January 27, 2016
By Dean Baker According to their acolytes, the rich are great innovators and job creators. But they haven't lived up to that billing in this century, as both job growth and overall economic growth have been extraordinarily weak since 2000. If their benefit to the economy is in doubt, no one can dispute that the wealthy are world-class tax avoiders. The New York Times recently reported that the country's 400 wealthiest families paid an average of just 17 percent of their income in taxes.
January 26, 2016 |
Roughly 15 years ago, I wrote an article about a notable Wall Street figure and his secretive investment fund that never, ever lost money. His name was Bernard Madoff. The dot.com bubble had just burst, yet Madoff's hedge fund earned 10 percent that year, without missing a beat. In May 2001, I wrote about some red flags surrounding Madoff's hedge fund: eerily consistent returns and no losing years even when the stock market crashed, no due diligence allowed by investors, no independent brokerage statements, and odd threats that investors could not return to the fund once they had cashed out. Madoff himself gave me a brief interview by phone, then metaphorically patted me on the head and told me to go away.
December 5, 2015 |
A former Montgomery County hedge fund has agreed to pay $6.8 million in fines and restitution in a fraud settlement with the U.S. Securities and Exchange Commission. The SEC said Covenant Partners' two owners, William B. Fretz Jr. and John P. Freeman, raised millions of dollars from 1999 to 2014, mostly from their family and friends. "Rather than investing the money as promised," the SEC wrote, "they funneled more than $1 million to [a business of theirs that was failing], paid themselves nearly $600,000 in performance fees they had not earned, and used fund assets to repay personal obligations.
August 2, 2015 |
The super PAC backing Gov. Christie's presidential candidacy disclosed its list of donors to federal regulators Friday, offering the first detailed glimpse of his national network of financial backers. Among the donors are members of the Christie campaign's national finance team, such as hedge-fund billionaire Steven A. Cohen and Home Depot cofounder Kenneth G. Langone. Other contributors include New Jersey firms that have been awarded a total of more than $100 million in state contracts.
April 21, 2015 |
William B. Fretz Jr. and John P. Freeman thought they had hit a low point in 2009, when one of their biggest clients - and one of the state's premier power brokers - was convicted of corruption. As former State Sen. Vincent J. Fumo headed to prison, their Montgomery County hedge fund, Covenant Partners, sagged under the weight of the recession and federal investigations. But the two were never charged, and Covenant carried on with the type of high-risk, high-reward investments that had made them millions.
November 30, 2014 |
The $134 million corporate meeting center rising at Harrah's Resort Atlantic City is supposed to represent the city's less casino-centric future. But a lawsuit filed this week also gave it a role in the high-stakes battle between Caesars Entertainment Corp. creditors, owed about $25 billion, and the Las Vegas firm's private-equity backers over who will get paid from Caesars' insufficient resources. The lawsuit, filed in Delaware Chancery Court on Tuesday by a bank representing senior lenders owed $1.25 billion, called efforts to deal with Caesars' debt load "a case of unimaginably brazen corporate looting and abuse.
November 21, 2014 |
An ally of Gov. Christie announced his resignation Wednesday as chairman of the State Investment Council. Robert E. Grady, a private-equity firm director who served in President George H.W. Bush's administration, said during the council's meeting Wednesday that he needed time to deal with an illness in his family, officials said. The council oversees the state's pension funds, which have about $80 billion invested. Grady also said during the meeting that he had stayed longer than he intended, wanting to oversee a leadership change in the investment division of the state Treasury Department, officials said.
October 6, 2014 |
Struggling to raise cash for future pensions without bigger taxpayer bailouts, state workers' and teachers' retirement plans in the last dozen years or so have sought higher returns by betting on "alternative" investments not traded on public markets: hedge funds, real estate, private equity. Hedge-fund managers have collected billions in fees, but their returns have mostly trailed stocks in recent years. The largest U.S. pension plan, the California Public Employees Retirement System , plans to dump its $4 billion hedge-fund portfolio, citing "complexity, cost," and the difficulty of buying enough good ones.
June 3, 2014 |
Pennsylvania's Public School Employees Retirement System (PSERS), the 18th-largest state-sponsored, defined-benefit public pension fund in the nation, runs money for more than 400,000 teachers and retirees. And PSERS likes hedge funds. But are hedge funds worth it? PSERS oversees assets of $50.4 billion. Roughly 10 percent, or $5 billion, of that is invested in hedge funds, which generally charge 2 percent of assets and 20 percent of performance annually. An index mutual fund typically charges much less, say, 0.50 percent a year.
February 14, 2014 |
What is the main difference between a mutual fund and a hedge fund? These days, the goodies inside the portfolios are strikingly similar. The only difference might be the wrapping paper. For instance, which is riskier? A hedge fund holding hundreds of diversified stocks, or a mutual fund such as the popular Fairholme Fund (symbol: FAIRX), which has about 40 percent in one stock - the recovering insurer AIG? An investor's aptitude for risk should be the result of analysis. To navigate the increasingly blurred lines between mutual funds and hedge funds, we checked in with Brian Portnoy, whom I first interviewed a decade ago when he was a mutual fund analyst for the Morningstar Inc. database.