JPMorgan’s Wallace Quits, Leaves Investment Banking - Bloomberg
Sean Wallace, JPMorgan Chase & Co.’s head of Asian capital markets, quit the New York-based investment bank after nine years with the company.
Wallace, 44, will leave the investment banking industry in his new job which will be announced next week, he said in a telephone interview. He resigned from JPMorgan two weeks ago.
“They do have a great team and have a very deep bench and tremendous amount of momentum in their business,” Wallace said. “It was a difficult decision. We hope that I will be a client for them in the future and they will be a bank for me.”…
Credit Suisse’s Lydon leaves for U.S. hedge fund – Reuters
Kevin Lydon, co-head of special situations and head of distressed trading at Credit Suisse, resigned from the company earlier this week, a spokeswoman said.
Lydon is moving to Strategic Value Partners, a he
dge fund based in Greenwich, Connecticut, a person familiar with the situation said.Michael Guy, co-head of special situations, will continue to run the team at Credit Suisse, while Dermot Murphy will become head of distressed trading, the spokeswoman said.
Strategic Value Partners manages about $4 billion and employs about 100 staff, according to a recent release by PRNewswire….
Dorman in talks to join Deutsche Bank unit – Financial TImes
Jeffrey Dorman has quit the prime brokerage unit at Bear Stearns and is in late-stage discussions to join the equivalent division at Deutsche Bank, people familiar with the matter said.
It would be a major appointment for Deutsche Bank which, like other investment banks, is scrambling to attract business from hedge fund clients, especially those eager to expand trading across global markets and new asset classes. Deutsche views its offerings in those areas as a competitive strength.
Hedge funds paid $50bn in fees to investment banks last year for securities lending, trading, financing, technology and other services, according to research by Dresdner Kleinwort. The fees accounted for up to a quarter of investment banking’s pre-tax profit…..
HSBC U.S. Head Mehta Resigns After Loan Losses Jump – Bloomberg
HSBC Holdings Plc, Europe’s biggest bank by market value, said Bobby Mehta stepped down as head of the North American unit after the lender raised its forecast for bad loans in the U.S.
Mehta, 48, also resigned as chief executive officer of HSBC Finance Corp., formerly Household International, the bank said in a statement today. London-based HSBC bought Household, which lends to clients with below-average credit, for $15.5 billion in 2003.
HSBC CEO Michael Geoghegan said Feb. 8 he would shake up management after the bank increased the amount set aside for U.S. bad loans to about $10.6 billion, 20 percent more than analysts estimated. Shares of banks including New Century Financial Corp. have tumbled this year on fears that higher interest rates and falling home prices will trigger indebted customers to default….
Microsoft Hit With $1.52 Billion Verdict in MP3 Suit – Wall Street Journal
A federal jury ordered Microsoft Corp. to pay $1.52 billion to Alcatel-Lucent SA for infringing patents on a fundamental technology for digital music.
The decision found that Microsoft’s Windows Media software had infringed two patents related to MP3, a software technology for recording and playing digital audio.
The patent verdict, one of the largest on record, could have broad repercussions because of the widespread use of the MP3 audio format in technology and electronics products. Devices that employ the technology include Apple Inc.’s iPod, software from Macromedia and Internet services from Yahoo Inc….
Private equity groups show interest in Chrysler – Financial Times
At least four private equity groups have been in preliminary talks with DaimlerChrysler about buying Chrysler, and could emerge as bidders in the auction for the German carmaker’s US subsidiary.
According to people familiar with the matter, Apollo Management, Blackstone, Carlyle, and Cerberus Capital Management – as well as several European firms – were contacted about their potential interest in acquiring Chrysler before last week’s announcement by DaimlerChrysler that "all options are on the table" for the unit. Those discussions continued after the announcement, these people said….
Coles Puts Itself Up for Sale; KKR, Cerberus May Bid – Bloomberg
Coles Group Ltd. put itself up for sale four months after rejecting a A$18.2 billion ($14.4 billion) offer by a Kohlberg, Kravis Roberts & Co.-led group, setting up a potential bidding war for Australia’s second-largest retailer.
The KKR-led buyout group has had discussions with Coles’ advisers since November, and a second group comprising Cerberus Capital Management Ltd., Permira Holdings Ltd. and CCMP Capital Asia has also expressed interest in bidding, three people with knowledge of the matter said today. The retailer is reviewing a “number” of approaches, Coles said in a statement today.
Coles cut its profit forecast for 2008 by 10 percent as a strategy of rebranding stores and cutting jobs failed to narrow the gap with Woolworths Ltd. in sales and profit margins. The plan had formed the centerpiece of Chief Executive Officer John Fletcher’s defense against last year’s offer led by KKR, which indicated this month it may bid for Britain’s J Sainsbury Plc…..
