Tuesday, 21 October 2014
Last updated 2 hours ago
Oct 10 2013 | 8:34am ET
Four hedge funds are set to enjoy a handsome profit after bankruptcy court judge ruled that a failed bank is entitled to a huge tax refund.
The hedge funds stepped in when the receiver for Downey Financial Corp., which filed for bankruptcy in 2008, ran out of money, agreeing to continue to finance its legal battle. The hedge funds put up $12 million—and are now poised to split as much as one-third of the $373.8 million refund, Reuters reports.
U.S. Bankruptcy Judge Christopher Sontchi on Tuesday ruled in favor of Downey Financial and against the Federal Deposit Insurance Corp., which seized the firm's Downey Savings & Loan in 2008. Downey Financial had claimed Downey S&L's huge losses against their taxes for the preceding five years, but the FDIC argued that the refund belonged to it, as the receiver for the S&L.
Sontchi ruled that the FDIC would have to make a claim for the refund as part of bankruptcy proceedings, during which time it would have to battle other creditors. The FDIC, which noted in court papers that the hedge funds are poised to reap at 1,000% return, estimated its own losses on the Downey failure at $1.6 billion.
Those hedge funds, which also own some $200 million in Downey Financial bonds, are Alden Global Capital, Davidson Kempner Capital Management, Farallon Capital Management and Halcyon Asset Management.
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 ...