Financial advisers who gathered in New York to hear leaders of the asset management industry impart their best investment ideas for the year ahead were given a surprising tip by one prominent hedge fund manager: Bitcoin. Michael Novogratz, co-chief investment officer of macro funds at the $55bn Fortress Investment Group, used a panel discussion on the prospects for emerging markets to trumpet the much-hyped digital currency, which he said could be used as a cheaper way of transferring money in countries with weak banking systems. Even if that did not come to pass, he said, there could be money to be made from a Bitcoin bubble along the way. Speaking after his appearance at the UBS Wealth Management CIO Global Forum in New York, Mr Novogratz said that he and another Fortress colleague had taken personal positions in the yo-yoing currency three months ago. Fortress itself looked at the idea. The market capitalisation of the entire stock of Bitcoin in existence is $2.2bn, and Fortress decided it was too speculative an investment for its own funds. [FT]
Robert Hess, who interned at [Fortress] in 2008 and will attend Yale University in August, will try to see the future over the next seven days — on a chessboard. The 19-year-old grandmaster is alone atop his group in the first phase of the 2011 U.S. Championship in St. Louis, and has clinched a spot in the semifinals. In five months, he plans to use his chess skills to help study finance at Yale in New Haven, Connecticut, and join the likes of Harvard University economics professor Ken Rogoff as grandmasters to attend the university. “These are the kinds of things that I like doing, strategizing and finding patterns,” Hess said in a telephone interview from St. Louis. Hess, who deferred from Yale for a year to play chess full time, worked a summer internship at Fortress. There, Hess analyzed entertainment stocks and developed an interest in finance. [Bloomberg via BI]
May was the worst month for hedge funds since October 2008. The HFRX Global Hedge Fund Index lost 2.6 percent and Louis Moore Bacon got hammered. Not Boaz Weinstein. Yeah, he might have lost $1 billion at Deutsche Bank, but that’s old news. Boaz’s Saba Capital (Hebrew for grandfather) bucked the trend in May, up 1.6 percent for the month and 5.8 percent for the year.
Here’s some other winners and losers from May: Read more »
The salad days for CMBS are back!
Just a couple weeks after the first commercial mortgage-backed securities deal in a year went down, two more are on their way. It’s like 2007 all over again (and, in a related note, as if 2007 never happened).
Second to the market is Inland Western Retail Real Estate Trust won $625 million in fresh financing yesterday from JPMorgan Chase, which plans to turn the $500 million first-mortgage part into CMBS. Those who like to live on the wilder side can pick up some of the $125 million mezzanine debt in a private placement.
Can it be? Could they pull it out of the fire?
Fortress blocked redemptions from its flagship Drawbridge Global Macro Fund in December, telling investors at the time that they would get 72% of their requested withdrawals by April. But on Jan. 22, the New York firm moved up the timetable, promising investors they would get the 72% back this month, subject to a 10% hold-back pending a final audit. The remaining 28% of assets that the investors sought to redeem — representing illiquid investments — has been put into a side pocket to be paid out over 18 months.
Fortress, Tudor and Threadneedle Permit Redemptions Again [Hedge Fund Alert via Zerohedge]
Two years after commissioning the ski lift, Edens, 47, finds himself staring into an abyss of a different sort. He’s the chief executive officer of money manager Fortress Investment Group LLC. Edens and his partners became instant billionaires when the company, which manages $34.3 billion in private equity and hedge fund holdings, went public in 2007. The Montana-born Edens, who ski-raced in high school, could have paid for the gondola himself.
In the past four months the shares of Fortress have lost most of their value, falling 96 percent to $1.34 from $31 on Feb. 9, 2007, their first trading day. “There’s been a lot of hardship in the world since then,” says Edens in a rare interview.
The stock prices of a half dozen other publicly traded companies controlled by Fortress have also plunged.
Analysts are bearish on Fortress, even at a rock-bottom price.
The (very long) article on Bloomberg is worth a look. Particularly if you hate pretentious skiers.
Fortress Blocks Redemptions as Shareholders Lose 96% Since IPO [Bloomberg]
What do you do when maintaining the artifice of your series of fraudulent transactions is threatened by the credit crunch? Why, impersonate a pension fund lawyer and get $50 million from Fortress, of course.
According to people familiar with the matter, Mr. Dreier was attempting to secure tens of millions of dollars from Fortress Investment Group LLC, a New York asset-management firm, by impersonating an Ontario Teachers’ Pension Plan attorney in a sham business transaction. Fortress asked for certain guarantees from the pension plan, which Mr. Dreier represented to be involved in the deal when it wasn’t, these people allege. These people say problems arose for Mr. Dreier when Fortress representatives wanted to meet with pension-plan managers in person.
On Tuesday, Mr. Dreier arranged a meeting in Toronto with Ontario Teachers’ on an unrelated matter, gaining him access to their offices, the people familiar with the matter said. They said that instead of leaving after the meeting, Mr. Dreier waited in the office for the arrival of Howard Steinberg, a Fortress executive, who thought he was meeting with an Ontario Teachers’ lawyer.
The people familiar with the matter allege that Mr. Dreier intercepted the Fortress executive, took him to a conference room, and began a meeting in which he pretended to be Michael Padfield, an in-house lawyer with the pension plan. According to the people familiar with the situation, Mr. Dreier handed out a business card with Mr. Padfield’s name and signed documents as Mr. Padfield. Mr. Padfield couldn’t be reached for comment.
Mr. Steiberg got suspicious and Dreier wandered off, got in the elevator and vanished.
“Hi, I’m Mr. Dreier…er… Padfield… damn! Can we start over?” apparently didn’t go so well.*
*Ok, so we made that up.
Dreier Faces Federal Charges [The Wall Street Journal]
Continuing the theme that funds named for fixed emplacements are dangerous investments (we think the marketing types are over-compensating for their poor risk-mitigation expertise) Fortress Investment Group, LLC has frozen withdrawals from their largest fund. The $8 billion fund is looking at $3.51 billion in redemption requests. Ow.
Sure, part of it might have to do with everyone’s lust for liquidity, or the 13.5% loss through the end of September. Whatever the case, the fund will be under $4 billion in assets absent some miracle.
Fortress Halts Withdrawals From Global Macro Fund [Bloomberg]