Philippe Jabre’s $300 Million Blunder: Buying Japanese Shares (WSJ)
Few investors have made as many mistakes navigating markets over the past two weeks as Philippe Jabre. Mr. Jabre, one of Europe’s best-known hedge-fund managers, bought Japanese stocks on news of the earthquake, and then suffered when the Nikkei Stock Average quickly tumbled 13%. Making matters worse, Mr. Jabre got nervous and sold his shares last week, just before a rebound in Japanese stocks. The miscues cost his firm about $300 million, the worst few days of his career. But as Mr. Jabre reflects on his decisions, he isn’t sure he made many mistakes.
Rajanatram Arrest Led Rengan to Take Notebooks, Smith Says (Bloomberg)
Shortly after Raj Rajaratnam was arrested on Oct. 16, 2009, his brother Rengan went into the Galleon Group LLC’s co-founder’s office and took his sibling’s notebooks, former Galleon trader Adam Smith told prosecutors, according to a court filing made yesterday. Raj Rajaratnam’s lawyers yesterday asked a judge to bar Smith from testifying about Rengan Rajaratnam’s actions on Oct. 16. Prosecutors want to offer the account from Smith, who may testify for the government today, “to prove the existence” of a conspiracy and “Rengan’s membership in it,” they wrote.
Investors concerned over super-size hedge funds (Reuters)
The hedge fund industry’s strong rebound from the credit crisis has prompted investors to ask whether some funds have grown too large and inflexible to keep delivering bumper returns for which the sector is famous. The growth of big funds — helped by strong returns during the credit crisis and some clients’ belief that risks are lower than in start-ups — helped push industry assets to $1.92 trillion at end-December, close to the all-time high in 2008, according to Hedge Fund Research. However, with the growth of big funds has come the old question of whether they could be stuck if another crisis hits, whether liquidity forces them into less profitable markets and whether their prized trade ideas will be discovered by rivals.
Porsche, Schaeffler Sell $9.6 Billion to Reduce Debt (Bloomberg)
Porsche SE, the German sportscar maker, and Schaeffler Group, which controls Europe’s second- biggest tiremaker, are selling 6.8 billion euros ($9.6 billion) in stock to cut debt in the busiest week for German equity sales since September. Porsche, which is merging with Volkswagen AG, will start a 5 billion-euro rights offering on March 30. Closely held Schaeffler, the world’s second-biggest maker of roller bearings, today sold 1.8 billion euros of shares in Continental AG to institutional investors to reduce borrowings accrued from its purchase of a controlling stake in the tiremaker in 2008.
Actelion board seeks rejection of Elliot plan (Reuters)
The board of Actelion (ATLN.VX) urged shareholders on Monday to reject what it called an ill-conceived plan by activist hedge fund Elliott Advisors to install six new board members and prepare the way for a sale. “Elliott’s attempt to seize control of your company has been undertaken with one goal — to force a quick sale,” Actelion’s board said in a letter to shareholders urging them to register for the company’s annual general meeting on May 5. Elliott, Actelion’s largest shareholder, announced this month it had asked six pharma executives and M&A experts to stand for election to the board of Europe’s biggest biotech firm.
D.E. Shaw, Indian Billionaire Plan Financial Services Venture (FinAlternatives)
D.E. Shaw Group is expanding its relationship with India’s richest man with a new financial-services joint venture. Mukesh Ambani‘s Reliance Industries said yesterday that it has reached a deal with the New York-based hedge fund to begin offering financial services in the subcontinent.
The agreement has been some time in coming; Ambani and his estranged brother, Anil, ended the non-compete agreement that has kept the oil billionaire out of the financial services sector last year. Shortly afterwards, Reliance and D.E. Shaw created a joint infrastructure fund and began talks about creating joint private equity vehicles. The two sides have also mulled a joint carbon-trading venture.
Hedge Fund Vet, Former Madam Could Run For N.Y. Mayor (FinAlternatives)
With disgraced former New York Gov. Eliot Spitzer reportedly mulling a bid to succeed Michael Bloomberg as New York City’s mayor, hedge-fund-executive-turned-prostitution-maven Kristin Davis is doing the same. Davis, who claims Spitzer as a former client of her escort service, is considering a follow-up to her quixotic run for Spitzer’s old job as governor last year.
She received just over 20,000 votes, coming in dead last in a seven-way race won in a landslide by former New York Attorney General Andrew Cuomo. “If Spitzer throws his black socks in the ring, I may have to throw in my lacy brassiere,” Davis, a former vice president at Brookhaven Capital Management, said.