Dirty War Over Wilshire Enterprises

February 25, 2009

Wilshire CEO and party girl Sherry Wilzig Izak with her brother "Sir Ivan"

Wilshire CEO and party girl Sherry Wilzig Izak with her brother "Sir Ivan"

The battle over Wilshire Enterprises between Phil Goldstein’s Bulldog Investors and Wilshire’s (WOC) CEO Sherry Wilzig Izak is gradually growing into a full scale war, if not a jihad. Among a string of litigation, the shareholder meeting was postponed from this week to March 24th, giving management crucial time to beef up their defenses that ultimately will be futile. We have previously chronicled the battle between Wilshire and Bulldog, which ended in a temporary defeat of Bulldog when management declared that “initial bids are in” for a prompt sale of the company. Almost a year after the initial bids, a buyer emerged for $3.88/share, down from $8.50 a few years ago when management rejected a bid by Mercury Real Estate as “undervalued”. Last year’s buyer didn’t have enough funds to acquire Wilshire, and the stock now trades just over $1.

With the date of the shareholder meeting approaching, the fight over Wilshire is heating up. Wilshire’s management is fighting hard to keep Bulldog out: Read the rest of this entry »

Avenue Capital’s Marc Lasry Is In Therapy Over Depressed Asset Prices

February 23, 2009
Marc Lasry, Avenue Capital

Marc Lasry, Avenue Capital

At the first Wharton Hedge Fund Conference keynote speaker Marc Lasry of Avenue Capital declared that he was still in shock over how his firm got to $22 bn in size. Lasry started his firm in 1995 after breaking off from an entity that is affiliated with the Bass family with $7 million, expecting to run a few hundred million dollars if things were to go well. At its peak in 2007, the firm exceeded all targets with $22 billion in assets under management. The wonders done by a decade of liquidity and leverage helped him grow beyond his wildest dreams. Read the rest of this entry »

The State Of The Hedge Fund World

February 22, 2009

Rosy forecasts were in short supply at the first annual Wharton Hedge Fund Conference. The shock of last year’s worst-ever performance still reverberates through the industry. Career plans of students at Wharton are the best indication we have seen to date of how bad things have become for hedgies: one Wharton professor reports that last year, two thirds of his students wanted to get a job in a hedge fund. This year, only one student admitted to hoping for a hedge fund career. Read the rest of this entry »

Mark Fisher: Keep It Simple, Stupid

February 21, 2009

Mark Fisher, inventor of the technical trading method ACD, sees this market as a pure trading market in which analysis does not matter. This was probably not what some of Wharton’s students attending its first annual Wharton Hedge Fund Conference wanted to hear. After all, they have committed to spending a six figure amount on learning how to perform just that analysis. Fisher probably depressed also Wharton’s faculty whose livelihood depends on a steady supply of students willing to pay ever increasing tuition rates. Not to mention that Fisher himself holds a Wharton MBA. Read the rest of this entry »

SPAC Liquidation Arbitrage: How To Profit From Hedge Fund Redemptions

January 28, 2009

Among the least-damaged victims of the boom’s unwinding are SPACs, which arguable were among the worst manifestations of the irrational exuberance driven by excess liquidity. Despite their relative resilience to the bust, their cash hoards coupled with limited life offer an interesting arbitrage opportunity with yields that, in some cases, reach well into the double digits.

SPACs are an outgrowth of blank check companies, which got a bad name when some were scams run through boiler room operations. The SEC Read the rest of this entry »

Merger Arbitrage Is Dead (Yet Again)

April 8, 2008

Declining returns on merger arbitrage funds Once or twice every decade, M&A markets go through a bust and returns of merger arbitrage and event-driven funds slip. It does not take long until pundits and performance chasing hedge fund investors ask: Is merger arbitrage dead? Read the rest of this entry »

SCPIE Merger Should Get A Higher Hostile Bid

February 19, 2008

SCPIE logoHedge fund activist Joseph Stilwell has been so busy trying to block the acquisition of SCPIE Holdings (ticker: SKP) by privately held The Doctors Company that he lost sight of the forest amid the trees. Investors don’t get an answer to the obvious question of why no higher bid has been made, even though Stilwell insists that a higher bid was available. The reason: the potential buyers all signed standstill agreements that prevent them from making acquisition proposals without the board’s approval. Read the rest of this entry »

Negative Alpha Is Built Into 130/30 Funds

February 4, 2008

Short-extension strategies, also known under 130/30, 120/20 or even 150/50 monikers, are the latest fad to hit money management. Amidst the excitement over this new product, it has been lost on most of its advocates that the implementation actually starts with a negative alpha.

Read the rest of this entry »

How Low Can Wilshire Enterprises Go?

January 14, 2008

Wilshire Enterprises 3-year returnWhile the process of selling Wilshire Enterprises (ticker: WOC) continues to drag on into its seventh month after the announcement that “initial bids are in,” WOC’s shares have fallen to a level where they trade almost at the level of cash on WOC’s book. We have pointed previously to the disastrous record of its management team, and the current trading levels are only increasing our enthusiasm for the deep value opportunity in WOC.

Read the rest of this entry »

Hedge Fund December Performance Spike Can Be Explained

January 5, 2008

Hedge Fund December Performance Spike Can Be ExplainedA study by Vikas Agarwal, Naveen D. Daniel and Narayan Y. Naik, Why is Santa so kind to hedge funds? The December return puzzle! has prompted many observers to conclude that hedge funds mis-report their December performance. The report finds that hedge fund returns spike in December with an average return of 2.51% in that month alone, versus an average monthly return of 0.96% for the January-November period (see adjacent chart from the study). This spike can not be explained by higher market returns in December and therefore the authors conclude that it must be caused by return management. To back up their claim of large scale wrongdoing, they also show that funds with higher performance fees, more illiquid strategies and higher volatility exhibit higher December outperformance than others. In addition, they claim that funds borrow January performance to boost December returns.

Not so fast. Read the rest of this entry »

Seth Hamot Will Revitalize CCA Industries

July 1, 2007

CCA IndustriesCCA Industries (ticker: CAW) reported earnings of only $0.18/share after recognizing about $0.06/share in expenses relating to the botched buyout by Dubilier & Co. Dubilier was unable to arrange financing for the buyout, and CCA Industries was left holding the bag in the form of $405,000 in expenses in the first quarter alone. In hindsight, it becomes clear why Dubilier executed a letter of intent rather than a definitive agreement, which may have included a reverse break-up fee.

An unexpected result of the end of the buyout is the appointment of Seth Hamot to the board. Read the rest of this entry »

Indemnification Conundrum In Solengo Capital’s Blind Pool

April 2, 2007

Amidst court orders against websites that leaked a confidential marketing brochure by hedge fund upstart Solengo Capital, the content of the formerly confidential brochure got lost in the brouhaha.

Solengo is the new hedge fund raised by Brian Hunter, who is the trader reportedly responsible for the multi-billion dollar loss suffered last year by hedge fund Amaranth in natural gas futures. He wants to get back into the business with a new fund only half a year after Amaranth’s near-meltdown. Thanks to this short road to redemption, it is no surprise that Hunter’s marketing materials have become the object of merciless mockery in the financial blogging community.

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