Main News

 

Liquidity crisis exposed weaknesses of large market neutral funds, says Sabre's Hill
The losses suffered last summer by some of the big quantitative funds, such as Goldman Sachs' Global Alpha, illustrate the dangers of funds that outgrow the capacity of their strategy, according to Melissa Hill, the managing principal of Sabre Fund Management.

 

Citigroup Extends $500 Million Credit Line to Falcon Hedge Fund
Bloomberg - USA
22 (Bloomberg) -- Citigroup Inc., which froze redemptions from a hedge fund in January, said late today it was providing a $500 million line of credit to ...

 

Blog: Credit Suisse & the Oversight Crisis

Credit Suisse's mispricing of some of its structured credit products will put further pressure on regulators to force banks to pay more attention to their risk management systems. When the going is good it's easy to forgo necessary investments in information technology and non-profit centers like controls. Investors put further pressure on bank managements to reduce their non-compensation expenses so that net earnings maintain their upward trend, but there's little doubt that overall the financial sector's risk systems and oversight capabilities haven't kept pace with growth in assets. Link read entire story on source's website

 

Podcast: A Balanced Approach to Risk and Performance

In today's business environment, the overall importance of risk management and internal controls has increased, resulting in greater responsibilities for those who manage risk and controls. As such, executive management and board members have higher expectations for the oversight of key business risks and how management and control efforts should support overall business performance. Link read entire story on source's website Source Ernst & Young

Bankers to the Rescue?
By Igor Greenwald
A reported plan to bail out bond insurer Ambac helped stocks end a rocky week on a high note.
  http://www.smartmoney.com/t.cfm?pId=7&mID=400&mDt=02/22/2008&ui=1157312&ctu=%2Fbn%2Findex%2Ecfm%3Fstory%3D20080222090253

 

U.S. elections help bring M&A back into focus
Recent merger activity indicates dealmakers are more afraid of election results in November than of a recession or the ongoing credit crunch. Some deals are being rushed to get them approved before President George W. Bush leaves office in January. Sen. Barack Obama has criticized the Bush administration's antitrust record and pledged to "reinvigorate" enforcement. BusinessWeek (22 Feb.)

 

Inadequate IT security allowed a trader at Paris-based bank Société Générale to make a series of unauthorized transactions that ultimately cost the bank $7.2 billion, an internal investigation has found. To prevent a recurrence, the bank should immediately introduce stronger security systems, including biometric authentication of trading personnel, a special committee has recommended in its preliminary report to the bank's board of directors on Wednesday.

Full Story...

 

The Basel Committee's Working Group on Liquidity began work on this topic in late 2006 to review liquidity risk supervision practices in member countries. In response to the financial market turmoil that began in mid-2007, the Working Group's mandate was expanded to evaluate how these developments had affected liquidity risk at financial institutions.

Full Story...

Hedge Funds Feel New Heat
Wall Street Journal - USA
By GREGORY ZUCKERMAN The past decade has been the era of the hedge fund, as investors snapped them up for their track record of beating the market with ...

 

Dark days for hedge fund king
CNN Money Fri, 22 Feb 2008 11:24 AM PST
Welcome to superstar hedge fund manager Cliff Asness' winter of discontent

 

Mortgage Insurer PMI's Prospects Held Hostage To FGIC's Woes
CNNMoney.com - USA
The holdup is likely tied to FGIC's controversial attempt to find a way out of a $1 billion or more capital shortfall by jettisoning the subprime mortgage ...

 

Did FASB Scupper the Auction-Rate Market? <http://seekingalpha.com/article/65690-did-fasb-scupper-the-auction-rate-market?source=i_email>

 

TIPS: Great or Terrible? <http://seekingalpha.com/article/65680-tips-great-or-terrible?source=i_email>
by Felix Salmon <http://seekingalpha.com/author/felix-salmon?source=i_email>

 

Collapse of Credit Markets? The Data Suggest Otherwise <http://seekingalpha.com/article/65700-collapse-of-credit-markets-the-data-suggest-otherwise?source=i_email>
by Mark J. Perry <http://seekingalpha.com/author/mark-j-perry?source=i_email>

 

FBI's Top 10 Stories - From Extraditions To Hedge Fund Fraud
Lawfuel (press release) - Wellington,New Zealand
Michael Lauer, founder of Lancer Group Hedge Fund, and four others were indicted on conspiracy and wire fraud charges in a $200 million hedge fund fraud. ...
See all stories on this topic

 

Nearly 50 years of rule by Fidel Castro formally ended in Cuba on Sunday as lawmakers selected his brother Raul Castro as the country's next president. The vote came five days after the ailing 81-year-old Fidel Castro said he was retiring. Raul Castro, 76, has headed Cuba's caretaker government for the past 19 months, since Fidel Castro announced he had intestinal surgery and was provisionally ceding his powers.
FOR MORE INFORMATION, see: http://wsj.com?mod=djemalertNEWS

 

BAIL BONDSMEN
 By ANDREW BARBER
The billionaire boys of the buyout world are having their wings clipped this year.  The new kings of Wall Street are not only suffering through a terribly slow period in mergers and acquisition - thanks to the credit crunch and economic slowdown -...
full story: http://www.nypost.com/seven/02242008/business/bail_bondsmen_99007.htm

 

The key to efficiently and effectively responding to investors' growing demand for information disclosure from both investors and regulators is due diligence. Investors in alternative investment vehicles such as hedge funds, funds of funds, private equity funds, commodity pools and venture capital funds are increasingly conducting substantial levels of due diligence to identify both investment and operational risks. ......

 

Global Issuers
Debt Recovery For Creditors And The Law Of Insolvency In Kazakhstan
On a global basis, Kazakhstan is not a friendly jurisdiction for creditors. The insolvency regime appears to offer certain formal protections to creditors--such as a relatively modern bankruptcy law and a centralized system for the registration of securities--but the regime is highly unpredictable for creditors. Debt recoveries for creditors are extremely uncertain due to laws that are vague and applied inconsistently by the courts. We believe that creditors may be materially affected in their recovery of principal and interest during an insolvency in Kazakhstan.
To learn more, click or copy and paste the URL below:
http://standardandpoors.rsys1.net/servlet/cc5?kHiQAACBQTVsLgHxhilpuHQJhuV2VSS

 

Venezuela: Chavez, Oil and China's Quiet Loan
February 22, 2008 0808 GMT
A $4 billion loan from China to Venezuela is to be repaid in shipments of fuel oil, said Venezuelan President Hugo Chavez. It seems Chavez is doing all the talking as China and others hungry for Venezuelan oil continue to make these deals.
http://www.stratfor.com/analysis/venezuela_china_chavez_oil_and_chinas_quiet_loan

 

The Trouble With Quants AQR hedge fund is still struggling. Read More

 

Did The Auditors Trigger The Sell-Off of Auction Rate Securities? <http://dealbreaker.com/2008/02/did_the_auditors_trigger_the_s.php>

 

Asset Deflation and Price Inflation: A Tough Mix for the Fed <http://seekingalpha.com/article/65651-asset-deflation-and-price-inflation-a-tough-mix-for-the-fed?source=i_email>
by David Merkel <http://seekingalpha.com/author/david-merkel?source=i_email>

 

Dresdner Bank to bailout $18.8bn SIV
Allianz's Dresdner Bank unit became the latest institution to guard against forced asset sales at a structured investment vehicle it manages, with a plan to provide a backstop facility on senior debt at its $18.8bn (?12.7bn) K2 vehicle.  (The Wall Street Journal)
http://mail2.efnmail.co.uk/r/342208/MTk4MTI1OjE2NTAy/

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Yield Curve Corner

 

Bernanke's Surprise
Gold Seek - USA
Bernanke is applying this principle to credit creation. On the one hand, the FED is making loans to banks based on dodgy collateral. On the other hand, ...

 

US Leading Indicators Fell 0.1% in January on Stocks, Housing
Bloomberg - USA
Federal Reserve policy makers are prepared to cut interest rates further to maintain growth, Chairman Ben S. Bernanke told lawmakers last week. ...

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Natural Disaster Corner

 

Climate Prediction  http://www.nws.noaa.gov/predictions.php

World Meterological Organization http://severe.worldweather.org/

Tornadoes: http://www.disastercenter.com/tornado.htm

Great Sat Pictures of events:

 

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Iranian Situation and Other Man Made Disasters

 

Iran says work plan closed, U.S. intelligence fake
Reuters via Yahoo! News Sun, 24 Feb 2008 8:35 AM PST
Iran said on Sunday it had cleared up all past outstanding issues over its nuclear program with the United Nations nuclear watchdog and accused the United States of providing intelligence that was fake.

 

Iran Blames US for Lack of Nuke Response
ABC News Sun, 24 Feb 2008 3:32 AM PST
Iran Says US to Blame for Tehran's Lack of Response on Alleged Nuclear Weapons Work

 

Ahmadinejad: US should apologize to Iran
AP via Yahoo! News Sat, 23 Feb 2008 11:56 AM PST
Iranian President Mahmoud Ahmadinejad called on the U.S. and its allies Saturday to "apologize" to Iran for accusing it of seeking nuclear weapons — a day after the U.N. nuclear watchdog released its latest report on Iran's atomic program.

 

Iran allows 4,500 to run in March elections
AFP via Yahoo! News Sat, 23 Feb 2008 6:08 AM PST
Iran's hardline vetting body the Guardians Council said on Saturday it will allow more than 4,500 candidates to run for parliament next month but that 2,200 candidates have been disqualified, the official news agency IRNA reported.

 

 

Radical cleric Moqtada al-Sadr announced that he will extend a cease-fire order to his Shiite Mahdi Army by another six months in a message read by clerics during prayer services. Sadr's decision to halt the activities of his powerful militia last August was considered a key step that has been widely credited with bringing the Iraqi death toll down considerably in recent months.
FOR MORE INFORMATION, see:  http://online.wsj.com/article/SB120367455749285567.html?mod=djemalertNEWS

 

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Opalesque’s Corner

 

- Zwirn to close hedge funds due to large redemptions following improper accounting, Founder`s private jet rattled investors
- Performance: FoHFs manager Caliburn`s flagship fund returned 21.53% in 2007, After successful 2007, two China-focused hedge funds post double-digit loss in January
- AQR`s biggest hedge fund fell almost 15% through mid-February, AUM dropped from $4bln to $2.9bln, Comment: Liquidity crisis exposed weaknesses of large market neutral funds, says HF manager, Comment: Hedge funds record worst month since 2000 in January
- Fund launches: Tuono launches Alpha Energy Fund, prepares equity/commodities fund, Pa. firm launches water-focused hedge fund
- HF Replication Debate: Lars Jaeger: Traditional beta or alternative beta? Two different ways of looking at replicating hedge funds, Harry Kat: HF replication using alternative betas `very useful` but `sounds better on paper than in practice`
- Ernst & Young: Due diligence preparation can pay off
- Fund Profile: Oppenheimer Quest Opportunity Value Fund uses hedge-fund tools, has held its own by betting against mortgage-backed securities
- Regulators: UK FSA clears way for retail investment in hedge funds
- Credit Crunch Update: Why the credit crunch doesn`t squeeze as hard on hedge funds as it did in 1998, Analysts expect further write-downs at investment banks, BNP Paribas assets under management down $6bln in Q4, Dresdner bails out $19bln SIV, Lehman Brothers to cut 200 jobs, Wall Street layoffs looming, Fairfax gains from credit crunch
- SocGen Update: Societe Generale missed 75 warnings on trader Kerviel, SocGen announces record loss in Q4, net profit in 2007
- Northern Rock Update: Shareholders accuse government of `rigging` the bank`s valuation, Fitch places Northern Rock`s A- IDR on rating watch positive
- People: Mercer Investment Management doubles assets under management in two years, appoints new executives, Morgan Stanley hires new risk overseer, CalPERS re-elects president, vice president
- Recruitment Survey: Back-office staff face longer hours and more responsibilities, HFs hiring trainees and inexperienced staff to meet demand
- Environmental Trading News: Zurich Financial Services Group to provide political risk insurance for carbon credit projects
- Commodities: Stagflation fears push gold, Boone Pickens on $100 oil (video), Nestle chief warns of land resources clash as world runs short of water
- Exchanges: ECX and ICE Futures Europe announce launch of CER futures, Nasdaq to start listing blank checks, US equity options trading `rising out of obscurity`, says study
- Tech Update: Markit, six global banks to launch first global, multi-bank, cross-asset client valuations platform in H2
- Legal: Notice to all investors of Citigroup`s CSO Partners hedge fund that trading practices will be investigated, fund has suspended redemptions, Florida-based Executive Commodity Corp., three employees to pay $24m in restitution and penalties for commodities options fraud, Oppenheimer pays $4.5m in market-timing probe, Financial advisor charged with stealing tens of thousands of dollars from his Artist Kiosk LLC hedge fund
- Other Voices: F&C: Stock-pickers to benefit from volatility, European small caps to bounce back,
Commerzbank: Banking crisis or crisis of confidence?
- Activist News: N.Y. Times board recommends against Harbinger nominees, Dissident shareholder group disappointed over board`s proxy filing, Harbinger raises Times stake to 15%
- News Briefs: Oliver Wyman acquires Celent, AVP Advisors raises $400m in commingled real estate fund, Unigestion launches new quantitative risk-managed US equity fund, French fund firms expand into U.S., Mideast, Japan FSA`s commissioner wants to improve the regulatory environment
- And Finally. Discovery of ancient, very nasty 10 pounds (4.5 kg) frogs that may have eaten baby dinosaurs
- Logon: http://www.opalesque.com/main.php?act=archive

 

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Misc. Items of Interest

 

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Funnies, Facts, Quotes, etc….

 

irrupt ih-RUHPT, intransitive verb:

1. To burst in forcibly or suddenly; to intrude.
2. (Ecology) To increase rapidly in number.

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Conference, Courses, Books, Papers

 

Great Research Sites:

 

Merrill Lynch research Link to full report including important disclosures see example

 

John Mauldin’s Weekly Analysis

 

James Altucher’s Website:

 

Other useful sites:

 

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Index Corner

 

The CSFB/Tremont Hedge Fund Index www.hedgeindex.com.

The Cogent Dynamic Averages http://www.cogenthedge.com/home/inv_strategy.asphttp://www.cogenthedge.com/home/inv_strategy.asp

The Dow Jones Indices: http://www.djhedgefundindexes.com/index.cfm?event=viewPremiumContent (free registration)

HFRX Indices https://www.hedgefundresearch.com/hfrx_reg/index.php?fuse=login&1170880431

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Regulatory Info

 

 

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Disclaimer

 

The information contained in this document does not constitute an offer or solicitation to sell any security or other type of vehicles to or by anyone in any jurisdictions, nor should it be regarded as a contractual document. Under no circumstances should the information provided on this document be considered as financial advice, or as a sufficient basis on which to make investment decisions. The information contained herein has been gathered by Investor DNA, LLC from sources deemed reliable as of the date of publication, but no warranty of accuracy or completeness is given. Investor DNA, LLC is not responsible for and provides no guarantee with respect to any of the information provided herein or through the use of any hypertext link. Past results are no indication of future performance. All information in this newsletter is for educational and informational purposes and does not constitute investment, legal, tax or accounting advice. All materials are the property of the respective publishers, as referenced by header and appropriate hypertext links.