Would You Run for $100 Million?
May 15, 2011
Posted by Jody Eisenman | Filed under Uncategorized
Although stocks finished down for the week, the big news were the conviction of Galleon hedge fund chief Raj Rajaratnam on all counts. From his beginnings as a technology analyst at Needham, Raj rose to become a manager of a fund with more than $7 billion in assets at it’s’ peak. As the richest Sri Lankan in the world, he cultivated a group that included many from the South Asian immigrant community. Raj claimed that all he received was information that he worked hard for; the prosecutors disagreed, claiming he traded on inside information. What probably clinched the case were recorded conversations that were pretty damning. It didn’t help that out of the 26 people indicted along with him, 21 pleaded guilty and testified against him. He is now free on bail pending sentencing on July 29. Raj is supposedly worth close to $2 billion. He put up $100 million as bail which is the highest in US history. Is he a flight risk? If so were facing 20 years in prison, would you run? Apparently, a lot of hedge fund managers think so : http://www.cnbc.com/id/43022451.
Meanwhile, people are continuing to buy treasuries at rates that are simply anemic. Currently, three month treasuries yield a juicy .02%. That means that if you put up a million bucks, you would get the splendid return of FIFTY DOLLARS for your trouble. Don’t spend it all in one place. The one year treasury yields are now an amazing .17%. According to CWS market review, that works out to be about 21 Dow points. The yield alone on the DJIA would be the equivalent of 250 Dow points. All I can say this, there are an awful lot of individuals and institutions who are incredibly risk averse.
