Search This Blog

21 Nov 2006

Rare Coin Dealer faces 18 years

The guilty party in the 2005 loss of up to $13 million in a rare-coin fund managed by Maumee coin dealer Thomas W. Noe, has played out with Noe receiving the maximum sentence for his involvement in the scandal.

Judge Thomas J. Osowik sentenced Noe to 18 years in prison for for stealing state money from the Ohio Bureau Compensation fund. The judge also has scheduled a hearing to determine what restitution Noe must pay. Prosecutors are seeking at least $13.7 million, the amount they say Noe stole from the coin funds. Osowik also fined Noe $139,000, plus the nearly $3 million cost of the investigation.

Noe began stealing and spending state money seven years ago in order to buy yachts, positions on state boards, a multimillion dollar house in the Florida Keys and other luxuries in order to present himself as having a "bottomless cup of wealth and luxury", while managing the $50 million rare-coin investment for the state.

Osowik also ordered that Noe begin serving the state sentence after he finishes a 27-month prison term on an unrelated federal conviction for illegally funneling $45,400 to President Bush’s reelection campaign. Ohio Democrats used the scandals Noe sparked to help reclaim the governor’s office and other statewide posts in the Nov. 7 election. "Tom Noe violated the public trust by using $50 million as his own ATM, living a lavish lifestyle at the expense of real people whose lives depended on agency monies."

The loss of up to $13 million in the rare-coin fund managed by the Maumee coin dealer was made public on the heels of the unrelated MDL Capital loss of $215 million from what was a $355 million investment. The hedge fund founded by Aliquippa entrepreneur Mark D. Lay, also lost $215 million last year in a case involving the activities of the Ohio Bureau of Workers’ Compensation investment fund.

MDL Capital also manages $500 million for the Pennsylvania State Workers Insurance Fund, and $91 million of the nearly $27 billion portfolio of the Pennsylvania State Employees Retirement System. MDL Capital is one of 13 fixed-income portfolio managers. Since it started in December 2000, the annualized return on its portfolio has been 4.5 percent.

Hedge Fund Investment possibilities in India, Pakistan and China

Emerging markets are again catching the eye of more foreign firms as an investment destination.

Morgan Stanley sees India's FDI rising to $10 billion, or 1 percent of GDP by 2008, with the flows mostly targeting low capital services and manufacturing for the domestic market, rather than factories for exports like many in China.

Since the start of 2002, the Pakistan market has risen 741%, topping the 297% gain for India's Sensex. Still, Pakistan stocks only trade at about 10.6 times forecast profits, while Indian stocks trade at 20 times earnings. Pakistan, one of the world's hottest emerging markets despite current instability, has an economy that grew by 6.6% in the financial year that ended in June, a rate that the government expects will rise to 7% this year. Liberal rules on foreign investment are luring overseas players, with foreign investors pouring $307 million into the market since July 1.

Pakistan's biggest listed firm, Oil and Gas Development Co., is planning the the $1.4 billion sale of global depository receipts (GDRs) and local shares in December. Money from the Middle East, and increasingly Singapore and elsewhere in East Asia, has been helping drive growth, with infrastructure, energy, financial services and makers of consumer goods such as motorcycles seen as attractive plays.

Last month, MCB Bank raised $150 million in a London GDR issue. Earlier this month, Pakistan Mobile Communications (Pvt.) (Mobilink) attracted nearly $4 billion in orders for its $250 million bond, the country's first corporate offshore bond issue.

The Karachi 100 index is up 12 percent this year on daily turnover that exceeds $400 million, making it more active than markets such as Thailand, Indonesia, and Malaysia.

In China the government wants foreign money to help with an estimated $350 billion worth of projects to build an efficient road network, expand ports and address a woeful power deficit. Michael J. Cannon-Brookes, vice president of business development for China and India at IBM, said to Reuters in Bejing; "In manufacturing you need infrastructure to run your plants, get your goods to market and bring in supplies. That's clearly a strong selling point for China."

Hedge Fund Mergers show Substantial Profits

Atticus, a New York-based hedge fund that manages more than $12 billion has been having talks with Freeport-McMoRan Copper & Gold Inc. Freeport has already undertaken the world's biggest mining takeover, valued at about $26 billion when the mining company acquired hedge-fund Phelps Dodge Corp.

Phelps Dodge Corp manager Timothy R. Barakett saw his investment jump by about $517 million, capping a 13-month campaign to find a buyer for the mining company and get more of its cash. Shares of Phelps Dodge are trading at below Freeport's offer price, which may mean investors don't expect a higher bid, analysts said.

Atticus Capital is the largest Phelps Dodge shareholder, with about a 10% stake.

Barakett had been seeking a buyer for the copper producer since he opposed a proposal by Phelps Dodge CEO J. Steven Whisler to acquire two Canadian nickel producers for $40 billion. Before that, Barakett successfully pushed for the company to give more of its $2.5 billion cash pile to investors, after a rally in metals prices sent profit to a record.

"Some of their efforts have done shareholders of Phelps Dodge a great service," said John Rosenberg, who helps manage $900 million including Phelps Dodge shares at Geneve Capital Group in Stamford, Conn. "There's a place in the market for activism."

According to financial research firm Dealogic, the value of global mergers and acquisitions for 2006 reached a record $3.368 trillion, beating the previous high set in 2000 of $3.332 trillion. Private equity firms such as hedge funds accounted for 22% of total global M&A volume in the first nine months of the year, hitting a new record of $570.1 billion in deals.