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.
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]
Our advice: Avoid investing in funds named for secure buildings or edifices that are expected to resist attacks from barbarian hordes, throngs of Mongolian horsemen that blot out the rolling hills, or otherwise protect the occupants (like your cash) from serious injury, sale into slavery, ritual execution or beheading, rape, or the depletion of capital. Remembering Patton (“fixed fortifications are a monument to the stupidity of man.”) you might instead want to invest in smaller, nimbler, more agile structures that can simply slip across the border when Atilla the Hun invades. Consider the French Maginot Line, Fort Eben-Emael, that guarded the Gap of Vice, or, in what is just the latest, modern example:
Fortress Investment Group LLC’s hedge-fund clients have asked to pull more than $4.5 billion, or a quarter of their money, over the next few months as the company reported its first quarterly loss since going public.
The redemption requests poured in as Fortress’s Drawbridge Global Macro funds lost 13.5 percent this year through Sept. 30 and its Special Opportunities funds declined as much as 7.2 percent, the New York-based company said today in a statement. Hedge funds fell an average of 11.6 percent in the same period, according to the HFRX Global Hedge Fund Index.
With enough research, one might even discern a pattern.
How’s your PnL looking so far this year? Happy your long dollar position is starting to look good? Or are you annoying your b-school alumni affairs office asking them to post more jobs for experienced grads (Hey, Columbia, are you reading this? Get to work!).
Either way, if you have time to read this, I’ll bet you’re not doing as well as Adam Levinson. No, not that jerk from Maroon 5 — that’s Adam Levine.
Adam Levinson is doing WAY better than Adam Levine. For one, no one’s calling him a no-talent bastard to his face. For another, Fortress Investment Group just gave him $300 million in shares. But that’s not the first time he made more money than you or that weasel Adam Levine.
According to Jeffrey Cane of Portfolio.com (who wrote a piece linking to a lot of other pieces I didn’t read; As a former derivatives trader, I like to think of this as derivative journalism):
“Levinson, whose annual income Trader Monthly estimated a year ago was between $75 million and $100 million, joined Fortress in 2002 from Goldman Sachs. “
Then Cane asks the question we all ask ourselves when we read such things, if only to make ourselves feel better:
“The package shows that even amid a slowdown, firms are still paying out huge sums to star traders and dealmakers. Are they worth it?”
If you’re not Adam Levinson, the answer to that question is usually, “Hell no! Give that money to me!”. However, if you’re Adam Levinson, the answer is inevitably, “Hell yes! I should be paid more!”
Apparently, a Citigroup analyst disagrees with Fortress and Levinson and Cane provides a nifty quote. However, at the rate things are going, Levinson can buy out Citigroup, fire the analyst, and delete Adam Levine’s bank account so we don’t have to read about his dating exploits ever again.
Apropos of nothing, I always think of this site when i think of Adam Levine.
There’s an old saying in the alternative-asset management game–when your business is down, the best way to get up is to finance a movie that makes Norbit look good. And if it makes Ed, the film starring Matthew LeBlanc and a monkey, look good? All the better. John Devaney and the team at United Capital Markets knew this, which is why they invested a bunch of money in “Poseidon” before, you know. Same deal for RenTec and “Dough Boys,” L-Train and “I Know Who Killed Me.” Obviously the brain trust at Fortress, which reported a $55 million loss today, is aware of this strategy, as well. Here’s the trailer for Disaster Movie, which, in addition to a few other Oscar contenders, FIG has committed more $300 million to finance.
[click to view]
Related: Fortress Down
Earlier: How Katherine Heigl’s Rack Nearly Sank Bridgewater
“I think that the use of the word loss in this case is pejorative and actually not at all accurate,” sniffed [Fortress CEO Wes] Edens to Rashad Fonti, analyst from Citigroup, when the matter of FIG’s public portfolio holdings falling from $7.18 billion to $765 million was brought up in passing.
Fortress CEO to analysts: We don’t call them “losses” [Reuters]