This content is from:Portfolio

The Morning Brief: Hedge Funds Feel the Pain of Hertz Slump

Now that’s gotta Hertz. Shares of Hertz Global Holdings, which ranks ninth on Goldman Sachs’ basket of stocks that matter most to long portfolios of hedge funds, fell 9 percent Friday after the car rental giant disclosed in a regulatory filing that it needs to restate its financials for the past three years to correct a series of accounting errors. It also warned that first quarter results will come in below consensus forecasts. At least 33 hedge funds held the stock among their top-10 holdings as of March 31, according to Goldman. Among the largest hedge fund owners: New York-based Fir Tree, New York-based York Capital Management and New York-based SAB Capital Management.

You can erase that circle around June 10 on your calendar. The scheduled sentencing of former SAC Capital Advisors managerMathew Martomahas been postponed after his lawyers asked for more time, according to Bloomberg BusinessWeek, citing a court clerk. Martoma, who was convicted in February stemming from the government’s widespread insider trading probe, faces up to nearly 20 years in prison. Martoma had earlier turned down offers by the government to cooperate against SAC founder Steven Cohen. He can still receive leniency if he chooses now to cooperate. It will be interesting to see what happens before his new sentencing date, which has not yet been announced.

The HFRI Fund Weighted Composite Index rose 1.2 percent in May, bringing year-to-date gains to 2 percent, according to Chicago-based industry tracker Hedge Fund Research. May’s performance was led by fundamental growth, shareholder activist, emerging markets and yield alternative strategies, according to HFR.

Four individuals who used a phony hedge fund to create a massive securities fraud must pay $55 million in investor restitution, civil penalties and disgorgement, according to an announcement from the New Jersey Division of Consumer Affairs and the Bureau of Securities. Peter Zuck, Michael Spak, Joseph Spak and John Najarian as well as the Osiris Fund and Osiris Partners were accused of fraudulently selling millions of dollars in securities issued by the Osiris Fund Limited Partnership, which they described as a “hedge fund” for the “little guys” and “moms and pops.”

They allegedly failed to disclose Zuck’s numerous prior convictions involving theft and fraud, including a securities fraud conviction for “bilk[ing] unsuspecting people out of a substantial amount of money [with] no remorse,” according to the press release, which quoted the judge. They were also accused of creating false investor account statements, failing to disclose their use of investors’ funds for the benefit of certain individual defendants and their family members, overstating the hedge fund’s net asset value to produce higher management fees and conceal losses, and improperly using unregistered agents to sell limited partnership interests in a hedge fund. Altogether, 76 investors were victimized by the scheme.

Nick Xanders, the former head of strategy at brokerage BTIG, has joined the London office of Israel “Izzy” Englander’s Millennium Management. He will serve as a fund manager, according to eFinancial news. Earlier this month, Millennium hired James Ter Haar, a former partner at credit hedge fund Lucidus Capital. Ter Haar, in turn, is looking to hire three or four people for a credit portfolio between $350 million and $450 million, according to the report.