Tiffany Sparkles in Nelson Peltz Hedge Fund

Chidem Kurdas

Diamonds are really forever, it turns out, despite a Great Recession and all. That’s how it looks from the stake activist investor Nelson Peltz took in Tiffany & Co.

Cramer, KKR, Cooperman and Converts

Chidem Kurdas

Last Friday Jim Cramer recommended KKR Financial Holdings, the publicly-traded credit vehicle from private equity giant Kohlberg Kravis Roberts. The investment idea came with a couple of warnings.

One, it is speculative. They borrow money to buy debt, Mr. Cramer said. They buy primarily below-investment-grade debt as well as distressed or stressed paper.

Two, the main reason Mr. Cramer says he went for KKR Financial is insider buying—-by KKR chief executive William Sonneborn and notably by Leon Cooperman, long-time equity investor and head of Omega Advisors. Surely a good sign.

Mr. Cooperman is a substantial shareholder. The striking thing, though, is something Cramer did not mention.

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Repo Credit Lesson from Paulson Auditorium

Chidem Kurdas

A broker does a repurchase transaction with a hedge fund. Mortgage-backed securities are the collateral. The fund get short-term financing; the broker holds the securities. This market broke down in 2008 and never recovered to pre-crisis levels. What happened?

Models Compete-Man, Investcorp, Blackstone

Chidem Kurdas

Man Group’s acquisition of GLG Partners, with $24 billion in assets, brought up questions about the future of alternative investment businesses.  For growth, is it better to rely more on mergers and acquisitions or wait for investors to come? Do companies with diverse strategies have an advantage?

Tudor, Caxton Like China

Chidem Kurdas

Big global macro funds stayed with China even as hedge fund people talked about a bubble in that country. Paul Tudor Jones’ Tudor Corp. and Bruce Kovner’s Caxton Associates held significant investments in Chinese companies as well as market indexes in the first quarter.

Altman Questions Debt Market Conditions

Chidem Kurdas

The latest research on credit markets was presented this week at New York University’s business school. The conference was held at the appropriately named Paulson Auditorium—as in hedge fund manager John Paulson, graduate of ’78, who gave the school $20 million of the several billions he made betting against the housing bubble.

Money Flows: Fortress Surprises

Chidem Kurdas

First quarter net capital inflow to hedge funds was positive but small—$2 billion according to Credit Suisse Tremont Hedge Index data, out of total industry assets of around $1.5 trillion.

With that number in mind, it is impressive that Fortress Group raised over $1 billion (gross) for its various funds during the quarter. At the same time, however, the assets of the firm’ global macro funds decreased, albeit slightly from $3.4 billion to $3.3 billion.

Gottex Pushes Ahead with US Venture

Chidem Kurdas

Fund of hedge funds manager and service provider Gottex Group has resumed an ambitious program to raise multi-asset investment vehicles in the US as well as in other countries. The new funds’ portfolio manager is William Landes, a former managing director at Putnam  Investments.

Short Seller’s Vindication; SEC Scandal

Chidem Kurdas

There is a frightening implication in the government’s settlement of fraud charges against a small-business lender called Business Loan Center and another business, both of which owned by Allied Capital, a business development company.

Money Flows: Evidence from Calamos

Chidem Kurdas

Calamos Asset Management, primarily a mutual fund manager that started as a convertible bond specialist but over time diversified into equities and other bonds, also runs hedge fund strategies. These apparently are attracting investors.