Raptor Fund Is Road Kill

Elaine Meinel Supkis

More hedge funds are going under. This time, it is Raptor Fund's turn to become a carcass rather than a high-flying seeker of dying livestock. The names these guys use always amuses or horrifies me. Who in their right minds would buy funds with these names? I still haven't seen 'Rip-off LDC'. But maybe there is one, it just hasn't made the news yet. Time to look into the SEC filings of Mr. Tudor, the guy cooking up this latest financial disaster.

From Forbes:

On a day when another mortgage lender, American Home Mortgage, teetered toward liquidation, Standard & Poor's said half the U.S. corporate bond market was officially speculative grade.

The big ratings agency said 50.7% of the corporate bond market is now rated BB or lower, the first time this has happened, marking a decade-long shift toward more aggressive finance strategies and the evolution of the leveraged finance market.

"The ratings mix continues to deteriorate as firms borrow to buy back shares and make acquisitions," S&P's fixed-income research managing director, Diane Vazza, wrote in a report Tuesday. "However, the key force in the downward shift in the ratings distribution has been new entries into the bond market."

Through the first half of 2007, 70% of 158 new issues were rated B, according to S&P research.

A sign that a boom of some sort is at an end is when the big boys and big girls go running about, getting involved in more and more interlocking, interlaced deals that are riskier and riskier in a search for greater returns. Eventually, they go so far out on various limbs, the branch breaks and they fall. Going through the SEC filings of this latest crashing through the upper stories of the financial markets shows us how interlaced all these organizations and funds are. Seems this rather small crew of people are responsible for a considerable proliferation of funds.

In other words, as one fund after another goes belly up, we should picture just a handful of mostly male people running about, scared to death and worrying about making more bad deals. This is why the trainwreck happens pretty fast: if only a three or four people are dealing with running 30 funds, when one of these funds go bad, all the others are in jeopardy due to the emotional rising hysteria of the key characters running these get-rich-quick schemes. They can't sleep at night, they can't party in the evening, they can't pay $23 million for a really crummy painting! The entire system of upper-class financing can collapse.

From the Forbes article above:

The default rate is low, however. It is projected to be 1.4% by the end of the year, up from 1.2% at the end of June.

This unfolding wreck is like driving on the freeway: one car goes out of control and hits another in the fog and soon, everyone is in a 100 car pile up. The default rate is still 'low' just like the repossession rate of delinquent mortgaged housing starts low. Indeed, moving from 1% to 1.4% is bad news in this regard. During the worst of the Great Depression, the rate was seldom more than 4% a year. It just went on, year after year. Japan did this with its own depression. From 1994-2002, the bankruptcy rate nibbled away at everything. The main thing is, the rate is rising. Direction of movement matters. In this case, very much so since the people running these funds and these schemes are one and the same and the emotional toll of seeing things fall apart grows and the desperation this causes has an impact on all funds, as I will now show.

From Bloomberg:

Tudor Investment Corp.'s Raptor Fund lost 9 percent in July as stock prices fell worldwide, investors said. Caxton Associates LLC's flagship hedge fund dropped about 3 percent.

The loss by Raptor, managed by James Pallotta in Boston, left the $8.9 billion stock pool down about 2.9 percent for the year through July 27. Bruce Kovner's Caxton Global Investments, an $11 billion fund, held on to a 3.5 percent gain for the year through July.
*snip*
``This is a market event much like we had back in 1998,'' Virginia Parker, who helps oversee about $1.8 billion at Parker Global Strategies LLC in Stamford, Connecticut, said in an interview. ``We've had an extraordinary withdrawal of liquidity from the credit markets that's affected every type of paper. The nervousness from the credit markets is spilling over into the equity markets.''

In August 1998, Russia devalued the ruble and defaulted on debts, sending global markets tumbling. The biggest victim was John Meriwether's Long-Term Capital Management LP, which lost $4 billion, or more than 90 percent of assets.

And what happened after the 1998 defaults? Well, stocks shot up and then crashed as Greenspan raised interest rates higher and higher 'to stop inflation.' Like with this cycle, investors ran away from these various schemes. So far, no Russia has gone bankrupt...yet. But the possibility of some certain major country going into serious economic trouble is the hidden part of this story.

One thing that constantly strikes me, reading the news of hedge funds, is the names these guys give to their funds. There are, of course, a lot of traditionalists who use the word 'Trust' and 'Security' in their names. Fortress funds is an example of that as well as Aegis funds. But the younger guys love to pull our legs and they also love to signal their 'in the know' bratz attitude. The Enron guys gave their false front funds funny names from Star Wars movies, for example. So I look with bemusement as these various financial wizards give obvious signals about the dark nature of their funds by using names like 'Raptor' or 'Cerberus.' There is even a 'Pirate' fund! They also like the word 'black' and also magic terms.

From the Bloomberg article:

Tudor was founded by billionaire trader Paul Tudor Jones, 52, and manages $20 billion. Its flagship Tudor BVI fund, which wagers on interest rates, currencies, commodities and equities, fell 3.1 percent in July and is up 4.6 percent for the year. The $10.3 billion pool has returned 24.2 percent a year since November 1986.

And Mr. Tudor can't attract investors with a return that is the same or less than Bernanke's offerings which are less than quite a few countries' interest rates on bank CDs! If Mr. Tudor goes down in flames, this would be a very big event in the financial world. Expecting a 24% return on funds forever is madness. And he is part of the problems afflicting our nation. If we pry into his affairs, we meet a guy who is cheating on his taxes by using off-shore tax havens and he makes his great wealth by basically driving us into destruction on an awful lot of levels.

From the previous article:

New York-based Harbinger, run by Philip Falcone, returned 17 percent in July in its flagship fund that invests in distressed debt and shares of companies going through events such as mergers and bankruptcies, according to investors. Harbinger, which oversees $12 billion, has increased more than 40 percent this year, helped by bets that securities of subprime lenders would decline.

Harbinger..of things to come. Yes, the vultures grow fat this summer. And note the word 'bets' here. Wagers and bets. The greatest casino on earth. Gambling has spread like a cancer across the planet. The gambling mentality is infecting every single level of our systems and one element of this mentality is the 'easy money' and 'let's take bigger and bigger risks.' This latest gambling mania is going to end like all previous manias for gambling instead of working: when the system crashes, there will be the Puritanical reaction.

Indeed, this is already happening. This is what bin Laden is all about. The puritanical revolution rising in the streets of Muslim countries is a serious social force. The Christians of the US and the Roman Catholic revival not only didn't face the facts of gambling mania, they presided over expanding and extending it. The moral failures of the born-again Christians is most glaring. The more a community claims they are moral and upright Christians, the more gambling casinos they have. I have a brother who is a minister in Las Vegas, for example. Very appropriate.

From the International Herald Tribune:

Tudor Investment, the hedge fund company run by Paul Tudor Jones, is shutting its $550 million small-company stock fund after returns failed to meet expectations.

"We have been frustrated with the lack of viable ideas in the small-cap arena," James Pallotta said in a letter Tuesday to investors in the Witches Rock Fund. Tudor, which oversees $17.7 billion, will refund clients' money this month, including $25.3 million of performance fees accrued since the fund opened in December 2004.

The Russell 2000 index, a benchmark for companies with market values of less than $1 billion, is trailing the Standard & Poor's 500 index of bigger stocks by 0.2 percentage points this year after beating the S&P by an average of 1.1 percentage points annual over the previous 10 years.

Pallotta also manages the $11.5 billion Raptor Global Fund, which targets companies with larger market values than those held by Witches Rock.

I see they are giving up their fees! Wow, that must hurt, heh. Amazing, how they cull their own cash, isn't it? In this case, it isn't generosity that motivates these guys, it is naked fear. They have to reassure investors they will get their money back! When Bears Stearns decided to save themselves and basically, told the investors they would get anywhere from 3¢ on the dollar to 0¢ on the dollar, the flight from all these funds took off, and for good reason. So the other guys are sighing and writing checks which weakens their own base further. They hope the media will resume lying and let them continue to be the hunters and not the hunted. But this is part of the 'stripping down the wealth' cycle when things go the other direction, down and down rather than up and up.

All the fund managers hasten to say they are not losing money. But if their rate of growth is lower than half of the central banks of the world's interest rates then they are losing the race for attracting investors. Namely, why pay a clown $25 million to make money that one can do for $0 in fees? A 4% growth rate that has some baby-faced guy at one end, eating up 2% of that growth, stinks!

And here it is again! 'Witches Rock' fund! I should definitely buy into that fund! It is the name of a Caribbean resort so I suppose Mr. Pallotta thought it would be a super-cute name. Never trust your money with a guy that thinks this way. Even if you are a witch. Time to look at a bunch of interesting but probably boring SEC filings put in by these guys.

First, there is this larger group they named 'Pegasus Solutions. I find this all rather amusing because these guys are obviously very attracted to my end of the universe. I don't see any 'Whore of Babylon IIC' listings but perhaps they are still too shy to be that perverse. The Pegasus organization is attached to the Perseus group which again, points towards some interesting religious things dear to my own heart.

The Securities and Exchange Commission's filing for Pegasus Solutions Inc.: Click on all images to enlarge.
**************

The story of Pegasus and Perseus involves a witch, so to speak: Medusa. The lady with the snake hair who was once beautiful but was cursed and turned into a monster who turned men into stone with her baleful eyes. Medusa was slain by Perseus and out of her blood sprang Pegasus. It is amusing these money men use these ancient symbols. I wonder if they understand what it all means? For Perseus is a constellation that has the Evil Eye star so many ancient people feared. And the Square of Pegasus is also the Celestial Garden of Eden and is a powerful symbol of the World Enclosed or the Mirror of the Earthly Delights. Anyway, many tribal cultures for thousands of years, thought that quartet of stars were directly connected with the Earthly divine enclosed gardens guarded by the gods. Ie: heaven.

This digression is simply a continuing reflection on the magical and mythological nature of money making. The very earliest coins used religious symbols to give the money a magical force. One of the earliest coins used Pegasus on one side, just for example. I remember when dimes had a picture of Mercury on one side. I loved these dimes when I was a child and would examine them closely. But now we put Presidents on coins and paper which is akin to the Roman and Greek tendency to make their leaders and despots gods and put their faces on coins starting with Alexander the Great.

Reading the lists of names and the many funds that own each other is most interesting. These things are all funds of funds of funds. Like the seventh son of a seventh son, they are all chopping up each other's funds and then reassembling them within each other. This chop-chop, smush togetherness is why the collapse of just one of these many funds causes all the others to go belly up faster and faster.

Raptor's SEC filing:

As Of Filer Filing On/For/As Docs:Pgs Issuer Agent

6/26/96 Tudor Fund for Employees LP SC 13D/A 1:16 Pacific Crest Capital Inc 950130
Paul Tudor Jones, II
The Raptor Global Fund L/P
The Raptor Global Fund Ltd
Tudor Arbitrage Partners L/P
Tudor BVI Futures, Ltd.
Tudor Fund for Employees LP

Item 1. Security and Issuer
-------------------

This Amendment No. 1, dated June 26, 1996 to Statement on Schedule 13D
relates to the common stock, par value $.01 per share ("Common Stock"), of
Pacific Crest Capital, Inc., a Delaware corporation (the "Company"), and amends
the Schedule 13D previously filed by Tudor Investment Corporation, a Delaware
corporation ("TIC"), Paul Tudor Jones, II, a natural person and a citizen of the
United States ("Mr. Jones"), The Raptor Global Fund Ltd., a company organized
under the laws of the Cayman Islands ("Raptor Ltd."), The Raptor Global Fund
L.P., a Delaware limited partnership ("Raptor L.P."), Tudor Arbitrage Partners
L.P., a Delaware limited partnership ("TAP), Tudor BVI Futures, Ltd., a
corporation organized under the laws of the British Virgin Islands ("Tudor BVI",
and collectively with TIC, Mr. Jones, Raptor Ltd., Raptor L.P. and TAP, the
"Reporting Persons") and Danforth, L.P. ("Danforth")./*/ The summaries of
information on schedules attached hereto are qualified in their entirety by
reference to such schedules, which are incorporated by reference herein.

The Company's principal executive offices are located at 30343 Canwood
Avenue, Agoura Hills, California 91301.

Item 2. Identity and Background.
-----------------------

The Reporting Persons are TIC, Mr. Jones, Raptor Ltd., Raptor L.P.,
TAP and Tudor BVI. The business address of each of TIC, Mr. Jones, Raptor
L.P. and TAP is c/o Tudor Investment Corporation, 600 Steamboat Road,
Greenwich, Connecticut 06830. The business address of each of Raptor Ltd. and
Tudor BVI is c/o Curacao International Trust Company N.V., Kaya Flamboyan 9,
Curacao, Netherlands Antilles.

TIC is an international money management firm that provides investment
advice to Raptor Ltd., Raptor L.P. and Tudor BVI, among others.

Mr. Jones' principal employment is as Chairman and Chief Executive
Officer of TIC of which he owns a majority of the capital stock and voting
securities.

---------------
----------------------

Each of Raptor Ltd., Raptor L.P., TAP and Tudor BVI initially acquired
the Common Stock beneficially owned by such Reporting Person for investment
purposes. Each of such Reporting Persons intends to continue to evaluate
their respective investments in Common Stock based on the Company's financial
condition, results of operations and prospects as well as other then existing
or anticipated facts and circumstances including general economic, market and
other financial conditions. Accordingly, each of the Reporting Persons
reserves the right to change its plans and intentions with respect to its
investment in securities of the Company at any time, as it deems appropriate.
In particular, each of the Reporting Persons may at any time and from time to
time (i) acquire additional shares of Common Stock, (ii) dispose of Common
Stock, or (iii) enter into privately negotiated derivative transactions with
institutional counterparties to hedge the market risk of some or all of its
positions in the Common Stock. ,b> There can be no assurance that any Reporting
Person will increase or decrease his investment in the Company or as to the
number of shares of Common Stock or derivative securities that may be bought
or sold in any such transactions.

For a long time, I didn't go off to the SEC to find out what is going on with companies and funds in the news but for the last year, I have changed my reporting technique and instead of echoing what the reporters elsewere say, I felt that peeking under the covers to see what is actually there, matters. I know my ability to parse the news has improved greatly after doing this. And I feel that readers can educate themselves by discussing these filings together. Many of the mysteries of finance are not so very mysterious when one looks behind the curtains.

And trusting other people's evalutations isn't good. One can't see the entire hedge if one looks only at one small twig! And the various funds, all 700+ of them, that have ceased existing this last year are all twigs from the same hedge and the roots are all greatly entangled and seeing exactly how this works is very interesting. The SEC filings must show all parties involved in transacting inside of funds authorized by the SEC. They also have to tell the SEC about their various off-shore pirate coves. These should be made illegal but they are not, they have proliferated because our rulers make lots and lots of money this way. I read inside of one of these funds, VP Cheney used an offshore fund to 'grow' his $6 million stake, for example. Our rulers set up this stupid system and they run it ruthlessly and they do this so they can avoid paying taxes for the system they run for themselves, namely, the USA. Which is why we have a huge budget deficit and owe the world...AND these same guys!...$9 trillion.

Inside this particular filings is 'Altar Rock'. Another grim name. The hell hounds love altars where human sacrifices are done.

Altar Rock SEC filing:

“The Altar Rock Fund L/P” has been a Group Member with the following 36 Group Members:

CR Intrinsic Investors LLC
D E Shaw & Co LP
D/E/Shaw Valence Portfolios/L/L/C
David E Shaw
James J. Pallotta
Oppenheimer Funds/Inc
Oppenheimerfunds/Inc
Paul Tudor Jones II
S A C Capital Management LLC
Sigma Capital Management LLC
Steven A Cohen
The North End Value Fund Ltd
The Ospraie Portfolio Ltd
The Raptor Global Fund L/P
The Raptor Global Fund Ltd
The Raptor Global Portfolio Lt
The Raptor Global Portfolio Ltd
The Raptor Global Portfolip Ltd
The Tudor Bvi Global Fund Ltd
The Tudor Bvi Global Portfolio
The Tudor Bvi Global Portfolio Ltd
The Tudor Bvi Global Portfolip Ltd
The Upper Mill Capital Appreciation Fund Ltd
Tudor Arbitrage Partners L/P
Tudor BVI Futures, Ltd.
Tudor Global Trading LLC
Tudor Group Holdings LLC
Tudor Investment Corp Et Al
Tudor Investment Corporation
Tudor Proprietary Tarding/L/L/C
Tudor Proprietary Trading L/L/C
Tudor Proprietary Trading/L/L
Tudor Ventures Group L.P.
Tudor Ventures Group LLC
Tudor Ventures II L/P
Witches Rock Portfolio Ltd

It looks like a new organization but when we look at the list of partnerships and inside buying, whoopsie! Mr. Tudor is all over it like a fly on a pile of cow manure. Mr. Shaw and Mr. Pallotta, too. This SEC filing led me to yet another fishy organization with this same cast of characters. And a goofy name. Oh, who wouldn't just DIE to plunk their cash down with an organization called 'The International Fight League'!

This is the list of names of members of this other hedge fund organization, the International Fight League Inc:

This is probably why bin Laden named his own counter-organization, 'The Organization.' All these guys are very snarky. This international game of 'in the know' playing with people's minds is why I suddenly started talking about wizards all the time. They are exactly that, you know. Baum, the great writer who created the 'Wizard of Oz' books was a man who suffered from bankruptcy before he found his calling as one of the best fantasy writers in American history. He was very political and he was a speculator in business and he himself knew that his books have a lot of insights into the economic systems of modern capitalism. Reading his books as an adult is very amusing for one can see his sly allegories are very appropriate.

From Bloomberg:

The Frankfurt-based bank will signal it's ready to raise the rate to 4.25 percent next month, 11 of 14 economists said in a Bloomberg News survey. Trichet has typically signaled plans to increase borrowing costs one month in advance by pledging to show ``strong vigilance'' on inflation.

``Most people would probably think Trichet will announce a September increase,'' said Ken Wattret, chief euro region economist at BNP Paribas in London. ``I wouldn't disagree with that, but there is also a possibility that they feel compelled to explain today's decision bearing in mind the market impact it could have in the current environment.''

While financial-market turmoil over the past week prompted some investors to trim bets on rate increases, many economists expect the ECB to move twice more this year. Trichet said July 5 he didn't want to change investors' expectations for a rate increase in September or October.

Rates are going up and up and up, except in Japan. This is the 'dry' cycle of investing. Namely, all the loose loot flows back into banks when interest rates rise. And the wild stock markets collapse as there is no one being lured into it to make money. If Japan continues to buck all other national trends, the money flowing into the US stock market will continue. But if that fails, all falls down.

From Bloomberg:

Credit Suisse Group posted the biggest profit gain among the world's top investment banks in the second quarter by boosting securities-trading income to a record and avoiding losses on subprime mortgage loans.

Net income at Switzerland's second-largest bank rose 48 percent to 3.19 billion Swiss francs ($2.65 billion), or 2.82 francs a share, from 2.16 billion francs, or 1.86 francs, a year earlier, Zurich-based Credit Suisse said today. Earnings beat the 2.27 billion-franc estimate of analysts surveyed by Bloomberg.

The Swiss tend to be conservative and this shows that their conservative ploys are paying off much better than the wilder betting parlors run by guys like Mr. Tudor.

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Comments

[Cato]

I'm not surprised there is a fund called the Pirate's Fund. So typical of the irrationally predatory goals of these operators.

A few years ago, writing in the New Yorker, Adam Gopnik said: "Leafing through Forbes or Fortune is like reading the operating manual of a strangely sanctimonious pirate ship".

The next President needs to be a combination Jefferson and Teddy Roosevelt and rid the country of these scoundrels.

[Elaine Meinel Supkis]

Heh, that is a good quote! Yes, we need someone who is an outsider but insider. Teddy was a member of the ruling class which is why he, like FDR, could do a frontal assault.

[Al]

I accidentally caught a glimpse of CNBC today, they were discussing SWF. They repeatedly patted themselves on the back for being the first to break the story, and how Nobody Else is Saying This ! You've been talking about it for months. They even had visuals labeled 1 and 2, 1 saying you heard it here first and 2 nobody else is talking about this.

[Al]

Whore of Babylon LLC ? pretty good. I should form a hedge fund with that name specializing in lottery tickets.

[Elaine Meinel Supkis]

Thanks, Al. I am a voice in the wilderness. Or the ho of babylon. Maybe you can be my agent.

[Eric Blood Axe]

Well at least with a name like tudor and jones,he's not an anglo-saxon,

[Elaine Meinel Supkis]

Yeah, the Tudors had something to do with Richard III and his shoeless warhorse.

[RigJohnawh]

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