Fri, 28/09/2007 - 06:57
A group of international banks are seeking to buy a stake of up to 20 per cent in embattled US securities firm Bear Stearns, with HSBC, Barclays, Bank of America, Wachovia, Santander and Unicredito rumoured as potential suitors. Legendary investor Warren Buffett is also reported to have held talks with Bear, sending the company's share price soaring 7.7 per cent on September 26.
Meanwhile, two of the bankrupt hedge funds it managed will have to return USD8m to the US if they want to enjoy continued protection from US lawsuits during their liquidation in the Caymans Islands.
Bear Stearns must return the funds, which it transferred to the Cayman, or post an equal amount as bond, US bankruptcy judge Barton Lifland said at a hearing in federal court in Manhattan. The judge has given the funds until September 29 to file for reorganisation or liquidation in a US court. If no petition is filed by then, they will lose protection from US lawsuits.
Separately, three new hires have joined Bear Stearns' prime brokerage business, which services hedge funds. Douglas Stern arrived from Morgan Stanley to help manage Bear's prime brokerage sales team. Joseph Aurilio, previously with UBS, and Ted Post of Banc of America Securities have been hired to develop new business for the prime brokerage unit.
Morgan Stanley eyes stake in Biggs firm
Morgan Stanley may take a minority stake in Traxis Partners, a USD1.5bn global macro manager founded in 2003 by the bank's former strategist Barton Biggs with partners Cyril Moulle-Berteaux and Madhav Dhar. The investment bank currently provides compliance and administrative support to Traxis.
Mutual fund giant MFS Investment Management of Boston is making a foray into alternative investments by opening a subsidiary that will provide funding to outside emerging hedge funds. The new outfit, called Four Pillars Capital, will run independently from MFS but will use MFS for operational, marketing and distribution support.
President Thomas Knott will run the new business with help from investment chief Eric Lass. Knott was one of the founders of K Capital Partners, while Lass managed its Credit Opportunities Fund.
The venture will provide both seed and expansion capital to those hedge fund managers that have previous track records and do not rely heavily on leverage or illiquid strategies to produce gains. MFS currently manages USD202bn of assets for nearly five million investors.
Hedge funds say downturn would be good news
Hedge funds are bracing for a recession in 2008, according to a survey by audit and taxation firm Rothstein Kass. Of the 239 hedge fund principals polled, more than 61 per cent believed a recession was 'very likely'.
However, only 17 per cent of the survey participants viewed an economic downturn as bad news for their funds. On the contrary, 66 per cent believed an economic slowdown would create investment opportunities. Overall 87 per cent expect to see an increase in market volatility this year.
Citadel alumnus Carey Metz and John James have established Whiteside Energy to trade futures linked to oil, gas, electricity, weather derivatives, and coal and emissions credits. Metz was also a founding partner at Alpha Energy Partners. Karl Robijns and Andrew Rechtschaffen are among other recent departures from Citadel.
Lehman Brothers has appointed as its finance chief Erin Callan, who has led the firm's global hedge fund unit since it was established last year. On December 1 she will replace Chris O'Meara, who will take on a new position as global head of risk management. Callan has been with the bank around 12 years.
Pequot Capital Management's Pequot Ventures is backing a new platform called Restricted Securities Trading Network, which is in beta testing after an October 2005 launch.
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