Soros' Penney Shares

Said a billionaire octogenarian
Of a much-unloved stock he was carryin':
"What's the use of my hoard
If I cannot afford
To indulge in a bet that's contrarian?"

Billionaire's Blues

Said a mogul of stock-market dealing,
His support for Obama repealing:
"I don't mind paying tax,
But this President lacks
Due regard for my sensitive feeling."

In this week's New Yorker magazine, Chrystia Freeland poses the pertinent question: Why do billionaires feel victimized by Obama? "The growing antagonism of the super-wealthy toward Obama can seem mystifying, since Obama has served the rich quite well," she writes, supporting Wall Street rescues and resisting calls for bank nationalization. "The economists Emmanuel Saez and Thomas Piketty have found that 93% of the gains during the 2009-10 recovery went to the top one per cent of earners... the top 0.01 per cent captured thirty-seven per cent of the total recovery pie..."

If there is a leader of the hedge fund opposition to Obama, it may be the Bronx-born, billionaire Democrat Leon Cooperman, manager of the hedge fund Omega Advisors. Cooperman seems to have taken personal offense to President Obama's rhetoric regarding "millionaires and billionaires not paying their fair share of taxes." Says Cooperman: "It’s a question of tone. The President makes it sound like the problems of the ninety-nine per cent are caused by the one per cent, and that’s not the case." Of course, having made comparisons between Obama and Hitler on a couple of occasions, Cooperman may have tonal problems of his own.

2012 Outlook: Bad & Good

Said a hedge fund Colossus: "The crux
Is the global economy sucks;
But, by legerdemain,
To be perfectly plain,
My investors make billions of bucks."

The outlook for the developed economies is so bad that it might be a banner year for one of world's largest and most successful hedge funds. So says co-chief investment officer Robert Prince of Bridgewater Associates in Westport, Connecticut. "What you have is a picture of broken economic systems that are operating on life support," says Mr. Prince to The Wall Street Journal. "We're in a secular deleveraging that will probably take 15 to 20 years to work through and we're just four years in." Mr. Prince can only hope that the new year is as bad as the old, in which Bridgewater made 25% returns while the average "global macro" fund lost 3.7%. Among his firm's winning bets on bonds, stocks and commodities were "long" positions in gold (i.e., betting that the price would rise) and a well-timed call that the euro would fall against the yen.

Insider Trading: Is It Bad?

If A buys a company share
From B, who remains unaware
Of the info that A
May not give away,
Well then, this is rather unfair.

The sentencing of hedge fund manager Raj Rajaratnam to 11 years in prison for his insider trading conviction highlights once again the seriousness of this offense in the US legal system and, for some, revives the debate over whether it should be so.  Mr. Rajaratnam, who will soon rub shoulders with Bernie Madoff in the Butner, NC federal prison, used a network of experts in selected industries to "find an edge" in his investments.  Such experts really comprised a network of well-placed tipsters, US Attorney Preet Bharara convinced a Manhattan jury.  To those who would argue that insider trading is a victimless crime, one could point out that every inside trade has a counterparty unaware of the underlying material, non-public information, who is thus cheated out of the full value of the traded stock; in Mr. Rajaratnam's case, the defrauded values were in the millions.

The FBI Comes Calling

"Legal scholars have often debated it:
'When's the info too hot to have traded it?'
It's a thin, hazy line
That's hard to divine,
But it's here that I fear we've located it."    


The FBI has raided a trio of hedge funds, two of them run by alumni of Stephen A. Cohen's SAC Capital Advisors. The funds - Diamondback Capital Management LLC, Level Global Investors LP and Boston-based Loch Capital Management LLC - are known for their reliance on the expert research of analysts with deep industry knowledge, which the Bureau evidently perceives to have crossed the line into inside trading.

An Alleged Violation of the Securities Act of 1934

"Find an edge!" bellowed Raj Rajaratnam,
To the geeks at his hedge fund in Gotham.
But a Galleon tipper
Informed on her skipper;
Crowed the SEC: "Ha! Now we've gotten 'im!"