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Private Equity Stock Review, Thursday 5/01/2009.

Chicago 53..66F Cloudy.
Los Angeles 46...67F Sunny. (189)
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1. Favorite Quote.
2. Hedge Funds Must Go.
3. Berkshire Hathaway Annual Meeting. Not Going.
4. Fortress Group (FIG) $4.25 Powering Ahead.
5. Disclaimer.

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1. Favorite Quote.

"Investors who were finally getting comfortable with being back in the water, suddenly discovered they swam too far and when they realized they could no longer see bottom, decided to head back towards shore."

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2. Hedge Funds Must Go.

http://privateequitystockreview.ning.com/

In another head-shot to the once beloved term, "hedge fund" -- John Dingell called them "rogues" and "vultures," noting that they "they pick carcasses and they do it for a living" and "will now be dealt with accordingly in court."

Court?

Well all-righty then -- time for a few name changes....Pirates, Vikings, Piranha, Sharks...all history.

"Pirate Capital" will from this day on be known as "Dinghy Capital."
http://www.piratecapitalllc.com/

Viking Capital will from this day on be known as the "Flowering Hawaiian Fund."
http://www.vikingglobal.com

And "Eifuku" (means good fortune in Japan) will from this day on be known as "Can We Just Cuddle Capital."
http://hf-implode.com/imploded/fund_EifukuMasterFund_2005-01.html

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3. Berkshire Hathaway Annual Meeting. Not Going.

Imagine being is a stadium that holds 25,000 coughing shareholders during a Flu epidemic and whose shareholders have collectively lost $40 billion (or so). We hope their giving out blue masks ! What a photo o[ that would be.

"We would be very happy if we earned 10%, pre-tax" on the additions to Berkshire's equity portfolio, said Buffett. "Anyone that expects us to come close to replicating the past should sell their stock; it isn't going to happen. We'll get decent results over time, but not indecent results." Added Munger: "You can take what Warren said to the bank. We are very happy at making money at a rate in the future that's much less than the past... and I suggest that you adopt the same attitude."

We're not to good at math, so we'll ask. How many years will it take for BRKB to get to even ($5000 per share) from it's current price of $3,042 at 10% per year ?

Think we'll pass....it ain't gonna happen.

Oh great -- but too late idea. We should have had 30,000 blue masks made with the Berkshire logo on them made ($5.00 each) and hawked them at the meeting. Dang. Collectors item of a lifetime. Easy free coverage from all the media outlets -- including CNBC !

Oh well. Focus...

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4. Fortress Group (FIG) $4.25, Powering Ahead.

Fortress is up 22% today and up 93%, from where we added it to the Watch List.

Chart: http://finance.alphatrade.com/quotes/chart?s=FIG


Here's some interesting news we had not previously contemplated and a potential mountain of potential revenues. A few months ago everyone (including us) was worrying about declining assets from market losses and withdrawals (even with the doors being bolted shut at many managers).

And truth be told -- that is happening. But who would have though of this.

Fortress is going to be taking over the liquidation of a hedge fund and potentially making a boatload of money to do it (if approved). Pure genius !

The fund "D.B. Zwirn Special Opportunities Fund LP." had $2.5 billion under management and had requests for $2 billion back, from clients. Like we said, something to worry about.

"Fortress, founded in 1998, will be reimbursed for costs of winding down the fund, plus 1 percent of the fund’s net assets, the people said. It also will get 5 percent of any profit it makes. Zwirn’s investors will pay more than $21 million in one- time fees associated with the liquidation of assets."

How nice.

By the way, our Private Equity list is screaming today. We're pulling this out of thin blue air, but we think whatever the market does -- these companies can do three times more (note we didn't say better -- but more).

Today:

Fortress Group (FIG) $4.41 up 22%
GLG Partners (GLG) $2.83 up 18%
Blackstone (BX) $11.22 up 14%
Rodman (RODM) $0.50 up 11%
Och-Ziff (OZM) $$7.96 up 7%

That's in a day folks. How fun is that ! And these aren't penny stocks. These are billion companies, run by billionaires...oh the joy.

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Bloomberg Article.


By Pierre Paulden, Katherine Burton and Jody Shenn

April 29 (Bloomberg) -- D.B. Zwirn & Co.’s $2.5 billion in hedge-fund assets will be taken over by Fortress Investment Group LLC, the New York-based manager of about $29 billion, people familiar with the decision said.

Zwirn’s board and some of its biggest investors chose Fortress, a private equity and hedge-fund manager, to liquidate the assets. Fortress was picked from nine candidates, including a group headed by Irish financier Desmond Dermot, the people said. They asked not to be identified because the discussions are private.

Daniel Zwirn, 37, who runs the New York-based company, told investors in February 2008 he planned to wind down his flagship D.B. Zwirn Special Opportunities Fund LP. The fund makes loans to companies including those that have trouble getting financing elsewhere. Zwirn decided to close the fund when investors asked to withdraw more than $2 billion after a delay in the release of the fund’s 2006 financial audit. He told investors in the main fund in 2008 that they might have to wait as long as four years to get all their money back.

Fortress’s takeover would mark the end of Zwirn’s involvement with his seven-year-old firm, which managed $5.5 billion at its peak. Zwirn, who will be paid $1.95 million by the fund in deferred compensation from 2008, used $13 million of his own money to run the company since October, the people said.

Zwirn tried last year to start a fund called ZLC Global Investments that would use the same investment strategy as his Special Opportunities Fund.

Brian Maddox, Zwirn’s spokesman, and Lilly Donohue, a spokeswoman for Fortress, declined to comment.

Stock Rises

Fortress, which went public in February 2007, rose 18 cents, or 6.4 percent, to $2.99 in New York Stock Exchange composite trading. The stock has fallen 79 percent in the past year.

The transfer of assets to Fortress must be approved by a majority of investors. Fortress will keep Zwirn’s remaining employees, the people said.

Fortress, founded in 1998, will be reimbursed for costs of winding down the fund, plus 1 percent of the fund’s net assets, the people said. It also will get 5 percent of any profit it makes. Zwirn’s investors will pay more than $21 million in one- time fees associated with the liquidation of assets.

The fund also will set aside $15 million to pay any future claims or fines. The U.S. Securities and Exchange Commission started investigating the company after Zwirn told investors in early 2007 that an internal probe found improper financial transfers and expense accounting.

Audit

An independent auditor, PricewaterhouseCoopers LLP, took until December 2007 to sign off on the firm’s 2006 books. D.B. Zwirn has said it was the victim of misconduct by a former employee, and that an investigation showed that current management is above reproach. Clients were repaid with interest on any money they were owed because of the accounting irregularities.

Zwirn previously was a managing director and senior investment manager overseeing special opportunities for Highbridge Capital Management LLC. Earlier, he was a portfolio manager at MSD Capital LP, the money manager for Michael Dell, founder of Round Rock, Texas-based personal-computer maker Dell Inc.

To contact the reporters on this story: Pierre Paulden in New York at ppaulden@bloomberg.net; Katherine Burton in New York at

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