Boss Capital is shutting down

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Tourbillon Capital hedge fund is shutting down

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Another hedge fund bites the dust.

Tourbillon Capital — led by SAC Capital alum Jason Karp — is shutting down after six years, according to a letter sent to investors Oct. 8.

“We have recently not delivered the results that you expect of us and what we know we are capable of,” Karp wrote, adding that the fund is starting a “prudent” wind-down of assets and will be returning more than $1 billion to investors by year-end.

Tourbillon is the third major hedge fund closure this month.

San Francisco-based Criterion Capital Management announced plans to shut down last week on the heels of $12 billion Highfields Capital announcing its plans to shut down as well.

The $3.2 trillion hedge fund industry has had a tough run in recent years as investors have been able to get favorable returns in low-cost index funds without the hefty hedge fund price tag.

For Tourbillon, which “delivered outsized returns” in its first three years, recent returns have been underwhelming. The fund shed 2.6 percent through August, according to a person familiar with the matter, while the S&P 500 gained 8.5 percent over the same period.

Annualized returns for Tourbillon averaged 12.3 percent, the person said.

Although Karp plans to return investor money, he is not fully out of the game.

Karp and his partners plan to continue investing their own funds in a “radically different, unconstrained manner.”

Separately, the hedgie plans to invest in health and wellness companies — including Hu Kitchen, a health food restaurant and store he launched with his family six years ago.

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For 40 years I watched ‘rampant fraud’ on Wall Street destroy capitalism, Covid-19 nailed its coffin shut

By Mitchell Feierstein, investor, banker, and author of Planet Ponzi: How we got into this mess, what happens next, and how to protect yourself. He spends his time between London and Manhattan.

Last week, I spoke with a young stock trader currently working on Wall Street. I remember saying: “The last time I remember seeing volatility like this in markets, my 40-year Wall Street career flashed in front of my eyes. I was like a deer in the headlights.

Thirty seconds of silence followed before I added: “Well, actually, the volatility we have seen since mid-February is unprecedented; in history, nothing like this has ever happened. It’s a case of 12 years of climbing up the staircase only to be pushed down the elevator shaft – with more downside ahead.”

Later that evening, thinking about my conversation, I recalled the highly-rated Wall Street crashes I saw during my career. In 1982, the fraud at Drysdale Government Securities INC. made one of our traders on the floor frantic. He was wildly flailing his arms, jumping up and down, and threw the handset of his phone to the floor, smashing it to pieces. All the while, he was shrieking: “F**king Drysdale has gone f**king bust. They will take down Chase Manhattan Bank with them, and the entire global f**king banking system. Repo is finished.”

Repo is an abbreviation for Repurchase Agreements. The Repo marketplace is like a securities dealers’ pawn shop for government bonds – bring us your securities and some other player will provide short-term loans.

Shortly after his tirade, the Telerate screens flashed “Drysdale misses interest rate payments.” Drysdale was crashing and Chase Manhattan Bank, Manufacturers Hanover Trust, and US Trust Co. were all on the hook.

But luckily for them, the Federal Reserve was there to bail them out. The Federal Reserve Bank is not part of the federal government and is not actually a bank. It’s owned by the big member banks and acts to protect banking interests – it seems they enable fraud and cover it up.

The Federal Reserve called in the 30 broker-dealers and an opaque bailout was arranged. Chase was on the hook for around $300 million, which was tax-deductible, because its client Drysdale was a total fraud. Two bankers were jailed and this killed Repo volumes for a few years.

A “broken Repo market” indicates something is very seriously wrong with financial markets, and a few short years later, we had another crisis. Who could forget living through October 19, 1987, Black Monday, when the stock market plummeted 508 points or 22.6 percent – the biggest one-day percentage decline in history? After markets closed, we all had drinks on the 107th floor of our building in One World Trade Center. It felt like a funeral. With my eight years of experience, I calmly said: “Don’t feel bad. It’s probably a buying opportunity.”

If looks could kill… I am just glad the windows in the Windows On The World’s bar did not open or they may have given me a push. I later found out that many of them had lost millions of dollars, of their own money, in a single day.

My memory then flashed to the Savings and Loan Crisis. I remember the Dow Jones new board headlines flashing across the trading floor: “Numerous bankers arrested for their part in the S&L crisis.” Many of these bankers were jailed for a series of frauds and other illegal activities that took place. The S&L crisis saw 1,043 out of the 3,234 Savings and Loan associations in the United States from 1986 to 1995 go bust. Real crimes were committed, and bankers were jailed. The Resolution Trust Company was born to unwind the 1,034 S&Ls in an orderly manner. The S&L unwind has long been referred to as the most “catastrophic collapse of the banking system since the Great Depression.

And then came the Global Financial Crisis of 2008 (GFC). I still recall seeing a video of ex-Federal Reserve chairman Alan Greenspan on stage with then-Fed Chairman Bernanke. Greenspan, commenting on the Lehman Brothers collapse, lamented that “if you have adequate capital, you do not have defaults of senior debt and you do not have contagion.

Greenspan, aka “The Maestro,” continued as Bernanke twitched, looking increasingly uncomfortable: “I think there was rampant fraud in a lot of what was going on in these markets. We need to get far higher levels of enforcement of existing fraud statutes… things were being done that were certainly illegal and clearly criminal in certain cases, by which I mean fraud. Fraud is a fact. Fraud creates very considerable instability in competitive markets. If you cannot trust your counterparties, it won’t work, and indeed, we saw that it didn’t.”

Bernanke seemed shocked at how easily Greenspan admitted Wall Street’s rampant fraud. Illegal and criminal activities played a major role in the GFC for which no bankers were jailed and no banks closed down. They paid tax-deductible fines that were insignificant relative to the gains made.

The same players who were bailed out then went back to what they do best. Too big to fail is now bigger, but with one crucial difference – the concentration of toxic risk remains in fewer hands and is enabled by Washington’s pay-to-play swamp. As corporate debt hits new all-time highs, balance sheets remain riddled with accounting fraud and enforcement hits all-time lows; we will soon see who is naked and it won’t be pretty.

Last autumn, I warned investors that Germany’s economy was falling off a cliff and was either in a recession or would be very soon. I cautioned that Italy’s debt is a huge problem and other member states and the rest of the world are not far behind Germany. Now in March, you can expect and will need to prepare for a full-blown economic depression.

Banks, politicians and governments will scapegoat Covid-19 to shift the blame for over 30 years of fiscal profligacy, loose monetary policies, fraud, and the lack of any proper regulatory enforcement away from themselves and onto anything or anyone else. Eventually, taxes will skyrocket to pay for these opaque bailouts, reckless spending policies, and record low interest rates during the past three decades.

Covid-19 presents an easy way to assign blame while forcing through “emergency legislation” allowing big government to implement 1984-style draconian social controls that will impinge and dismantle personal freedoms, liberties and democratic principles as they fleece taxpayers – again. If you think the 2008 recession and bailouts were bad, wait until you see how the greatest economic depression in history plays out.

This bubble has only begun to pop, and there are many more shoes to drop from this centipede before prices hit bottom. The downside will be significantly worse than the upside. Until leverage, valuations and corporate debt return to reasonable levels, stay clear. When these events do happen, we will see once-in-a-lifetime opportunities to create wealth.

The two most important lessons I learned from my 40 years in international financial markets, lessons that can also be applied to politics and to life in general, are to never make any decision based on emotion or ideology and to never, ever trust the news. Today’s media are exponentially worse than they were in the 1980s and 1990s. They no longer provide news. What they provide are stories that are around 80 percent ideology and opinion,10 percent lies and spin, and 10 percent fact.

You need to divorce yourself from emotion and ideology. You need to base decision-making on statistical probability utilizing raw economic data, rational reason, logic and facts. Fasten your seat belts tightly; severe turbulence is coming, and the ride will be bumpy.

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The statements, views and opinions expressed in this column are solely those of the author and do not necessarily represent those of RT.

Hedge Fund Eton Park Is Shutting Down After a Decade

Eric Mindich at the CNBC Institutional Investor Delivering Alpha Conference in New York on July 15, 2020.

Photographer: Heidi Gutman/CNBC/NBCU Photo Bank via Getty Images

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Eric Mindich at the CNBC Institutional Investor Delivering Alpha Conference in New York on July 15, 2020.

Eric Mindich, a one-time Goldman Sachs star trader who jumped into the hedge fund industry during its heyday, is throwing in the towel on his $7 billion firm.

Mindich — whose Eton Park Capital Management was among the biggest fund startups — is returning client money after 13 years, he said in a one-page letter to clients Thursday. The firm expects to return 40 percent of all investors’ capital by the end of next month.

“Recently, a combination of industry headwinds, a difficult market environment and, importantly, our own disappointing 2020 results have challenged our ability to continue to maintain the scale and scope we believe necessary to pursue our investment program consistent with our founding principles,” Mindich, 49, wrote.

The decision follows the fall of another Goldman alumnus who ran a multibillion-dollar hedge fund. In September, Richard Perry called it quits, announcing that he was closing his main fund after almost three decades. Last year was the toughest for hedge fund closures since 2008. Liquidations totaled 1,057, according to Hedge Fund Research Inc.

Unlike some of the other firms, Mindich had net inflows in his main hedge fund last year. But it lost 9.4 percent in 2020, in part from a wrong way bet on Japanese equities, according to people familiar with the matter.

Global Player

Performance this year was flat, according to one of the people. Since Eton Park’s inception, it averaged annual returns of 9.4 percent and made money in the previous four years, including a 22 percent gain in 2020, one of the people said.

From the start, Mindich had set up his fund to be a global player, with offices in New York and London, and a team approach that focused on companies going through turnarounds, bankruptcies and other corporate events. It was an operation he wasn’t sure he could continue given that assets had fallen by 50 percent since 2020.

“As responsible stewards of your capital, we have been unwilling to compromise on the business model and investment program in which you invested or the way in which we have pursued it,” Mindich wrote. “As a result, we have made the very difficult decision to return your capital, from a position of relative strength.”

Mindich expects to return the rest of the money to clients in the coming months, though certain special investments will take longer, he said in the letter.

Mindich raised about $3.5 billion when he opened Eton Park in November 2004, the biggest startup in the industry at the time. It was a golden time for hedge funds when Wall Street traders were quitting big banks in droves to become their own bosses and hopefully make their fortune.

Before starting Eton Park in 2004, Mindich spent 15 years at Goldman, where he ran both the equities and equities arbitrage businesses and eventually served as senior strategy officer. He became the youngest partner in Goldman’s history at the age of 27, and was a member of the bank’s risk-arbitrage desk that came to spawn a group of big-name managers including Perry and Dan Och.

A spokesman for Eton Park declined to comment.

— With assistance by Saijel Kishan, and Katia Porzecanski

Radical Heights & LawBreakers studio Boss Key shuts down

14th May 2020 / 8:37PM

After LawBreakers failed to strike it rich, many saw studio Boss Key’s decision to rush-release ’80s game-show themed battle royale Radical Heights as proof that the studio was in jeopardy, and that pushing the game out with only one half-finished map available was a wild spin on the wheel of fortune. While starting out free-to-play ensured that the price is right, it just wasn’t enough to hit the jackpot and save the studio from a complete wipeout.

Today on Twitter, studio head Cliff Bleszinski announced that Boss Key Productions is no more.

In a sobering and understated comment on Twitter earlier, former Epic lead Cliff Blesinzki announced that this was the end of the line for Boss Key Productions, and that he was going to be taking some time off, away from the games industry to reflect and spend time with his family. Hopefully some day he’ll feel confident enough to return to the fold, but I can entirely understand feeling especially deflated after having to deliver the news to the rest of his team.

The decision to pivot to making a battle royale shooter wasn’t inherently bad either, just another case of being in the wrong place at the wrong time. The stratospheric success of both Plunkbat and Fortnite can be chalked as much up to luck as judgement, and no shortage of exciting-looking potential rivals have fallen through. Even my own brief favourite – Robocraft Royale – fizzled out almost immediately.

Boss Key Productions was clearly a studio with plenty of talent on board, but their decision to go after the competitive multiplayer shooter crown right off the bat was a gamble that just didn’t pay off in the end. I sincerely hope that everyone left without a job after this gets picked up quickly by other studios, as LawBreakers – while flawed – was clear evidence that this is a team that know their way around the Unreal engine, and I wish everyone the best of luck.

I also fully apologise for that opening paragraph. I’ve been itching to do that ever since Radical Heights first appeared, and figured this was my last chance. No disrespect intended.

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