It’s true, according to a county official, two hedge fund service providers based there and the New York Post.
An increasing number of financial firms, especially private equity and hedge funds, are fed up with New York’s sky-high city and state tax rates and are relocating to the business-friendly climate in Florida’s Palm Beach County.
And they’re being welcomed with open arms — officials in Palm Beach recently opened an entire office dedicated to luring finance hot shots down south.
But wait, you say: Didn’t another Rupert Murdoch newspaper recently tell me that all of the hot young hedge funds want to be in New York because lazy institutional investors aren’t interested in driving to Connecticut (or, presumably, flying to Florida) to meet with them? And wasn’t that story backed up with statistics and interviews with several actual hedge fund managers? Read more »
It’s called the Golden Rectangle. And if you’re reading this, there’s a decent chance you work in it. Read more »
There is an inverse relationship between penis size and hedge fund performance, one study of a nine-month period shows. Read more »
U.S. financial regulators are pushing to turn hedge funds into informers on the white collar crime beat. The Financial Crimes Enforcement Network (FinCEN) is working on a rule that would require U.S. hedge funds to file formal reports notifying U.S. authorities of any suspicious trading by employees or outside parties, the regulatory agency said. The rule being crafted by FinCEN, part of the Treasury Department, would force the $2 trillion hedge fund industry to police itself in much the same way banks, brokerages and mutual funds are required to do by filing suspicious activity reports (SARs) with the unit. Steve Hudak, a FinCEN spokesman, said a proposed rule for the hedge fund industry could be filed for public comment some time in the first half of this year. But the rule, which would cover activities such as insider trading and money laundering, will force funds to spend more money on building out their compliance and legal departments. Hedge fund lawyer Ron Geffner said he expects many in the industry will oppose the new rule as being both intrusive and costly. [Reuters via Dealbook, FINalternatives]
Well, the praise was brief but extravagant, specifically “this is the best managed pyramid scheme in the history of the world,” which I at least would be proud to have on my resume, but I might be in the minority there. What do you think Ackman’s goal was in this morning’s 340-slide, nineteen-hour Herbalife presentation featuring phrases like “Shane’s going to come up here and talk about the accounting again” and “now I’m going to bring on our lawyer for the next 200 slides” and “here’s where it gets really interesting: shipping and handling,” and, at the 2 hour 28 minute mark, “feel free to go to the men’s room, ladies’ room, it’s at the top of the stairs, but I’ll keep going”?1 Ackman thanks several team members for working tirelessly for a year or more on this presentation, and if you watched all of it you have a pretty good sense of how they must have felt.
One model of this fight is that Ackman and Herbalife are attempting to wage regulatory battle by proxy. Presumably some SEC and FTC lawyers are watching this and the respective hopes are:
- Ackman hopes that the Federal Trade Commission will conclude that Herbalife is a pyramid scheme and shut it down, bringing the stock to zero-ish and making him a zillion dollars on his short position, and
- Herbalife hopes that the SEC will conclude that Pershing Square is a market-manipulation scheme and shut it down, causing HLF’s stock to soar.2
Neither, either, or both of these things could happen, I suppose; the FTC and the SEC are their own dogs and so you could have each running around investigating one of the protagonists here. But generally relying on a regulator is sort of a dicey proposition; even if you’re right, the regulator may have better, or possibly worse, things to do with its time than inflicting pain on your adversaries. So what does that leave you? Read more »
What is the best line from Herbalife CEO Michael Johnson’s amazingly hostile call with CNBC this afternoon, in which he maintained that Bill Ackman is wrong that Herbalife is a pyramid scheme? I think the two leading contenders are:
- “Mr. Ackman’s proposition that the United States would be better when Herbalife is gone? The United States will be better when Bill Ackman is gone.”
- “Our customers are sometimes called distributors. That’s the only confusion that we have.”
Oh that’s the only confusion is it? That’s … confusing. “You’re a pyramid scheme; you only sell products to your distributors.” “No we’re not, we sell real products to real customers.” “Oh.” “But we call the customers distributors.” I’m looking forward to a confusing exchange of press releases.1
Johnson’s claim is that the whole presentation, and the leak thereof to CNBC, are about market manipulation: “an extraordinary number of puts” on HLF are due to expire this Friday, he claims, and Ackman’s presentation tomorrow is designed to basically juice those puts going into expiry (and, one might add, year-end). That … I mean, sure, whatever.2 Read more »
They were willing to ‘em a chance, but no more. Read more »
Earlier today, Bill Hwang, the founder of the Tiger Cub’s Asia-based branch, Tiger Asia, pleaded guilty to one count of wire fraud and agreed to fork over $44 million to make allegations by the SEC of insider trading in Chinese bank stocks go away. According to Hwang, his firm “regrets the actions for which is accepts responsibility today and is grateful that this matter is now resolved.” According to SEC director of enforcement Robert Khuzami, who we would love to consider a side job writing fables for children about foxes who trade on unreleased information about clinical trials of Alzheimer’s drugs and take advantage of innocent hens,* Hwang was a very bad boy and should serve as a cautionary tale for anyone thinking about breaking the law. Read more »
Will it? I don’t know. The Wall Street Journal has a good article today about creepy stuff going on around window-dressing, where investment managers bid up the illiquid stocks they own on the last day of a quarter to make their quarterly numbers look good and increase their fee income and stuff. Sadly the Journal leads with its own study, which is kind of like statistics for people who don’t like statistics:
The Journal’s analysis compared the performance of those 10,000 stocks to the one-day return of the Standard & Poor’s 500-stock index. On days that didn’t end the quarter, an average of 217 stocks beat that index by at least 5 percentage points then trailed it by at least three the next day. But on the final trading days of quarters, an average of 280 stocks did.
Umm! There’s a chart of that, too, but … umm! Would you trade on that?1 Who cares, though; the Journal also cites forthcoming statistics from the Journal of Finance, which is like by, for and about people who love statistics:
[Let's talk about] Rabih Moussawi, a finance researcher at the Wharton School at the University of Pennsylvania who has studied window dressing. In a study slated for publication next year in the Journal of Finance, he and his colleagues found that the stocks most heavily owned by hedge funds outperformed the market by an average of 0.3 percentage points on the final day of the quarter — and underperformed by 0.25 points on the following trading day.
You could trade on that! Here’s what you do. Read more »
…even as it digests the latest government allegations of a former employee’s insider trading, SAC has turned around another positive month, leaving it up nearly 12 percent for the year through November, said someone familiar with the company’s performance. [CNBC]