TLC Capital Group Readies Summer Hedge Fund Launch

.Atlanta-based TLC Capital Group LLC is preparing the launch of a new option-hedged market neutral fund, the Salvus Hedged Yield Fund LP.

“The fund is designed for the preservation of capital and will offer investors the advantage of a defined market risk and a target high single digit ROR*.” CIO William J. Taylor said, “By investing exclusively in large- and mid-cap listed equities and hedging with corresponding listed options, the fund will offer unparalleled liquidity and transparency. We feel the fund will appeal to both institutional and individual investors alike, and should be a core holding for both.”

The Salvus Hedged Yield Fund LP will launch later this summer with a $250,000 minimum subscription per investor.

William Taylor is also co-author of the popular Professional Traders Opinion newsletter with Ron George and has been widely published on Futuresmag, Seeking Alpha and tastytrade. TLC Capital Group is a partner with MVS Capital Management and is also merging operations with registered investment advisor Salvus Financial LLC. The firm currently manages $25 million in AUM in an institutional SMA.

Hedge Funds

Bloomberg Markets To Sponsor A Panel Of Hedge Fund Experts

Bloomberg Markets magazine announced today that it is bringing together a group of experts to help hedge funds and other alternative structures increase transparency and define marketing practices in the wake of the JOBs act.

As of today, 21 people are on the Bloomberg Alternative Marketing Council, including Blackstone’s Avi Sharon, and Stanley Goldstein, Chairman and Founder of the New York Hedge Fund Roundtable.

The need for hedge funds to begin defining marketing best practices is significant, given a changing competitive landscape shaped not only by regulatory changes such as the JOBs act, but also by the growth of new structures such as liquid alternatives. One estimate indicates as much as $12.8 trillion of U.S. retail capital may ultimately be in play as a result of these changes, with nearly $1 trillion of potentially flowing into alternatives by 2017, including traditional hedge funds, liquid alts, and ’40 Act funds.

The advisory board includes:

* Ryan Alderman, Senior Vice President, Financial Services, Razorfish
* David Benway, CEO, Verinvest
* Jarvis Cromwell, Consultant, Hedge Fund Marketing Strategies, Bloomberg Markets
* Edward Dartley, Investment Practice Attorney, Pepper Hamilton LLP
* Dominic DiPasquale, Sales Management, Bloomberg LP
* Michael Dukmejian, Publisher, Bloomberg Markets
* Jonathan Ewert, CEO, Reputation Institute
* Stanley Goldstein, Chairman and Founder, New York Hedge Fund Roundtable
* John Griswold, Executive Director, Commonfund Institute
* Simeon Hyman, Head of Investment Strategy, ProShares
* Gary S. Kaminsky, Managing Director, Global Regulatory and Compliance, ConceptONE
* Candace Klein, Chief Strategy Officer, Dealstruck; Chief Counsel, Women Investing in Women; Of Counsel, Ellenoff, Grossman & Schole, LLP
* Patrick McCurdy, Managing Director, Wells Fargo Prime Services
* Maureen McGuire, CMO Emeritus, Bloomberg LPLayne Moskowitz, Sales Management, Bloomberg LP
* Samer Ojjeh, Principal, Financial Services, Ernst & Young
* Pen Pendleton, Partner, Cattell, Locke, Pendleton & Partners
* Dan Simon, President: Cognito Media
* Avi Sharon, Principal, Private Wealth, The Blackstone Group
* Ilaria Vigano, Regulatory Products, Bloomberg LPDavis Walmsley, Greenwich Associates

The Bloomberg Alternative Marketing Council says that they are planning invitation-only, in person gatherings that combine the latest thinking, case studies and best practices in alternative marketing with peer-to-peer networking as well as the sponsorship of surveys, white papers, web conferences and educational briefings.

Hedge Fund Strategy, Hedge Funds, hedge fund research

Global Hedge Funds Reach $2.12 Trillion In First Half Of 2014

Despite mixed returns, hedge funds grew assets under management by US$105.6 billion in the first half of 2014 bringing the current AUM of the global hedge fund industry to a record high of US$2.12 trillion, according to the July 2014 Eurekahedge Report.

Hedge funds followed global equity markets higher to close 1.25% up by the end of June, with the Eurekahedge Hedge Fund Index reaching another new high during the month. Global equity markets saw another month of broad-based gains in June, with the strongest performers being Asia Pacific and Latin America for the emerging economies and North America for developed economies.

Hedge Fund Strategy, Hedge Funds, hedge fund research

Hedge Fund Awards: JP Morgan Wins “Manager of the Year”

J.P. Morgan Alternative Asset Management (JPMAAM) has been named “Firm of the Year” among Large Fund of Hedge Funds managers at the 12th Annual Hedge Fund Industry Awards. Institutional Investor presented the award at a ceremony attended by more than 450 investors and hedge fund leaders at the Mandarin Oriental in New York.

With $11.4 billion under management (as of May 31, 2014), JPMAAM’s Hedge Fund Solutions platform is comprised of commingled funds of funds as well as a substantial number of customized and advisory accounts.

“We are honored by this prestigious award, which is a validation of our commitment to delivering hedge fund solutions to clients,” said Paul Zummo, CIO/CEO of the group. “This award also reflects our focus on unique investment strategies and our continual search for managers who can add alpha. Together, these factors have helped us drive outperformance for the benefit of clients.”

Overall consideration for the award was given to “performance, innovation, due diligence, risk management, firm culture and the proven ability of the firm to provide overall value in constructing hedge fund portfolios for clients,” according to Institutional Investor. Other finalists in the category included Goldman Sachs Hedge Fund Strategies, Morgan Stanley Alternative Investment Partners, Pacific Alternative Asset Management Company and Permal Group.

Clients of JPMAAM’s Hedge Fund Solutions group include many of the world’s largest and most sophisticated investors, including pension funds, sovereign wealth funds, university endowments, insurance companies and charitable foundations.

Events, Hedge Fund Strategy, Hedge Funds

KKR Takes Minority Stake in Hedge Fund BlackGold Capital

Global investment firm KKR & Co. L.P. is acquiring a 24.9% interest in credit-oriented hedge fund BlackGold Capital Management, the WSJ reports.

Founded in 2006 by co-founders Erik Dybesland and Adam Flikerski, Blackgold manages $1.4 billion in assets and specializes in energy and hard asset investments.

The investment in BlackGold is part of KKR’s efforts to develop the firm’s hedge fund platform, which is co-led by Girish Reddy and Todd Builione, and to expand the firm’s energy business, which is led by Marc Lipschultz.

“Through this strategic investment in BlackGold, we are partnering with an outstanding team with an excellent track record of delivering returns to investors.” Todd Builione, co-head of Hedge Funds at KKR, said. “We are thrilled to add BlackGold to our hedge fund platform and we look forward to a long-term partnership with Erik, Adam and the full BlackGold team.”

BlackGold’s management team will continue to manage the business independently, and BlackGold’s investment strategies will not change as a result of KKR’s investment. All of BlackGold founders’ capital will remain invested in the funds and the majority of the proceeds received from this transaction will be re-invested in the funds – maintaining full alignment with their investors. Pro forma this transaction, the BlackGold management team will own 75.1% of BlackGold.

KKR’s hedge fund platform includes its approximately $10 billion multi-manager hedge fund business (KKR Prisma) and a Strategic Stakes & Seeding business that invests the firm’s balance sheet to acquire minority stakes in hedge fund managers. BlackGold represents KKR’s second minority stake in a hedge fund manager, following the 2013 investment in Nephila Capital, an insurance-linked securities manager with approximately $10 billion under management.

Hedge Fund Strategy, Hedge Funds

Louisiana Hedge Fund Manager Pleads Guilty To Fraud

A hedge fund manager has pleaded guilty to multiple counts of mail fraud based on his executing a $13 million investment fraud scheme that included victims in Louisiana, Mississippi, Texas and Florida, The Times-Picayune reports. He is scheduled for trial later this week.

Zachary Holdman operated a hedge fund called Greenwing Capital Management, LLC. As the owner and operator of the fund, the FBI alleges that he solicited and received millions of dollars in investment funds from the victim investors, many of whom were retirees, including former military veterans as well as survivors of Hurricane Katrina.

“Those individuals who prey on a vulnerable investing public, especially during such challenging economic times, will continue to be held fully accountable.” FBI Special Agent-in-Charge Michael J. Anderson said.

Holdman faces a maximum term of imprisonment of forty years and millions in fines and restitution to his victims.

The indictment alleges that from approximately February 2008 to October 2008, Holdman concealed a failed investment plan by falsely representing to the victim investors that their investments were earning positive rates of return when, in fact, Holdman had lost over 98 percent of their funds.

“Investment fraud is a devastating crime that goes on far too often. We will continue to pursue such matters aggressively, particularly when the victims include some of our community’s most vulnerable. My appreciation goes to our federal and state law enforcement partners, both here in Louisiana and in Texas and Mississippi, for helping us uncover and address this scheme.” U.S. Attorney Green said.

Fraud, Hedge Funds

Citigroup To Pay $7 Billion In Sub-Prime Mortgage Settlement

Citigroup has agreed to pay approximately $7 billion for its part in the financial crisis of 2008, the WSJ reports. Citigroup is accused of downplaying the risks of sub-prime mortgages when packaging them selling them to hedge funds, mutual funds and pension funds.

“The penalty is appropriate given the strength of the evidence of the wrongdoing committed by Citi,” Attorney General Eric Holder said, “The bank’s misconduct was egregious. As a result of their assurances that toxic financial products were sound, Citigroup was able to expand its market share and increase profits.”

The Department of Justice initially asked for $12 billion, while Citigroup placed its opening bid at $363 million.  The end result consists of fines of $4 billion in cash to the DoJ, $2.5 billion in consumer relief, more than $200 million to the FDIC and just under $300 million to settle probes by five states.

“We believe that this settlement is in the best interests of our shareholders, and allows us to move forward and to focus on the future, not the past.” Citi CEO Michael Corbat said.

The consumer relief will be in the form of financing provided for the construction and preservation of affordable multifamily rental housing, principal reduction and forbearance for residential loans, as well as other direct consumer benefits from various relief programs. Citigroup has agreed to provide the consumer relief by the end of 2018.

Citigroup today reported second quarter earnings per share of $0.03; $1.24, a net income of $181 million; $3.9 billion, and revenues of $19.3 billion, excluding the impact of the mortgage settlement.

Fraud, Hedge Funds

Hedge Funds Get $16.9 Billion in May but Underperform S&P 500

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BarclayHedge and TrimTabs Investment Research reported today that the hedge fund industry took in $16.9 billion (0.7% of assets) in May, down slightly from $19.1 billion (0.8% of assets) in April.

Hedge funds raked in $72.2 billion in the first five months of this year, the strongest January-May inflows since 2007,” said Sol Waksman, president and founder of BarclayHedge.

Industry assets climbed to a 5¾-year high of $2.3 trillion in May, according to estimates based on data from 3,426 funds. Assets rose 18% in the past 12 months but were down 6% from the all-time high of $2.4 trillion in June 2008.

The monthly TrimTabs/BarclayHedge Hedge Fund Flow Report noted that the hedge fund industry gained 1.2% in May, bouncing back from April’s 0.2% loss but underperforming the S&P 500, which gained 2.4%. In the past 12 months, the industry returned 7.6%, while the S&P 500 rose 18.0%.

“Funds targeting distressed securities are up 5.1% this year, outperforming all other fund categories,” said Waksman, who noted that macro funds fared the worst, losing 0.9%.
The monthly TrimTabs/BarclayHedge Survey of Hedge Fund Managers finds a plurality of respondents was neutral on the S&P 500 over the next 30 days, although bullish sentiment rose to a three-month high, and bearish sentiment dipped. The majority favoring developed markets grew larger, rebounding from a 15-month low in May. The proportion expecting crude oil prices to rise in the next six months hit a 17-month high, while the proportion expecting gold prices to climb rose to a four-month high.

Hedge Fund Strategy, Hedge Funds

Hedge Funds: January-May Inflow of $72.2 Billion Highest since 2007

BarclayHedge and TrimTabs Investment Research reported today that the hedge fund industry took in $16.9 billion (0.7% of assets) in May, down slightly from $19.1 billion (0.8% of assets) in April.

Hedge funds raked in $72.2 billion in the first five months of this year, the strongest January-May inflows since 2007,” said Sol Waksman, president and founder of BarclayHedge.

Industry assets climbed to a 5¾-year high of $2.3 trillion in May, according to estimates based on data from 3,426  funds.  Assets rose 18% in the past 12 months but were down 6% from the all-time high of $2.4 trillion in June 2008.

The monthly TrimTabs/BarclayHedge Hedge Fund Flow Report noted that the hedge fund industry gained 1.2% in May, bouncing back from April’s 0.2% loss but underperforming the S&P 500, which gained 2.4%.  In the past 12 months, the industry returned 7.6%, while the S&P 500 rose 18.0%.

“Funds targeting distressed securities are up 5.1% this year, outperforming all other fund categories,” said Waksman, who noted that macro funds fared the worst, losing 0.9%.

The monthly TrimTabs/BarclayHedge Survey of Hedge Fund Managers finds a plurality of respondents was neutral on the S&P 500 over the next 30 days, although bullish sentiment rose to a three-month high, and bearish sentiment dipped.  The majority favoring developed markets grew larger, rebounding from a 15-month low in May.  The proportion expecting crude oil prices to rise in the next six months hit a 17-month high, while the proportion expecting gold prices to climb rose to a four-month high.

Hedge Fund Strategy, Hedge Funds, hedge fund research

Two Executives and A Hedge Fund Portfolio Manager Sentenced To Federal Prison

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Eric M. Martin, Mark Megalli, and Richard T. Posey have been sentenced to federal prison for their roles in a multi-million-dollar insider trading conspiracy involving children’s clothing company Carter’s, Inc. stock.

Mark Megalli worked at New York hedge fund Level Global Investors was the contact point for some of the insider trading, the FBI says. Megalli in turn caused Level Global to execute multimillion dollar trades in Carter’s stocks based on the inside information received from Martin from September 2009 through July 2010. The former-Carter’s executives also tipped off others including NJ hedge fund Titan Capital Management LLC.

Eric Martin was Carter’s Director and later Vice President of Investor Relations, his actions, the FBI said, including illegal trading and tipping of others between 2005 and 2010 resulted in over $7 million in insider trading gains and losses avoided for Martin and his downstream tippees. Posey’s illegal trading and tipping of Martin between 2009 and 2010 resulted in over $5 million in insider trading gains and losses avoided. Megalli’s illegal trading between 2009 and 2010 resulted in over $3 million in insider trading gains and losses avoided for Level Global.

The FBI said: “On a consistent basis between early 2005 and his separation from Carter’s in March 2009, Martin disclosed material, non-public information about Carter’s upcoming earnings releases and other developments to a former Wall Street analyst identified by the government as “Cooperator Number 1,” for the purpose of making illegal insider trades. Cooperator Number 1 repeatedly bought and sold Carter’s stock on the basis of this information, earning substantial illegal profits and illegally avoiding substantial losses. Cooperator Number 1 also tipped others, including Titan Capital Management LLC, a New Jersey hedge fund that had retained him as an outside consultant. Martin disclosed this and other material, non-public information in exchange for friendship, reciprocal stock tips about other public companies to which Cooperator Number 1 had access, and future business and networking opportunities.”

After Martin separated from Carter’s in March 2009, Martin continued to obtain inside information in advance of Carter’s earnings releases and other events from Posey, who was his friend and former Carter’s co-worker. Posey was employed as a Vice President of Operations for various Carter’s brands and divisions and later as Vice President of Operations for the company’s wholesale sales business from in or about July 2002 until his termination in January 2013. Posey disclosed the information to Martin from early 2009 through July 2010 in exchange for friendship, reciprocal stock tips, and future business and networking opportunities.

A fourth defendant, Steven E. Slawson, 67, of Lebanon, New Jersey, was indicted by the grand jury on May 20, 2014. Slawson, a co-founder of Titan Capital Management, is alleged to have traded on tips obtained from Cooperator Number 1 and later directly from Martin from early 2005 through July 2010.

Fraud, Hedge Funds