Hedge Fund News Wrap: Week Ending 1/31/14

Glade Brook Capital Says ‘Open Sesame,’ Betting $250 Million on Alibaba

hedge_fund_news_wrapGlade Brook Capital is making some big bets on the prices of China e-commerce company Alibaba Group, buying $250 million in a private stock transaction.

The investment reportedly puts the value of the company at around $140 billion. Managers at Glade Brook expect the price of the firm to go to $200 billion when it goes public, according to an unnamed source cited by CNBC. Alibaba’s IPO is expected to take place in the next few months, according to analysts.

Glade Broom capital was founded in 2011 by Shumway Capital Partners manager Paul Hudson.

To be sure, Yahoo shares fell on Tuesday, after reporting a slowdown at Alibaba Group. Yahoo owns a 24 percent stake in Alibaba, and this asset is estimated to comprise about half of Yahoo’s total market value.

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Defense Rests in Martoma Insider Trading Trial

The defense team of Matthew Martoma, on trial for insider trading, finished closing arguments, saying that the embattled former fund manager of SAC Capital Advisors LP was trading on information that was already in the public domain.

Martoma is on trial for allegedly trading on inside information from two doctors overseeing parts of a clinical drug trial of bapineuzumab, a drug to fight Alzheimer’s disease being developed  by Elan Corp. and Wyeth

Federal prosecutors claim that Martoma made $275 million for the firm based on gains from trading, and avoiding losses, resulting from disappointing results for the drug.

If convicted, Martoma could face as long as twenty years in jail for each count of the two counts of securities fraud, and five additional years for a conspiracy charge.

See detailed coverage from Reuters


Rifat of Moore Capital Charged in UK Market Abuse Case

Julian Rifat, a former equity trader at US hedge fund Moore Capital, was charged with insider trading. Rifat, is part of a wider investigation by UK authorities, dubbed Operation Tabernula, the largest insider trading case in Britain’s history.

Rifat has been “accused of eight counts of passing confidential, price-sensitive information to an accomplice to his significant advantage’ according to a report in Reuters.

UK regulators had been criticized for not taking a tough enough stance on financial crime before the mortgage-lead meltdown of 2008. Since 2009 there “have been 23 convictions for insider dealing and last year the FCA arrested another 15 suspects,” according to Reuters.

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Hedge Titans Shutter Back-to-back as Scout and Joho Call It Quits

Scout Capital Management, with $6.7 billion under management, and Joho Capital LLC, with $5 billion under management,will return outside money to investors.

The two closures, less than a week apart, mark the biggest hedge funds to shutter in recent years, according to news reports.

Hedge Fund Research Inc. reported that in 2013 608 funds liquidated, the lowest number since 2007, when 563 funds shuttered, according to data from Hedge Fund Research Inc.

Hedge Fund Research also reported that fund inflows hit a record in the fourth quarter of 2013, up $120 billion on $10.5 billion in net inflows to $2.63 trillion, as hedge funds saw their best performance in three years.

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Marathon Asset Management Spends $530 Million Sifting Rubble in Europe

“Vulture” hedge fund Marathon Asset Management, which has $11 billion under management, is committing $530 million towards distressed debt in Europe.

Marathon plans to focus on Spain, Germany, and Ireland, according to a report in the New York Times.

See detailed coverage from The New York Times


Hedge Fund Gives Super Bowl to the Broncs By Three

Los Angeles-based quant hedge fund Analytic Investors has developed a model to both predict the winner of the Super Bowl and to garner a ton of free publicity ahead of the game.

The Analytic Investor model, called the NFL Alpha Model, has called the game for the Denver Broncos over the Seattle Seahawks by more than three points.

NFL Alpha has already delivered for Analytic Investors in a big way – at least on the PR front. In an industry where returns are trailing the stock market, it looks like they’re already far ahead of the pack before the first snap has even taken place. (Sorry if I sound a little negative – I’m a Giant’s fan.)

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