Intrepid Analyst Arrested For Insider Trading
Note to analysts: if you’re under investigation by the Federal Bureau of Investigation it’s a good idea not to antagonize the agency. John Kinnucan, an independent tech analyst formerly with Broadband Research, learned that that lesson the hard way. The good news is that, having been arrested for alleged insider trading last night, he’ll have time to reflect on his mistakes in jail.
Of course, Kinnucan could have benefited from a bit of forward thinking since refusing the FBI’s requests to have him rat out his clients during its 2010 “Perfect Hedge” investigation may have been a tip off that something was amiss. The bureau opted to tap his phone and recorded his conversations with Level Global’s Anthony Chiasson and Donald Longueuil, a former portfolio manager with SAC Capital.
The kicker is Kinnucan often called the FBI to sound off on their “criminal activities” and “Constitutional violations.” Insider trading, as we all know, is just so legal.
Citi Gives Managers Piece Of Hedge Fund Unit
No, Citibank isn’t turning into a hippie co-op even though it’s now allowing managers to own a “significant” stake in its Citi Capital Advisors hedge fund unit. The move’s an attempt to get around the Volcker rule’s stipulation that banks be more responsible with their customers’ deposits.
Now, to be fair, the ownership model isn’t anything new: Pick a firm where the nearly threadbare skin-in-the-game argument isn’t used to drum up partner assets and impress clients. But COO John Havens’ assertion Citi is trying to appeal to clients’ taste for independent managers all of a sudden is rather amusing.
Small Funds Outflank Big Firms
The funny thing about green shoots is that they’re always greener somewhere else. Some of the larger hedge funds may be turning a few shades now that some of the little guys seem to have beaten them on performance.
While Paulson and SAC were busy losing their clients’ money last year, smaller outfits such as Dallas-based Carlson Capital posted gains of 40%. Likewise, London’s LMR Partners’ LMR fund gained 38.7%.
Data from Barclays Capital showed funds with less than $100 million in assets saw an annualized gain of 10.1% over the last decade. The top quartile of small hedge funds returned an average of 99% annually compared to big shops, which gained 60%.
So, what’s the “secret sauce?” Andrew Lee, an advisor at JPMorgan Chase’s wealth management arm, said small firms can react more quickly to the market.
That’s great news for the little guys. Maybe some of them will bring that up when they’re trying to snag a gig at Paulson.