One year ago
D.E. Shaw made good on redemption requests from investors
in its multistrategy Composite fund, which resulted in outflows
of an estimated $3 billion. The firm quickly followed the
laying off 150 people-about 10% of its staff, mostly in the
D.E. Shaw offered a new share class for the multistrategy
fund that excluded exposure to its less liquid investments and,
six months later, cut its Composite fund management fee to 2.5%
from 3.0% and performance fee to 25% from 30%.
The tumult contributed to
the firm's total hedge fund assets falling to $14.3 billion
at yearend, from $17.8 billion six months earlier. As of the
midyear 2011, however, assets had bounced back to $15.5
billion. The D.E. Shaw Composite fund
is up 4.14% this year through the end of July.
Oliver Stone spoke to AR about turning his
signature Wall Street villain, Gordon Gekko, into a hedge fund
manager in Wall Street 2: Money Never Sleeps.
In the film, Gekko flees to the U.K. and turns a $100
million investment into $1.1 billion. But instead of vilifying
hedge funds as a group, which was the original intention, Stone
went after the bankers. "Yes, the first script was about hedge
funders. Shia [Labeouf] was a hedge funder, as was Josh
Brolin," Stone said. "So we just took everybody and we moved
them to banks, and we made Shia's firm more of a Bear Stearns,
with the old guy a little bit out of touch-Langella. And the
idea was that Josh would be more like Goldman Sachs or Morgan
or Citicorp, for that matter.
"[The original] script was essentially about hedge funders,
and [there were] scenes with Russian hedge fund guys in yachts
and cars, and they wanted the emphasis on that style, and I
said, 'I'm not really interested in all that stuff. I want to
make this movie about the banks.'"
Perhaps Stone should have stuck with the original plan. In
the end, the film was a commercial disappointment at the box
office, earning $135 million worldwide. And despite pre-release
hype, it was all-but ignored during awards season, with its
only major accolade being a lone Golden Globe nomination for
Five years ago
Dan Loeb's Third Point slammed Nabi Biopharmaceuticals for
"gross mismanagement" and asked for a look inside their books.
Third Point owned 9.5% of Nabi at the time.
Perhaps most memorably,
Loeb wrote to the board "you hide your heads in the nearest
warm aperture in an apparent 'ostrich defense' and ignore your
shareholders...in the hope that the company's owners will go
away before your next annual meeting."
That was just the beginning. Third Point then
threatened a proxy fight to remove the company's chief
executive officer, Thomas McLain, unless it gave the hedge fund
two members on the board and veto power over major acquisitions
That effort failed. By November, both sides were ready to
reach a deal.
Nabi agreed to reimburse Third Point up to $250,000 for its
expenses, and to form a new committee to consider strategic
alternatives for the company.
Earlier this year, Third Point reduced its stake in Nabi to
8.2% from 9.4%, according to an
Despite writing some
fiery politic rhetoric, Loeb had been less vituperous
against corporate chieftains in the intervening years, but he
burst back into the headlines last week by disclosing a
5.15% stake in Yahoo! following its noisy firing of CEO Carol
Bartz. Though he approved of Bartz' sacking, Loeb's trademark
blunt style shone through in a public letter. "From the failed
Microsoft sale negotiations, to a subsequent bungled and
disappointing search deal with Microsoft, through a series of
misguided CEO selections, and most recently the Alipay debacle,
this board's failures have destroyed value for all Yahoo
stakeholders," he wrote.
»» AR profiled Raj Rajaratnam's Tsunami
Relief organization, which was focused on building housing for
displaced fishing communities in his native Sir Lanka. The
Galleon Group founder was vacationing with his family on the
island nation when a tsunami with waves up to 20 feet high hit
the coast, killing 35,000 and leaving one million others
Rajaratnam pledged $5 million of his own money to relief
efforts and organized a fundraiser at Manhattan's Stone Rose
Lounge overlooking Central Park, raising another $10 million.
Rajaratnam said he was particularly impressed by the eagerness
of Sri Lankan fishermen to return to the sea, comparing them to
hedge fund managers because of their high-risk occupation.
"They are the greatest entrepreneurs," he said.
A now-infamous risk-taker himself, Rajaratnam was arrested
in 2009 on charges of insider trading. The Galleon Group was
quickly liquidated and, earlier this year,
Rajaratnam was found guilty on 14 counts of securities
fraud. He posted a $100 million bail and remains on house
arrest in advance of sentencing later this month.
Would Raj risk it all for a mere $45 million?
Lessons learned from the Rajaratnam case
Galleon pros get new jobs
Galleon, Karsch alums start risk consulting firm