Week in Review
June 16, 2008
FBI Investigating Suicide of Hedge Fund Criminal Israel
Instead of reporting to Ayer, Mass., federal prison on Monday to serve a 20-year term for defrauding $450 million from investors in the failed Bayou hedge fund, ex-CEO Samuel Israel III has either committed suicide or left clues to make authorities believe he has.
Israel's 2006 GMC Envoy was found two days ago on Bear Mountain Bridge near West Point, with the phrase "Suicide is Painless" scrawled in dust and pollen on the hood.
New York State Police and the FBI are looking for Israel, 48, including searching the waters of the Hudson River, but at deadline had not found a body.
Investigators were first tipped off to fraud at the company in 2005, when a money manager visiting Bayou's Stamford, Conn., offices found a five-page suicide note written by partner Daniel Marino, in which he confessed to swindling investors beginning as far back as 1998.
The judge who sentenced Israel said, "People who commit crimes while wearing a tie do not get a break."
Global Macro, Arbitrage Hedge Funds Thrive
Hedge funds may be coming off their worst first quarter in history, including, surprisingly enough, a poor showing in the energy sector, but not everyone is doing poorly.
Global macro strategies have been thriving, and many fund-of-hedge-fund managers are looking at other strategies like convertible arbitrage, Financial News writes. Global macro strategies trade on macroeconomic trends through liquid assets, including stocks and bonds, commodities and currencies. According to Hedge Fund Research, the strategy is up 10% for the year through May.
Some institutional investors have a problem with the strategy, however.
"It suffers from the perception that the sector is dominated by cowboy attitudes, high fees and unfavorable risk adjusted returns," said Michael Hennessy, managing director of investments for Morgan Creek Capital Management, a fund-of-hedge-funds. "If you are good at finding out who the stronger players are, they tend to be more liquid than other hedge fund strategies."
Commodity trading advisors also performed well this year, rising with oil and agriculture prices.
New Exchange-Traded Funds Invest in Foreign Currencies
With the dollar beaten down-7% against the euro and 6% against the yen so far this year-fund companies are offering investors the opportunity to invest in exchange-traded funds that invest in foreign currencies, The Wall Street Journal reports.
Two companies that recently launched currency income ETFs are WisdomTree Investments and Dreyfus. Morgan Stanley's version is a Euro exchange-traded note.
But Jeff Tjornehoj, research manager at Lipper, dismissed the new funds as "really entering the realm of speculation."
Funds Against Cancer Aims To Raise $1 Million in 2008
Having already raised more than $850,000 this year, Mutual Funds Against Cancer (MFAC) is aiming to top $1 million, all of which will be donated to the Center for Applied Cancer Sciences at the Dana-Farber Cancer Institute.
The 13-year-old organization made the announcement on the eve of its annual Expect Miracles Golf Classic and banquet dinner last Thursday, where 450 executives gathered at the Pinehills Golf Club in Plymouth, Mass.
For more information on sponsoring, donations, participating in other events or serving on the group's board, visit the organization's website: www.mutualfundsagainstcancer.com.
Interactive Data Corp. of Bedford, Mass. currently serves as Foundation Sponsor for MFAC. Top sponsors of the Expect Miracles Golf Classic include: State Street Corp., JPMorgan, Citibank, Confluence, BOWNE|GCom(2)Solutions, Legg Mason, Computershare Fund Services, RR Donnelley, Bank of New York Mellon, John Hancock Financial Services, MFS, Boston Financial Data Services, Broadridge, Eaton Vance, Northern Trust, Sentinel Investments and UMB Fund Services.
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