NEW YORK (AP) -- Investment bank Merrill Lynch & Co. said Monday it sold a stake in itself to Temasek Holdings and Davis Selected Advisors for $6.2 billion as it looks to strengthen its balance sheet.
Temasek, an investment fund for the government of Singapore, will acquire $4.4 billion in Merrill Lynch common stock. Temasek has the option to purchase an additional $600 million of common stock by March 28. The investment is for no more than 10 percent of common stock.
Davis Selected Advisors will receive common stock from an $1.2 billion investment as well. Both investors will remain passive. The sales are expected to close by the middle of January.
Like other investment banks, Merrill Lynch has reached out to a foreign investment fund for a new source of capital as it is plagued by the weakening credit markets. Merrill Lynch took a nearly $8 billion writedown on the value of bonds and debt backed by mortgages in the third quarter and is expected to take billions of dollars in additional writedowns in the fourth quarter. Shares of Merrill Lynch rose $2.80, or 5 percent, to $58.34 in morning trading.
Monday, December 24, 2007
Sunday, December 16, 2007
Ethanol
Little over a year ago, ethanol was winning the hearts and wallets of both Main Street and Wall Street, with promises of greater U.S. energy independence, fewer greenhouse gases and help for the farm economy. Today, the corn-based biofuel is under siege.
In the span of one growing season, ethanol has gone from panacea to pariah in the eyes of some. The critics, which include industries hurt when the price of corn rises, blame ethanol for pushing up food prices, question its environmental bona fides and dispute how much it really helps reduce the need for oil.
A recent study by the Organization for Economic Cooperation and Development concluded that biofuels "offer a cure [for oil dependence] that is worse than the disease." A National Academy of Sciences study said corn-based ethanol could strain water supplies. The American Lung Association expressed concern about a form of air pollution from burning ethanol in gasoline. Political cartoonists have taken to skewering the fuel for raising the price of food to the world's poor.
Last month, an outside expert advising the United Nations on the "right to food" labeled the use of food crops to make biofuels "a crime against humanity," although the U.N. Food and Agriculture Organization later disowned the remark as "regrettable."
The fortunes of many U.S. farmers, farm towns and ethanol companies are tied to corn-based ethanol, of which America is the largest producer. Ethanol is also a cornerstone of President Bush's push to reduce dependence on foreign oil. But the once-booming business has gone in the dumps, with profits squeezed, plans for new plants shelved in certain cases, and stock prices hovering near 52-week lows.
Now the fuel's lobby is pleading with Congress to drastically boost the amount of ethanol that oil refiners must blend into gasoline. But formidable opponents such as the livestock, packaged-food and oil industries also have lawmakers' ears. What once looked like a slam-dunk could now languish in pending energy legislation that might not pass for weeks, if ever.
Ethanol's problems have much to do with its past success. As profits and production soared in 2005 and 2006, so did the price of corn, gradually angering livestock farmers who need it for feed. They allied with food companies also stung by higher grain prices, and with oil companies that have long loathed subsidies for ethanol production.
The U.S. gives oil refiners an excise-tax credit of 51 cents for every gallon of ethanol they blend into gasoline. And even though it's the oil industry that gets this subsidy, the industry dislikes being forced to use a nonpetroleum product. The U.S. ethanol industry is further protected by a 54-cent tariff on every gallon of imported ethanol.
Ethanol prices peaked at about $5 a gallon in some markets in June 2006, according to Oil Price Information Service. The price soon began to slide as the limited market for gasoline containing 10% ethanol grew saturated. New plants kept coming online, increasing supply and dropping prices further. Today, the oil refiners that purchase ethanol to blend in need pay only about $1.85 a gallon for it.
The low ethanol prices help some oil refiners. "I'd pay a hell of a lot more for ethanol than I am right now.... I'm getting a windfall because it's priced so much less than its value to me," Lynn Westfall, chief economist for refiner Tesoro Corp., told investors recently. The ethanol tax credit will bring refiners an estimated $3.5 billion this year. Some oil companies use ethanol to stretch gasoline supplies or meet state requirements to make gasoline burn more cleanly. Ethanol that's voluntarily blended into gasoline reached a high this month, according to the Energy Information Administration.
The low prices reflect soaring output. Global ethanol production has grown to a projected 13.4 billion gallons this year, from 10.9 billion gallons in 2006, according to the International Energy Agency. The U.S. production is more than half of that total, or about seven billion gallons this year, up 80% in two years. It equals less than 4% of U.S. gasoline consumption.
Analysts expect U.S. production capacity to keep growing, encouraged both by high oil prices and by the hope that Congress will stiffen the mandate for refiners to use ethanol. Some observers regard the profit squeeze as part of an ordinary industry shakeout that will ultimately leave the best producers in a position to thrive. As ethanol prices were pushed lower and corn prices stayed high, ethanol profit margins dropped from $2.30 per gallon last year to less than 25 cents a gallon.
In the span of one growing season, ethanol has gone from panacea to pariah in the eyes of some. The critics, which include industries hurt when the price of corn rises, blame ethanol for pushing up food prices, question its environmental bona fides and dispute how much it really helps reduce the need for oil.
A recent study by the Organization for Economic Cooperation and Development concluded that biofuels "offer a cure [for oil dependence] that is worse than the disease." A National Academy of Sciences study said corn-based ethanol could strain water supplies. The American Lung Association expressed concern about a form of air pollution from burning ethanol in gasoline. Political cartoonists have taken to skewering the fuel for raising the price of food to the world's poor.Last month, an outside expert advising the United Nations on the "right to food" labeled the use of food crops to make biofuels "a crime against humanity," although the U.N. Food and Agriculture Organization later disowned the remark as "regrettable."
The fortunes of many U.S. farmers, farm towns and ethanol companies are tied to corn-based ethanol, of which America is the largest producer. Ethanol is also a cornerstone of President Bush's push to reduce dependence on foreign oil. But the once-booming business has gone in the dumps, with profits squeezed, plans for new plants shelved in certain cases, and stock prices hovering near 52-week lows.
Now the fuel's lobby is pleading with Congress to drastically boost the amount of ethanol that oil refiners must blend into gasoline. But formidable opponents such as the livestock, packaged-food and oil industries also have lawmakers' ears. What once looked like a slam-dunk could now languish in pending energy legislation that might not pass for weeks, if ever.
Ethanol's problems have much to do with its past success. As profits and production soared in 2005 and 2006, so did the price of corn, gradually angering livestock farmers who need it for feed. They allied with food companies also stung by higher grain prices, and with oil companies that have long loathed subsidies for ethanol production.
The U.S. gives oil refiners an excise-tax credit of 51 cents for every gallon of ethanol they blend into gasoline. And even though it's the oil industry that gets this subsidy, the industry dislikes being forced to use a nonpetroleum product. The U.S. ethanol industry is further protected by a 54-cent tariff on every gallon of imported ethanol.
Ethanol prices peaked at about $5 a gallon in some markets in June 2006, according to Oil Price Information Service. The price soon began to slide as the limited market for gasoline containing 10% ethanol grew saturated. New plants kept coming online, increasing supply and dropping prices further. Today, the oil refiners that purchase ethanol to blend in need pay only about $1.85 a gallon for it.
The low ethanol prices help some oil refiners. "I'd pay a hell of a lot more for ethanol than I am right now.... I'm getting a windfall because it's priced so much less than its value to me," Lynn Westfall, chief economist for refiner Tesoro Corp., told investors recently. The ethanol tax credit will bring refiners an estimated $3.5 billion this year. Some oil companies use ethanol to stretch gasoline supplies or meet state requirements to make gasoline burn more cleanly. Ethanol that's voluntarily blended into gasoline reached a high this month, according to the Energy Information Administration.
The low prices reflect soaring output. Global ethanol production has grown to a projected 13.4 billion gallons this year, from 10.9 billion gallons in 2006, according to the International Energy Agency. The U.S. production is more than half of that total, or about seven billion gallons this year, up 80% in two years. It equals less than 4% of U.S. gasoline consumption.
Analysts expect U.S. production capacity to keep growing, encouraged both by high oil prices and by the hope that Congress will stiffen the mandate for refiners to use ethanol. Some observers regard the profit squeeze as part of an ordinary industry shakeout that will ultimately leave the best producers in a position to thrive. As ethanol prices were pushed lower and corn prices stayed high, ethanol profit margins dropped from $2.30 per gallon last year to less than 25 cents a gallon.
(Re)New Sector
Renewable energy stocks rose Friday after the Senate passed a revised energy bill, and solar-power companies reported new contracts.
The bill -- passed by a vote of 86 to eight -- raised sixfold the amount of renewable fuels that must be used for blending of products like gasoline, to 36 billion gallons a year by 2022. The legislation boosted ethanol stocks Friday.
I anticipate that this new legislative mandate will do alot to help the renewable energy market. Since profits will continue to be slim, subsities cant be far behind; Congress has already opened up its wallet to cotton and the steel industry.
However, a mandate for utilities to derive 15 percent of electricity from renewables by 2020 was scrapped from the bill, representing a "marginal negative" for solar companies, according to Calyon Securities analyst Kelly Dougherty. Had that Mandate remained it would have really pushed stock prices up.
Pacific Ethanol Inc. led gains in ethanol stocks, rising 65 cents, or 10.8 percent, to $6.69 in midday trading. Aventine Renewable Energy Holdings Inc. rose $1.10, or 10.7 percent, to $11.39, while BioFuel Energy Corp. rose 46 cents, or 8.1 percent, to $6.12, and Verasun Energy Corp. rose $1, or 7.1 percent, to $15.
Among solar energy stocks, China Sunergy rose Friday after it said it would supply solar cells to German solar-system maker asola Automotive Solar System GmbH next year. The stock advanced $1.56, or 16.3 percent, to $11.11.
Elsewhere, Evergreen Solar Inc. climbed after it reported a 10-year polysilicon supply agreement with Silicium de Provence SAS on Thursday. Dougherty lifted Evergreen's rating to "Buy" from "Add" and increased his price target to $22 from $15.
Shares of Evergreen Solar rose $1.73, or 11.5 percent, to $16.84. Earlier, it traded at a 52-week high of $17.75. Akeena Solar Inc. rose 93 cents, or 14.4 percent, to $7.40, and JA Solar Holdings Co. gained $7.72, or 12.3 percent, to $70.74.
The bill -- passed by a vote of 86 to eight -- raised sixfold the amount of renewable fuels that must be used for blending of products like gasoline, to 36 billion gallons a year by 2022. The legislation boosted ethanol stocks Friday.
I anticipate that this new legislative mandate will do alot to help the renewable energy market. Since profits will continue to be slim, subsities cant be far behind; Congress has already opened up its wallet to cotton and the steel industry.
However, a mandate for utilities to derive 15 percent of electricity from renewables by 2020 was scrapped from the bill, representing a "marginal negative" for solar companies, according to Calyon Securities analyst Kelly Dougherty. Had that Mandate remained it would have really pushed stock prices up.
Pacific Ethanol Inc. led gains in ethanol stocks, rising 65 cents, or 10.8 percent, to $6.69 in midday trading. Aventine Renewable Energy Holdings Inc. rose $1.10, or 10.7 percent, to $11.39, while BioFuel Energy Corp. rose 46 cents, or 8.1 percent, to $6.12, and Verasun Energy Corp. rose $1, or 7.1 percent, to $15.
Among solar energy stocks, China Sunergy rose Friday after it said it would supply solar cells to German solar-system maker asola Automotive Solar System GmbH next year. The stock advanced $1.56, or 16.3 percent, to $11.11.
Elsewhere, Evergreen Solar Inc. climbed after it reported a 10-year polysilicon supply agreement with Silicium de Provence SAS on Thursday. Dougherty lifted Evergreen's rating to "Buy" from "Add" and increased his price target to $22 from $15.
Shares of Evergreen Solar rose $1.73, or 11.5 percent, to $16.84. Earlier, it traded at a 52-week high of $17.75. Akeena Solar Inc. rose 93 cents, or 14.4 percent, to $7.40, and JA Solar Holdings Co. gained $7.72, or 12.3 percent, to $70.74.
Friday, December 14, 2007
Cell phone good will
OTTAWA (AFP) - An oil field worker in western Canada was shocked this month to be charged 85,000 dollars for surfing the Internet on his new mobile phone, local media said Thursday.
Calgary resident Piotr Staniaszek, 22, had signed up for Bell Canada's cellular phone service at about 150 dollars per month, with unlimited mobile Web browsing.He believed the plan allowed him to use the phone to connect with his computer, using it as a modem to download a lot of data, high-definition movies and other bandwidth-hungry applications.
But when his first bill arrived in the mail, Staniaszek realized to his horror that the company was charging him on a per-kilobyte basis for Internet downloads.
"I didn't know what to think. I thought there was probably a mistake," he told public broadcaster CBC. "I told them I wasn't aware that I would be charged for hooking up my phone to the computer."
A spokesman for Bell said the company will adjust Staniaszek's bill to 3,243 dollars, as "a measure of goodwill."But Staniaszek said he still plans to try and fight it, "because I didn't know about the extra charges. Nobody explained any of this to me."
"The thing is, they've cut my phone off for being like 100 dollars over," he told CBC News. "Here, I'm 85,000 dollars over and nobody bothered to give me a call and tell me what was going on."
Calgary resident Piotr Staniaszek, 22, had signed up for Bell Canada's cellular phone service at about 150 dollars per month, with unlimited mobile Web browsing.He believed the plan allowed him to use the phone to connect with his computer, using it as a modem to download a lot of data, high-definition movies and other bandwidth-hungry applications.
But when his first bill arrived in the mail, Staniaszek realized to his horror that the company was charging him on a per-kilobyte basis for Internet downloads.
"I didn't know what to think. I thought there was probably a mistake," he told public broadcaster CBC. "I told them I wasn't aware that I would be charged for hooking up my phone to the computer."
A spokesman for Bell said the company will adjust Staniaszek's bill to 3,243 dollars, as "a measure of goodwill."But Staniaszek said he still plans to try and fight it, "because I didn't know about the extra charges. Nobody explained any of this to me."
"The thing is, they've cut my phone off for being like 100 dollars over," he told CBC News. "Here, I'm 85,000 dollars over and nobody bothered to give me a call and tell me what was going on."
Sunday, December 9, 2007
Ride the Bull
THE STOCK MARKET IS ON THE VERGE of a new breakout. While the technical evidence today is conflicted as ever, there is one thing the bulls have that the bears do not -- the market is going their way. It may not be the "next leg up" but it's better than the alternative.
After last week's sharp rally, the ensuing pause was rather mild. It certainly would have been reasonable to look for more than two small days of rest, but if we look into its technicals we'll see that the market gave back 25% of its rally with much lighter than average volume. This is a classic definition of a correction.
Unfortunately, this is all short-term analysis. What we want to know is whether this rally will continue, and for that we have a relatively simple chart to follow (see Chart 1).
The Standard & Poor's 500 is now challenging 1490 once again, and if it can move significantly through that level it will have proved itself worthy of another run at its old highsThe 1490 level is what chart watchers call resistance -- the price level at which supply swells and advances stall. A successful crossing above that level means that the demand was able to soak up all that supply, and then some, and that clears the path toward even higher prices.
How high is high? Assuming the breakout actually occurs, the old highs between 1555 and 1565 would be likely targets -- and formidable barriers.Last week, I wrote, "Another consideration is that for the first time since the major bottom in August 2004, the S&P has not made clearly higher highs and higher lows."
What this means is that the forces that drove the market three steps forward and one step back in the natural ebb and flow of a bull market had changed. In 2007, it has been three steps forward and three steps back, and that is a different animal on Wall Street. Therefore, unless proved otherwise, 2007 is shaping up to be a giant trading range at best and the start of a significant decline at worst.
How do we know which one it is? We don't but we must give the benefit of the doubt to the side that is currently winning. The bulls now have the ball.
But as the market rallies, supporting evidence is still rather shaky. For starters, the volume on today's rally was not much different during the bulk of the rally in the morning hours than it was Tuesday as the market fell. In fact, volume during the entire post-Thanksgiving rally has been rather uninspiring.
A chart of the very active SPDR S&P 500 exchange-traded fund (ETF) shows a continuous decline in volume as price moved higher (see Chart 2). The same is true for all the other major broad market ETFs. What this means is that the rally is not drawing in new bulls, and that means its fuel is in danger of running out.
After last week's sharp rally, the ensuing pause was rather mild. It certainly would have been reasonable to look for more than two small days of rest, but if we look into its technicals we'll see that the market gave back 25% of its rally with much lighter than average volume. This is a classic definition of a correction.
Unfortunately, this is all short-term analysis. What we want to know is whether this rally will continue, and for that we have a relatively simple chart to follow (see Chart 1).
The Standard & Poor's 500 is now challenging 1490 once again, and if it can move significantly through that level it will have proved itself worthy of another run at its old highsThe 1490 level is what chart watchers call resistance -- the price level at which supply swells and advances stall. A successful crossing above that level means that the demand was able to soak up all that supply, and then some, and that clears the path toward even higher prices.How high is high? Assuming the breakout actually occurs, the old highs between 1555 and 1565 would be likely targets -- and formidable barriers.Last week, I wrote, "Another consideration is that for the first time since the major bottom in August 2004, the S&P has not made clearly higher highs and higher lows."
What this means is that the forces that drove the market three steps forward and one step back in the natural ebb and flow of a bull market had changed. In 2007, it has been three steps forward and three steps back, and that is a different animal on Wall Street. Therefore, unless proved otherwise, 2007 is shaping up to be a giant trading range at best and the start of a significant decline at worst.
How do we know which one it is? We don't but we must give the benefit of the doubt to the side that is currently winning. The bulls now have the ball.
But as the market rallies, supporting evidence is still rather shaky. For starters, the volume on today's rally was not much different during the bulk of the rally in the morning hours than it was Tuesday as the market fell. In fact, volume during the entire post-Thanksgiving rally has been rather uninspiring.
A chart of the very active SPDR S&P 500 exchange-traded fund (ETF) shows a continuous decline in volume as price moved higher (see Chart 2). The same is true for all the other major broad market ETFs. What this means is that the rally is not drawing in new bulls, and that means its fuel is in danger of running out.
Wednesday, December 5, 2007
Bump up the volume
Last week crude oil prices dropped on speculation that OPEC would increase oil production; what were the experts thinking? For months now OPEC has made it clear that, in their (collective) mind they felt no connection with the record high crude prices. In fact, Iran and Venezuela voiced their opposition to any sort of a production increase; while the number-one producer Saudi Arabia was more amenable to a 500,000 barrel-a-day hike.
In the end OPEC left its output unchanged on Wednesday, blaming "speculative activity" for pushing up the price of oil and insisting that the market was well-supplied. Although OPEC promised to review this decision at its next meeting in February 2008, the prospect of a winter without a helping hand from the 13-member organization seemed to fuel exactly the kind of "speculative activity" it spoke out against.
In reality OPEC is correct. The issue is not production rather it is refinery capacity. Cruse production is not the issue because no matter how much is in the market place it can only be used once biproducts have been produced. I have not seen a car yet that runs on light crude. The fact is simple: U.S. refineries cannot cope with the ever-increasing demand of US cosumers. Its time for a infrastructure upgrade.
Fine line
Fineline Properties.com Inc. (www.finelineproperties.com) has teamed up with IPnetwork.com (www.ipnetwork.com), the Internet's premier business-to-business intellectual property & licensing marketplace.
Fineline's entire product line of new cartoon characters are marketed within the IPnetwork.com Web site, offering online bidding of Fineline's library of more than 200 characters. In addition, IPnetwork.com provides domestic and international exposure through a variety of marketing campaigns and tradeshows.
In the end OPEC left its output unchanged on Wednesday, blaming "speculative activity" for pushing up the price of oil and insisting that the market was well-supplied. Although OPEC promised to review this decision at its next meeting in February 2008, the prospect of a winter without a helping hand from the 13-member organization seemed to fuel exactly the kind of "speculative activity" it spoke out against.
In reality OPEC is correct. The issue is not production rather it is refinery capacity. Cruse production is not the issue because no matter how much is in the market place it can only be used once biproducts have been produced. I have not seen a car yet that runs on light crude. The fact is simple: U.S. refineries cannot cope with the ever-increasing demand of US cosumers. Its time for a infrastructure upgrade.
Fine line
Fineline Properties.com Inc. (www.finelineproperties.com) has teamed up with IPnetwork.com (www.ipnetwork.com), the Internet's premier business-to-business intellectual property & licensing marketplace.
Fineline's entire product line of new cartoon characters are marketed within the IPnetwork.com Web site, offering online bidding of Fineline's library of more than 200 characters. In addition, IPnetwork.com provides domestic and international exposure through a variety of marketing campaigns and tradeshows.
Monday, December 3, 2007
Keep your hedge up - Candidates
WASHINGTON (AFP) - Wealthy hedge fund managers closely guard their investment strategies, but mounting political donations reveal how some "hedgies" are betting in the crowded US presidential race.
Hedge funds' campaign donations have skyrocketed in recent years as trading profits have ballooned and the industry has lobbied Congress aggressively this year against raising taxes on managers' often multimillion-dollar earnings. Democratic White House hopefuls have been more successful so far, compared with their Republican rivals, in winning funds.
The top-grossing recipient is Democratic Senator Christopher Dodd who garnered 714,500 dollars in donations from the hedge fund industry in the first nine months of the year, according to the Center for Responsive Politics (CRP).
The CRP, which tracks political cash flows, says Republican presidential aspirant Rudolph Giuliani holds second place with donations of 565,000 dollars followed by Democratic contenders Barack Obama, Hillary Clinton and John Edwards.
"They want to make friends in Washington and campaign contributions are a good way to do that," said Massie Ritsch, a spokesman for the research center. Ritsch pointed out that Dodd is charged with overseeing the industry because of his chairmanship of the powerful Senate Banking Committee while Giuliani, a former New York mayor, has strong ties to the city where many hedge funds are based.
Paul Singer, the founder of the nine-billion-dollar hedge fund Elliot Associates, is one of Giuliani's backers and has also made a corporate jet available to him.
Federal Election Commission (FEC) records show Singer has made a maximum individual donation of 4,600 dollars to Giuliani's campaign this year. Elliot Associates's staff have stumped up a combined 200,000 dollars.
Singer, who could not be reached for comment, became an advisor to Giuliani earlier this year. Gregory Chase, who runs Chase Capital Management, says he has spent about 500,000 dollars of his own money promoting Democrat Mike Gravel, a former senator.
"I've been very unhappy with the United States foreign policy and its dependence on foreign oil over the last few years," Chase explained.
The currency trader can spend as much as he wants because he is acting independently of Gravel's official campaign and not bound by US campaign laws, like Singer, which cap donations. Chase has placed advertisements in USA Today, The New York Times, The Washington Post and other major newspapers in support of Gravel.
He offered to buy one million dollars in advertising from NBC in October after the nationwide television network locked Gravel out of a debate featuring the seven other Democratic candidates on fundraising grounds.
"I think there're a lot of people in the financial industry who take issue with the political turn that the United States has taken lately. My goal is at least to sway, maybe in some very small way, public opinion," Chase said.
Gravel advocates cutting US dependence on foreign oil, withdrawing American troops from Iraq, simplifying the tax code and cutting the Pentagon's budget.
Other investment gurus are also placing bets. Marc Lasry, the founder of the 20-billion-dollar Avenue Capital Group, has dug into his wallet for Hillary Clinton. Lasry has long supported Democrats and his fund employs Clinton's daughter, Chelsea.
Lasry has also supported the Clinton Global Initiative set up by former president Bill Clinton to address poverty alleviation and other social issues. FEC records show Lasry has given 4,600 dollars to Hillary Clinton's presidential bid while the CRP says Avenue Capital has donated funds to the campaigns of other Democratic lawmakers.
An Avenue Capital spokeswoman said Lasry was not available for comment. Employees at the Fortress Investment group have supported former Democratic senator John Edwards and Republican Mitt Romney has gained funds from executives at Bain Capital which he co-founded during a prior business career.
FEC records show Republican Senator John McCain and former Republican senator Fred Thompson have also secured hedge fund donations. The investment pools used to be restricted to rich investors, but now count pension funds and universities as investors. Hedge funds typically chase lucrative returns through risky investment strategies.
Concerns about investor protections have increased following the six-billion-dollar implosion of the large Amaranth hedge fund in 2006 and because of several high-profile cases of insider trading. The trillion-dollar industry is represented in Washington by the Managed Funds Association which runs a well-funded political action committee to support its lobbying efforts.
Hedge funds' campaign donations have skyrocketed in recent years as trading profits have ballooned and the industry has lobbied Congress aggressively this year against raising taxes on managers' often multimillion-dollar earnings. Democratic White House hopefuls have been more successful so far, compared with their Republican rivals, in winning funds.
The top-grossing recipient is Democratic Senator Christopher Dodd who garnered 714,500 dollars in donations from the hedge fund industry in the first nine months of the year, according to the Center for Responsive Politics (CRP).
The CRP, which tracks political cash flows, says Republican presidential aspirant Rudolph Giuliani holds second place with donations of 565,000 dollars followed by Democratic contenders Barack Obama, Hillary Clinton and John Edwards.
"They want to make friends in Washington and campaign contributions are a good way to do that," said Massie Ritsch, a spokesman for the research center. Ritsch pointed out that Dodd is charged with overseeing the industry because of his chairmanship of the powerful Senate Banking Committee while Giuliani, a former New York mayor, has strong ties to the city where many hedge funds are based.
Paul Singer, the founder of the nine-billion-dollar hedge fund Elliot Associates, is one of Giuliani's backers and has also made a corporate jet available to him.
Federal Election Commission (FEC) records show Singer has made a maximum individual donation of 4,600 dollars to Giuliani's campaign this year. Elliot Associates's staff have stumped up a combined 200,000 dollars.
Singer, who could not be reached for comment, became an advisor to Giuliani earlier this year. Gregory Chase, who runs Chase Capital Management, says he has spent about 500,000 dollars of his own money promoting Democrat Mike Gravel, a former senator.
"I've been very unhappy with the United States foreign policy and its dependence on foreign oil over the last few years," Chase explained.
The currency trader can spend as much as he wants because he is acting independently of Gravel's official campaign and not bound by US campaign laws, like Singer, which cap donations. Chase has placed advertisements in USA Today, The New York Times, The Washington Post and other major newspapers in support of Gravel.
He offered to buy one million dollars in advertising from NBC in October after the nationwide television network locked Gravel out of a debate featuring the seven other Democratic candidates on fundraising grounds.
"I think there're a lot of people in the financial industry who take issue with the political turn that the United States has taken lately. My goal is at least to sway, maybe in some very small way, public opinion," Chase said.
Gravel advocates cutting US dependence on foreign oil, withdrawing American troops from Iraq, simplifying the tax code and cutting the Pentagon's budget.
Other investment gurus are also placing bets. Marc Lasry, the founder of the 20-billion-dollar Avenue Capital Group, has dug into his wallet for Hillary Clinton. Lasry has long supported Democrats and his fund employs Clinton's daughter, Chelsea.
Lasry has also supported the Clinton Global Initiative set up by former president Bill Clinton to address poverty alleviation and other social issues. FEC records show Lasry has given 4,600 dollars to Hillary Clinton's presidential bid while the CRP says Avenue Capital has donated funds to the campaigns of other Democratic lawmakers.
An Avenue Capital spokeswoman said Lasry was not available for comment. Employees at the Fortress Investment group have supported former Democratic senator John Edwards and Republican Mitt Romney has gained funds from executives at Bain Capital which he co-founded during a prior business career.
FEC records show Republican Senator John McCain and former Republican senator Fred Thompson have also secured hedge fund donations. The investment pools used to be restricted to rich investors, but now count pension funds and universities as investors. Hedge funds typically chase lucrative returns through risky investment strategies.
Concerns about investor protections have increased following the six-billion-dollar implosion of the large Amaranth hedge fund in 2006 and because of several high-profile cases of insider trading. The trillion-dollar industry is represented in Washington by the Managed Funds Association which runs a well-funded political action committee to support its lobbying efforts.
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