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The hedge fund managers profiting off Sandy Hook

Mon, 18 Mar 2013 16:25:00 +0000

After Adam Lanza shot dead 20 children in a Connecticut primary school with his mother's Bushmaster XM15-E2S rifle, public discourse turned swiftly to the well-hashed gun control debate. Legislation was proposed, teacher gun-training groups launched, Bushmasters flew off shelves in fear of an impending ban. Meanwhile, the markets were moving.

Arms manufacturers Smith & Wesson, Cabela's and Big 5 all boasted sterling third quarter results in the post-Sandy Hook gun boom. A number of big retail chains moved to end sales of AR-15s and similar assault weapons in the wake of the shooting and Cerberus Capital, the New York firm that owned Bushmaster, sold the company, calling the Connecticut shooting a "watershed event." But a small number of hedge funds, accustomed to a sadly familiar pattern (gun massacre, leads to fear of gun bans, leads to mass gun sales), moved to make bank on the tragedy and this predictable trajectory.

How Mitt Romney made a fortune off the auto bailout

Fri, 19 Oct 2012 15:40:00 +0000

Faced with the hard facts that “bin Laden is dead and General Motors is alive,” as Vice President Biden always says, Mitt Romney has resorted to claiming that Obama followed his lead on the auto industry bailout. “I know [Obama] keeps saying, you wanted to take Detroit bankrupt," he said during this week's debate at Hofstra University. "Well, the president took Detroit bankrupt.” Romney's right, in a way -- both his plan and Obama’s plan envisioned the auto companies going through a period of bankruptcy restructuring. But there’s a key difference: Obama's approach was to use government dollars to prop up the auto companies until they could stand on their own again -- something that Romney, like other Republicans in the Tea Party's anti-spending thrall, adamantly opposed as dangerous government intervention in private industry.

But it turns out that Romney should know firsthand that this kind of intervention can be successful, as a new report shows that he and his wife made at least $15.3 million courtesy of Obama's auto bailout. According to a Greg Palast, who followed the paper trail for the Nation, Romney and his wife made the money via an investment in a hedge fund that saw astronomical returns on its investments in an auto parts maker that would have gone under absent the president's rescue operation.

Hedge funds shrug off Dodd-Frank

Mon, 15 Oct 2012 16:10:00 +0000

The Dodd-Frank bank reform act has always worked perfectly as prism for determining partisan alignment. Conservatives see it as burdensome over-regulation that will unfairly constrict the banking industry and slow overall economic growth. Liberals see it as a hopelessly co-opted toothless compromise, gutted by special interests. The reaction to the law works as a perfect metaphor for the Obama administration's overall record -- take your pick: outrage or disappointment.

Well, we finally have some data that casts light on both narratives. On March 12, 2012, a provision of Dodd-Frank requiring hedge fund managers to register with the Securities and Exchange Commission and provide information about their trading activities came into effect. Three months later, Wulf Haal, a law professor at the University of St. Thomas in Minneapolis, sent a survey to 1,264 "private fund advisers" asking them questions about the costs associated with complying with the new regulations:

Guess what? The sky isn't falling...