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19 Mar 2007

Give him a place to stand, and he will move the world

Actually, the title is the name of the picture, it has nothing to do with the story, I just like it. The article is called "Investing: Hedge funds: market angels or demons?"

The article is from Bloomberg, asking whether hedge funds really the disruptive, destabilizing force their critics make them out to be, or do they help make the financial markets run smoother?

It says, "The beauty of hedge funds is their ability, at least in theory, to operate free from the shackles of the usual emotions and psychology of the marketplace."

A measure of cold calculation may be just what is wanted when most investors get caught up in the emotions of a turbulent market. While the herd is stampeding in one direction, nobody is better equipped than hedge funds to get a little movement going the other way.

Interesting poem.

Chapman Hedge Fund Files Against eSpeed Inc.

Activist hedge fund Chapman Capital, filed a 13-D filing with the Securities and Exchange Commission in a bid to put electronic trading network eSpeed Inc. on the market.

Robert Chapman said his hedge fund, which is eSpeed's biggest shareholder with 9.3%, has begun contacting eSpeed’s competitors to gauge interest in the firm, which has suffered a disappointing recent trading performance.

In its SEC filing, the hedge fund wrote; "Chapman Capital announced its demand that eSpeed maximise shareholder value via a change of control transaction." It also asked the SEC to compel the eSpeed board of directors to convert the company's B shares into A shares. Holders of B shares have 10 votes per share, A shares just one vote.

The hedge fund also said it communicated to Howard Lutnick, the chairman, chief executive and president of eSpeed, its "strong assertion" that, given his "demonstrated failure to perform in his capacity as CEO", eSpeed's long-term shareholder value "should be maximised via a full-scale auction" and that "the company’s ownership base has conveyed a nearly uniform desire for eSpeed’s Class A shares to be maximized through a change-of-control transaction."

Chapman Capital is a $300 million dollar L.A. based hedge fund run by Robert Chapman. Chapman is founder of the "13-D filing" that most activist hedge funds use today. Over the past 10 years, Chapman Capital has agitated successfully for the restructuring or sale of over 20 publicly-traded companies.