Posts Tagged ‘Galleon’

Galleon Group’s Historical Returns: Did They Gain Too Much Of An Edge?

Here’s an update on R-Squared’s encounter with the law and a look at Galleon’s impressive but tainted returns. – Ilene

Galleon Group’s Historical Returns: Did They Gain Too Much Of An Edge?

Courtesy of Market Folly

It’s been a little while since we checked in on the happenings at the current circus known as Galleon Group so we wanted to cover all the updates. Raj Rajaratnam’s (R Squared) hedge fund is involved in one of the largest insider trading cases to rock Wall Street. But, of course, Raj says he is innocent in his letter to investors:

Raj Rajaratnam"October 21, 2009

Dear Galleon Employees, Clients and Friends,

I have decided that it is now in the best interest of our investors and employees to conduct an orderly wind down of Galleon’s funds while we explore various alternatives for our business. At this important time, I want to reassure investors of the liquidity of our funds and assure Galleon employees that we are seeking the best way to keep together what I believe is the best long / short equity team in the business.

As many of you know, we have built our business on the fundamental belief in rigorous investment analysis combined with active trading around core positions. We have encouraged and invited our investors to attend our daily research morning meetings. Many of you have done so and got a first hand look at our process. This research process is the core of our investment and trading strategy.

The privilege of managing investors’ capital is a responsibility that I have always taken very seriously. I want to reiterate that I am innocent of all charges and will defend myself against these accusations with the same intensity and focus I have brought to managing our investors’ capital.

For those who have been my partners and supporters over the last 17 years, I sincerely thank you. I also want to thank you for the innumerable expressions of support I have received from you over the past few days.

Sincerely

Raj Rajaratnam"

So, he says he is innocent yet he is winding down the funds… hmm. That probably has something to do with the fact that over the course of 3 days, he received $1.3 billion in redemption requests. On that note, it looks like he was


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HOW LONG WAS GALLEON TRADING ON INSIDER INFORMATION?

HOW LONG WAS GALLEON TRADING ON INSIDER INFORMATION?

Courtesy of The Pragmatic Capitalist

Raj Rajaratnam, GalleonReader DanH was nice enough to forward us a recent copy of Galleon Groups performance going back to 1992.  It turns out that the fund was Madoff-like in its performance.  These guys just couldn’t lose.  Whether the market was up or down they cranked out 25% returns like they were printing money.  It makes you wonder just how long these guys were trading on insider information?

I have run the risk adjusted returns on hundreds if not thousands of portfolios throughout my career and I have never seen numbers like these.  NEVER.  There is virtually ZERO downside volatility in these figures.  Their largest one month drawdown was -6.19%!  That is simply unheard of for a portfolio with such high returns.  Gauging from the returns I would be willing to bet the insider trading was going on for most of Galleon’s existence and was likely much more rampant than currently reported:

Galleon 1Galleon2

 


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Wall Street Panics In Wake Of Galleon Insider Trading Case

Wall Street Panics In Wake Of Galleon Insider Trading Case

fleeCourtesy of John Carney at Clusterstock

Traders at hedge funds and Wall Street trading desks are quaking over the news that the FBI tapped the phone lines of Galleon founder Raj Rajaratnam. 

The news that the government is (finally) employing techniques typically used against organized crime or international drug cartels is raising fears about who might be next.

We spoke to traders at two prominent hedge funds who both described the feeling at their firms as “panicked.”

“Suddenly you are wondering about every conversation you’ve had about a public company, wondering if the Feds were listening in,” one trader said.

Traders spend a lot of time exchanging information with colleagues and reaching out to people in the industries they cover in hopes of gaining an edge. Rumors, gossip and loose talk are their bread and butter.

Raj RajaratnamMost of this is fair game. But if the ultimate source is an insider or the news is about a major deal that has yet to be announced, the trader can step into dangerous legal territory.

Even when traders learn inside information, there is usually little chance of getting caught. The SEC watches unusual trading activity but an active trader will usually get a pass if he’s buying or selling stocks that he usually trades in anyway.

Even those cases that do come up are hard to prosecute, especially if no one confesses. So occasional civil cases are brought but almost no criminal cases emerge involving traders.

This case shattered that pattern because the government used the tools it uses against hardcore drug criminals and terrorists to uncover the alleged insider trading.

Traders are now living in a very different world. Legally speaking, trading is far more dangerous than anyone knew.

Now see the scandal in photos >

See Also:

Raj Rajaratnam Funded Sri Lankan Terror Group

Galleon "Shocked" By Raj Rajaratnam Arrest

Will Raj Rajaratnam Spend 200 Years In Jail?

 

Previously, John Carney reporting:

Raj Rajaratnam, Founder of $3 Billion Galleon Group Hedge Fund, Arrested (GOOG, AMD, AKAM, CLWR)

Prosecutors and the FBI have announced that they have filed charges against several people involved with the Galleon Group hedge fund, including founder Raj Rajaratnam. Galleon is a major hedge hund player known for its investment in technology stocks…

Most notably, the government is filing criminal…
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Phil's Favorites

Mr. Morgan

 

Mr. Morgan

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The Federal Reserve had a precursor before it became the lender of last resort. It wasn’t an institution or a government department. It was a single, solitary man named J. Pierpont Morgan. Mr. Morgan, he was called in the newspapers, and you didn’t need to go any further – everyone knew to whom you were referring.

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Anatomy Of The $2 Trillion COVID-19 Stimulus Bill

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The unprecedented response to the COVID-19 pandemic has prioritized keeping people apart to slow the spread of the virus. While measures such as business closures and travel restrictions are effective at fighting a pandemic, they also have a dramatic impact on the economy.

To help right the ship, the Coronavirus Aid, Relief, and Economic Security Act — also known as the CARES Act — was passed by U.S. lawmakers last week with little fanfare. The act became the largest economic stimulus bill in modern history, more than doubling the stimulus act passed in 2009 during the Financial Crisis. ...



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Government officers seize civets in a wildlife market in Guangzhou, China to prevent the spread of the SARS disease, Jan. 5, 2004. Dustin Shum/South China Morning Post via Getty Images

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Fear Indicators Creating Huge Bearish Reversal Patterns This Month?

Courtesy of Chris Kimble

Its been a rough month for Stocks and Crude Oil. Could these two indicators be suggesting that a panic in fear has run out of steam?

This 2-pack looks at the fear indicators in the Nasdaq (VXN) and Crude Oil (OVX).

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Strategist Channels His Inner Elsa, Says Apple Investors Need To Let It Go

Courtesy of Benzinga

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While coronavirus rages, bitcoin has made a leap towards the mainstream

 

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Courtesy of Iwa Salami, University of East London

Anyone holding bitcoin would have watched the market with alarm in recent weeks. The virtual currency, whose price other cryptocurrencies like ethereum and litecoin largely follow, plummeted from more than US$10,000 (£8,206) in mid-February to briefly below US$4,000 on March 13. Despite recovering to the mid-US$6,000s at the time of writin...



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Promotions

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TODAY's LIVE webinar on stocks, options and trading strategy is open to all!

Feb. 26, 1pm EST

Click HERE to join the PSW weekly webinar at 1 pm EST.

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This week, we also have a special presentation from Mike Anton of TradeExchange.com. It's a new service that we're excited to be a part of! 

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Lee's Free Thinking

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Lee,

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About Phil:

Philip R. Davis is a founder Phil's Stock World, a stock and options trading site that teaches the art of options trading to newcomers and devises advanced strategies for expert traders...

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