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HEDGE FUND NEWS
@ Mon 07 May 2007 : GMT
Today the UK enjoys a socialist Bank Holiday (May Day - although I don't expect to see Tony Blair sitting atop a Tank in Trafalgar Square) with pile ups on the M25 and the sky grey and dull. My tasks today are to entertain my children and cook lunch which are probably more stressful than running a multi billion dollar hedge fund management company.
France turns towards the 21st Century with a new President who hates Hedge Funds, Fortress clicks its fingers and raises USD4Bn, and Citi is the new ABN AMRO.
Snooker News
Private equity comes clean (observer) (Related)
Personal insolvency rates at record as 'debt crisis' deepens (times) (Related)
CITI!
Hedge funds put Citigroup in their sights (times) (Related)
IS Citigroup, the world's biggest financial-services group with a market value of $268 billion, just too big a break-up target for activist hedge funds?
Many have dismissed the suggestion as fanciful. But some Citigroup executives, it emerged last week, are taking the question deadly seriously. Concerns have intensified in recent months after the campaign led by The Children's Investment Fund, the activist hedge fund, to force change at ABN Amro, the Dutch bank that is now the subject of an almighty bid battle between Barclays and a consortium led by Royal Bank of Scotland.
If ABN, a pillar of the Dutch establishment, can be attacked successfully, where will the activists' ambitions end?
Chuck Prince, Citigroup's chairman and chief executive since 2003, is on the ropes and urgently needs to address the underperforming share price.
Critics say the problem is that Citigroup is just too unwieldy and complex. Some suggest that splitting the group in four - wealth management, investment banking, consumer finance in America and international consumer finance - would unlock significant value. Citigroup fires back that there is more to be gained by keeping the group intact.
Supporters of Prince argue that in his first few years he was embroiled in regulatory and strategic problems - Citigroup was certainly hurt, like many others, by the scandal of conflicts of interest between investment banking and research. Still, today this is not a sufficient excuse and shareholders are understandably restless.
Prince's big bet, after selling the insurance business, has been to concentrate the group broadly on consumer and investment banking. But progress has been limited. In one sense, Citigroup has suffered the handicaps of many behemoths created by giant deals - it has too many layers of middle management and bureaucratic back offices. Prince is belatedly taking an axe to the business, slashing 17,000 jobs and promising to make billions in cost savings.
First-quarter earnings beat expectations as costs were reined in, and the share price rose. That bought Prince some time, but if he does not deliver in the next year, hedge funds could yet force his hand.
LEFT FIELD
The two faces of Sarkozy (independent) (Related)
He made his name as a minister who was accused of dividing France with his hardline rhetoric. But last night he won the race to succeed Chirac and vowed to be 'a president of all the French'
France has taken a sharp turn to the right, electing Nicolas Sarkozy by a thumping majority to be President for the next five years.
M. Sarkozy defeated the Socialist candidate, Ségolène Royal by about 52.7 per cent to 47.3 per cent.
Although a centre-right President will replace a centre-right President on 16 May, M. Sarkozy, 52, represents a much harder, less compromising kind of right wing, but also protectionist, politics.
Clashes immediately broke out in Paris and a dozen other cities between riot police and left-wing youths protesting against M. Sarkozy's victory.
In an energetic, but sometimes disturbing, campaign, M. Sarkozy promised to cut taxes and curb trades union rights but also to restore "moral values " allegedly betrayed by successive left-wing and centre-right governments for four decades.
M. Sarkozy's wife, Cécilia, said to have left him after a split during the campaign, did not turn up to vote with her husband when he cast his ballot near his home in Neuilly-sur-Seine, just west of Paris, yesterday lunch-time.
In his victory speech, M. Sarkozy, the son of a Hungarian immigrant, attempted to reach out to his many critics. He said he would be the " President of all the French people" and would govern "in a spirit of inclusion ... so that everyone feels that they have the same chances as everyone else". He declared himself a "convinced European" but begged other EU governments to "hear the cry of peoples who want to be protected ... and see in the EU a Trojan horse for all kinds of menaces" . This was a clear warning and not the first that M. Sarkozy would push for a protectionist European trade and immigration policy.
Yesterday's result was a stinging defeat for the French Socialist Party and Mme Royal the third successive presidential election won by the right. She started the second round campaign two million votes behind M. Sarkozy and needed centrist voters to switch to her en masse.
Polls indicated yesterday that one in five of them had abstained or voted blank. The rest of the centre vote split down the middle between Mme Royal and M. Sarkozy. She had scored well among younger voters but was flattened by a Sarkozy landslide among the late middle aged and the elderly. There was an 84.8 per cent turnout, the highest for 26 years.
Mme Royal, 53, still beaming her wide smile, accepted defeat graciously. She said she had started a "renewal of the way politics is conducted in France, and especially on the left ... Something has arisen in France which will not stop here," she said. She said she intended to remain an important figure in the rebuilding of the left in new alliances with the centre something other Socialist leaders will contest.
Last night's triumph crowns a four-year march to power by M. Sarkozy, starting when he began to denigrate his ageing boss, President Jacques Chirac, a year after the last election. The former interior and finance minister presented himself initially as a man capable of healing the divisions in French society; a man of action, rather than an ideologue.
During the last couple of months, his campaign moved sharply to the right. He adopted the language and tone of a populist outsider, rather than the representative of an outgoing government. He attacked the "moral bankruptcy" of the left on crime and security. He suggested that the values of the 1968 left-wing student revolt in France had sapped the moral fibre of French society and enfeebled all recent governments, including those in which he had himself participated.
M. Sarkozy's rhetorical lurch to the right hooked many former far-right voters but may make his task as President much harder. His language has allowed opponents on the left and centre to demonise him as a threat to democracy. Last night's violent protests by anarchist and far-left youths, and scattered incidents in the suburbs, were condemned by left and right alike. They may, however, be signs of worse to come.
M. Sarkozy claims to be the candidate of "renewal" and " rupture" with the past. Opinion polls suggested that his greatest concentration of support was among older groups of voters. This was already true in the first round. Older voters may have been less inclined to vote for a woman. They may have been more sensitive to M. Sarkozy's appeals on crime, security, immigration and "national identity".
There were two Sarkozys in the race: the ranter and the reformer. The generational break-down of the vote suggests that, of the two, it was the conservative-populist who won the most support.
Outside a polling station in the 12th arrondissement of Paris, which voted 32 per cent for each candidate in the first round, it was difficult to tell the "Sarkozystes" from the "Ségolènistes". There were many cases of people who looked vaguely leftish who were voting for Sarkozy and people who seemed grimly conservative who were voting for Royal.
"The split is bizarre," said Sophie, 36, a smart-looking marketing executive, who had voted for Mme Royal. "There are people from the left voting Sarko because of his law-and-order mantra. There are people from the right voting Royal because they are scared of Sarkozy."
Share of the vote
53 per cent The share of the vote won by Nicolas Sarkozy in the second round of the French presidential elections
47 per cent The share won by his Socialist rival Ségolène Royal
PIRATES LAUNCH ANOTHER SHIP
Fortress to close fifth fund at $4bn (financialnews-us) (Related)
Fortress Investment Group, an alternative investments firm that recently listed in New York, is expected to close its latest buyout fund at $4bn (€3bn), despite being heavily oversubscribed.
Fortress' fifth fund is expected to be one third bigger than the $3bn fund the firm raised in March last year. Fortress' private equity operation manages the largest share of group assets, $17.3bn out of $29.7bn as at the end of September, according to its US Securities and Exchange Commission filing ahead of the initial public offering.
At this date, Fortress had delivered a net internal rate of return of 31.7% from its first branded fund, which raised $946m after the group was founded in 1998. Fortress' second fund has invested $164bn in 16 deals to deliver a 68.4% IRR.
Although these returns put Fortress into the top decile of private equity managers, its other operations have also done well, according to sources. Fortress managed $9.4bn in hedge funds and $3bn in publicly traded investment companies at the end of September.
The increase to its assets under management and continued pulling power is expected to provide succour to Fortress' shares, which nearly doubled in the first day of trading in February as investors bet on its ability to continue generating high annual management and performance fees.
Fortress traded at $30.30 a share at last Friday's opening, giving it a market capitalisation of $2.9bn. It floated at $18.50 on February 9 and jumped to $35 a share before falling slightly by the end of that day.
DUMMIES
Bank of America CIO leaves to launch hedge fund (financialnews-us) (Related)
Bank of America's has promoted internally to replace its chief investment officer who has resigned to start a hedge fund.
Walter Muller will replace Ian Banwell, who is leaving the company to start Round Table Investment Management, an alternative investments firm.
Muller, whose appointment is effective today, was promoted from the corporate investments team where he has worked for the past 15 years. He has been quantitative finance executive since 1999.
Banwell has been chief investment officer at Bank of America since 2000 and joined the bank in 1998. BofA will have a minority stake in Banwell's new business and will invest seed money in several of Round Table's funds.
BofA chief financial officer Joe Price voiced confidence in Banwell's investment strategy and his ability to maximize the banks return on its investment.
Banwell said that the hedge fund company will combine research-based investing with quantitative and macro-based strategies. He will be joined by two other Bank of America executives including Bob Miller, from the firm's corporate investments group and Jason Osier, who comes from the equity side. David Lewis will be Round Table's chief operating officer and is currently with law firm Moore & Van Allen.
@ Mon 07 May 2007 : GMT
permalink (Related) | mail this (Related) | tag cloud (Related) | posted by finbar taggit: mon 07 may 2007 07:30 gmt | filed under: hedge funds (Related) citi (Related) sarkozy (Related) fortress (Related) debt (Related)
FINTAG COMMENTToday the UK enjoys a socialist Bank Holiday (May Day - although I don't expect to see Tony Blair sitting atop a Tank in Trafalgar Square) with pile ups on the M25 and the sky grey and dull. My tasks today are to entertain my children and cook lunch which are probably more stressful than running a multi billion dollar hedge fund management company.
France turns towards the 21st Century with a new President who hates Hedge Funds, Fortress clicks its fingers and raises USD4Bn, and Citi is the new ABN AMRO.
Snooker News
Private equity comes clean (observer) (Related)
Personal insolvency rates at record as 'debt crisis' deepens (times) (Related)
CITI!
Hedge funds put Citigroup in their sights (times) (Related)
IS Citigroup, the world's biggest financial-services group with a market value of $268 billion, just too big a break-up target for activist hedge funds?
Many have dismissed the suggestion as fanciful. But some Citigroup executives, it emerged last week, are taking the question deadly seriously. Concerns have intensified in recent months after the campaign led by The Children's Investment Fund, the activist hedge fund, to force change at ABN Amro, the Dutch bank that is now the subject of an almighty bid battle between Barclays and a consortium led by Royal Bank of Scotland.
If ABN, a pillar of the Dutch establishment, can be attacked successfully, where will the activists' ambitions end?
Chuck Prince, Citigroup's chairman and chief executive since 2003, is on the ropes and urgently needs to address the underperforming share price.
Critics say the problem is that Citigroup is just too unwieldy and complex. Some suggest that splitting the group in four - wealth management, investment banking, consumer finance in America and international consumer finance - would unlock significant value. Citigroup fires back that there is more to be gained by keeping the group intact.
Supporters of Prince argue that in his first few years he was embroiled in regulatory and strategic problems - Citigroup was certainly hurt, like many others, by the scandal of conflicts of interest between investment banking and research. Still, today this is not a sufficient excuse and shareholders are understandably restless.
Prince's big bet, after selling the insurance business, has been to concentrate the group broadly on consumer and investment banking. But progress has been limited. In one sense, Citigroup has suffered the handicaps of many behemoths created by giant deals - it has too many layers of middle management and bureaucratic back offices. Prince is belatedly taking an axe to the business, slashing 17,000 jobs and promising to make billions in cost savings.
First-quarter earnings beat expectations as costs were reined in, and the share price rose. That bought Prince some time, but if he does not deliver in the next year, hedge funds could yet force his hand.
Fintag says
As I mentioned last week (I know its tough being a journalist, but so many of themes that FiNTAG starts off end up being in the mainstream press, which is flattering but some credit would be nice sometimes) we are currently looking at ways at making Citi a better company.
Citi is the ABN AMRO of the US. A large franchise, well known but run by useless and incompetent bankers who are in it for themselves. If Goldman were Google, then Citi would be Yahoo! It is time it were broken up and the umbrella folded away for good.
Microsoft in Early Talks With Yahoo (dealbook) (Related)
As I mentioned last week (I know its tough being a journalist, but so many of themes that FiNTAG starts off end up being in the mainstream press, which is flattering but some credit would be nice sometimes) we are currently looking at ways at making Citi a better company.
Citi is the ABN AMRO of the US. A large franchise, well known but run by useless and incompetent bankers who are in it for themselves. If Goldman were Google, then Citi would be Yahoo! It is time it were broken up and the umbrella folded away for good.
Microsoft in Early Talks With Yahoo (dealbook) (Related)
LEFT FIELD
The two faces of Sarkozy (independent) (Related)
He made his name as a minister who was accused of dividing France with his hardline rhetoric. But last night he won the race to succeed Chirac and vowed to be 'a president of all the French'
France has taken a sharp turn to the right, electing Nicolas Sarkozy by a thumping majority to be President for the next five years.
M. Sarkozy defeated the Socialist candidate, Ségolène Royal by about 52.7 per cent to 47.3 per cent.
Although a centre-right President will replace a centre-right President on 16 May, M. Sarkozy, 52, represents a much harder, less compromising kind of right wing, but also protectionist, politics.
Clashes immediately broke out in Paris and a dozen other cities between riot police and left-wing youths protesting against M. Sarkozy's victory.
In an energetic, but sometimes disturbing, campaign, M. Sarkozy promised to cut taxes and curb trades union rights but also to restore "moral values " allegedly betrayed by successive left-wing and centre-right governments for four decades.
M. Sarkozy's wife, Cécilia, said to have left him after a split during the campaign, did not turn up to vote with her husband when he cast his ballot near his home in Neuilly-sur-Seine, just west of Paris, yesterday lunch-time.
In his victory speech, M. Sarkozy, the son of a Hungarian immigrant, attempted to reach out to his many critics. He said he would be the " President of all the French people" and would govern "in a spirit of inclusion ... so that everyone feels that they have the same chances as everyone else". He declared himself a "convinced European" but begged other EU governments to "hear the cry of peoples who want to be protected ... and see in the EU a Trojan horse for all kinds of menaces" . This was a clear warning and not the first that M. Sarkozy would push for a protectionist European trade and immigration policy.
Yesterday's result was a stinging defeat for the French Socialist Party and Mme Royal the third successive presidential election won by the right. She started the second round campaign two million votes behind M. Sarkozy and needed centrist voters to switch to her en masse.
Polls indicated yesterday that one in five of them had abstained or voted blank. The rest of the centre vote split down the middle between Mme Royal and M. Sarkozy. She had scored well among younger voters but was flattened by a Sarkozy landslide among the late middle aged and the elderly. There was an 84.8 per cent turnout, the highest for 26 years.
Mme Royal, 53, still beaming her wide smile, accepted defeat graciously. She said she had started a "renewal of the way politics is conducted in France, and especially on the left ... Something has arisen in France which will not stop here," she said. She said she intended to remain an important figure in the rebuilding of the left in new alliances with the centre something other Socialist leaders will contest.
Last night's triumph crowns a four-year march to power by M. Sarkozy, starting when he began to denigrate his ageing boss, President Jacques Chirac, a year after the last election. The former interior and finance minister presented himself initially as a man capable of healing the divisions in French society; a man of action, rather than an ideologue.
During the last couple of months, his campaign moved sharply to the right. He adopted the language and tone of a populist outsider, rather than the representative of an outgoing government. He attacked the "moral bankruptcy" of the left on crime and security. He suggested that the values of the 1968 left-wing student revolt in France had sapped the moral fibre of French society and enfeebled all recent governments, including those in which he had himself participated.
M. Sarkozy's rhetorical lurch to the right hooked many former far-right voters but may make his task as President much harder. His language has allowed opponents on the left and centre to demonise him as a threat to democracy. Last night's violent protests by anarchist and far-left youths, and scattered incidents in the suburbs, were condemned by left and right alike. They may, however, be signs of worse to come.
M. Sarkozy claims to be the candidate of "renewal" and " rupture" with the past. Opinion polls suggested that his greatest concentration of support was among older groups of voters. This was already true in the first round. Older voters may have been less inclined to vote for a woman. They may have been more sensitive to M. Sarkozy's appeals on crime, security, immigration and "national identity".
There were two Sarkozys in the race: the ranter and the reformer. The generational break-down of the vote suggests that, of the two, it was the conservative-populist who won the most support.
Outside a polling station in the 12th arrondissement of Paris, which voted 32 per cent for each candidate in the first round, it was difficult to tell the "Sarkozystes" from the "Ségolènistes". There were many cases of people who looked vaguely leftish who were voting for Sarkozy and people who seemed grimly conservative who were voting for Royal.
"The split is bizarre," said Sophie, 36, a smart-looking marketing executive, who had voted for Mme Royal. "There are people from the left voting Sarko because of his law-and-order mantra. There are people from the right voting Royal because they are scared of Sarkozy."
Share of the vote
53 per cent The share of the vote won by Nicolas Sarkozy in the second round of the French presidential elections
47 per cent The share won by his Socialist rival Ségolène Royal
Fintag says
So France decides to enter the 21st century. This should shake up the EU a bit. The UK has benefited from France's continued socialist experiment (high unemployment, Brits owning most of the country houses, and all the best working for Hedge Funds in London) but this may start to change. Mind you, the French are a bit like Tony Blair. Lots of rhetoric but no delivery.
So France decides to enter the 21st century. This should shake up the EU a bit. The UK has benefited from France's continued socialist experiment (high unemployment, Brits owning most of the country houses, and all the best working for Hedge Funds in London) but this may start to change. Mind you, the French are a bit like Tony Blair. Lots of rhetoric but no delivery.
PIRATES LAUNCH ANOTHER SHIP
Fortress to close fifth fund at $4bn (financialnews-us) (Related)
Fortress Investment Group, an alternative investments firm that recently listed in New York, is expected to close its latest buyout fund at $4bn (€3bn), despite being heavily oversubscribed.
Fortress' fifth fund is expected to be one third bigger than the $3bn fund the firm raised in March last year. Fortress' private equity operation manages the largest share of group assets, $17.3bn out of $29.7bn as at the end of September, according to its US Securities and Exchange Commission filing ahead of the initial public offering.
At this date, Fortress had delivered a net internal rate of return of 31.7% from its first branded fund, which raised $946m after the group was founded in 1998. Fortress' second fund has invested $164bn in 16 deals to deliver a 68.4% IRR.
Although these returns put Fortress into the top decile of private equity managers, its other operations have also done well, according to sources. Fortress managed $9.4bn in hedge funds and $3bn in publicly traded investment companies at the end of September.
The increase to its assets under management and continued pulling power is expected to provide succour to Fortress' shares, which nearly doubled in the first day of trading in February as investors bet on its ability to continue generating high annual management and performance fees.
Fortress traded at $30.30 a share at last Friday's opening, giving it a market capitalisation of $2.9bn. It floated at $18.50 on February 9 and jumped to $35 a share before falling slightly by the end of that day.
Fintag says
I have to hand it to the management team at Fortress. Listing was a great "marketing" idea and seems to have offered them an excellent distribution path.
I have to hand it to the management team at Fortress. Listing was a great "marketing" idea and seems to have offered them an excellent distribution path.
DUMMIES
Bank of America CIO leaves to launch hedge fund (financialnews-us) (Related)
Bank of America's has promoted internally to replace its chief investment officer who has resigned to start a hedge fund.
Walter Muller will replace Ian Banwell, who is leaving the company to start Round Table Investment Management, an alternative investments firm.
Muller, whose appointment is effective today, was promoted from the corporate investments team where he has worked for the past 15 years. He has been quantitative finance executive since 1999.
Banwell has been chief investment officer at Bank of America since 2000 and joined the bank in 1998. BofA will have a minority stake in Banwell's new business and will invest seed money in several of Round Table's funds.
BofA chief financial officer Joe Price voiced confidence in Banwell's investment strategy and his ability to maximize the banks return on its investment.
Banwell said that the hedge fund company will combine research-based investing with quantitative and macro-based strategies. He will be joined by two other Bank of America executives including Bob Miller, from the firm's corporate investments group and Jason Osier, who comes from the equity side. David Lewis will be Round Table's chief operating officer and is currently with law firm Moore & Van Allen.
Fintag says
Another sale of Hedge Funds for Dummies and another person who thinks they can start a Hedge Fund. Lets see how quickly they find themselves working back at BoA.
Another sale of Hedge Funds for Dummies and another person who thinks they can start a Hedge Fund. Lets see how quickly they find themselves working back at BoA.
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