Archive for March, 2009

  • Top Hedge Fund Earnings Last Year
    , March 25th, 2009 at 8:18 am

    Alpha Magazine looks at what the top hedgies pulled down last year:
    1. James Simons (Renaissance Technologies Corp.) $2.5 billion
    2. John Paulson (Paulson & Co.) $2 billion
    3. John Arnold (Centaurus Energy) $1.5 billion
    4. George Soros (Soros Fund Management) $1.1 billion
    5. Raymond Dalio (Bridgewater Associates) $780 million

  • Yesterday’s Rally
    , March 24th, 2009 at 10:15 am

    The S&P 500 had its fourth-best day yesterday since the 1930s. The top two days came last October. Number three came after the market crash in 1987. Bloomberg notes that the last two weeks have seen the best 10-day run since 1938.

  • Paging Sherman McCoy
    , March 24th, 2009 at 9:58 am

    From Bloomberg:

    Eat-What-You-Kill Bond Traders Rise From Wall Street Wreckage
    Wall Street bond trading is heading back to the 1980s, when private partnerships and independent firms dominated the market.
    Jon Bass, who traded debt five seats from Salomon Brothers Inc. Chairman John Gutfreund and later helped run fixed income at UBS AG, joined equity broker BTIG LLC to help start its credit operation last month. BTIG, with a pool table and gym adjoining its seventh-floor midtown Manhattan trading room, is one of more than 50 credit dealers seeking to take advantage of the widening gap at which securities are bought and sold.
    Smaller firms are emerging from the wreckage of the world’s largest financial companies, which are conserving capital following more than $1.2 trillion of writedowns and credit losses since the start of 2007. They’re luring traders with a shot at $500,000 commissions for two days’ work as banks that accepted federal bailouts retrench and slash bonuses.
    “I don’t mean to dance on anybody’s graves here, but it’s just this incredible opportunity to reassemble a securities firm that does business the right way,” said Lee Fensterstock, chief executive officer of one of the firms, Broadpoint Securities Group Inc. in New York. “That business is going to lead with brain as opposed to capital. We’re not planning to run big balance sheets or big leveraged positions.”

  • Hey Can I Play?
    , March 23rd, 2009 at 1:56 pm

    Timmy’s plan is a pretty good deal for institutional investors. You basically have the government as your silent partner and your downside is limited. James Kwak at Baseline Scenario thinks the public should be allowed in on the action as well.
    Thanks to BlackRock, individuals may have a way to invest:

    BlackRock will raise money from investors such as pension funds and endowments for the new Treasury programs, Fink said. The company might consider creating mutual funds so that individual investors can also participate.

  • Hedge-Fund Investors Hire Private Investigators
    , March 23rd, 2009 at 12:36 pm

    Bloomberg finds an interesting story; investors in hedge funds are hiring private investigators to look into the funds:

    Background checks can take from two to six weeks, and may cost about $1,000 for each individual or company investigated, according to the firms.
    “Basically you don’t want managers to have distractions that will impact their decision making,” said Michael Dubin, president of New York-based The LongChamp Group Inc., which allocates client money to hedge funds.
    Background searches helped Cole Partners Asset Management LLC stay away from managers that were later found to have had run-ins with regulators, said Rian Akey, chief operating officer of the Chicago-based firm, which channels money into hedge funds.
    Akey said a check done three years ago on a New York-based hedge fund found that in 1999 the managers had paid fines amounting to $500,000 for violating trading rules. “That was enough to put us off,” he said, declining to name the fund.

  • AIG Renames Itself
    , March 23rd, 2009 at 11:41 am

    AIU.
    At least the good parts will be called that. It really doesn’t seem like much of a change.

  • Application to Be in the Treasury’s Bank Plan
    , March 23rd, 2009 at 8:43 am

    Curious about how to be a private investor in Timmy’s bank plan? Well, let’s just say you are.
    Here’s the application. The requirements are:

    Fund Managers will be pre-qualified based upon criteria that are anticipated to include:
    • Demonstrated capacity to raise at least $500 million of private capital.
    • Demonstrated experience investing in Eligible Assets, including through performance
    track records.
    • A minimum of $10 billion (market value) of Eligible Assets currently under management.
    • Demonstrated operational capacity to manage the Funds in a manner consistent with
    Treasury’s stated Investment Objective while also protecting taxpayers.
    • Headquarters in the United States.
    All Applications must be submitted no later than 5:00 p.m. ET on April 10, 2009.

  • The Swedish Model
    , March 23rd, 2009 at 8:06 am

    I’ve reluctantly come to the conclusion that we ought to nationalize our failing banks. Interestingly, my support for this position comes from looking at Sweden’s experience during its banking crisis in 1992.
    The Swedish government wound up spending about 4% of its GDP on their banks. But here’s the secret. The government owned the banks and made a killing. In fact, the nationalization may really have been self-financing.
    I mention Sweden because the country isn’t socialist by reflex. It looks like the government is perfectly willing to let Saab go down the drain.

  • The Timmy Plan
    , March 23rd, 2009 at 7:53 am

    The Treasury Department has announced its bank plan:

    The federal government will use up to $100 billion in funds from the Troubled Asset Relief Program, or TARP, and capital from private investors in order to generate $500 billion in purchasing power to buy legacy assets, Treasury said in documents provided early Monday. The department noted that the program could potentially expand to $1 trillion over time.
    The program has two parts. It will address both the legacy loans and the legacy securities clogging the balance sheets of financial firms.
    Under the legacy loan program, banks will identify the assets they wish to sell. The FDIC will conduct an analysis to determine the amount of funding it is willing to guarantee. Leverage will not exceed a 6-to-1 debt-to-equity ratio. Eligible assets will be determined by banks, regulators, the FDIC and the Treasury Department.

    Here’s the statement from Treasury.
    Paul Krugman has described this as basically a rehash of the Paulson plan: “if asset values go up, the investors profit, but if they go down, the investors can walk away from their debt. So this isn’t really about letting markets work. It’s just an indirect, disguised way to subsidize purchases of bad assets.”
    The only thing I would add is that TARP has been such a failure that it may force banks to play ball since it will get Treasury off their back.

  • The Sweet Sixteen
    , March 22nd, 2009 at 6:38 pm

    The selection committee did a pretty good job this year. The sweet sixteen consists of four #1s, four #2s, four #3s, two #4s, a #5 and a #12. The first weekend was almost not needed.