It was not only banks that endured a tough 2012. As the year drew to a close, some hedge fund managers were also licking their wounds. An insider-trading probe at top US hedge fund SAC Capital is a concern. In late November 2012, the firm said that it might face civil fraud charges from the SEC. Also in 2012, Raj Gupta, a former main board Goldman Sachs director, was sentenced to two years imprisonment for leaking insider information to his friend, and current prison inmate, Raj Rajaratman, co-founder of the Galleon Group hedge fund. And while we are on the subject of Goldman Sachs, did any devoted readers notice that Pierre-Henri Flamand, the former head of the principal strategies group at the US investment bank, quietly closed his European event-driven hedge fund, Edoma, two years after opening it in London with over $2 billion under management. Investors are said to have been less than enamoured of the former golden boys performance after the fund lost some 8% of its value.
And talking of Goldman guys who land at hedge funds, Manny Roman, a former Goldman partner, and co-CEO of the hedge fund GLG, has been promoted to be chief executive designate of Man Group as a crumpled Peter Clarke, the former CEO, totters off to spend more time with his family. This is ironic: as far as I am concerned Man overpaid for GLG in 2010. The purchase price was $1.6 billion and Mans share price has been falling virtually ever since, as the company suffered client outflows and its AHL computer-driven black box fund underperformed. So can Roman turn things around at Man? Im not sure, but in the last few weeks the share price has been stabilizing. And last autumn, the canny hedge fund investor Crispin Odey announced that he had a 5% stake in Man. Odey is a clever contrarian: he is reputed to have bought Barclays shares at the bargain-basement price of 50 pence in early 2009. I will watch the Man story with interest to see whether Odey has got it right once again.
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