Hedge Fund News Wrap: Week Ending 03/27/15

Former Fed Official Stein Brings Credit Bubble Expertise to Hedge Fund
(Forbes) – BlueMountain Capital, the credit-focused hedge fund that profited from JPMorgan Chase’s London Whale trading fiasco in 2012, said on Tuesday former Federal Reserve Governor Jeremy Stein will begin advising the firm on monetary policy, regulation and financial market changes. The consulting arrangement pairs one of the largest credit investors with Stein, who in his brief time at the Fed, warned about bubbles and the unintended consequences of the central bank’s post-crisis easing efforts.

Stein, who was a Fed governor between May 2012 and May 2014, is being taken on by BlueMountain as a consultant and is expected to advise the hedge fund on interest rate moves, Federal Reserve actions, and potential investment opportunities, particularly at times when markets become dislocated. The consulting gig may be a perfect fit for Stein given his belief the Federal Reserve can use monetary policy to curb asset bubbles, particularly in the credit markets where BlueMountain is considered a savvy and contrarian investor.

Read the entire article at Forbes
More coverage: CNBC and FINalternatives

Cooperman Says U.S. Seeks Information about Omega Trades

(Bloomberg) – Leon Cooperman built a reputation as a stock picker over almost half a century by scrutinizing undervalued companies and asking management tough questions.

This week, the billionaire told his clients that the government is looking into some of the trades at his $9.4 billion hedge fund Omega Advisors. The firm, Cooperman wrote in a letter dated March 24, was subpoenaed by the U.S. Attorney’s Office in New Jersey and the U.S. Securities and Exchange Commission, which are seeking information on trading in certain securities.

The inquiries are at a “very early stage” and no one at the firm has been accused of any wrongdoing, according to the letter. The 71-year-old said that his firm is cooperating with both agencies and “is highly confident that it and its employees have at all times acted properly and lawfully.”

Read the entire article at Bloomberg Business
More coverage: Wall Street Journal and HedgeCo

Vivendi Rejects Calls to Sell Universal Music

(DealBook) – The French conglomerate Vivendi has rejected an American hedge fund’s call to sell the Universal Music Group, the home of Kanye West, U2 and Sam Smith.

The move represents an unusual and prominent activist campaign by an American investor against a top French company.

In a statement on Monday, Vivendi confirmed that it had received a letter in late December from the fund, P. Schoenfeld Asset Management, calling for the sale of the music company. The investment firm has also demanded a higher dividend.

But the conglomerate reiterated that it had no intention of selling Universal, pointing to comments by the chairman of its management board, Arnaud de Puyfontaine, at a conference last week.

Read the entire article at DealBook
More coverage: Financial Times and Fortune