This content is from: Portfolio

The Morning Brief: Shake-Up Planned at Fortress Macro Hedge Fund

Fortress Investment Group is planning a massive overhaul of its flagship macro hedge fund following significant recent losses and investor redemptions, the Wall Street Journal reports. The fund, run by outspoken manager Michael Novogratz, is off by approximately 10 percent this year, owing in part to losing currency bets — such as the Swiss franc short that hurt many hedge funds earlier this year, when the country’s central bank scrapped the currency’s peg to the euro, according to the report. The fund fell 1.6 percent last year. Novogratz will reportedly take a larger role at the fund, which he now manages alongside others.

Fortress now manages $2.8 billion in the fund and related accounts, down from $3.2 billion at the start of the year and more than $8 billion in 2007, according to the report. The fund launched in 2002.

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Weight Watchers International has gotten a little too good at losing. The weight-loss giant has shed some 86 percent of its value since December, and now an activist hedge fund manager is taking aim at the company in hopes of beefing up its returns, according to a report in the New York Post, which did not name the hedge fund.

The fund recently purchased most of Weight Watchers’ remaining $144 million in senior loans, due April 2016, and is talking with potential partners about making a buyout offer to the company’s majority owner, according to the report, which cited sources familiar with the situation.

Weight Watchers is losing business to mobile apps and devices such as the Fitbit and reported a 17 percent decline in subscribers from a year ago in its first-quarter report. The company now reports having only $130 million in cash, not enough to meet the loan payments due in April unless it uses a revolving line of credit. But the activist hedge fund may have a hard time persuading the majority owner of Weight Watchers — Luxembourg-based investment fund Artal Group, managed by investment firm Invus Group — to sell, given that it had once been a cash cow for the firm, the Post reports.

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A Ponzi scheme operator masquerading as a hedge fund manager has been sentenced to six years in prison for swindling $9 million from unsuspecting investors, according to the Chicago Tribune. Neal Goyal, who founded the Chicago-based Caldera Investment Group, solicited investors from a Hindu community in which his parents, both doctors, were active. Goyal blew the funds on a mansion for his family, trips to Hawaii and Tahiti and luxury car leases, among other things, without even placing trades for several years, according to prosecutors. He also funded two posh baby boutiques for his wife and a tavern, Tommy Knuckles, for his father-in-law. Goyal even took his staff on an all-expenses-paid trip to the Dominican Republic for a week to celebrate achieving 50 percent returns in 2013 — returns that turned out to be fictitious, of course.

Goyal’s investors, some of who were family friends, spoke in court of losing millions, including college funds. “I’m a rotten individual for what I did to (investors). I’m a rotten individual for what I did to my family,” Goyal told the court, while pleading for mercy for his family, according to the report. But Judge Matthew Kennedy wasn’t swayed, telling Goyal, “If you had given one thought — one thought — to your family during those eight years you would not be standing here now,” according to the report. Goyal also was ordered to pay $9.2 million in restitution.

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