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2. Financing not a problem for Icahn, Southeastern

Hedge fund bigwig Paul Tudor Jones has really stirred the pot with his recent comments about women. The scene was a roundtable at his alma mater, the University of Virginia. Business Insider provides a transcript, and here are some choice excerpts:

About some female colleagues he once worked with, he said that, "Within four years, by 1980, right when I was getting ready to launch my company they both got married. Then they both had — which in my mind is as big of a killer as divorce is — they both had children. And as soon as that baby's lips touched that girl's bosom, forget it. Every single investment idea, every desire to understand what's going to make this go up or go down is going to be overwhelmed by the most beautiful experience which a man will never share about a mode of connection between that mother and that baby. I just see it happen over and over. I'm talking about trading, not managing ..."
About female investors he said that, "You will never see as many great women investors or traders as men. Period. End of story. And the reason why is not because they're not capable. They're very capable. Like, one of my No. 1 rules as an investor is as soon as my manager, if I find out that manager is going through divorce, redeem immediately. Because the emotional distraction that comes from divorce is so overwhelming. The idea that you could think straight for 60 seconds and be able to make a rational decision is impossible, particularly when there are kids involved. You can automatically subtract 10 to 20% from any manager if he is going through divorce."

Needless to say, the comments gave rise to a Larry Summers-like controversy, forcing him to issue a statement that his comments were "off the cuff."

He also noted that, "I believe that great success is possible in any field — from music to mathematics to macro trading — as long as a woman or man has the skill, passion, and repetitions to work through the inevitable life events that arise along the way."

For more:
- here's the BI piece
- here's the video from the Washington Post

By Jim Kim

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3. Private equity recruiting still intense on sell-side

The next big milestone in the Dell leveraged buyout drama may well be the upcoming shareholder meeting, when the deal proposal put forward by Silver Lake and Michael Dell will be voted on.

Carl Icahn and Southeastern Asset Management, which have put forward a competing concept, are working toward securing bridge financing for their deal, according to Reuters. They want between $5.2 and $7 billion in commitments to back their deal. The lead banker is apparently middle-market powerhouse Jefferies, which has committed $1.6 billion. They want all this lined up by next week.

Reuters noted that, "Lenders committing to the deal are being offered a fee upfront of 3.5 percent, which is typical of these transactions. As an added sweetener, Icahn and Southeastern are also offering lenders an additional 7.5 percent of any incremental profit the two shareholders receive if Silver Lake prevails with an increased offer. Pricing on the loan is guided at 350bp over Libor, though pricing could change as syndication efforts are only in the early stages, the same sources said."

The leveraged loan market is hot, though LBO-linked leveraged loan activity has been one of the few weak spots. While front-end LBO activity has been somewhat disappointing despite some marquee deals, the conventional wisdom is that the demand for such debt supply is strong. Yields remain under pressure across the board. All in all, it doesn't appear that financing will be an issue for Icahn and Southeastern.

For more:
- here's the article

Read more about: lbo, Leveraged Loans
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By Jim Kim

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4. Hedge funds continue to embrace mutual funds

When it comes to switching to the buy-side from the sell-side, the process is starting as early as ever.

The reality is that the current state of the sell-side -- and most people are willing to blame regulation -- remains sub-optimal, which makes the buy-side look all the more enticing. And the competition for the best young trainees at companies like Goldman Sachs, Morgan Stanley, and JPMorgan Chase is intense this year.

"When private equity recruiting season began in early April, junior analysts at banks like JPMorgan Chase and Morgan Stanley eagerly awaited calls from recruiters who could set up interviews at leading companies… It's a careful song and dance. Young analysts are approached by executive search firms hired to fill anywhere from one opening at a hedge fund to a few spots at a middle-market private equity firm to more than 50 positions at big operations like Kohlberg Kravis Roberts, the Blackstone Group or the Carlyle Group. Traditionally, these jobs do not begin immediately but a year and a half later, after analysts finish their two-year contracts," notes DealBook.

For Goldman Sachs, this trend has proven frustrating. It recently tried to crack down, firing a few analysts for breaking rules that apparently preclude them from lining up a new job in the first year of the analyst program. The bank later got rid of the time-honored two-year analyst program altogether, offering their youngest recruits full-time jobs in an effort to keep them from the recruiters.

You can bet young analysts are being recruited anyway. The bottom line is that private equity firms seem to offer just about everything that an investment bank does -- even the stock options. The work is quite similar, especially with more private equity firms dabbling in investment banking. And the future rewards are judged to be higher.

For more:
- here's the article

Read more about: sell-side analysts, recruiting
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By Jim Kim

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5. NYT wedding announcements favor MBAs, Wall Street execs

In the hedge fund industry, it's tempting to suggest that we're seeing a dichotomy emerge between the elite and the average -- the haves and the have-nots. By one estimate, just 5 percent of hedge funds will garner up to 90 percent of the inflows into the industry this year.

For the 95 percent of hedge funds that have yet to amass the sheer heft, compliance savvy, marketing might and performance record of the elite, it's time to get creative to survive. One obvious tactic is to re-jigger product line-ups in order to garner more assets from new sources, one of the most promising being retail investors. This trend has been slowly heating up for years, with the rise of so-called hedge fund mutual funds and other products.

Citigroup has come out with a report that predicts retail assets in hedge fund-like mutual funds will more than triple to $940 billion over the next four years from $305 billion at the end of 2012, as noted by the Financial Times. The prediction covers both mutual funds and Ucits. Money managers are increasingly looking at these sorts of products to differentiate themselves in crowded markets.

Not to be outflanked, traditional mutual funds companies are tiptoeing into the hedge fund industry, as a great convergence gathers steam. It will be interesting to see if big institutions ultimately decide to embrace these products, looking for hedge fund performance on the cheap.

For more:
- here's the article

Read more about: Hedge Funds, Mutual Funds
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By Jim Kim

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