Tuesday, 21 October 2014
Last updated 1 hour ago
Mar 21 2011 | 6:57am ET
Billionaire Randy Lerner wants his money back. Hedge fund Paige Capital Management says he can't have it. And so as with so many such disputes, the matter has landed in court.
Delaware Chancery Court last week began hearing the case of the unhappy relationship between Lerner, the owner of the National Football League's Cleveland Browns, and Paige Capital, the distressed debt hedge fund he seeded with $40 million three years ago. The former says Paige is "hiding" his money; the latter, which is collecting $400,000 per year in management fees from Lerner, says Lerner's family office has done just about everything to sink its business.
At issue is a gating provision imposed by Paige, which bars investors from withdrawing more than 20% of the hedge fund's total capital. That's a real problem for Lerner, because his capital accounts for 99.9% of Paige's capital, the hedge fund's founder, Michele Paige, acknowledged.
Paige also acknowledged that she had done very little investing of Lerner's money, telling the court she became spooked by signs from the family that it had taken a beating during the financial crisis.
"From a humanitarian perspective, I didn't want to be the reason that they… lost their empire," Paige testified. She invested only 10% to 30% of the money entrusted to her.
Until, that is, representatives of Lerner told her in August of 2009 that the family had done its own distressed investing, and made a killing. Then she poured all of Lerner's money, and then some, into investments, becoming "100%-plus invested." The Lerners countered by filing to redeem their entire investment in October, when their three-year lockup expired.
But, Paige testified, the Lerners' troubles became her own, making it hard to line up other investors. One pulled out after she told it that her main seed investors "had issues of their own."
Paige's husband, Christopher, the hedge fund's general counsel, put it more succinctly in a letter to Lerner that he no doubt wishes he could take back: Paige Capital, he wrote, would "litigate this matter to the bitter end because we will continue to manage your money, and collect management and incentive fees, until this matter is resolved many years hence."
Sep 22 2014 | 4:15pm ET
"I tell people that everybody likes good news and so if you have good performance that’s wonderful,” explains Mike McKitish of Peddie School's endowment, “but it’s the people that want to talk about the bad news or where they drifted and how they came back and how they stayed to their discipline…” that he wants to hear from. Read more…
Sep 30 2014 | 9:29am ET
The crisp Autumnal days of October are upon us, and so are a few of the hedge fund industry’s favorite charitable events. If you have never been to Rocktoberfest, well, you are missing out. And for a quieter evening of sipping and socializing, stop by HFC’s Wine Soiree. Read more…
Most traders agree that proper risk management is the key to successful trading. However, many traders depend on the deeply flawed measure of standard deviation as a benchmark of risk. Here we put it ...