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Showing posts from March, 2015

Transforming Hedge Fund Fees?

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Stephanie Eschenbacher of the Wall Street Journal reports, Swiss Investor Calls for Big Cut in Hedge Fund Fees:
One of Europe’s biggest hedge fund investors, Unigestion, is pushing hedge funds to scrap management fees in place of a bigger slice of profits as investors attempt to crack down on high charges.

Nicolas Rousselet, head of hedge funds at the $16.7 billion investor, which has $1.9 billion invested in hedge funds, said that a zero management fee in exchange for a higher performance fee of 25% was “a great fee structure”. Hedge funds typically charge a 2% management fee and a 20% performance fee although better performing, more established managers can charge much higher fees. These top managers tend to attract investors easily, often having to turn away new ones, and can dictate terms to investors.

Mr. Rousselet said Swiss-based Unigestion had been pushing for a “transformation of fees”, that his team had successfully negotiated lower management fees with some hedge fund manag…

The China Bubble?

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Laura He of MarketWatch reports, China stocks may be in serious bubble:
Some say that when the average “mom-and-pop” retail investors get back into the stock market, it could be time to get out. But what about when even teenagers start buying?

China has entered a new stock frenzy, like something out of America in the Roaring 20s or the dottiest days of the dot-com bubble, with trading volumes continuing to push to new record highs.

On Wednesday, combined trading on the Shanghai and Shenzhen markets hit 1.24 trillion yuan ($198 billion), the seventh straight session in which turnover surpassed the 1 trillion yuan mark. By comparison, the New York Stock Exchange typically saw $40 billion-$50 billion a day in trading during the first two months of this year.

The Shanghai Composite Index is hovering near its seven-year closing high of 3,691, hit on Tuesday when the index completed a 10-session winning streak.

For the year so far, the benchmark is up 13.8%, making it the best-performing maj…

A Buyback or Biotech Bubble?

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Steven Davidoff Solomon, professor of law at the University of California, Berkeley, wrote a comment for the New York Times, General Motors’ Stock Buyback Follows a Worrying Trend:
General Motors' announcement that it will buy back $5 billion worth of stock raises the question of whether the stock buyback has turned into a shareholder activist shakedown.

G.M. did not open its coffers willingly. Harry J. Wilson, a former member of the auto industry crisis task force led by Steven Rattner, gave it a helping hand. A few weeks ago, Mr. Wilson announced a campaign to press G.M. to buy back $8 billion worth of stock, leading four hedge funds with a total stake of about 2 percent in the automaker. As part of this, Mr. Wilson was nominated to run for a board seat.

Because G.M. was bankrupt only a few years ago, it seems a bit foolhardy for the company to willingly part with billions of dollars of hard-earned cash. But in a world where stock buybacks and shareholder activism are all the ra…

America's Pensions in Peril?

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John W. Schoen of CNBC reports, Funding shortfalls put pensions in peril:
These days, a pension just isn't what it used to be.

For generations, a defined benefit pension—a fixed monthly check for life—provided an ironclad promise of a secure income for millions of retired American workers. But today, that promise has been badly corroded by decades of underfunding that have undermined what was one of the cornerstones of the American dream.

The safety net that millions of retirees spent decades working toward has been fraying for some time. The Great Recession, and the market collapse that wiped out trillions of dollars of investment wealth, weakened the pension system further, though some of the damage has been repaired since the stock market rebounded and the economic recovery took hold.

Hundreds of billions of dollars in defined benefits are still paid out every year to retirees. State and local public pension benefit payments reached $242.9 billion in 2013, according to the mo…