Exclusive: Hedge fund Diamondback founders Schimel and Sapanski plan new fund – sources

The founders of Diamondback Capital, one of a handful of hedge funds touched by the U.S. government’s insider trading probe, have reunited and are working on a new investment project, people familiar…

Reuters: Wealth


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Activist hedge fund secretly built stake to push Caesars sale

An activist hedge fund known for rattling the cages of gaming companies has quietly built a 4.9 percent stake in Caesars Entertainment, The Post has learned. HG Vora Capital is said to be intent on forcing the company to put itself up for sale — or to sell significant assets, sources said. The move by…
Business | New York Post


Facebook implosion hits hedge funds hard

Facebook just made the so-called smart money look pretty dumb. Hedge funds holding hefty Facebook stakes got clobbered on Thursday after the social media giant’s stock plunged 19 percent after it forecast slower growth. More than 10 percent of hedge funds surveyed by Goldman Sachs count Facebook as a top 10 holding. The hedgies’ seeming…
Business | New York Post


Hedge fund Tiger Global takes $1 billion stake in Softbank: source

U.S. hedge fund Tiger Global has built a stake worth more than $ 1 billion in Japan’s Softbank Group which it considers to be under-valued, a source with direct knowledge of the matter said on Wednesday.

Reuters: Technology News


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This hedge funder is actually making the world a better place

While Wall Street takes its lumps for being too profit-driven, people on the Street are some of the most dedicated and generous do-gooders around. For every Bernie Madoff, there’s a Paul Tudor Jones. Jones, who runs the Tudor Investment Corp. hedge fund, created the Robin Hood Foundation in 1988, which is now New York’s largest…
Business | New York Post


Hedge fund boss makes more per hour than you do in a year

Last year, hedge-fund tycoon James Simons made $ 194,000 — an hour, that is. The former math professor who heads Rennaissance Technologies earned $ 1.7 billion in 2017, making him the highest-earning hedge-fund manager for the third year straight, according to an annual survey by Institutional Investor’s Alpha magazine. Simons edged out Appaloosa Management’s David Tepper, who…
Business | New York Post


Hedge fund Third Point increases short bets against market

Billionaire hedge funder Dan Loeb is seeing more opportunities to bet against the market this year. Loeb’s $ 18 billion Third Point fund said Thursday that it has increased its short bets amid increased “disruption” in stocks. “An important shift in markets happened in the first quarter,” Loeb said on a call with analysts of his…
Business | New York Post


The cryptocurrency craze hasn’t quite hit the hedge fund industry yet

Wannabe hedge fund managers are itching to get in on the cryptocraze — they just need some hand-holding getting there. Only two hands went up at a crypto event attended by dozens Thursday when a panelist asked how many were at a hedge fund. “You’re a salesman. You’re always going to be a salesman,” said…
Business | New York Post


Fake hedge fund manager pleads guilty to securities fraud

Phony Westchester hedge fund manager Michael Scronic may soon be trading in his high-flying lifestyle for a cell in the big house. Scronic, 46, on Thursday pleaded guilty to securities fraud, admitting that he defrauded 45 investors — many of them pals — out of $ 22 million while running his fake hedge fund from his…
Business | New York Post


Some 90% of hedge funds aren’t worth the fees, but there’s still a place for them, says expert

Hedge funds have been criticized for their hefty fees, but there are reasons to invest in them, according to an expert.
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Mnuchin promises to fix hedge fund tax loophole

Hedge funds that thought they outsmarted the tax man may soon be in for a rude awakening. Treasury Secretary Steven Mnuchin said Wednesday that he is working with the Internal Revenue Service to make sure hedge funds don’t take advantage of a seeming loophole in the tax code that allows them to pay lower taxes…
Business | New York Post


VIX Surge Hands 8,600% Profit to Little-Known Hedge Fund

Not everyone got crushed when the market collapsed.

For traders at a little-known Denver hedge fund who saw it coming, it was the score of a lifetime — a $ 17.5 million payday on a $ 200,000 bet.

“People were laughing at us, saying this could never happen, this should never happen,” Justin Borus, the 41-year-old founder and manager at Denver-based Ibex Investors, said in an interview. “We saw people pricing this as a 1-in-5,000 event, but it was more like a one-in-five-year event.”

Borus’s team bet that an exchange-traded fund linked to a calm stock market would go to zero in the event of suddenly volatile trading. The ETF almost did — it lost 96 percent of its value.

Borus said they always believed in the wager, even when just about no one else did. But the jackpot still caught them by surprise. Two of the group — Ari Rubin and Cooper Stainbrook — were taking a long walk around the Colorado capital when the market started to go haywire on Feb. 5.

As they walked, the two of them — Ibex’s director and chief data scientist — were on the phone with a client and in passing mentioned rare, so-called black-swan events. The client told them to check out the VIX Index. One was happening as they spoke.

Extreme Velocity

“We came back to our screen and we’re watching the VIX and it’s moving with extreme velocity,” said Rubin, a former Israeli Defense Force soldier and ski bum turned money manager. “We’re laughing at every tick up until we realized what was going on. Cooper just looks at me and goes, ‘Oh man. The Vol-pocolypse just happened.'”

What was happening was the biggest plunge for U.S. equities in more than six years. Concern inflation was seeping into the economy triggered a decline in the Dow Jones Industrial Average that reached 6.3 percent at its lowest level. The benchmark index for equity volatility rose to more than twice its level the day before, crushing bettors who’d gotten used to years of very low volatility.

For about a year, Ibex had been buying options on the ProShares Short VIX Short-Term Futures ETF, ticker SVXY. The executives wouldn’t comment publicly on the exact mechanics of the trade or its profit, but they were detailed in a research note published by an adviser to the firm, Pravit Chintawongvanich of Macro Risk Advisers. Owning the contracts fit into the 15-year-old fund’s niche-product strategies. As of January, the 20-person firm managed about $ 350 million.

Volatility Spasm

Ibex’s plan was to profit when five years of a record-calm stock market burst into a spasm of volatility. Exchange-traded volatility notes that rose when volatility fell looked like a particularly ripe target, given the potential for a feedback loop that might send the Cboe Volatility Index surging in the event of market stress.

Other investors may have been lulled by the years of relative serenity in the stock markets. The average volatility rate for 2017 was lower than every single trading day from Dec. 22, 1995, to June 20, 2005. The VIX finished below a level of 10 — super quiet! — on only nine days before May 2017 and 68 days since.

That’s why so few have dared bet against short-vol, which had been minting money with breathtaking consistency. Even retail traders bought inverse VIX ETPs, hoping to make a quick and easy buck. That’s what intrigued Ibex.

Laughed in Their Faces

They went shopping for the right derivatives to place their bet. Brokers responded with ridicule — options speculating the inverse VIX would go to zero would never pay off.

“Cooper and I go to New York a lot,” Rubin said. “In one instance, someone actually laughed in our faces at the type of options we were looking at.”

On Jan. 2, the managers put down $ 200,000 on what looked like a lottery ticket, with each SVXY put costing 34 cents. On Feb. 6, they sold the 6,300 contracts at about $ 28 each, leaving them with $ 17.5 million.

The firm had been in frequent contact with MRA’s Chintawongvanich, who’d been warning that the VIX notes could blow up for a while. Ibex was one of the few clients who actually heeded his warning, he said.

“Before this happened, I looked like the boy who cried wolf,” Chintawongvanich said. “There’s a risk that was underpriced by the market which we’ve been pointing out for a long time, and one of our clients capitalized on it, and I’m really happy for them.”

Ibex gives partial credit to a view of the Rocky Mountains outside the firm’s window. They’re 2,000 miles from New York and the conventional wisdom that said VIX ETPs could never blow up.

“The traditional mutual fund and hedge fund business is toast,” Borus said. “Most people investing in equities are going to index funds and ETFs. We believe in different strategies with higher risks and higher returns.”

After a sleepless Monday night, Rubin and Stainbrook celebrated by going skiing.



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Hedge funds’ wild equities ride could hit a wall: report

Hedge fund investors piled into equity strategies in 2017, but the tea leaves suggest that bet may not bode as well for them in 2018 as it did last year. “Historically this has been a bad sign for equity markets, in each instance the following year equities experienced low annual returns,” eVestment said in a…
Business | New York Post


Hedge fund sues Google for info on scamming WSJ imposter

Months after Muddy Waters Capital, a San Francisco hedge fund, shorted shares of a French retailer, a man posing as a Wall Street Journal reporter tried to obtain tactical insight from the fund’s founder, Carson Block, a shocking new lawsuit claims. The suit seeks to unmask the unidentified fake reporter by forcing Google to reveal…
Business | New York Post


Hedge funder says Puerto Rico is better off with massive debt

Expunging Puerto Rico’s massive debt load is “impractical” and will harm the island more than help it, according to one hedge fund investor. Erasing the debt will hurt not only the hedge funds that own the debt but will also have a “devastating effect” on Puerto Ricans who own the debt, said Seth Klarman, of…
Business | New York Post


Hedge fund manager charged for scamming investors out of millions

A Ponzi-like scheme that would make Bernie Madoff proud has been uncovered in Boston, authorities say. Massachusetts officials have charged hedge-fund manager Raymond Montoya with scamming investors out of millions of dollars. On Wednesday, Montoya was charged by the feds with mail fraud and wire fraud, and then released after his appearance in federal court….
Business | New York Post


Hedge fund accused of Ponzi scheme is ruining athletes’ lives: former NFL player

An alleged Ponzi-scheming hedge fund that preyed on pro athletes is still ruining lives, according to a former NFL player. Ex-NFLer Nic Harris was one of nearly two dozen athletes who fell for the charms of Darien Dash, a one time Internet mogul whose sister is “Clueless” actress Stacey Dash and whose cousin, Damon Dash,…
News | New York Post