Hedge Fund News Wrap: Week Ending 1/10/14


Ex-SAC Trader, Martoma, Forged Grades at Harvard Law

As the insider trading case against Mathew Martoma unfolds, startling facts about the former portfolio manager for SAC Capital Advisors have begun to surface. Two court documents unsealed Thursday by U.S. District Judge Paul Gardephe reveal that Martoma used computer software to fabricate his academic transcript from Harvard Law School while applying for a clerkship with a federal judge.

Martoma used the software to change several of his grades from Bs to As. Then, the fabricated transcript was sent to twenty-three judges.

According to DealBook, Martoma tried to cover the fabrication by creating a fake paper trail that included false e-mails, and a report from a computer forensics firm that Martoma had created to cover his activities.

However, Martoma was expelled from Harvard Law, and he would eventually change his legal name from Ajai Mathew Mariamdani Thomas to Mathew Martoma.

Martoma’s defense team did not dispute any of the revelations.

A spokesperson for Martoma argued that these new facts from Martoma’s past are irrelevant to the current insider trading case. “This event of 15 years ago is entirely unrelated to — and has no bearing on — this case,” Lou Colasuonno said in a statement. “Raising it now is a transparent effort by the government to unduly influence the ongoing court proceedings.”

However, prosecutors argued that Martoma’s experience with manipulating evidence should be relevant, considering that the insider trading case revolves around undisclosed information about an Alzheimer’s drug, which was obtained from a private Power Point document he acquired from a doctor.

“Martoma’s demonstrated capacity to create elaborate electronic forgeries — which included expertise with respect to altering the dates of electronic records — could have been employed by Martoma to generate phony evidence purporting to show that Martoma had received the document only once it had become public.”


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Bloomberg News



Ray Dalio’s All-Weather Fund Posts Lackluster Returns

According to Fortune, Dalio’s hedge fund has claimed that it will never have an off year. However, that is exactly what happened in 2013.

Bridgewater Associates, one of the world’s biggest hedge fund firms, had an underwhelming year when it came to the performance of its Pure Alpha fund and All-Weather fund. The Pure Alpha fund rose 5.25 percent in 2013, with $80 billion in assets. However, the All-Weather fund was down 3.9 percent, with $70 billion in assets for the year.

The lackluster returns are somewhat surprising, considering that the broader market rose nearly 30 percent, with the S&P 500 index posting its best gains since the 1990s.

According to DealBook, the performance of the two Bridgewater portfolios also lagged behind the rest of the hedge fund market, as hedge funds on average posted a 9 percent gain in 2013.

All-Weather is based on a concept called “risk parity,” which results in a leveraged bond portfolio.

However, rising interest rates will ultimately impact the fund’s performance.

“With rising interest rates, and the expectation that they will continue to rise for a while appears to be the end of the run for All-Weather, along with the belief that the fund had the ability to perennially defy the market,” writes Stephen Gandel, senior editor at Fortune.

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Investment News



Glenview Named Best Big Hedge Fund

Glenview Capital Partners was named the best hedge fund of 2013, according to Bloomberg Market’s annual ranking.

The hedge fund’s $1.8 billion Opportunity Fund rose 84.2 percent in the first ten months of 2013, outperforming Matrix Capital Management, Paulson & Co.’s Recovery Fund, and Lansdowne Partners.

According to FINalternatives, Glenview’s returns were influenced by its bets on healthcare stocks. Glenview’s founder, Larry Robbins, became bullish on the sector in 2012, after the Supreme Court allowed President Obama’s Affordable Care Act to stand.

SAC Capital, which was last year’s winner, did not make it onto the list because it will now become a family office.

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Bloomberg News



One Hedge Fund is Serious about Bitcoin Trading

In a job posting from recruiter, Glocap, a San-Francisco hedge fund is seeking a junior trader. However, besides strong analytical skills and familiarity with Excel, this hedge fund seeks someone who is a “cryptocurrency” expert.

It is the first job posting for a Bitcoin trader, as the virtual currency is starting to be taken seriously.

According to FINalternatives, both Pantera Capital and Fortress Investment Group are planning to start a Bitcoin fund.

The job posting lists that candidates should be “comfortable working on a volatile, illiquid, and new product.”

VentureBeat writes that at the time of publication, Bitcoin was trading at $877 on Mt.Gox, which is the largest Bitcoin exchange.

Below is a screenshot of the job posting, courtesy of VentureBeat.


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