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Hedgeweek Comment: Garden state governor stands up for hedge fund investment

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It’s not all hostility to hedge funds in the so-called blue states that helped deliver the US presidency to Barack Obama on Tuesday night.

It’s not all hostility to hedge funds in the so-called blue states that helped deliver the US presidency to Barack Obama on Tuesday night. Jon Corzine, the Democratic Party governor of New Jersey, has come out in defence of the state pension system’s decision to add USD143.5m to its investment in a BlackRock credit hedge fund that has been falling in value.

Corzine yesterday rejected demands for an investigation into the pension fund’s investment, saying that ‘anybody that knows anything’ would know that those investments are protected by the government’s Wall Street bailout.

BlackRock Credit Investors, which invests in corporate loans, is down about 25 per cent since the New Jersey pension scheme initially invested USD400m, according to William Clark, director of the state government’s investment division.

Nevertheless, the pension scheme made two investments within a month. On October 17, New Jersey put in USD49.5million – something that drew criticism from New Jersey Senate president and former governor Richard Codey, who complained that it had been deliberately pitched just under the USD50m threshold that would require review by the New Jersey state investment council – followed by an additional USD94m.

Hedge fund managers may be nervous about the intentions of Obama and his party, especially since the president-elect has been co-sponsor of a bill that would impose anti-money laundering requirements on hedge funds and close offshore tax loopholes.

But perhaps they will have a friend at court. Yesterday Corzine denied he had discussed succeeding Hank Paulson, with whom he shared the positions of chairman and chief executive at Goldman Sachs for seven months in 1998-99, as Treasury secretary in the Obama administration, but coyly added: ‘I am not going to say never to anything.’

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