Bloomberg Hedge Funds 04.26.11 BRIEF

Home , Amaranth Advisors, Baupost Group, Bridgewater Associates, Citadel LLC, CIT Group, Convertible arbitrage

Hedge Fund Returns Winton Replaces Moore in Rankings by Assets Bloomberg BAIF indices, which represent all by kelly bit funds tracked by Bloomberg data, are the source Winton Capital Management LLC, a person briefed on the returns. The fund of the below hedge fund and fund of funds data. the hedge fund started by David Winton advanced 4.8 percent in 2010. The $4.6 bil- 15.06% Harding, bumped Louis Moore Bacon’s lion Moore Macro Managers Fund rose 0.2 2010 total returns

Moore Capital Management LLC from percent in the first quarter and 12 percent 2011 YTD total returns the list of the 20 largest hedge fund firms last year, the person said. after assets surged by 34 percent. “They’re not trying to raise a ton of mon- 9.77% The $20 billion Winton Capital, which is ey,” said Emma Sugarman, head of the based in London, climbed to 14th place U.S. capital-introductions group at BNP 5.92% from 21st, according to data compiled by Paribas SA in New York. 3.90%* Bloomberg as of April 7. Moore Capital in Man Group’s assets surged to $69 billion 2.75% 2.23% 2.47% New York fell to 21st from 20th six months from $39.5 billion after the firm acquired ago, with assets unchanged at $15 billion. GLG Partners for $1.6 billion to try to re- 0.02% London’s Man Group Plc became No. 1 duce its dependence on Man AHL Diversi- Hedge Funds Funds of Funds S&P 500 2-Year Treasuries at $69 billion with its Oct. 14 purchase of fied, which had accounted for more than a *from Feb. 26, 2010 GLG Partners Inc. third of its assets under management. AHL Harding founded Winton Capital in 1997. declined 4.9 percent this year through April 2011 YTD returns by strategy He co-founded the AHL Diversified Plc 20 after gaining 16 percent in 2010. Strategy % return The largest 20 hedge funds’ assets in- computerized-trading program in 1987. Equity Statistical Arbitrage 7.24 The Winton Futures Fund, the firm’s larg- creased 10 percent to $582.5 billion from est at $7.3 billion, climbed 3.8 percent this $528.2 billion six months ago, Bloomberg Mortgage-Backed Arbitrage 6.32 year through April 22, according to a per- data show. Asset-Backed Securities 5.95 son briefed on the returns. The fund gained Funds with $5 billion or more pulled in 15 percent in 2010. 51 percent of new investor money in the Capital Structure Arbitrage 3.91 Moore’s flagship, the $7.4 billion Moore first quarter, according to Chicago-based Fundamental Market Neutral 3.81 Global Investment Fund, declined 0.6 per- Hedge Fund Research Inc. Convertible Arbitrage 3.17 cent this year through April 7, according to The hedge-fund industry exceeded $2 continued next page Emerging Market Equities 3.08 Long/Short Equities 2.96 inside Page Page Multi-Strategy 2.86 Fixed-Income Arbitrage 2.36 Performance Snapshot Arbitrage Alert 6 Havens, Evenstar lead merger-arb tables 2 Commitments of Traders 7 Merger Arbitrage 2.28 Mandate The Short of It Distressed Securities 2.16 Arkansas Teachers mull macro, credit funds 3 Canadian rare earth stock sees high demand 8 Long-Biased Equities 1.77 Investor Focus 13F Forensics: Greenlight Capital 9 Ben Stein on event-driven, FX strategies 3 Emerging Market Debt 0.59 Regulatory/Compliance Global Macro 0.37 The Wire Expert networks, South Africa, Japan, FERC 10 Japan ‘blog’ fund to target overseas investors 4 CTA/Managed Futures -0.53 Over The Hedge 11 Deals & Deal-Making Short-Biased Equities -1.35 Citadel cuts E*Trade stake, Elliott buys more Calendar of Events 13 Danisco, MSD drops out of All Saints bidding 5 Spotlight: BTG Pactual’s John Fath 15 Source: Bloomberg Hedge Fund Indices Type HFND to view return statistics new hedge fund launches

anticipated firm fund manager location assets ($Mln)* launcH date Boodell & Company GP LLC Boodell Value Capital Partners LP Peter Boodell New York 8.6 Launched Mar 1

*Commitments To Date 04.26.11 hedge funds | Bloomberg Brief 2

Performance Snapshot: merger arbitrage A look at some of the best-performing merger arbitrage hedge performance through at least Feb. 28 are included. For questions funds that report to Bloomberg data. Only funds that have reported please contact Anibal Arrascue at [email protected]

By Trailing 12-Month Total Returns inception sharpe Firm Fund manager Return % date ratio Havens Advisors LLC Havens Intl Enhanced Fd Ltd-A Nancy Havens-Hasty 12/30/2005 2.43 18.72 Evenstar Capital Management Ltd Evenstar Sub-Fund I Team Managed 1/5/2005 5.59 12.48 Credit Suisse Asset Managemen Credit Suisse Mer Arb Liq Index-B Peter Little 3/17/2010 2.28 9.73 Dexia Asset Management Dexia Long Short Risk Arbitrage Sophie Elkrief 3/24/1999 2.51 7.57 Green & Smith Investment Mgmt LLC The Merger Fund Ltd Roy D Behren 1/2/1996 2.31 6.30 Gabelli Securities Inc Gabelli Associates Limited-A Raffaele Rocco 8/31/1989 3.44 5.94 Green & Smith Investment Mgmt LLC Hudson Valley Partners LP Roy D Behren 9/1/1987 2.21 5.89 York Asset Management Ltd The Lion Fund Limited S Nicholas Walker 12/29/1995 1.72 5.80 Glenfinnen Capital LLC Glenfinnen-Highland Cap Mgmt LP Jeff O’Brien 4/1/2000 2.61 5.67 First Eagle Investment Mgmt LLC Aetos Corporation-A Jason Dahl 1/1/1986 1.47 5.34

By Trailing 5-Year Annualized Returns inception sharpe Firm Fund manager Return % date ratio Evenstar Capital Management Ltd Evenstar Sub-Fund I Team-Managed 1/5/2005 3.83 14.36 Glenfinnen Capital LLC Glenfinnen-Highland Cap Mgmt LP Jeff O’Brien 4/1/2000 3.63 12.72 Havens Advisors LLC Havens Intl Enhanced Fd Ltd-A Nancy Havens-Hasty 12/30/2005 0.85 10.79 Green & Smith Investment Mgmt LLC The Merger Fund Ltd Roy D Behren 1/2/1996 1.00 7.69 CDC Overseas Fund Management NATIXIS Const-Eur Events-I EUR Frederic Babu 7/31/2003 0.73 7.26 Green & Smith Investment Mgmt LLC Hudson Valley Partners LP Roy D Behren 9/1/1987 0.70 5.72 Gabelli Securities Inc Gabelli Associates Limited-A Raffaele Rocco 8/31/1989 0.72 4.85 First Eagle Investment Mgmt LLC Aetos Corporation-A Jason Dahl 1/1/1986 0.63 4.67 KDC Investment Management LP KDC Merger Arbitrage Fund LP Christopher Pultz 5/15/1981 0.64 4.52 York Asset Management Ltd The Lion Fund Limited S Nicholas Walker 12/29/1995 0.05 2.06

For Sharpe Ratio Calculation MEthodology Type FLDS Sharpe on Bloomberg. “Risk Free Rates” IDOC 2047613

the world’s biggest firms winton replaces moore… Assets RANK Firm Location ($Bln) continued from page 1 1 Man Group London 69 2 Bridgewater Associates Westport, Conn. 62 trillion for the first time at the end of the first 3 Paulson & Co. New York 36 quarter, marking a recovery from record 4 Brevan Howard Asset Management London 32.3 investment losses and client withdrawals 5 Och-Ziff Capital Management New York 28.7 during the financial crisis. 6 Soros Fund Management New York 27 Pension funds are contributing most to 7 BlackRock New York 26.6 the growth of the industry, according to 8 Highbridge Capital Management New York 25 David Shukis, director of hedge-fund re- 9 BlueCrest Capital Management London 24.5 search and consulting at Boston-based Cambridge Associates LLC, an adviser 10 Baupost Group Boston 24 to institutional investors. Cerberus Capital Management New York 24 Man’s ascendancy knocked Bridgewa- 12 Angelo Gordon & Co. New York 23.5 ter Associates LP to second place in the 13 Farallon Capital Management San Francisco 21.5 rankings, even as Westport, Connecticut- 14 King Street Capital Management New York 20 based Bridgewater grew 3.3 percent to Winton Capital Management London 20 $62 billion. Source: Bloomberg Rankings 04.26.11 hedge funds | Bloomberg Brief 3

Top Stories This Week By Bloomberg News

Rajaratnam Jury Set to Deliberate for Second Day Galleon Group LLC co-founder Raj Rajaratnam’s fate rests with jurors as the panel is investor focus scheduled for a second day of deliberations in the insider-trading trial. U.S. District Judge Richard Holwell in Manhattan yesterday instructed jurors on the law Ben Stein Says He Likes of conspiracy and securities fraud and asked the panel to weigh the evidence presented Event-Driven Funds at the trial of Rajaratnam, who prosecutors said was worth at least $1 billion the day of By Kelly Bit his arrest in October 2009. The jury, which deliberated for four hours, is scheduled to Ben Stein, the lawyer, economist, return today. actor and recent author of “The Lit- Rajaratnam, 53, faces five counts of conspiracy to commit securities fraud and nine se- tle Book of Alternative Investments: curities fraud charges. The conspiracy counts each carry a maximum five-year prison sen- Reaping Rewards by Daring to be tence and the fraud charges each carry a maximum 20-year term. The Sri Lankan-born Different,” said he likes event-driven money manager denies wrongdoing. hedge funds because of the oppor- The jurors hail from Westchester County, the Bronx and Manhattan. The panel includes tunities in the market. teachers, a retired bookkeeper who served with the Israel defense forces, an activities “This has been an absolutely mon- therapist for a private nursing home, a nurse, a customer-service representative for the umental recent period for event- Metropolitan Transportation Authority and a three-decade veteran food-service worker for driven arbitrage, so that’s what I New York’s Education Department. love,” Stein said in an interview. Yesterday, the panel selected Juror 9 as its foreman. He is a 56-year-old resident of the He dislikes currency hedge funds Bronx who is a graphic artist and works for Apple Inc. because the strategy is “too treach- —Patricia Hurtado, Bob Van Voris and David Glovin erous.” “I don’t have any confidence that the people I’d be working with can outperform any kind of index of it,” ATRS Considers Global Macro, Credit Hedge Funds he said. The Arkansas Teacher Retirement System, with about $11.2 billion in assets, is con- Stein’s only hedge fund investment sidering global macro and credit hedge fund investments on the recommendation of its is in New Canaan, Connecticut- consultant, Hewitt EnnisKnupp Inc., according to the minutes of its Feb. 7 meeting. based Rangeley Capital Partners The consultant recommends searching for and choosing two global macro and two credit LP, run by Chris DeMuth, nephew hedge fund managers with an allocation of $50 million each. ATRS currently allocates 25 of Stein’s co-author Phil DeMuth, percent of investments to “illiquid or low liquid investments,” such as real estate, private who also helps manage Stein’s per- equity, and alternatives such as timber and agriculture. sonal money. Rangeley, a merger Hewitt said ATRS should give priority to the hedge funds because their “expected return arbitrage strategy, has returned is similar to stocks, they provide a diversification benefit, and are timely due to volatility of close to 23 percent annually since market and uncertainty in credit.” 2008 and was up 5.5 percent in the ATRS approved the investment committee’s recommendation to invest up to $50 million first quarter of this year. each in Anchorage Capital Partners, York Capital Management’s York Credit Opportuni- Retail investors should invest in ex- ties Fund and the Capula GRV Master Fund. change-traded funds or mutual funds ATRS also approved the investment committee’s recommendation to invest up to $40 mil- that replicate hedge fund returns, lion in Tennenbaum Capital Partners LLC. Stein said, because they charge low- ATRS is still considering the investment committee’s recommendation to allocate up to er fees and have better terms. $50 million to Graham Capital Management’s Graham Proprietary Matrix fund, condi- “These simulacra of hedge funds are tional upon negotiation of annual fees. going to completely change that world,” ATRS is also considering an investment in Man AHL Alpha. he said. “That is the wave of the future. —Kelly Bit If you’re getting the same results as you get if you’re paying 2 and 20, why not go with the $5,000 minimum investment and the fee of $100?” $100 Bln Still Locked in Distressed Funds, Kinetic Says The federal government’s insider More than $100 billion in assets are still locked up in distressed hedge funds since the trading investigation is also another 2008 financial crisis, according to London-based Kinetic Partners LLC. reason to avoid investing in traditional Investors are increasingly pursuing redeeming their money from the funds, the firm said hedge funds, he said. in a report this month. “Financial theory tells you that you “We’ve seen a notable increase this year in the number of investors elevating efforts to cannot beat the large indexes unless realize their holdings in these funds through targeted legal actions against the underlying you are getting inside information, funds or, in some cases, the fund managers themselves,” said Geoff Varga, head of the and I don’t want to be part of anything distressed funds practice at Kinetic Partners. that involves inside information.” —Kelly Bit 04.26.11 hedge funds | Bloomberg Brief 4

The Wire By Bloomberg News

Launches Paulson Paid 9 Cents for Lehman Bonds Ex-Goldman Banker Starts Japanese Blog Fund By Linda Sandler Paulson & Co. paid as little Former Goldman Sachs Group Inc. banker Hideki Furusho and a Univer- as 9 cents on the dollar for sity of Tokyo professor have teamed up to create a hedge fund that invests in some of its $4 billion in Leh- Nikkei 225 futures based on a model that analyzes Japanese blogs. man Brothers Holdings Inc. The Pluga AI Fund, which uses web-mining technology developed by Yu- senior bonds, according to a taka Matsuo, an associate professor at University of Tokyo, is aiming to raise court filing. 5 billion yen ($61 million) after starting with 30 million yen in August, said A bondholders group includ- Furusho, the founder of Pluga Capital Co., which runs the fund. Pluga plans ing New York-based Paulson to target overseas investors starting from June, he said. and the California Public Em- The fund has returned 7.5 percent since launching in August, he said. ployees’ Retirement System The fund, which targets annual returns of 30 percent, every day makes an made the filing in response investment decision to either buy, sell or not invest in Nikkei 225 futures based to a U.S. bankruptcy judge’s on the algorithm model, and closes its position at the end of trading by cash- order that the group disclose ing out to maintain liquidit, Furusho said. The algorithm finds patterns be- details about its members. tween blog data and stock movements to form its investment decision. The group is fighting to control The fund eventually aims to expand its investment universe, such as bets on defunct Lehman’s $61 billion overseas futures and foreign exchange markets, as it incorporates wider web liquidation with a payout plan data beyond Japanese blogs, Matsuo said in the same interview. that competes with Lehman’s —Tomoko Yamazaki and Shunichi Ozasa own proposal. Paulson paid 9 cents on the dollar for $5.1 million of Leh- man’s senior bonds on Dec. 1, On The Move 2008, according to the filing. He paid 34 cents to 35 cents when Lehman filed bankruptcy UBS Hires Asia-Pacific Prime Services Head on Sept. 15, 2008. Calpers UBS AG hired Tim Wannenmacher from Nomura Holdings Inc. as head paid 86 cents to $1.04 on the of prime services for the Asia-Pacific region, according to an internal memo. dollar for $90.1 million of Leh- Wannenmacher will replace David Gray, who left the Swiss bank after 17 man’s senior bonds between years, according to the memo. July 2006 and December 2007, Wannenmacher, who was most recently global head of prime services and according to the filing. delta one at Nomura, will join UBS in early May. He previously ran prime ser- Paulson and other senior vices in the region for Lehman Brothers Holdings Inc. bondholders are being offered 21.4 cents on the dollar in Le- —Cathy Chan and Netty Ismail hman’s liquidation plan, and as much as 24.5 cents in the Mizuho to Lose Three Electronic Trade Execs Paulson-Calpers proposal. The bondholders group was Mizuho Financial Group Inc.’s brokerage arm will lose three executives formed around May 2009 to from its electronic trading group in Tokyo, said two people with direct knowl- share the costs of participating edge of the situation. in Lehman’s bankruptcy, ac- Anthony Brooker, who runs the team, Nobuo Wazaki, head sales trader, cording to the filing. Its steer- and Kiyohiko Hirose, in charge of the electronic trading service desk, re- ing committee comprises Paul- signed and will leave Mizuho as early as June. The three employees previ- son, Canyon Capital Advisors ously worked at Lehman Brothers. LLC, Fir Tree Inc. and Taconic The departures come less than three years after Mizuho hired 16 people Capital Advisors LP. The bond- from Lehman Brothers to provide algorithmic trading for clients. The employ- holders own $16.1 billion in ees are leaving in part because Mizuho is focusing more on domestic rather face value of Lehman’s senior than global business under new management. bonds, they said in the filing. —Takahiko Hyuga 04.26.11 hedge funds | Bloomberg Brief 5

BY BLOOMBERG NEWS The Wire continued from page 4

Deals & Deal-Making Japan Pensions to Boost Alts, Survey Says Citadel Cuts E*Trade Stake to Under 10% By Tomoko Yamazaki and Komaki Ito E*Trade Financial Corp. said Citadel LLC will sell shares of the online bro- Japanese pension funds plan kerage, cutting its stake to less than 10 percent, after it sold almost 24 million to increase investments in al- shares less than two months ago. ternative assets and pare their Citadel, which injected capital to help E*Trade avoid bankruptcy three years holdings of domestic bonds ago, plans to sell 27.5 million shares through Morgan Stanley, according to and stocks this fiscal year to an E*Trade statement yesterday. E*Trade won’t receive any proceeds. The of- diversify portfolios and bolster fering is set to close on about April 29. returns, a survey showed. The hedge fund will have an almost 10 percent ownership stake after the Thirty-two percent of 119 sale, according to a spokeswoman for E*Trade. Japanese pension funds aim Kenneth Griffin, the founder of Chicago-based Citadel, joined E*Trade’s to increase investment in as- board in June 2009. The money manager sold 170 million shares in April sets such as hedge funds in 2009, cutting its stake from 33.2 percent, and announced another 24 million the year ending March 2012, in February, reducing the stake to less than 20 percent. according to a survey by JP- E*Trade got a $2.55 billion cash infusion from Citadel in November 2007 Morgan Chase & Co.’s Tokyo- to help it weather losses from bad loans and shore up its banking unit. The based asset management unit. New York-based company on April 20 posted quarterly earnings and sales They also plan to keep invest- that exceeded the average analyst estimate, according to data compiled by ing in emerging-market stocks Bloomberg. It has posted a profit in three of the last four quarters. and bonds, it showed. —Whitney Kisling “We’re expecting further diversification to continue going forward among pension funds’ investment strategies,” Elliott Boosts Danisco Stake Ahead of Deadline Hidenori Suzuki, head of the Elliott Associates LP, which says DuPont Co.’s 31.7 billion-krone ($6.2 strategic advisory group at JP- billion) bid for Danisco A/S is too low, raised its stake the company to 4.9 Morgan Asset Management percent, according to a person familiar with the situation. (Japan) Ltd., said. “The trend Elliott is confident DuPont won’t get the necessary approval from investors to lower domestic bond hold- holding at least 90 percent of Danisco’s shares before its tender offer expires ings is rather new.” April 29, according to the person. Almost 89 percent of 79 re- The Danish food-ingredients maker, agreed in January to DuPont’s 665-kro- spondents said the March 11 ner-a-share offer. Wilmington, Delaware-based DuPont’s Chief Financial Of- record earthquake and ensuing ficer Nicholas Fanandakis said April 15 that he was “very confident” the deal tsunami that led to a nuclear di- would be completed at the current price this month. saster does not have a “major” New York-based Elliott said in a February letter it held 1.2 percent of shares impact that will force them to and that the bid undervalues the company. change their investment plans, —Jack Kaskey the survey showed. Still, about 11 percent said there are con- cerns that investments may not be carried out as planned MSD Withdraws From All Saints Bidding or may change depending on U.K. retailer All Saints says negotiations to inject 100 million pounds ($165 the situation, it showed. million) of capital into the company continue after Michael Dell’s MSD Capi- JPMorgan surveyed 119 tal LP investment company withdrew, the Financial Times reported. Japanese pension funds with Goode Partners, a U.S. private equity firm, is leading the bid to buy out the combined assets of about 10 stakes owned by collapsed Icelandic banks Kaupthing Bank hf and Glitnir trillion yen ($122 billion) in its Bank hf, the paper said. MSD pulled out of the group yesterday, it said. The preliminary report. It plans to banks have hired Ernst & Young LLP to sell the stakes, the FT said. release a full report in May. —Nandini Sukumar

Daybook. Big Picture. Newsmakers. Trends. Bloomberg Briefs. www.bloomberg.com/brief 04.26.11 hedge funds | Bloomberg Brief 6

Arbitrage Alert

Silver Expensive Relative to Gold

By Michael McDonough, Bloomberg Economist Silver Gold-to-Silver Ratio Have the Hunt brothers returned? On January 18, 1980, the price of silver reached an all- 100 time nominal high of $49.45 an ounce, having gained over 90 80 200 percent in less than 60 days, mostly thanks to Nelson 70 Bunker Hunt and William Herbert Hunt, two brothers 60 who cornered the market using significant leverage. 50 December, 1979: As a side effect, the relationship between gold and silver 40 Gold/silver ratio March, 2011: Gold/silver ratio began to break down as silver prices rose at a much faster 30 drops below par drops below par with spot silver with spot silver. for first time in 31 years. pace. Investors found themselves paying just 14 ounces US$ Price perOunce 20 of silver for an ounce of gold, versus the current 31-year 10 average of 62.5 ounces. 0 The same pattern can be seen today. Silver has gained 1978 1981 1984 1987 1990 1993 1996 1999 2002 2005 2008 2011

some 150 percent in about 240 days, quickly approach- Source: Bloomberg Data ing its earlier nominal highs and outpacing gains in gold prices of about 75 percent over the same period. Investors dices have rebounded. Or someone may have snapped up a large Hedgeare paying about 33 ounces Funds of silver for an ounce of Adgold currently. portion of the silver market, a move about which there have been Why the pattern is repeating isn’t obvious. Inflation- or risk- rumors for months now. averse investors would typically move into both gold and silver, Whatever the cause, the silver-to-gold ratio is worth careful moni- failing to explain the divergence between the two. It is possible toring. The Hunt Brothers’ escapade ended in an event known as that demand for silver -- used in many manufacturing applications, “Silver Thursday,” with a $100 million margin call on the pair, a mar- unlike gold -- may be playing a role. China imported more than ket crash that saw the price of silver decline by 78 percent from Jan- twice the U.S.’s annual production of silver in 2010, and demand uary to May, and a $1.1 billion U.S. private bank-sponsored “bailout” for the metal has probably increased as global manufacturing in- to avoid the potential collapse of the financial system.

Hedge Funds Brief Newsletters

BRIEF Mergers 09.10.10 Friday deal p By Carol Ch remiums Hit Highest Since 1st Bloomberg the price ofuang, acquisitions data analyst BRIEF 09.07.10 is rising. the average premium qtr 2009 Structured Hedge Funds global acquirers pay over M&A Announcements the trading price for pub Premiums Trend Upward vol 35.00% U companies has reached mes lic 26.99 percent in the third 30.00% U.s. strUctUred notes volUmes* Enterprise GP Notes quarter, the highest since 25.00% Sold Last Week Associat Enterprise Products BRIEF ed Materials 31.56 percent in the first Quarter-to-Date 20.00% Avoca Resour Hellman & Fried 21,029.7 quarter of 2009. cesSecond Quarter man 15.00% Arizant Inc Anatolia M 1,300.0 Many of the big deals this First Quarter inerals Develop Munters AB 3M Co 876.7 10.00% Year-to-Date quarter carried high premi- Tres Palac Alfa Laval AB $546.8 million n ios 810.0 omura Paves ums. global interest-linke By Deir Goldcorp Inc.'s $3.1 5.00% Zymogenetic Inergy LP 796.7 $9.56 billion s Inc billion cash bid for Sold Last Week NomuraD Holdi 0.00% Gladstone LNG Bristol-M 735.0$11.61 billion re Fretz Resources Ltd. Andean Quarter-to-Date yers Squibb to begin compet 09.10.10 Overland Pass Total SA 725.2$10.65 billion for structured notes. 55.5 percent premium and 2008 Second Quarter d notes volUmes** w had a 2008 2008 Ecuador Bo Williams Partne 599.0$29.1 billion ngs, Inc. ay to brief the Q1 Q2 2008 Firstttling Quarter rs Intel Corp. Q3 2009 2009 Embotelladoras A with thet Securitie ing in the U.S. ret Q4 2009 Year-to-Date 424.0 okyo-based is signaling e outflows reach highest level Since January a premium ofagreed 52.32 percentto pay for its $6.59 bil Q1 Q2 2009 rca sion on Sept. 8 that nter U. Page Q3 2010 2010 $2.14 375.0 billion inSiDe Q4 2010 registere most read on bloomberg one reason for the higher premiums is there has Q1 Q2 Most Read M&A Stories $14.22 b firm filed a prospec plans Q3 are currently no Ja s and ail market s ited deals. d structured notes this ye . 1. Basel means Hig $22.26 billionillion 16 banks that have i exchange Commis- r there were 14 such deals this quarter,lion acquisition al of McAfee Inc. would allow it to issue etail By NATHANIel e. BAkeR last year. Trump Spurned in NYC Islamic Ce $31.01 billion notes this year. 2010 U. 2. eu raises Growth Forecast performance tables 2 hostile deals paid premium s $67.49 billion tus Morgan Stanl. retail3. u note.S. y iss m Economics 27.99 percent. been an increase in hostile and unsol t panese firms among the NEWS he decision refl arket Vodafone Sells Stake in China Mobile in the market, wher Bank of Amer there was also a $27 billion increases ofin 38ba percent moston average triple the this amount quarter; in friendly the same quarter nter Bid ssued SeC-regis 4. China’s Demandields may m ayFall W to hereisenhower Capital r atiosLow & The hedge fund industry posted an outflow funds in the BarclayHedge database. sold this week S ar. ey COMMENTARY average premium on basic materia Flowers, Others Weigh More I eC-registered structure there Barclays 5. Consumer DemiseUers in u the Wire 3 ic- sold so far in 2 ica ■ ects the growing int Goldman Sac overs. ■Eksportfinans AS 6. Boehner Supports middle-ClasamoUnt of $2.9 billion, or 0.2% of its total assets, this Commodity trading advisors fared better, at- sic material deals versus the prior qu Bank of America To Hire Nomura's Mee Nomura spokes e a total of $31 billio tered $7,077,620,725 t l deals is 23 percent. It is 11.45 percent f deals paid three-month month rish Buys y JPMorgan he proportion of all-cash deals is also ris ork declined to co010. (See table at right). 7. China’shs Car Sales Si torsNAB's if the A$13.3 Billion Axa Bid is Bloc Deutsche Bank $6,501,693, regulatory/Compliance 4 ments, a 7 percent increase the registration d notes have been 8. Swaps Show Subba eaken Case for y July, the most since January, according to es- tracting $3.8 billion in July. It was the twelfth declines, accord ing notes under a me erest $4,641,729,777 mium for all-cash transactions arter. t Standard & PooA sold $22.3 millio man Peter Citigroup 542 Bank Shares Gain on Basel Capital ing. or industrial takehe the notesPotash will CEO pay Says notes BHP that Likely pay inves Not Only Bid gram which n of 9. nflation Outlook may P .S. exaggerated from the prior quarter.sixty-eight percent of deals have a decline in the ind ked mment. HSBC $2,581,388,000 timates by research firm Trimtabs. month of inflows in the past 14 months, a sign - floating-rate notes is the first stept in 10. ruble Bond Debut to Cut y Market Calls 5 has been 24 percent comparedo with 18 p loss directlyEnterprise pro toing Buy to a EnterpriseSept. 9 S ruell in New RBC $2,321,516,843gnal ‘Sound’ Demand ver the last five years, the average pre r’s 500 Index n of linked to the pe may include fixed-rate uan first wor Deal By Deal ll-cash pay index between the investors five times an dium-term no Credit Suisse $1,313,947,865rao rates Peak s t ex. - commodities, forei data reports ax Cuts July's number follows an outflow of $2.7 bil- of demand even as returns posted by the t-he notes were p GP for $8 Bln $1,272,661,070 portionalinvestors to any willgain take ine a an index or ba UBS Brad D ercent for stock deals.Co.- C filing. or structured no offer- rompt SNB to raise D 13F Forensics 6 for a 0.5 perc cific offering wou rformance of securit tes pro SEK $1,123,344,632 ies in skillmanay CUS issue date and maturity Book: 09.13.10 lion in June. The industry has dropped 4 per- CTAs are down 1 percent so far this year. g formation to be fil ■ old m iP 282649177 laced by y gn exchange rates notes, - $1,122,978,150 ■ m ■ Monday ining m Recent Completed Deals sket of such assets. A Eksportfinans ield ■ arch 2009. WHAT TO WATCH: ■ Nomura is ranked 27 a personCOMPANIES: familiar Basel By PratI & ■ ent fee. tes Wells Fargo $1,074,326,181 k M. Patel, dat a reaches 10-y Bank of Ame Merrill Lynch &the issue structured ld require addition $1.56 billion, topping with stiffer capital requiremen cent since April 2010, according to Trimtabs, Trimtabs said that hedge funds appear to over the hedge 7 million of ten-year, fixed ies, $1,073,904,928 committee gave firms as muc gold mining companya takeovers analyst have kets, according to Blo ed. RBS explore options for its platformObama s deliverspredicted remarks (see story on page 6 ear High rate notes, a . underwrote , or lower yields reached their highest annual rica Corp. BMO $903,568,500 Hewlett-Packard may buy ArcSig filing. Sep 8 notes inth among banks thaspe ■■ which attributed the decline mostly to nega- have missed out on market gains in the S&P years. Healthcare Bus - source: Bloomberg ECONOMY: with the matter says. Bank shares gained after t fixed interestthe securities ratccording will to pay a Sept. al in $793,395,379 ■ here have been $37.6 billionvolumes worth in 10o Sep 9 Abbott at least seven issues ■ transactions so far this year, with the avera Enterprise Products Partners Beginning in t Inspectorate issued $20.2 european ma - MARKETS: at a rate not seen since -to-floating omberg. $122,991,000 turing growth. avis' latest bid. r tive returns in May and June. Flows have now 500 Index during July because of conserva- all-stock offer for pay a floatin Sep 7 Bureau Veritas 3,720 premium on the deals reaching 39.9 Bioniche Pharma $585 million in e $114,857,000 Peru’s sol Treasury budget statement, ules; HP Deal f ' $21dollar billion Libor plus 1.7Sepe 8of 6 percent per year Mylan Inc U. 668 the bank t o ts, more time than some analysts a was the largest. Enterprise GP Holdings he third yearAabar the Invest notes wi s ctober 1997. c on the economy at 2 p.mh as eight years to comply ndean ge a cap of 7.25 percen an initial3 S eC . n r- ineconomic-events the U.S., N $59,350,000 hina's yuan rose to a record afterHertz g ). been negative five of the last eight months tive positions. The S&P 500 surged 6.9 per- resources received a $3.2 billion been 35 takeoverss in the pipeline g rateSep of 9 three-month, Abu Dhabi InvestBy Deir 550 ote totaling agency deals to ■ climbedThe to cost a two-year of insuring high. bankolutions bonBAE business. Systems hires We Bond investors are betting on offer from 6%. o far this year therequarterly have begi Overland Pass ■TRADING: goldcorp and six more deals worth v cording to Bloom urope so far this year inc., the trading platform us raises offer for after the Global Hedge Fund Returns almost $1 billion were announced. a total volume of $40.78 billion. Merrill & Lyn Williams PartnersBanks 526 haveDre Fretz sold olume 9/13 5 percent, subject t a 10 percent are not registere omura has underwri nated 45 employees Cocoathis week fell be ht f (see chart, this page), the worst eight-month cent during the month, while hedge funds industryfor a 0.7 percentfor fe . 424 9/13 for $1.5 billioned as begansoon as buying tod there were 297 transactions worth $34.3 nning in December, 20 filings with the Secur AND 2:00 taling $427.5 million, a t i t. interest will b U.S. ll g 9/13 he latest fallout from a The Bloomberg BAIF Hedge Fund Index rep- billion announced this week, a 33 D BBG0014 ch Co. $4.98 zekebillion of structuredrows 10 Percent in5:00 EC Bimonthly mee SpotligH Anticipated Approvals Sales may totalincrease mo from July, and the 9/13 berg data.calendar for a fifth day to a 2 p.m., Dollar Thrifty Automoti. stretch since the September 2008 to April gained only 1.93 percent. ing 2008 vol FAU 5:00 Thailandd Bo with the SeC. . decrease in deal count and a ■ distributed the no o x 9/13 tten 11 lls Fargo and JPMorgan 5 t ■ x e. e paid 5:15 EU General Affairs Big Picture Malaysia’s ringgit rosea t resents all hedge funds tracked by Bloomberg Goldcorp Inc. and Eldora Bank of AmeriQP tured 9/13 these deals ug., estimate -$95 billion. reasur crease in dollar volume over the p .4 percent t ities and 8:45 European Commiard of Investmentsting BIS Meetin ed by institutions to buy andds sell large 5 10. retailProducts.comumes when banks issu 9/13 overnment data showed faster manuf 2009 period. A survey by Trimtabs shows hedge fund 4.8 percent de executives discuss Morgan Stanley led U.re than $47 billion for t TBA EU’s Barroso, Ukr c- against default plunged to a five-w - do Gold Corp 15-year calla e 9/13 t one-year low. Data. The graph compares BBHFUNDS to - Sep 14 tes xchange Commissionnotes to t individualTBA inves richet slowdown in equity trading: rior week. their $3.2 billion ca Corp. largest monthly vol Mauritius Core Inflation R Ministers Meet ay, Allegheny Bank of Amer 9/13 a cause of a slowdown in business. ve managers Sep 15 TBA Botswana Energyugustssion Forecasts Jean-ClaudeEuropean Trichet Central Ba benchmarks. merger. issuedRed $21.3Back Mi ning FirstEnergySachs followe ble step-up notes,. the lar 11:00 i Davi to Acq, Targ Co-Generation Worl aine’s President need to be capables Outof thre of Back Page Sep 17 Kinrosst Gold S. issuers, sellinged a recordhe year $top should currency performers g D G. Blanchflower to the strongest level since to Continental he jump in total icano was the secon TOP CURRENCYU.S. FedPERFORME to Purch alertness and swift action. Hedge Fund Flows, 2009-2010 t hat wereume compiled so far this by year, remain bear- Sep 16 hese notes madeAcqd with $600 million. tors in Conference the U.S. in Au Dollar Thrifty UAL Corp ates more: flexibility. this is an increaseAcq, Targ fro touch: His Sep 15 Hertz Global 38 billion theof the current pace contid Africa 2010 a 8.98% Boots & Coots a full break down of no gest S$1.8 billion of notes in Au ase Notes/Bonds t t Jackson 20 ish on equi- 9.0% te sales was driven by a richet made clear how says policy make blocks l of shares, elimi eek low. 8.51% Halliburton Targ up 56 percent of thed-largest t issuer, sell presumably the majority nk , iquidnet ac eC-registered de according to Bloom - 2010 YTD Return notes, accordingBloomberg. to Struc gust, wieldy 22-member 17.29 Targ h e things: humility,President i 7.5% through July 30 m an average of 21 pe ole, nflation BOrge h ties. That may nue, exceed to the dangers that he's missing one er oldings tes by asset class, RS facing. w G ing $1.07al in billion 2010gus in to date. yoming, last month, columnist 15.01 14.84 Total Return Since otal dollarn increase volume in ofnew sa notes lin t, including on rs maintaining a focus o 15 reflect the 6.0% - a a out of touch he and - Aug. 31, 2009 ug. 27,t a symposium of ce side the importance of heavy budg rcent during the first six mo $1 billion of - Governing Council see chart on of the t i 4.5% trichet emphasi hese policies are outs ofPure p Fiction deteriorat- notes. Goldman europe's economy is time when a global rec 3.44% ec seems to have lost the plot. page 6. les in ked to intere B's un n price stability, along 3.0% the month of August. the governors of the 10 ing economic zed thentral need bankers for are - Greek central banks can't h 2.00% nths of st rates. with the spe landscape and 1.5% 1.03% the year. For thing in it addressed their p overy is fading. 6.45 those of the lace andet out cuts. of KeeNe’ ing deflation and ech.a risi 0.0% - even after imposing austerityi measuri 4.68 the reluctance -0.11% t remains unclearrish, 5 4.31 C i t -0.83% rish, who are alread s richet -1.5% -1.02% O ave beenpanish happy and of hedge funds r roblems, especially BBHFUNDS S&P 500 Russell 1000 2-Year Treasuries NerS Mohamed El-Er 1.32 ng cost of borrowing, how any economic unc -2.60 -2.54 -2.70 -2.86 to take on risk y experienc 0 -

AY ian of Pimco on -

ULY having only

PRIL es UNE

J ertainty and risk avers M J

ARCH t A 2009 2010 he UGUST CTOBER M

A recently recov- EBRUARY ECEMBER O OVEMBER

-5 ULY F EPTEMBER J D

N S ered many of returnS by Strategy SnapShot ANUARY Back Page J Monthly Hedge Fund Flows, Flows, Hedge FundMonthly $ Bln by the losses that ion. -10 Strategy % ytD return occurred in Mortgage-backed arbitrage 1.14 2008. -15 Convertible arbitrage 1.05 -14.85 The industry Asset-backed arbitrage 0.98 -18.15 continues to -20 show signs of Capital structure arbitrage 0.77 consolidation. Distressed 0.45 Trimtabs expects August to be a quiet month The funds with more than $5 billion in assets Fixed income arbitrage 0.10 as there are historically very few redemptions have recorded net inflows of $7.7 billion this All funds -0.23 due to seasonality, it said in the report. year, while funds with less than $200 million Global Macro -0.44 "Redemptions should resume in Septem- have seen net losses of $18.3 billion, equiva- Multi-strategy -0.83 For a risk-free trial visit ber; historically one of the worst months for lent to 15.7 percent of assets. Merger arbitrage -1.34 hedge fund flows," the report said. For the Market-neutral -2.01 year, flows toward hedge funds stand at $1 Equity statistical arbitrage -2.39 billion, following redemptions of $172 billion in CTA/managed futures -3.45 www.bloomberg.com/brief/hedgefunds 2009 and $150 billion in 2008. Spotlight Long/Short equities -4.09 "We believe it is safe to assume this “lost” Liam Dalton, Ceo and founder of Axiom Fixed income arbitrage -4.19 $320 billion will not come back to the indus- Capital Manage- Short-biased equity -5.24 try any time soon," the report said. Trimtabs' Bloomberg Hedge Fund Indices www.bloomberg.com/brief/mergers findings are based on a survey of 954 hedge ment Back Page Most recent returns www.bloomberg.com/brief/structurednotes www.bloomberg.com/brief/economics

Breaking news… insight from industry Leaders… Performance data… Bloomberg terminal subscribers can sign up for free at Brief 04.26.11 hedge funds | Bloomberg Brief 7

Commitments of Traders David Powell, Bloomberg Economist

Risk appetite declined during the reporting period. Hedge funds and other large speculators sold the Australian dollar and bought U.S. Treasury securities, gold and oil. Those shifts may have since been reversed.

Currencies U.S. Treasury Securities

Contracts Contracts 250000 200000 200000 150000 EUR 150000 100000 JPY 100000 50000 GBP 50000 2-Year 0 CHF 0 5-Year CAD -50000 10-Year -50000 AUD -100000 20-Year -100000 NZD -150000 -150000 USD -200000 -200000 -250000 Apr-10 Jun-10 Aug-10 Oct-10 Dec-10 Feb-11 Apr-10 Jun-10 Aug-10 Oct-10 Dec-10 Feb-11 Source: Bloomberg Note: 1 USD contract = $200,000; Futures + Options Source: Bloomberg Note: Futures + Options

Funds reduced their net long position in Australian Hedge funds and other non-commercial accounts dollars by 5,286 contracts in the week ended April piled into U.S. Treasuries as risk appetite declined. 19 - the largest change during the reporting period They purchased a total of 172,781 contracts on two- - as the S&P 500 declined. That shift has probably , five-, 10- and 20-year securities. Two-year notes since been reversed with the latest bout of risk aver- were the most popular, with speculators acquiring sion having subsided. The position remains crowded 63,877 contracts. That net position is 2.5 standard with the ratio of net longs to open interest at 0.56. deviations above the one-year average versus 1.3 in the previous week, suggesting it is vulnerable to cor- rection, certainly more than the positions in 10- and 20-year bonds.

Gold Energy Products

Contracts Contracts 300000 600000

250000 400000

200000 200000 Gold 150000 0 Crude Oil Natural Gas 100000 -200000

50000 -400000

0 -600000 Apr-10 Jun-10 Aug-10 Oct-10 Dec-10 Feb-11 Apr-10 Jun-10 Aug-10 Oct-10 Dec-10 Feb-11 Source: Bloomberg Note: Futures + Options Source: Bloomberg Note: Futures + Options

Speculators purchased 22,817 contracts on gold Managers bought 22,895 contracts on crude oil. during the reporting period, bringing the net long The position is 2 standard deviations above the position to 251,710. That is only 0.4 standard one-year moving average versus 1.8 in the previous deviation above the one-year average versus week. In contrast to the historical norm, a rise in minus 0.3 in the previous week, suggesting it is risk aversion appears to be positive for oil prices in not overcrowded. the present environment, because the civil unrest in the Middle East is causing both to rise. 04.26.11 hedge funds | Bloomberg Brief 8

The Short Of It Will Gordon, Senior Researcher, Data Explorers

Canadian Stocks: Rare Earth, Tanzania, TMX Group

The first three months of 2011 have continued much like the end of last Rare Element Resources Ltd. year where Canada’s securities fi- (RES CN Equity) nance market is concerned. The sup- 7 18 ply of equities available for borrowing Short Interest* 6 equated to 6.5 times the demand to Stock Price 16 5 borrow. The value of inventory has 14 Stock Price risen in line with the markets. 4 Sixty percent of equities are loaned 12 3 against non cash collateral. For sov- 10 ereign bonds this ratio is 85 percent. InterestShort 2 Two smaller companies showing 1 8 strong borrowing demand are Tan- 0 6 zanian Royalty Exploration Corp. 10/1/10 11/1/10 12/1/10 1/1/11 2/1/11 3/1/11 4/1/11 and Rare Element Resources Ltd. The short interest in Tanzanian Roy- alty Exploration doubled in the fourth quarter of 2010, to 9 percent. It has come down to 6.5 percent, still triple Tanzanian Royalty Exploration Corp the average, as the gold exploration (TNX CN Equity) company’s share price drifted lower. The increased demand to borrow 9 8 Rare Element Resources stock is more recent, having gone from noth- 8 ing to 6 percent this year. The shares 7 quadrupled over the last 10 months 7 Price as it is one of very few non-Chinese 6 companies with rare earth assets.

Short InterestShort 6 Demand for TMX Group Inc. has 5 been sporatic. The proposed merger Short Interest* Stock Price with the London Stock Exchange 4 5 Group PLC is subject to the bless- 10/1/10 11/1/10 12/1/10 1/1/11 2/1/11 3/1/11 4/1/11 ing of the government. If the same protectionist logic seen with Potash Corp is applied in this case, it is far from a done deal. Some investors clearly agree, with short interest at TMX Group Inc. 6 percent of TMX’s shares, up from 4 percent in early March. Still, it was (X CN Equity) even higher in February, at 11 per- 12 Short Interest* cent. 11 42 Stock Price Since Yellow Media Inc.’s floata- 10 40 tion in late October, the demand to 9 38 borrow its shares has risen sharply, 8 Price 7 to a fresh high of 22 percent So far, 36 6 this has been a profitable trade since

Short InterestShort 5 34 the company floated at C$6.2 and 4 32 now trades at C$4.8. 3 2 30 Will Gordon is a guest columnist whose 10/1/10 11/1/10 12/1/10 1/1/11 2/1/11 3/1/11 4/1/11 views do not necessarily reflect those of this publication. He can be reached via email at [email protected] *as percentage of shares outstanding 04.26.11 hedge funds | Bloomberg Brief 9

13F Forensics: Greenlight Capital

David Einhorn’s Greenlight Capital Offshore Fund est new addition to Greenlight Capital’s portfolio in the returned roughly 12.5 percent in 2010, with its largest fourth quarter, followed by BP plc. Both stocks have ral- holding likely playing a substantial role. Contract drilling lied by around 13 percent this year. Still, the $2.2 billion company Ensco PLC gained over 37 percent including fund has lost 3 percent this year through March 31. Its reinvested dividends last year and has rallied another 11 long position in CIT Group Inc., which has decreased 10 percent since Dec. 31. Sprint Nextel Corp. was the larg- percent this year, may have had an impact.

Holdings by Market Value

change in return since holding % portfolio % held market value* market value* December 31 Ensco PLC 10.04 6.30 481 78 11% Pfizer Inc 8.46 0.29 405 8 14% CIT Group Inc 7.22 3.64 346 -87 -10% CareFusion Corp 7.18 6.00 344 12 14% Apple Inc 5.64 0.91 270 33 9% Cardinal Health Inc 5.29 1.89 253 36 12% Sprint Nextel Corp 4.94 1.89 236 236 13% Market Vectors Gold Miners ETF 4.55 2.84 218 74 1% Microsoft Corp 4.48 0.90 214 27 -9% NCR Corp 3.68 7.20 176 20 24% * $millions

Sector Specific Aggregate sector-specific portfolio changes from Q3 to Q4.

Einhorn’s new position in Sprint Changes From Last Quarter Nextel was the sole contributor to the fund’s 4.9 percentage point increase no change in telecom holdings. The wireless Utilities communications company is also the Telecoms 4.9% only telecom company in its portfo- -1.1% lio. The purchase of BP shares and IT a new position in SemGroup Corp. Financials -2.6% boosted Greenlight’s energy hold- -3.5% ings. Einhorn held close to 5 percent Health Care of the energy transportation com- Consumer Staples -2.6% pany’s shares as of Dec. 31. Sem- 0.1% Group’s shares have gained close to Consumer Discretionary 3 percent since then. The decrease Industrials -2.4% in healthcare holdings came largely 3.1% from selling 1.24 million shares of Materials Health Net Inc. Energy 4.1%

Type FLNG on Bloomberg to analyze 13f filings 04.26.11 hedge funds | Bloomberg Brief 10

Regulatory/Compliance By Bloomberg News

Mass. to Regulate Expert-Network Firms Madoff Trustee Recov- Massachusetts plans to regulate expert-network firms, the first state in the U.S. ery Tally Tops $7.6 Bln By Linda Sandler The proposed regulation will require state-registered investment advisers Irving Picard, the trustee liq- that pay expert-network firms to obtain written certification that the firms uidating Bernard L. Madoff’s aren’t subject to any confidentiality restrictions and won’t provide confiden- defunct investment firm said tial information, Secretary of the Commonwealth William F. Galvin said in he has recovered more than an e-mailed statement. $7.6 billion for investors against Galvin said the regulations governing expert-network firms will take effect fees of $175.5 million request- after a public comment period and a public hearing on June 23. ed since Madoff’s arrest. —Charles Stein Picard, who has filed more than 1,000 suits seeking money for the con man’s investors, S. Africa Plans ‘Interventions’ to Improve Rules said in February he was half- way to recovering the $20 bil- South Africa is looking at “interventions” to improve regulation of hedge lion in principal lost when Ma- funds, Deputy Finance Minister Nhlanhla Nene said at the annual confer- doff was arrested in 2008. In a ence of the International Organization of Securities Commissions in Cape court filing April 18, he put the Town on April 20. recovery $2.4 billion lower, at South Africa’s Financial Services Board expects draft legislation for hedge about 44 percent of principal funds to be adopted by the first half of 2010, the regulator said in November. lost. Most of the difference is Hedge funds are not governed by the same rules as mutual funds, although the amount of forfeited funds hedge fund managers are subject to the regulator’s supervision. held by the U.S. Attorney, which —Robert Brand has been disputed in court. Picard gave the new num- bers as part of a fee request to a bankruptcy judge, seek- Japan to Extend Short-Sale Restrictions ing approval for $43.2 million Japan’s financial regulator plans to continue restricting naked short selling for four months’ work by him- and require investors to disclose short-sale positions, it said in a statement self and his law firm, Baker & posted on its website. Hostetler LLP. An official extension until Oct. 31 will be announced by the end of this Picard’s biggest recovery month, the agency said. was a $7.2 billion settlement —Tomoko Yamazaki reached in December with the estate of Jeffry Picower, a Madoff investor who died in 2009. Of that amount, about FERC Sets $30 Mln Fine for Amaranth’s Hunter $5 billion went to Picard, and The Federal Energy Regulatory Commission issued a $30 million civil pen- $2.2 billion to the U.S., he said alty against former Amaranth Advisors LLC energy trader Brian Hunter, in the filing. who is accused of manipulating the natural-gas futures market in 2006. Recoveries could rise if The case was the first in which FERC went after a participant in the fu- Picard’s suits against feeder tures market for actions it said affected the price of delivered gas, which it funds succeed, he said in oversees. March. “This is a seminal case in FERC law,” Susan Court, an attorney with Ho- Picard’s law firm said it spent gan Lovells US LLP and a former FERC enforcement director. 7,086 hours on investigations at The fine “is a sufficient deterrent” to discourage traders from engaging in a cost of $3.1 million from Oct. market manipulation, FERC Chairman Jon Wellinghoff told reporters at the 1 to Jan. 31. Administration con- agency’s monthly meeting. Hunter has 30 days to pay or appeal. sumed 7,033 hours, and cost Amaranth lost $6.6 billion betting on the price of natural gas. The Green- $2.1 million. The trustee’s case wich, Connecticut-based hedge fund that once controlled half of the natural- against JPMorgan Chase & gas market, collapsed in 2006. In August 2009, the company agreed to pay Co. took 1,971 hours, while a $7.5 million to end U.S. cases brought by FERC and the Commodity Futures case against the owners of the Trading Commission for trying to manipulate natural-gas prices. A FERC New York Mets required 1,660 judge ruled in January 2010 that Hunter had manipulated gas markets. hours and customer claims —Brian Wingfield took 4,837 hours. 04.26.11 hedge funds | Bloomberg Brief 11

Over The Hedge

Plans by Glenview Capital Management Chief Executive Arbitrage, a movie about a hedge-fund manager who tries to sell Officer Larry Robbins to build an ice hockey rink in Creskill, his company to an investment bank before his creative bookkeep- N.J., have met fierce local opposition, according to the Bergen ing is exposed is shooting until May 21 in New York, according to County Record. The planned 16,000 foot structure is officially Backstage magazine. The film stars Al Pacino, Susan Sarandon a residence with a one-bedroom basement apartment, which and Eva Green. allows it to conform with local zoning laws. “Two neighbors have filed suit to stop the rink/residence, which is projected by the Jacobs Asset Management LLC Chief Operating Officer Ryan owner’s attorney to cost as much as $10 million and will also Zacharia will wed Michelle Rose next summer, according to a include a locker room, spectator area and racquetball court,” report in New Jersey’s Independent Press. the paper reported. Robbins also received an anonymous letter Robert Hess, a chess grandmaster who interned at Fortress threatening that things would “get ugly,” the Record said, citing Investment Group LLC in 2008 and will attend Yale University in a copy of the letter obtained by hedge fund manager. Last year, August, was due to compete in a playoff yesterday in the semi- after the borough approved the rink, Cresskill changed its zon- finals of the U.S. Championship in St. Louis. Hess, 19, drew two ing laws to require all single-family homes to devote at least 50 semifinal games on April 23 and 24 against grandmaster Yuri Shul- percent of their space to living, sleeping, eating, cooking, bath- man, who won the tournament in 2008. The two were scheduled ing, washing and sanitation, according to the newspaper. to play a best-of-two-games time- shortened match yesterday, with the winner advancing to play defending-champion Gata Kamsky in The $30 million Museum of Mathematics in Manhattan, the the finals. Hess was rated 11th out of the U.S. Championship’s 16 brainchild of former Renaissance Technologies manager Glen players and went undefeated through the tournament’s first phase, Whitney, is one step closer to opening its doors, Crain’s New winning five games and drawing two others. He was the only York reported. The museum, which will be known as MoMath, player in his group without a loss after the first seven rounds, set- signed a lease earlier this month for 19,000 square feet at 11 E. ting up his semifinal pairing with the 35-year-old Shulman. While at 26th St. It is scheduled to open in the fall of 2012 and will fea- Fortress, Hess developed an interest in finance, which he intends ture exhibits that “stimulate inquiry, spark curiosity, and reveal to pursue in college. the wonders of mathematics,” according to MoMath’s Web site. —Eben Novy-Williams

October 1993, had returned about 19 When Hedge Fund Owners Invest in Sports Teams percent on average annually until 2007. By Katherine Burton who is bidding for a minority stake in the That year his funds tumbled 8.5 percent, John W. Henry, founder of futures trad- New York Mets. followed by a 20 percent drop in 2008. er John W. Henry & Co., became the For a billionaire fund manager, buying He’s now running a new stock fund, Rap- principal owner of the Boston Red Sox a stake in a sports team might be about tor Evolution. “Every investment helps me in 2002. Two years later the team won its “fulfilling a childhood fantasy, showing in what we are doing—our network is our first World Series in 86 years. Three years the world you’ve made it, or buying out business,” says Pallotta, who adds that his after that it chalked up a second champi- of boredom,” says Brad Klontz, a finan- investments in the teams are passive. His onship. While the Sox were winning, the cial psychologist and associate research minority stake in the Celtics involves go- firm’s assets were dwindling, falling to professor in personal financial planning ing to two board meetings a year—after $319 million as of April 15 from a peak of at Kansas State University in Manhat- market hours. “It’s not a lack of focus,” he $3.4 billion in 2005. tan, Kan. says. “It’s absolutely the opposite.” James Pallotta, a Boston-based hedge In October, Henry, 61, added Liverpool For Philip Falcone, 48, head of New fund manager who at his peak oversaw FC, the English soccer club, to a sports York-based Harbinger Capital Partners, more than $11 billion, bought part of the portfolio that also once included the his interest in owning a team predates his Boston Celtics in December 2002. Six Florida Marlins baseball team. Henry’s hedge fund career. He played professional years later the basketball team won the funds buy and sell based on computer hockey in Malmö, Sweden, for a year, un- NBA championship. In June 2009, fol- models that haven’t changed dramati- til a leg injury sent him to Wall Street. He lowing two years of losses, he closed his cally since Henry designed them in became a billionaire after making a profit- Raptor Global hedge funds. the 1970s. That means Henry doesn’t able bet on the collapse of the subprime The trend hasn’t gone unnoticed by need to spend his days glued to trading loan market in 2007 and started spending hedge fund investors. “Owning a team screens, says Kenneth Webster, the his money immediately. can be a function of ego, it is very high- firm’s president. Webster says returns By February 2008, Falcone had profile, and it could prove to be a distrac- have picked up since 2007, after two bought Penthouse publisher Bob Guc- tion,” says Brad R. Balter, head of Bos- years of underperformance. cione’s 27-room townhouse on Manhat- ton-based Balter Capital Management. Pallotta, 53, has also added to his sports tan’s Upper East Side for $49 million. He “As an investor, I have to consider that.” holdings, joining a group that bought AS became a noncontrolling partner of the Words to bear in mind for Steven A. Co- Roma, an Italian soccer club, last week. National Hockey League’s Minnesota hen, the billionaire hedge fund manager Pallotta, who started Raptor Global in Wild in April of that year. His fund assets

continued next page 04.26.11 hedge funds | Bloomberg Brief 12

Hedge Funds Added to Bloomberg This Week

The following hedge funds were added to Bloomberg’s database this week. Access the Hedge Fund Database Portal by typing HFND on your Bloomberg Terminal. To view U.S. hedge fund managers, users must fill out an Accredited Investor Form (Option 13).

Manager Inception Ticker bloomberg id Fund Manager Management Company strategy Location Date Prime Broker

MINCAPA KY BBG001MKSQP3 STEVE BRANN Apollo Multi Asset Management Multi-Strategy U.K. 5/1/2011

ARCJLJC LX BBG001MKT2R3 TEAM MANAGED Arcus Investment Ltd Long Bias Eq U.K. 4/5/2011

ATFONFE LX BBG001MNTK33 A. CASARES Atum Investments Ltd CTA/Mgd Futures Luxembourg 3/31/2011

FSSRFND KY BBG001MHTFG3 FRANK L MERSCH Front Street Investment Mgmt Eq Fdmntl Mkt Neut Canada 7/31/2008

IKOHEUE KY BBG001MMZK29 TEAM MANAGED IKOS Asset Management Ltd Long/Short Eq U.K. 7/1/2003

INFCLEV VI BBG001MFVTS1 DAVID BROWN Infinity Capital Management Ltd Multi-Strategy U.K. 3/2/2011

INSAFAU KY BBG001MNLCB0 JAMES L ALLSOPP Insparo Asset Management Ltd Multi-Strategy U.K. 2/1/2010

JASMCLP US BBG001NB2807 KEVIN R GREENE James Alpha Management I LP Long/Short Eq U.S. 4/1/2009 Jefferies & Co

JPMEDAW LX BBG001MK91F0 JONATHAN INGRAM JPMorgan Asset Management Inc Long/Short Eq U.K. 4/1/2011

KLEUAWS GU BBG001MCKDZ7 SCOTT GRAY Kleinwort Benson CI Fund Srvcs Global Macro Jersey 1/1/2011

MANMUSD LX BBG001MKQL49 SANDRO KRATTLI Man Investments Luxembourg SA CTA/Mgd Futures Luxembourg 4/19/2011 Man Investments AG

MANMCBS MV BBG001MKQYC2 LEON DIAMOND Mansard Capital LLP/U.K. Global Macro U.K. 9/27/2010 Goldman Sachs

OPEQOVA US BBG001MKSML6 PETER ZUCK Osiris Partners LLC Long/Short Eq U.S. 9/1/2010 Goldman Sachs

MACFNDA VI BBG001MHV901 IVO BARTOLETTI Renalco SA Multi-Strategy Switzerland 5/1/2011

SWENTFE ID BBG001NB1CV5 RUPERT FLEMING Smith & Williamson Investment Long/Short Eq U.K. 3/21/2011 Credit Suisse AG

STAGINU KY BBG001MPPTC3 TORU HASHIZUME Stats Investment Management Long/Short Eq Singapore 9/1/2008

TICKDTB VI BBG001MNSTC5 TEAM MANAGED tickwise-trading GmbH Long/Short Eq Switzerland 5/1/2011 Rabobank International/London

DRVEGAS SP BBG001MMLXJ8 CYRIL MARINI Wedge Associates SA Multi-Strategy Switzerland 4/15/2011

DREQTYE SP BBG001MMGF49 CYRIL MARINI Wedge Associates SA Long/Short Eq Switzerland 3/8/2010

DRVEGAU SP BBG001MMLZ12 CYRIL MARINI Wedge Associates SA Multi-Strategy Switzerland 4/15/2011

When hedge fund owners… continued from page 11

peaked two months later at $26 billion. He mance suffer after investing in sports. David Steelers in September 2009. That year his now manages about $7 billion. Falcone Tepper, 53, who runs the $16 billion Ap- main fund climbed 130 percent. His fund re- also declined to comment. paloosa Management in Short Hills, N.J., turned about 30 percent last year and is up Not all managers have seen their perfor- bought a 5 percent stake in the Pittsburgh 10 percent so far this year. 04.26.11 hedge funds | Bloomberg Brief 13

To submit an event email [email protected] Calendar

contact / daTe event featuring location registration April 27 Direct Access Partner's Capital Introduction Program One-on-one roundtable session for 12 investors. Union League Club, http://www.daptrading.com New York

April 27 Make A Difference Wisconsin Investment Conference Keynote speaker William Ackman, Pershing Square Capital. Pfister Hotel, Mil- makeadifferencewiscon- waukee sin.org April 28 Bloomberg's Portfolio Strategies: Precious Metals Michael Cuggino, Permanent Portfolio Family of Funds; Jen- Crosby Street Hotel, Jason Earnhart, +1 nifer Fan, Arrowhawk Capital; John Hathaway, Tocqueville New York 646-834-5024, jearnhart@ Asset Management. bloomberg.net, bloomberglink.com April 28, Pillsbury's Changing Considerations for a Successful Rob Davis, Concept Capital; Bob Donahoe, Goldman Sachs. Pillsbury's San Fran- Kristen Gorts, kristen. 3:30pm Hedge Fund Launch in 2011 cisco office [email protected] May 1 Milken Institute Global Conference James Chanos, Kynikos Associates; Nick Calamos; Joseph The Beverly Hilton, Los milkeninstitute.org Dear, CalPERS. Angeles May 1-3 Institutional Investor Alphahedge Global Hedge Fund Lawrence Summers, former director of the White House The Fairmount South- marhedge.com Summit National Economic Council. ampton, Bermuda May 2-4 Soyatech's Global AgInvesting 2011 Angus Selby, Altima Partners; Matthew Powell, Ospraie The Waldorf Astoria, events.soyatech.com Management; Mary Law, Wake Forest University. New York May 3-4 6th Annual Value Investing Congress West Jeffrey Ubben, ValueAct Capital; Michael Kao, Akanthos Pasadena, Calif. valueinvestingcongress. Capital; Whitney Tilson, T2 Partners. com/hedgebrief May 3, Bloomberg's Due Diligence in the post-Madoff Era Fabio Savoldelli, Optima Fund Management; Simon Fludgate, Bloomberg headquar- Constantin Cosereanu, 4pm Aksia. ters, New York +1-212-617-2231, ccosere- [email protected] May 4, The Rise & Fall of Bernie Madoff Erin Arvedlund, author, "Too Good to be True: The Rise and Drexel University, lebrow.drexel.edu 6pm Fall of Bernie Madoff." Philadelphia May 4-5 EuroHedge Summit 2011 "A major hedge fund event which attracts the industry's elite Palais de la Bourse, hedgefundintelligence.com from around the globe." Paris May 9, Bloomberg & Toronto 100 Women in Hedge Funds' Global Panelists Camilla Sutton, Mark Grammar, Courtenay Wolfe. St. Andrew's Club, Emily Starkey, estarkey1@ 4:30pm Outlook & Trends Toronto bloomberg.net May 9, Robin Hood Foundation gala Performance by Lady Gaga, hosted by NBC's Brian Williams. Jacob K. Javits debbief@eventassociates- 6pm Convention Center, inc.com; +1 212-245-6570 New York x20 May 10 Bloomberg's Canada Economic Summit James Leech, Ontario Teachers' Pension Plan; Eric Bushell, The Carlu, Toronto Jason Earnhart, +1 CI Investments. 646-834-5024, jearnhart@ bloomberg.net, bloomberglink.com May 10 NYSSA's 3rd Annual Family Office Conference Keynote speeches by Jamie McLaughlin and Steve Braver- NYSSA Conference nyssa.org man, Pathstone Family Office Center, New York May 10. Aite Group Roundtable's Trading 2011: Life in the Fast Keynote speaker Donald Wilson, DRW Trading Group. Fairmont Chicago Mil- aitegroup.com 2pm Lane, Changing Gears lenium Park May 10, Bloomberg CMBS/CRE Seminar Panelists include Lisa Pendergast; Jefferies, Wayne Fitzger- Bloomberg headquar- naseminar@bloomberg. 5pm ald, Blackrock; Julie Han, TIAA CREF. ters, New York com May 11, 100 Women in Hedge Funds' Global Outlook & Trends Panelists Manoj Narang, Tradeworx; Duncan Niederauer, Bloomberg headquar- Elizabeth Levine, +1 5pm New York Stock Exchange. ters, New York 212-617-5576, elevine8@ bloomberg.net. May 11 CFA Institute 64th Annual Conference: Invest in the Jim Rogers; Theo Phanos, Trafalgar Asset Managers; Axel Edinburgh, Scotland, annual.cfaconference.org Future Merk. International Confer- ence Centre May Third annual SkyBridge Alternatives (SALT) Conference Speakers include Steven A Cohen, Israel Englander, Ken Grif- Bellagio, Las Vegas www.saltconference.com 11-13 fin, Daniel Loeb, James Dinan, John Burbank III. May 12, Credit Suisse New York Trading Forum Speaker Dan Mathisson, global head of AES. Bloomberg headquar- Casey Dunn, +1 212-325- 5pm ters, New York 1363, casey.dunn@credit- suisse.com May 14 100 Women in Hedge Funds' The MoonWalk London 2011 Walk 26.2 miles in support of U.K. breast cancer charities. London www.walkthewalk.org May 17 AIM Buy-Side User Forum 2011 Overview of the year's innovations, next year's planned Bloomberg headquar- bloomberg.com/promo devlopments; round table discussions. ters, New York May 19 9th Annual Hedge Funds Care Midwest Open your heart to the children benefit. JW Marriott Chicago Dan Butschko at Dbutch- [email protected]; hedgefundscare.org continued next page 04.26.11 hedge funds | Bloomberg Brief 14

continued from page 13 Calendar

daTe event featuring location contact / registration May 20 Eurekahedge Asian Hedge Fund Awards 2011 Black-tie gala dinner. Fairmont Hotel, awards@eurekahedge. Singapore com, +65 6212 0925, eurekahedge.com May 23-25 High-Frequency Trading Leaders Forum 2011, "How Andrew Kumiega, Infinium Capital Management; John Netto, Flatotel, New York hftleadersforum.com Speed Traders Leverage Cutting-Edge Strategies in the M3 Capital; Richard Flom, Systematic Alpha Management; Post-Flash Crash World" Petter Kolm, NYU. May 23-24 5th Annual Hedge Fund Investment Conference Japan Keynote speakers Shuhei Abe, SPARX Group; Shinya Fuji- Tokyo. Venue to be hedgefundinvest- awara, Tower Investment Management; John Roswell, Man determined. mentsjapan.com Investments. May 24 Argyle Executive Forum's 2011 Endowment & Foundation Benjamin Appen, Magnitude Capital; David Ben-Ur, Corbin New York. Exact www.argyleforum.com Spotlight: Investing in Hedge Funds Capital; Philippe Gougenheim, Unigestion; Jonathan Shear, location provided to University of Utah CIO. attendees. May 24 46th Edition Roundtable Forum Closed door sessions each with five managers and one The Pierre Hotel, New roundtableforum.com; investor. York manager applications due April 29 May 25-26 Alternative Investments Asia 2011 Joseph Pacini, JP Morgan; Patrick Alexander, Batavia Invest- Carlton Hotel, Singa- alternativeinvestment- ment Management; Mock Pack-Kay, Saratoga Capital. pore sasia.com May 26 Securities Financing Forum, New York Alexander Lange, ABN Amro Securities; John Arnone, Four Seasons Hotel, dataexplorers.com/ Deutsche Bank Securities. New York newyork June 2 GARP's 3rd Annual European Risk Conference Panel topics include Basel III, Solvency II, Dodd-Frank, op- Mint Hotel Tower of garp.org portunities in BRIC countries. London June 5-7 Marcus Evans' Private Wealth Management Summit "Will highlight the current challenges and opportunities…" The Westin Diplomat privatewealthsummit. Spring 2011 Resort & Spa, Hol- com lywood, Fla.

11.OCT.2011 | Hong Kong 1.DEC.2011 | New York

HEDGE Space is limited. To request an invitation, visit our website: FUND www.bloomberglink.com SUMMITS Bloomberg Hedge Fund Summits bring together the world’s top hedge fund managers with economists, investors and public sector newsmakers for a day of conversations about markets, trends and the year ahead.