Edwards' Hedge Funds: Consider the Source

[hfojvt]

It has been reported on MSNBC that John Edwards has investments in companies that are foreclosing on housing in New Orleans. I easily find that MSNBC's source is the Wall Street Journal.

This raises the question. Is Rupert Murdoch running that yet? Or is it still run by those friends of the working class who write their editorials?

http://online.wsj.com/article/SB118728685546999884.html?mod=hpp_us_whats_news

The article focuses on two companies - Green Tree and Nationstar.

First, Fortress only owns part of Green Tree.
"Fortress owns Green Tree jointly with Cerberus Capital Management LP, another private-equity firm. The percentage of its ownership isn't public."

Second, Fortress seems to have a variety of funds

http://www.fortressinv.com/site_content.aspx?s=24

Although John has $16 million invested with Fortress, it is not clear to me whether he actually has money invested in the fund that owns Green Tree or Nationstar.

"In the interview yesterday, Mr. Edwards said that when he first joined Fortress, "I made clear that I didn't want to have anything I was investing in to be antilabor or involved in predatory lending practices.""

It's up to Fortress, the broker or investment manager to keep those investments clean, as instructed. At least Edwards is running a campaign to stop something that he could potentially profit from. I think he cares alot more about the victims of foreclosure than either the WSJ or Murdoch or MSNBC.

[Mythsaje]

1. One might even wonder if it goes any farther than that...

If maybe, just maybe, someone was "pursuaded" to shift the investments in such a way that it could be used to embarass Edwards.

[still_one]

2. face it, the powers that be are going to minimize the republican faults

as much as they can

In answer to your first question, no, murdock isn't in control of the wsj yet, and in most cases their reporting of the news usually isn't to bad. However, their editorials are equal or worse than murdock

[hfojvt]

9. the M$M is going to attack all of our candidates

I don't think that we should run with pitchforks and torches to attack them too, or with shovels to help bury them.

[The Backlash Cometh]

3. Why isn't this on the Greatest Page yet? K&R.

[havocmom]

14. It is now

:thumbsup:

[rjones2818]

4. The NY Times wrote about it, too!

http://www.nytimes.com/aponline/us/AP-Edwards-Foreclosure.html?_r=1&hp&oref=slogin

:dilemma:

[hfojvt]

7. It's gone to the AP

but their source is still Wall Street Journal, and Edwards reaction to the WSJ story. It's not like the NYT is not known for running attack pieces on Democratic candidates too.

[The Backlash Cometh]

10. If Edwards made it clear that he didn't want investments in predatory lending,

then he may have a claim against the company. I know those things can be specified. My own brother said I'd be a problem for a consultant because I'd just want green friendly stocks.

[matcom]

5. RRRROO OOOOVVVVVV VVEE EEEEEEEE!!!!!

:rofl:

[Donnachaidh]

6. kicked and recommended

:kick: :kick: :kick: so that this can get to the greatest page!

[matcom]

8. for being 100% irrelevant and tin-foil-ha-tish?

good on ya! :thumbsup:

[The Backlash Cometh]

12. You're taking this awfully personal. Why don't you let the information

emerge instead of telling us all how we should feel about it based on the limited bits you've heard on t.v.?

[hfojvt]

13. it's tinfoil hattish to notice that the M$M is against Edwards and for Clinton?

Dems in the White House: This brings us to a political question: Is it important to send a Dem to the White House? Different people will judge that differently, of course; for ourselves, we assume that a President Clinton, Obama or Edwards would be better than a Giuliani, Romney, McCain or Thompson. Unless you think different, it is very unwise when we wander about inventing factually bogus tales which disparage the character of Major Dem Hopefuls. In 2000, Bradley’s bogus claims about Gore’s “character problems” were endlessly used in the general election. Eight years later, we’re very foolish to walk this path again.

http://www.dailyhowler.com/dh081307.shtml

[Donnachaidh]

41. it's far more relevant than that erudite snit you posted

But hey -- perhaps Edwards would look nice in the magic underwear, eh? :eyes:

[NYCGirl]

11. This was also in the Washington Post back in May.

http://www.washingtonpost.com/wp-dyn/content/article/2007/05/10/AR2007051002277.html

[saracat]

15. So?

[matcom]

16. what don't you "get"?

John meets 'black poor kids' in N.O.

does a photo-op

talks about how they are going to lose their house due to 'the man'

turns out he makes his $$ OFF 'the man' taking people's houses away

you really can't see how this is bad?

REALLY?

ok.

[saracat]

17. Yawn.Making it what it isn't .Sigh. Edwards Haters unite !

[matcom]

18. LOL! in my OP I mention how I actually LIKE(D) him

:rofl:

and I meant it.

this is idiocy on HIS part pal, not MINE

but you go right ahead...

[saracat]

20. What OP?

[The Backlash Cometh]

22. I think he means this:

http://www.democraticunderground.com/discuss/duboard.php?az=view_all&address=389x1609458

I took matcom at his word, until observing his performance on this thread.

[saracat]

23. Ah! So.I begin to see now.It becomes clear!

[matcom]

25. I work for Karl Rove

he signs my paychecks so I must post what I'm told

[The Backlash Cometh]

19. You make it sound like Edwards condoned it.

He had no idea it was happening. And what's more important it doesn't sound like he was working for them for long. Just long enough to accomplish something that I also think is important:

"In hindsight, Edwards said, he does not regret taking the job. "I guess it's my belief that I did learn something about capital markets that's valuable," he said. "I think it's very important for a president to understand how markets operate."

[hfojvt]

35. I see that's how the RWNM wants to spin it

I question whether those are actual facts.

Fact: Edwards has $16 million in Fortress
Fact: Some of Fortress' holdings are engaged in these foreclosings.

Do we know for sure that Edwards has money in those holdings? No we do not, but the WSJ wants to smear him by association. It's one of their standard scripts - "Edwards is a rich hypocrite." Thank goodness a free press can find out the truth about a rich hypocrite before we elect him. It could really be a disaster if a rich Texas oilman became President and started enacting policies to benefit the rich. That, however, will never happen on the WSJ's watch.

[NYCGirl]

24. Then, as the OP says, how is it Murdoch's evil plan? Murdoch doesn't own

the Washington Post.

[The Backlash Cometh]

26. I thought the Washington Post was very clear on the details.

And also gave Edwards the chance to explain himself. He wasn't at the Hedge Fund for long, so making a career of it wasn't a goal. And the last paragraph in that article indicates that he was there just long enough to understand capital markets.

[NYCGirl]

27. And make half a million bucks, a large group of campaign contributions, and

make a big investment.

[The Backlash Cometh]

28. Any doubt that Hedge Funds is lucrative money? Nope.

That's one of many. That's just the one we're getting to know. There are many other vehicles that are available to people with lots of money, that aren't available to us.

Am I concerned that Edwards made money, and is now running on a populist platform? Not concerned, yet, and this is why: In latin America, some of the most fierce fighters for the poor, have come from the ranks of the rich. People who were born into wealth and, through education, became to understand their obligation to the poor. So, they bonded with the common people. These are the leaders in foreign countries that our intelligence agencies fear the most. I don't know how Edwards will turn out in the end. I just know that with my latin American background, I'm not too concerned by this development...yet.

[KittyWampus]

29. Edwards was SUPPOSEDLY at Fortress to learn about Hedge Funds. Unless he's stupid he SHOULD have

learned what the fuck hedge funds are and had some familiarity with what Fortress was buying up.

This is about investment groups buying up bundled up bits and pieces of bank loans and mortgages. RISKY stuff.

And Edwards has condemned this practice and yet was invested in it.

See the hypocrisy?

[The Backlash Cometh]

33. I understand your skeptism. The perception is bad, but, the question

I want answered before I make up my mind is, why did Fortress mislead him? I know that my background in finance and markets is so shaky, that it would take me longer than a year to figure out what was going on on my own. It sounds like Edwards asked that there be no predatory lending in Fortress, and was assured that there was none. But that the predatory lending, the subprime lending was occuring in two companies purchased by Fortress. So, the big question is, did Fortress intentionally mislead Edwards?

It's a catch 22. What better way to know how these businesses operate, than to get first hand experience. But there's no way to come away without getting dirty because it's a dirty business.

I'm learning more and more about them everyday. And getting a worse impression about them as we go along. Is Chelsea Clinton still working for one?

[hfojvt]

39. So far we really only have the WSJ's word that he was invested in it

See the problem? The witness for the prosecution is not credible. The Wall Street Journal, that Right Wing enemy of the working class, wants you to think Edwards is a hypocrite. I am skeptical, very skeptical about trusting my enemy.

One other point it might make. Edwards is calling for legislation to restrict the practices that he condemns. The right wing would have you believe that good-hearted investors can restrict it themselves without government interference. Good intentions though, are not enough. It's only hypocrisy if he knew about it.

Of course, he should be all-knowing and should have a broker that he can rely on too. How easy is it to keep track of $16 million that is in diversified investments? How easy is it to find 'pure' corporations to invest in? How easy is it to keep track of what Fortress is buying into?

[The Backlash Cometh]

40. I think we should be prepared for a full frontal attack on Edwards.

And right now, the only important thing to me is how sincere he is about taking them on. Everything else that came before, if he is prepared to do battle against them, was necessary to get him to that point.

[hfojvt]

36. I was talking about the current story

not every story that the confederacy of plutocrats throws at Edwards. Do you think that nobody at the WaPo would ever smear a major Democratic candidate? Somerby notes that sometimes they are even worse than the Washington (moony) Times.

[smiley_glad_hands]

21. If Murdoch is involved then you know HRC isn't far behind. eom

[frazzled]

30. If it ain't true, why is he suddenly withdrawing the money?

Really, now. This is a pretty desperate attempt to scare away some fairly plain facts. And no, Murdoch does not have the WSJ yet.

Frankly, if I had an extra $16 million to sock away in a hedge fund, I'd have used a little of it to help forestall foreclosure among Katrina victims-- before I was called out on it in the press ... especially if I were running a campaign claiming to care about such issues. But that's just me. I've never had that kind of dough, but I have always imagined that if I came into some, I'd do something with some of it other than trying to grow more money for myself.

[hfojvt]

37. who said he was suddenly withdrawing the money?

The same people who wrote the hit piece. Perhaps he said something like "I do not believe my money is invested in such activities, but if it is, I will take it out." Since it is a hit piece, only the second half is quoted, as if Edwards has admitted that it is true. I am not gonna immediately believe a hit piece which is trying to advance an M$M script that Edwards is a hypocrite. At this point I still trust Edwards more than I do the WSJ even if Murdoch is not running it yet. They have a long history of being anti-working class. They surely are not going after Edwards in order to help the people of New Orleans.

[slipslidingaway]

31. Edwards has half of his net worth invested in Fortress which

was the first Hedge Fund (Management) Company to go public in February 2007. Reading through the conference call after the IPO management states that their investment in subprime loans is modest compared with total assets. Also there are a few funds that hold subprime loans in their portfolio, which funds does Edwards currently hold or did he hold in the past? Not sure that information will be disclosed.


Many of the funds are registered in the Cayman Islands, here is one article about the tax implications before the IPO and some discussion from the from the conference call.

http://www.taxanalysts.com/www/website.nsf/Web/HedgeFundManager4?OpenDocument

"Doesn't a hedge fund manager going public mean that hedge funds are going out of style? Perhaps. But the basic idea that one can organize an investment fund in the Caymans, operate it in the United States, and be answerable to no one has not gone out of style. A large chunk of investment capital has migrated to pretend offshore status. The public offering may indicate acceptance and respectability for this practice. "Alternative asset management" — as hedge fund managers characterize what they do to justify their hefty compensation — is one thing. Alternative election of taxation regimes for U.S.-managed investment funds is another, and entirely unjustifiable."

http://www.secinfo.com/dsvrn.u2rn.d.htm


http://seekingalpha.com/article/35663

"Dan Bass

What we learned is we have figured out that certain aspects of our business can run safely through the partnership side of our structure. As you know, our effective tax rate is a function of the mix of our businesses.

So to the extent that businesses can run through the partnership side of our structure, it bears a zero entity level tax. And when you put that combined with our taxable businesses, we come up with a blended effective tax rate."

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

"Roger Freeman - Lehman Brothers

Hi. I just wanted to come back to the tax rate again. How much of the difference between the 37% that you had talked about and what you're talking about now is because you are running more of the incentive fees through the PTP as opposed to through FIG Corp?"

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

"Roger Freeman - Lehman Brothers

So I guess, other than that, can you put a little bit more color as to why the magnitude of change relative to what you were talking about? Is it because of the regional income product?

Is there something that we can think about here, in terms of whether we can make an assessment as to how permanent this is? And I guess the corollary to that is how much of the improvement or the increase, that 25% increase in the dividend is really was done because of that expected better tax rate?

Dan Bass

Our initial 37% was a conservative estimate based on all the information we had in our mix of businesses at the time. The tax attributes of all of our businesses were evaluated, and some of the tax attributes relating from the Nomura transaction had been reflected in the setting of our range.


http://www.businessweek.com/bwdaily/dnflash/oct2005/nf20051013_3314_db016.htm

"BusinessWeek has learned that Edwards has signed up to work for the New York-based private investment concern Fortress Investment Group as a part-time senior advisor. As such, he will be "providing support in developing investment opportunities worldwide and strategic advice on global economic issues," says Edwards spokesperson Kim Rubey."


Fortress Investment Group Q1 2007 Earnings Call Transcript
http://seekingalpha.com/article/35663

"Lastly, one that’s a smaller investment, but is one that is worthy of note, just given all the interest in the sectors, is we made an investment in the first quarter, an additional investment in the subprime area.

As many of you know, there was a big dislocation in those markets earlier in the year. It was really much more of a liquidity crisis than a credit crisis, at least thus far, and we were able to pick up a pool of a couple billion dollars in mortgages that what we think are very attractive prices.

Again, our sense on it thus far is that the operating term to refer to that market is that there has not been a credit crisis thus far. We'll see how the second half of the year plays out, but we have a modest investment now in the sector. We are happy with the additional investment we made there, but just something also to keep your eye on.

So that's the update from the private equity business. So a very, very busy and productive start to the year."


Question from the debate

http://www.msnbc.msn.com/id/18352397/page/5/

Williams: And, Senator, I have a follow-up for you. On modern day America, you've been of counsel to hedge funds.

Do hedge funds make America any better in any way?

Edwards: Well, I think what -- first of all, I think the financial markets are an important component of trying to figure out what it is we need to do about the fact that we have 47 million people without health care, 37 million people who wake up in poverty every day.

They play an enormous role in how money moves in this country. And I happen to believe that we have a responsibility to the people in this country who wake up every day worried about feeding and clothing their children.

And I think those people in New York who work in financial markets understand -- in some ways, at least -- what can be done and can play a significant role in trying to lift people up who are struggling.

I am proud of what I've been doing for the last few years. You know, I've been all over the country, organizing workers into unions and raising the minimum wage, and also working at a poverty center at the University of North Carolina."

[goodgd_yall]

43. Saturday morning update

He's giving up Fortress.

[frogcycle]

Not knowing details on the specifics i won't comment on that

But it would be good to keep in mind that when you have millions and want to invest them, you almost by definition will be investing them in corporations*. You could probably count on one finger the green, clean, compassionate corporations. When you invest in a hedge fund, which is sort of like a mutual fund but limited to high rollers so it can take risks the regulations prohibit for the smaller-investor funds, you are turning your money over to a fund manager whose sole purpose in life is to make more money - for self and investors. You can put stipulations, and if you are a 16M investor they might say they'll comply. But we all know that when tradespeople are busy doing what they do (and these people are REALLY busy - day traders on steroids) they don't always pay close attention to the detailed instructions (ever try to get work done on the house just the way you want it?)

So you give them your guidelines on how to manage YOUR 16M, but the overall managed resources they may be moving around in a day may be a few billion. And, realistically, since your money is in a managed pool, I don't know how they would be able to say they are complying, unless they set up special sub-pools to manage separately. And if they are doing that, why don't you just have a personal financial advisor manage your funds? Maybe you thought it was better NOT to be too closely associated lest there appear conflict of interest?

So ok, whatever the details on whether he is "making money off taking people's houses" it is outrageous to suggest that he is some sort of Jekyll and Hyde. He could just as well forget this politics thing and go play with his money all day like Silas Marner if that were his true self. If it turns out some of his money got into something he doesn't approve of, well, I expect he'll fix it and yell at someone. Shit happens. And if he were watching them like a hawk he'd not be out there trying to champion the poor.

This incessant search for the feet of clay gets really old.

*how many, if they won the lottery, would put the whole thing in a 2.5% passbook savings account? maybe put in under the mattress?

[hfojvt]

34. very well said

but CDs pay 5% or more. One thing is, I have $20,000 or so in my credit union. I really do not know what they are doing with it. Maybe they are making home loans and foreclosing on people who default on those loans. Maybe they are doing other things, like refusing credit to poor people. My first loan ever was to borrow $2000 to buy a $3500 car. The credit union where I once had $7,000 turned me down because I was no longer a member. I was no longer a member because they moved 3 miles out of town next to the new Wal-mart, making it a huge hassle to use their services. So I had my money in an organization that later treated me like crap.

But 5% interest on $16 million is $800,000 a year. I think I would be satisfied with that instead of being greedy.

"This incessant search for the feet of clay gets really old."

The key is that the M$M primarily looks for the feet of clay for Democrats. Edwards first, while they push Hillary-with-the-insurmountable-lead. Then they will goto war against the Democratic nominee. If they cannot find true stories, they will make some up. It's sad that even the liberal web takes the bait.

[DU GrovelBot]

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[hfojvt]

38. Why Mike, because they understand economics?

Is that a comment on the OP :tinfoilhat:

I certainly am committed to keeping Gravel from getting the nomination.

As for the Journal. I still think it's possible that their editorial page can taint their reporting.

"In a way, this one little dumb-a$$ editorial is a microcosm of the Journal's editorial page. How much is stupidity? How much is dishonesty, and how much is the Journal just trusting that its readers' rabid ideological convictions will blind them to gaping holes in their reasoning? Hard to say." Al Franken "Lies, And the Lying Liars Who Tell Them" p. 175

[Time for change]

42. "At least Edwards is running a campaign to stop something that he could potentially profit from"

I think that's the bottom line.

Republicans are so desperate to criticize Dems who threaten the status quo that they are reduced to criticizing them for expensive haircuts, having comfortable homes, and for investing money that MIGHT be partially tied up in companies that do bad things, despite their best intentions. How pathetic.