13/08/2010 Author: Shannon Hawthorne

HFMWeek Daily Snapshot - 13 August

NEWSPAPERS AND WIRES
Billionaire money manager Philip Falcone's big bet on a high-speed wireless network, which has led him to mortgage many of his flagship fund's key assets, could soon look even dicier as one of its cornerstone telecom investments teeters on the brink of bankruptcy, says Reuters. Upstart telecom firm TerreStar Corp, which Falcone's Harbinger Capital Partners fund had invested in and which had been slated to provide some of the infrastructure for his ambitious satellite-based wireless network, recently warned that it lacks sufficient cash and financing to pay for all of its third-quarter expenses – which means it may have to file for a Chapter 11 bankruptcy. A TerreStar bankruptcy filing could come soon if TerreStar can't reach a restructuring agreement with its bondholders, which includes funds managed by Falcone's Harbinger Capital Partners, said people familiar with the company's situation.

One of the world's largest hedge funds participated in spreading false rumours that helped bring down Lehman Brothers, according to allegations filed in court papers in a Manhattan bankruptcy court, the Wall Street Journal reports. Och-Ziff Capital Management "likely disseminated and/or was the recipient" of an inaccurate rumour that Lehman had spun off debt to two Lehman-controlled hedge funds to reduce the investment bank's leverage, according to the filing. Investors were focused on Lehman's debt levels in the months before its failure. The rumour was one of many "lies" spread by unscrupulous market participants looking to profit from shorting the troubled investment bank's stock, alleged the filing, made on Wednesday by lawyers investigating Wall Street firms on behalf of Lehman's bankruptcy estate.

F&C Asset Management has denied trying to bully a pair of hedge fund managers with whom they set up a joint venture as it tries to avoid paying the men as much as £40m, FINalternatives reports. The London-based money manager and former partners François Barthelemy and Anthony Culligan have sued each other, with the former trying to prevent the two from exercising put options that would force F&C to buy out their 40% stake in F&C Partners. Barthelemy and Culligan allege that F&C deliberately undermined the hedge fund joint-venture to avoid buying them out. On the stand this week, Barthelemy said that “it’s very clear in my mind F&C have tried to bully me,” telling a London court that F&C’s cuts at the joint venture were designed to kill the project without consulting either himself or Culligan.

Nassim Nicholas Taleb, the hedge fund manager and best-selling author, is betting against US government bonds as he argues the move is a 'no brainer', reports Citywire. Taleb, who wrote 'The Black Swan' and 'Fooled by Randomness', said he was 'betting on the collapse of government bonds' and that investors should steer clear of stocks.In a recent interview, he explained his fears about the impact of what the governments are doing, stating: 'As an analogy. “You often have planes landing two hours late. In some cases, when you have volcanos, you can land two or three weeks late. How often have you landed two hours early? Never,” he said. “It's the same with deficits. The errors tend to go one way rather than the other ... Governments that try to shoot for a surplus hardly ever reach it.”

Fortress Investment Group funds agreed Wednesday to buy American General Finance, a big consumer lending business, from American International Group, reports MarketWatch. The Fortress funds could use the business as a platform to buy other struggling lenders. Throw in a few acquisitions of failed banks and the business would get a new source of funding that fixes one of American General Finance's main problems, according to analysts at CreditSights, an independent fixed-income research firm. Fortress, a large hedge fund and private-equity firm, was hit hard by the financial crisis. However, executives at the company are optimistic, partly because they hope to snap up assets being sold by de-leveraging financial institutions.

LAUNCHES 
Jabre Capital Partners, the hedge fund firm run by Philippe Jabre, is to launch a Luxembourg-domiciled version of its Jabcap Global Balanced equity fund, reveals Citywire. The new long-only fund launches on Monday and will be called Jabcap (Lux) Global Balanced. It will follow a similar strategy to the original, Dublin-listed version. Jabre is a renowned hedge fund manager, based in Geneva and is best known for his expertise in convertibles, though he also runs strategies focused on equity volatility arbitrage, global equity long/short, event driven arbitrage and long only equities. He also runs the Pictet-Convertible Bonds fund, which proved a huge success with investors and hit its €800m ($1.03bn) capacity just nine days after its launch at the beginning of February this year.

PEOPLE MOVES
Robert Rubin, the former US Treasury secretary who advised Citigroup as it lost $20bn in the subprime mortgage crisis, is halting work for two hedge funds as he joins Wall Street advisory firm Centerview Partners as a part-time counsellor, reports Bloomberg. Rubin will stop advising New York-based Taconic Capital Advisers and San Francisco-based Farallon Capital Management, said his spokesman, Adam Miller, who confirmed the move to Centerview. Miller and representatives of the three firms declined to say why he is departing. Taconic had $9.1bn under management as of 30 June, and Farallon had $20.6bn as of  January. Rubin will continue advising venture capital firms General Atlantic and Insight Venture Partners, Miller confirmed.