Private-Equity Investors Take Profits on Bank Stakes
A handful of private-equity investors who poured money into banks during the financial crisis are cashing out, reaping billions of dollars in profits—in some cases doubling their money—even as many small lenders continue to struggle.
Their success stands in contrast to dozens of other big investors who scooped up failed institutions but are still stuck with far less profitable holdings.
The different outcomes show that, during banking crises, the lowest price doesn’t necessarily make for the best deal. The investors who do better “are the ones who bought good franchises cheap, not distressed franchises very cheap,” said Joshua Siegel, managing principal and chief executive of StoneCastle Partners LLC, a New York firm formed in 2003 to invest in banks.
Private investors pumped billions of dollars into more than 60 financial institutions from 2008 to 2012, according to data provider Dealogic. Those figures account only for deals for which public data are available. Many bank deals during the period were private and details weren’t disclosed.
Posted in Equity Markets, Finance, Opinion, Private Equity
Tagged Business, Dealogic, Financial Services, funds, Investor, New York, Private Equity, Private equity firm
Mizuho Global Sees $2 Billion as Japan Pensions Seek Hedge Funds
Mizuho Global Alternative Investments Ltd., which introduces hedge funds to Japanese investors, expects assets to reach $2 billion by the end of the business year, reflecting demand from local pensions.
The unit of Japan’s third-largest bank by market value raised $1.7 billion by the end June that it placed with global alternative asset managers that offer funds that invest in bank loans and multistrategy hedge funds, Chief Executive Office Manabu Ando said in an interview in Tokyo. It plans to offer other alternative investments such as private-equity and infrastructure funds by the end of this fiscal year in March 2014, he said.
Posted in Breaking news, Events, Finance, Hedge Funds, Opinion
Tagged Alternative investment, asset, Fiscal year, funds, hedge fund, Japan, Mizuho, Private Equity, Tokyo
Hedge funds most bearish on treasurys in 16 months
Hedge fund managers are the most bearish on 10-year U.S. Treasurys in 16 months, according to a new survey, as they position for a winding down of the Federal Reserve’s bond buying program.
Of the managers polled, 48.3 percent were negative in their outlook for 10-year debt in July, up 6 percentage points from the previous month, according to a monthly survey by TrimTabs/BarclayHedge published late Wednesday. The survey, which was conducted July 16 and July 19, polled 95 fund managers.
Posted in Finance, Fixed Income, Hedge Funds, Opinion, Research
Tagged Asset Management, Business, Federal Reserve, Federal Reserve System, funds, hedge fund, investing
Private equity investor? Higher taxes may be looming.
Private equity funds are engaged in a trade or business under the Employee Retirement Income Security Act (ERISA), a court ruled this week. Now may be a good time for private equity funds, their managers, investors, and advisers to reexamine their tax position.
The First Circuit U.S. Court of Appeals ruled Wednesday that private equity funds are engaged in a trade or business under the Employee Retirement Income Security Act (ERISA). The court said the case, Sun Capital Partners v. New England Teamsters & Trucking, “presented important issues of first impression.” And the court’s resolution of the trade or business issue now may open the door to much higher taxes for private equity funds and their investors.
Posted in Finance, Opinion, Private Equity, Regulation
Tagged Business, Employee Retirement Income Security Act, funds, investing, Investor, Private Equity, Private equity fund, Sun Capital Partners
Hedge fund assets hit $2.4 trillion — Hedge Fund Research
Hedge funds toppled another record high point when industry assets totaled $2.4 trillion as of June 30.
Aggregate hedge fund assets were up 1.2% from March 31, 7.2% from Dec. 31 and 20.3% from Dec. 31, 2011, according to Hedge Fund Research’s second-quarter 2013 asset flows report.
Hedge fund industrywide assets have been climbing every year after hitting a nadir of $1.4 trillion at the end of 2008, HFR reported.
Net inflows in the second quarter were $14.5 billion and $15.2 billion in the second quarter. Midyear total net inflows of $29.7 billion were higher than first-half net inflows in 2012 of $20.4 billion.
New EU rules may attract hedge funds: regulator
(Reuters) – One of Europe’s top regulators has some good news for the hedge fund industry; pay curbs are not on the agenda.
While they will avoid the caps on bonuses facing bankers, Europe’s hedge fund managers can still expect restrictions on the manner and timing of their pay under new regulations coming into force on Monday.
The Alternative Investment Fund Managers Directive (AIFMD) is the European Union’s attempt to help protect investors and Gareth Murphy, a former hedge fund manager and equity derivatives trader with JP Morgan (JPM.N), is one of the key figures behind it.
Posted in Breaking news, European economy, Events, Finance, Hedge Funds, Regulation
Tagged Alternative Investment Fund Managers Directive, Business, European Union, funds, hedge fund, investing, J. P. Morgan, Reuters
Hedge Funds Are for Suckers
At the height of the financial crisis in 2008, a group of famous hedge fund managers was made to stand before Congress like thieves in a stockade and defend their existence to an angry public. The gilded five included George Soros, co-founder of the Quantum Fund; James Simons of Renaissance Technologies; John Paulson of Paulson & Co.; Philip Falcone of Harbinger Capital; and Kenneth Griffin of Citadel. Each man had made hundreds of millions, or billions, of dollars in the preceding years through his own form of glorified gambling, and in some cases, the investors who had poured money into their hedge funds had done OK, too. They were brought to Washington to stand up for their industry and their paychecks, and to address the question of whether their business should be more tightly regulated. They all refused to apologize for their success. They appeared untouchable.
Posted in Events, Finance, Financial Crisis, Hedge Funds, Opinion
Tagged Bloomberg Businessweek, Business, funds, hedge fund, investing, Investment management, mutual fund