Tax Lien Investors

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					                  Brokerage Caters to Tax-Lien Investors
    Increasing competition in the tax-lien auction market is
turning out to be a boon for GFI Group, a broker-dealer that is
building a secondary market for tax-lien investors.
    Earlier this year, the New York firm began brokering trades
of property-tax liens that hedge funds and other investors
acquire at municipal auctions. As was evident during recent                           JULY 7, 2010
                                                                                                                                             ‘Outsourced’ CIO
                                                                                       6 REGULATORY                                                           Reshuffles                              Pension Portfoli
bidding in Florida, competition for these assets has spiked                           2 Sky Fund Seek
                                                                                                        s Partner or Buye
                                                                                                                                                Lee Partridge is shak
                                                                                                                                               Last October, the ing things up at San Diego Coun
                                                                                                                                            oversee its investme $7 billion pension system hire ty Employees.
since market leader J.P. Morgan pulled back amid a federal                            2 Brokerage Cate
                                                                                     3 Credit Suisse
                                                                                                        rs to Tax-Lien Inve
                                                                                                                                           assets. In short orde nt portfolio, which includes abouPartridge as a consultant to
                                                                                                                                           had been managin r, he pulled out of a dozen cred t $1.5 billion of hedge fund
                                                                                                                                                                ga                                it and
                                                                                                                                              Other commitm combined $500 million of the pens multistrategy funds that
                                                                                                      Eyes Clearing Busi
probe into collusion at tax-lien auctions. The result: A number                      3 Stone Lion Spin
                                                                                    3 IPO Guru Pitch
                                                                                                       s Out of Tudor                     ment with GoldenTr    ents are under the
                                                                                                                                                                                    microscope, inclu ion’s money.
                                                                                                                                          million with Silve ee Asset Management, $35 mill
                                                                                                                                                             r Point Capital
                                                                                                                                                                                                       ding a $40 mill
                                                                                                                                                                                                ion with Davidson ion invest-
                                                                                                      es Research Prod                                                       and
of recent entrants have struggled to put their capital to work.                     3 Ex-Criterion Trad
                                                                                                        er Goes Solo
                                                                                                                         uct              also is pressing
                                                                                                                                             The big winner
                                                                                                                                                           managers to restr $60 million with Zazove Asso Kempner, $45
                                                                                                                                         firm that runs near
                                                                                                                                                               to emerge from re their fees.
                                                                                                                                                                                Partidge’s review
                                                                                                                                                                                                                 ciates. Partridg
                                                                                   4 Hsu Seeks Fres                                      only vehicles. San ly $10 billion in hedge funds and is AQR, a Greenwich, Conn.,
    “We’re hearing from funds who just got shut out of these                       4 Ex-OSS Manager
                                                                                                      h Start After Priso

                                                                                                        Maps Debut Fund
                                                                                                                         n                                  Diego County Emp                       anot
                                                                                                                                                                                 loyees decided last her $15 billion in long-
                                                                                                                                                                                                      week to plow $300
auctions by the competition,” said Howard Liggett, executive                     10 Bloomberg
                                                                                 11 LATEST LAUN
                                                                                                 Pitches Research
                                                                                                                    Product              Former Barclay
                                                                                                                                                                     s Execs Pitch
                                                                                                                                                                                                 OUTSOURCED on
                                                                                                                                                                                                               Page 4

                                                                                                  CHES                                     Fixed-income man                                  Credit Vehicle
director of the National Tax Lien Association.                                                                                          executives, will
                                                                                                                                                              ager C12 Capital,
                                                                                                                                                                begi            founded last         year
                                                                                                                                           The New York firm n marketing its first hedge fund by two former Barclays
                                                                                                                                                                 , which already
                                                                                                                                                                                  runs about $650 to outside investors.
    Such players are turning to GFI to source tax liens from                                                                            plans to launch
                                                                                                                                                         a mul
                                                                                                                                       Opportunities Fun ti-strategy credit fund in the
                                                                                                                                       securities and curr  d, would invest in
                                                                                                                                                                                                        million of inter
                                                                                                                                                                                                  fall. The vehicle, nal capital,
                                                                                                                                                                                corporate debt, com                    Helix
                                                                                                                                                            encies.                                     mercial mortgag Liquid
other investors. Thomas McOsker, the firm’s co-head, said just               THE GRAPEVINE
                                                                                                                                          C12’s founders,
                                                                                                                                      trouble raising
                                                                                                                                      director in char
                                                                                                                                                             Stephen King
                                                                                                                                                       capital, given their Michael Keeley, are expected
                                                                                                                                                                              experience at Barc

                                                                                                                                                                                                                      to have little
last week he was visited by two hedge fund managers. One had                 Jill
                                                                                Schurtz replaced
                                                                            chief executive of Michael Abbott as
                                                                            tor Robeco Sage
                                                                                                fund-of-funds oper
                                                                                                                                      a structured-produof the bank’s principal mortgag
                                                                                                                                                           ct                                 e trad
                                                                                                                                                                                                    lays. King was a
                                                                                                                                         “It sounds to me executive in Barclays’ capital mar ing group and Keeley was
                                                                                                                                                            like they should                        kets

                                                                                              last                                       King and Keeley                      get a real following unit.
raised $100 million from investors but only managed to buy                  been the firm’s chie month. Schurtz had
                                                                           Word has it that f operating officer.
                                                                           for personal reas
                                                                                             Abbott stepped
                                                                                                                                     their first vehicle, founded C12 after leaving Barc
                                                                                                                                                          called Protium,
                                                                                                                                                                             to manage $12.
                                                                                                                                                                                                     ,” one market
                                                                                                                                                                                             lays last Septemb player said.
                                                                                                                                                                                               5 billion of mor They set up
$3 million worth of liens during the Florida auctions in late              employed by the
                                                                          with $1.5 billion
                                                                                             ons and is still
                                                                                             firm. Robeco Sage
                                                                                                                 ,               Origami Scoops
                                                                                                                                                                                                         See BARCLAYS
                                                                                                                                                                                                                        on Page 4
                                                                          Robeco Investme assets, is part of                                    Up                          Cambridge Pla
May and early June. The other had $25 million to invest but               U.S. arm of Rott
                                                                                             nt Management,
                                                                                           erdam-based Rob
                                                                                                                                      Origami Capital,
                                                                                                                                ket, has acquired which buys illiquid hedge fund
                                                                                                                               ing funds.
                                                                                                                                                   40% of the shares
                                                                                                                                                                                         ce Shares
                                                                                                                                                                       in Cambridge Plac es on the secondary mar-
only was able to put $7 million to work.                                 Jeffr ey Lindenbaum
                                                                          chief executive of starts next week as
                                                                                                                                  The vehicles —
                                                                                                                               bined $230 mill CPIM Structured Credit Fund 20,
                                                                                                                                                ion under managem
                                                                                                                                                                                            e Investment’s

                                                                                                                                                                                          1000 and 1500 —
                                                                                                                                                                                                           three remain-

                                                                                             the                              Chicago-based Orig                        ent.                                 have
                                                                                                                                                    ami issued a tend With permission from Cambrid a com-
    “It’s a very welcome byproduct of the way the 2010 Florida            London-based fund U.S. unit of CQS, a
                                                                         billion under man operator with $6.8
                                                                                             agement. Lindenba
                                                                                                                              the end reached
                                                                                                                              Sellers included
                                                                                                                                                 deals to acquire
                                                                                                                                                                         er offer to all of                    ge Place,
                                                                                                                                                                   $92 million of shar the funds’ investors, and in
                                                                         is responsible for
                                                                                            business developm um                 The deal — a large of hedge funds and institutional at undisclosed discounts.
auctions went,” McOsker said. “Interest in the product is high          and for beefing
                                                                        relations and mar the firm’s investor-
                                                                                            keting functions
                                                                                                                ent          of a potentially muc one by secondary-market stan
                                                                                                                             funds manager         h larger transact
                                                                                                                                                                     ion between Orig
                                                                                                                                                                                          dards — comes
                                                                                                                                                                                                           on the heels
                                                                                                                             UBP investors, but n Bancaire Privee. Origami mad ami and investors in fund-of-
                                                                        North America.                       in                               Unio
and our inventory is growing every day.”                                                  He is replacing Keith
                                                                                          See GRAPEVINE
                                                                                                          on Back Page
                                                                                                                                The three Cambrid deal fell through about a mon
                                                                                                                                                      ge Place funds
                                                                                                                                                                                         e a $1 billion tend
                                                                                                                                                                                        th ago.             er offer to
                                                                                                                                                                       invested in U.S.
    Smaller and less-experienced investors suddenly have                                                                                                                                   and European com
                                                                                                                                                                                                    See ORIGAMI on
                                                                                                                                                                                                                     Page 10

come up against a new force in the market: Fortress
Investment, which appears to have snapped up several hun-
dred million dollars worth of tax liens in Florida, accounting
for about 20% of the market. Bank of America also was a major      other investor might want to shed a portion of its portfolio.
presence at the auctions.                                          Some investors, for instance, specialize in a so-called fast-pay
    Successful bidders win the right to collect on delinquent      strategy that bets property owners will be quick to make good
tax obligations, including interest and penalties that can climb   on their obligations. Those investors may seek to sell off liens
as high as 18%. In rare cases when a homeowner remains             that remain delinquent for longer periods. Other investors
delinquent, the tax-lien investor can foreclose on the proper-     may need to liquidate their portfolios in order to meet their
ty.                                                                own obligations.
    GFI is trying to carve out a niche matching investors that        By the end of this year, McOsker estimates, the secondary
want to buy more liens with other investors that want to sell.     market for tax-lien investments will grow to several hundred
McOsker said there are a number of reasons a hedge fund or         million dollars.

       HEDGE FUND ALERT: July 7, 2010, 5 Marine View Plaza, Suite 400, Hoboken NJ 07030. 201-659-1700

Description: Tax Lien Investors document sample