Hedge Fund News Wrap: Week Ending 7/11/14

Hedge Fund Performance: Hedge Funds Up 3.2 Percent YTD

For the first half of the year, hedge funds are up 3.2 percent, falling far behind the broader market as the Standard & Poor’s 500 Index is up 6 percent year-to-date.

finance1

According to the HRFI Fund Weighted Composite Index, India-focused funds (33.36 percent YTD), energy and basic materials funds (11.36 percent YTD), yield alternatives funds (9.72 percent YTD), and Middle East and North Africa funds (7.24 percent YTD) were able to top the broader market.

However, short-bias funds, currency funds, and Eastern Europe funds were among the worst performers for the first half of the year.

Although hedge fund assets under management are at a historic high of $3 trillion, the high inflows do not correlate with high returns or better performance.

See detailed coverage from:

FINalternatives

 

 

Hedge Fund to Take Control of American Apparel

Struggling clothing company, American Apparel Inc., received a $25 million breather on Wednesday, courtesy of the hedge fund, Standard General LP.

Standard General and American Apparel came to an agreement which will have the hedge fund investing $25 million into the company, while all but two of American Apparel’s seven board members will be replaced. The financial guarantees will help the clothing brand repay private-equity firm and longtime American Apparel lender, Lion Capital, $10 million in loans.

Dov Carney, the ousted founder of American Apparel, will serve as a strategic consultant until an investigation on allegations of misconduct is concluded.
“This partnership represents a tremendous opportunity for both American Apparel and Standard General,” said American Apparel co-chairman, Allan Mayer to The Wall Street Journal. “We both tihnk the company’s greatest days are still ahead of it.”

“American Apparel is an attractive brand, but that has been overshadowed by the chaos and the balance sheet problems,” said David Glazek, a Standard General partner. “We thought if it could get some breathing room, the company could be fixed.”

See detailed coverage from:

FINalternatives

The Wall Street Journal

Bloomberg News

 

 

Rengan Rajaratnam Acquitted in Insider Trading Case

Rengan Rajaratnam, the brother of Galleon Group founder Raj Rajaratnam, was acquitted in the insider trading case regarding his brother’s hedge fund, ending a winning streak by U.S. prosecutors.

According to Bloomberg News, Rengan Rajaratnam’s acquittal is the first trial loss in the five-year crackdown on insider trading by Manhattan U.S. attorney, Preet Bharara, and the Federal Bureau of Investigation.

Rajaratnam was accused of working with his older brother, Raj, to obtain nonpublic information about a deal involving Advanced Micro Devices Inc. and Clearwire Corp. Allegedly, the brothers traded on the information they received. Raj Rajaratnam was convicted on insider trading in 2011 and is serving an eleven-year prison sentence.

See detailed coverage from:

DealBook

Bloomberg News

Reuters

 

 

Falcone’s Hedge Fund Sues Dish Network

Harbinger Capital, the hedge fund owned by Philip Falcone, has filed a lawsuit on Tuesday against Dish Networks, accusing the satellite television provider of violating a federal racketeering law. According to The New York Times, Harbinger Capital is seeking $1.5 billion in damages.

According to the lawsuit, Charles Ergen, the chairman of Dish Network, allegedly carried out a plan to acquire the wireless broadband company, LightSquared, at bargain-basement prices. In addition, the hedge fund contends that Ergen violated the “Racketeering Influenced and Corrupt Organization Act” by buying large amounts of LightSquared’s debt at the same time that Dish Network was preparing a bid for the company’s assets.

“The defendants wrongfully and deceptively created chaos in the bankruptcy proceedings so that Harbinger would lose control of the LightSquared board to which it was contractually entitled,” read the lawsuit.

Harbinger Capital, the majority owner of LightSquared, planned to turn to the company into a wireless network that would rival Verizon Wireless and AT&T. However, LightSquared filed for bankruptcy in 2012 after the Federal Communications Commission blocked it from creating a 4G LTE network.

See detailed coverage from:

DealBook

Bloomberg Businessweek 

The Wall Street Journal