BlackRock has been tapped by the Federal Reserve Bank of New York to help manage the USD30bn portfolio of Bear Stearns, which is being acquired by JPMorgan Chase, now for USD1.2bn.
BlackRock has been tapped by the Federal Reserve Bank of New York to help manage the USD30bn portfolio of Bear Stearns, which is being acquired by JPMorgan Chase, now for USD1.2bn. This was a huge vote of confidence for chief executive Lawrence Fink, whose firm already manages USD1.4trn in assets.
Separately, BlackRock has teamed up with Highfields Capital Management and Stan Kurland, the president and chief operating officer of Countrywide Financial until 2006, to form Private National Acceptance Co, or PennyMac, to buy distressed mortgage loans from banks. The firm invests directly in whole mortgage loans. Kurland leads the company while the other two firms are strategic partners.
Petershill, a USD500m private equity fund within Goldman Sachs’ asset management division, is in talks to buy a significant stake in London-based Trafalgar Asset Managers. If both parties agree, the deal could be completed by April. Lee Robinson and Theo Phanos established Trafalgar in 2001 and now manage USD2.7bn in assets. Petershill, led by Jonathan Sorrell, was set up by Goldman last year to buy equity stakes in the management companies of other hedge fund groups.
London hedge fund manager Pentagon Capital, run by Lewis Chester and Jafar Omid, is to close its 17 funds with GBP1.1bn in assets due to tough credit conditions. Investors are likely to get back most of their capital, although the timing mat=y vary.
John Meriwether’s JWM Partners continues to face losses. The Relative Value Opportunity leveraged bond fund saw losses accelerate this month, after dropping 9.19 per cent over the first two months of the year. The broader JWM Global Macro fund was down 6 per cent in February. Mortgage securities backed by Freddie Mac and Fannie Mae are partly to blame. Meriwether, who manages USD1.4bn via his Greenwich, Connecticut firm, says he has trimmed risk in order to preserve capital.
Fortress Investment Group aims to raise up to USD20bn in new capital this year, chief executive Wes Edens told analysts during a post-earnings conference call. Battered mortgage-linked securities may offer the most compelling investment opportunities and financial services companies may become more interesting during the second half of 2008.
Fortress, which has raised USD2.7bn so far this year, reported a loss of USD29m, or 43 cents a share, in the fourth quarter. Edens says Fortress’ hedge fund business avoided most of the problems facing other firms because it did not employ much leverage.
Carrington Capital Management, a Connecticut-based mortgage specialist hedge fund manager, is persuading its investors to lend it up to USD200m to replace its bank loans. Carrington, which is a part of the now defunct US sub-prime lender New Century, has offered investors an 18 per cent interest rate on new preferred shares it plans to issue as part of this transaction.
Although it was in good stead with its remaining lenders Citigroup and JP Morgan, Carrington said it remained wary about borrowing from what it called an aggressive deleveraging dealer community for short-term reverse purchase, or repo, financing. The firm has USD161m of repo financing.
Carrington, which is led by Bruce Rose, missed a planned repayment at year-end and froze investor redemptions. It has said it will pay off debt before returning cash to shareholders. Carrington bought New Century’s loan servicing platform for USD188m last May.
Cornerstone Quantitative Investment Group is shutting down due to poor performance. Its International Value Fund lost 15.2 per cent last year and dropped another 8.2 per cent in January, while assets dropped to USD183m from a peak of USD475m in 2006.
Partners Group has closed its USD250m US Venture 2006 fund, which is 75 per cent invested. The Zug, Switzerland-based firm manages CHF24.1bn in private equity, hedge funds and other alternative products.
Soros Fund Management alumnus Charles Leykum is establishing an energy fund for launch this summer, CSL Energy Fund.
Hedge funds managed USD2.16trn of assets as of the end of 2007, according to a new report by Credit Agricole Structured Asset Management. Long/short equity was the biggest strategy with USD568bn, followed by event-driven, multistrategy and global macro funds. However, during the first quarter of this year, funds with USD3.9bnin assets were shut down, according to Absolute Return. Last year, 49 funds running a total of USD18.6bn were liquidated.