Thats just not how bond math works, said Michael Terwilliger, a portfolio manager at Resource Credit Income Fund. Earlier this month, Alden secured a third seat out of seven on the Tribune Publishing board as it seemed to inch closer to taking control of that company. In recent months, Postmedia closed approximately 15 community publications and laid off 120 employees in response to the Covid-19 pandemic, The Toronto Star reported. FORTUNE is a trademark of Fortune Media IP Limited, registered in the U.S. and other countries. Still, Chatham can elect one-third of Postmedias board, and it has debt covenants that give it huge sway over its long-term plans. Traders have privately criticized what they see as lofty valuations of illiquid securities. During that time, it invested relatively little, about $5.4 million, to try to improve the business. Thats exactly what happened. Although not physically imposing, Melchiorre could be foul-mouthed and loud, and would berate fellow traders as he bopped around the trading floor in his stocking feet. Vericast recently announced several growth initiatives, including investing in technology and hiring for more than 250 new positions across the organizationits largest investments in innovation and employees since the companys 2020 launch. The hedge fund is run by Anthony Melchiorre, a GOP donor who reportedly met with the president and AMI CEO David Pecker at the White House soon after Trump took office. After several stints at elite firms like Goldman Sachs and Morgan Stanley, he was let go from Morgan Stanley in 2002 as part of a sweeping round of layoffs. Those investments amounted to a bet that the companies would acquire competitors and cut costs. There are often clauses in agreements between pension funds and hedge funds that give states certain rights and recourse if they believe retirees money has been invested in companies engaging in criminal activity, he said. The next year, Seaport received internal complaints that brokers there agreed to buy bonds from Chatham with the promise the hedge fund would repurchase them at higher prices, according to people with knowledge of the situation. I remember that very well because by then I was hoping for a buyout and asked him, in front of the crowd, if he was planning on offering any. Under Republican governors, the two states committed at least $625 million of pension cash into Chatham Asset Management, a high-risk hedge fund that has taken control of theNational Enquirers parent company, American Media Inc., which is at the center of the federal investigation into President Donald Trumps 2016 campaign. Serving as the lead backstop investor in Vericasts multibillion dollar refinancing transactions in 2020 and 2021. Yet, over the years questions have swirled around Chatham. CHATHAM, NJ And as it happened, the hedge fund owned the tabloid, the National Enquirer, that he had just used to try and catch and kill stories about the future president. Chatham has been restructuring their debt to give them more time. As far as leadership goes, I feel like the way they talk about it, were almost operating like a sales agency, not a news service, Mr. Gibson, the union leader, said. Chathams media interests are led by two of its partners, Evan Ratner, a longtime Wall Street investor and a former analyst with Goldman Sachs, and Barry Schwartz, who has specialized in debt investments. Anthony Melchiorre, Chatham Asset Management, LLC: Profile and By clicking Accept, you consent to the use of ALL the cookies. Its bonds staged an improbable rally last year, charting a steady climb over 50 percent from 80 to 125 cents on the dollar. 13 Beds 11 Baths 5920 sqft. John Kasichs appointeescommitted$125 million to Chatham. . Chatham was the favorite in the McClatchy auction, but the New York hedge fund Alden Global Capital expressed strong interest last week, when a lawyer representing the firm said at a bankruptcy hearing that Alden was prepared to top any other bid. The $1.4 billion pension plan, created 75 years ago, was intended to provide money to more than 24,000 current and future retirees. But many dailies remained sources of reliable cash flow, making them attractive investments for owners focused on maximizing returns. Powered and implemented by Interactive Data Managed Solutions. New Jersey, which has generated a more-than 12 percent annualized return on its investment, is entitled to withdraw $355 million from one of Chathams funds at the end of this year. Wall Streets main regulator has been looking into opaque markets since the financial crisis, uncovering a wide swath of bad behavior from lying salespeople to bogus quotes from brokers. Cohens assignment: Get Carl Grimstad, the recently fired CEO of payments processor iPayment Holdings, to the table. They are scrappy, and they arent afraid of litigation to defend their investments, said Leon Cooperman, a recently retired hedge fund mogul who is a Chatham investor and part owner of American Media, the Enquirers publisher. These cookies do not store any personal information. Traders have privately criticized what they see as lofty valuations of illiquid securities. I can almost guarantee you there will be staff cuts at most or all of those newspapers. Luxury Homes for Sale in Cabris, Provence Alpes Cte D'azur, France. Found 4 colleagues at Chatham Asset Management. The average price per square meter is $528/sqft. Importantly, the trading occurred more than four years ago in funds that have since been closed. Last week, that kind of financial maneuvering reappeared in another major newspaper deal, when Chatham emerged as the winning bidder in a bankruptcy auction for the McClatchy Company, a chain with 30 media outlets including The Miami Herald, The Kansas City Star and The Sacramento Bee. With a strategy that led to deep layoffs at The Denver Post and other publications, it has made money in an ailing business while angering journalists and press advocates who accuse the firm of diminishing local news publications and doing a disservice to the communities they cover. And given the strains in the print-media business, the strong price of the debt is difficult to explain, traders say. Hedge funds and private equity companies have become a force in the news industry. That's why all these financial players Chatham Asset Management here, Alden Global Capital, Fortress Investment Group, and Apollo Global Management elsewhere find newspapers such a hospitable environment. Now he was working on behalf of Chatham Asset Management, a $4.3 billion hedge fund that owns the National Enquirer. Chatham Asset Management, LLC Anthony Melchiorre Managing Member - Form Hedge Fund Chatham, Founder Melchiorre Pay $19M in SEC Case Over Bond (One of the people whom Chatham installed on the Postmedia board was Daniel Rotstein, a consultant for American Media.). The SECs order also finds that Chatham and Melchiorre calculated the net asset values, or NAVs, of their client funds holdings using pricing data that was based, in part, on the trading prices of the securities. Chatham and the Enquirers publisher, David Pecker, had turned to Trumps fixer as a mediator. Grimstad claimed Chatham artificially drove down the price of the bonds by almost 30 percent in a single trade, effectively blocking a debt-restructuring effort so it could capture control of the company. Get access to the news, research and analysis of events affecting the retirement and institutional money management businesses from a worldwide network of reporters and editors. After stints at Donaldson, Lufkin & Jenrette and Goldman Sachs Group Inc., Melchiorre landed at Morgan Stanley in 1998 where he rose to head the junk-bond trading group. Chatham would conduct required due diligence and documentation and is prepared to devote considerable resources to completing this transaction, Melchiorre stated. Chrome Extension. Grimstad claimed in filings that Chatham had manipulated iPayment bonds to seize control of the company. Chathams tabloid publisher possesses a treasure trove of Trumps secrets, his former fixer Cohen told Congress last month. Something other than fundamentals are playing a huge factor in those bonds., In response to questions about the prices, Melchiorre sent a statement through a representative: We have tremendous conviction in our fundamental thesis on late stage media consolidation in North America and competitors are free to express opposing views.. Turnover is calculated by taking the # of new holdings (initial purchases) + the # of positions sold out of (not just reduced) divided by the total # of holdings for the quarter. Named after the leafy suburb where its based, Chatham has posted average annual returns of about 10 percent, trouncing many of its competitors. CHATHAM ASSET HIGH YIELD MASTER FUND, LTD. CHATHAM ASSET PRIVATE DEBT AND STRATEGIC CAPITAL OFFSHORE FUND II, LP, CHATHAM ASSET PRIVATE DEBT AND STRATEGIC CAPITAL FUND II, LP. If the business is not profitable, theyll do what they need to to right-size it., He added: If they look at the assets they are buying, part of their core purpose is to serve their community. The SECs order finds that, from 2016 through 2018, one Chatham-advised client sold certain American Media, Inc. (AMI) bonds while a different Chatham-advised client purchased the same bonds through various broker-dealers. Grimstad knows what its like to be under a tabloid-like glare. Tenth Floor Any statement or implication otherwise is false. Chatham hasnt denied Cohens participation in the meeting. Chatham investment firm moves to acquire Vericast for $2.85B The ugly litigation with the tech executive was resolved with a less-than-remorseful apology and a multimillion-dollar payday for Grimstad. Many hedge funds look to acquire companies that, while they may be failing, still generate a lot of cash. The order further finds that these trades were executed at prices Chatham and Melchiorre proposed and had the effect of increasing the price of the AMI bonds at a significantly higher rate than the prices of similar securities. Thats just not how bond math works, said Michael Terwilliger, a portfolio manager at Resource Credit Income Fund. Chatham already owns about half of the outstanding indebtedness of the marketing company, explaining that the purchase price is the value of outstanding indebtedness. What a perfect synecdoche. Its bonds rarely change hands. I was there. Long-term clients include the state pension fund of Chathams home state, New Jersey. ", A representative for Chatham said in an email that "Chatham sought, received and followed advice from an independent compliance consultant about the manner of executing the trading in question. They also agreed to pay civil penalties of $4,400,000 and $600,000, respectively. Postmedia is under investigation by Canadian regulators over a deal with a rival publisher, Torstar, the owner of The Toronto Star, that resulted in the closing of 36 newspapers and the loss of nearly 300 jobs. Altogether, the company has cut over 1,600 employees since 2016, or 38 percent of its staff, based on company filings. Postmedia, where Pecker sat on the board until last August, has posted annual losses for most of the past decade. Cohens involvement was detailed by people with knowledge of the talks. The Securities and Exchange Commission has stepped up examinations of various bond funds lately, inquiring about their relationships with brokers and how they value debt. A spokeswoman for Cohen declined to comment, and a spokesman for American Media and Pecker didnt respond to requests for comment. Activist Investor Chatham Asset Management - CB Insights Even before the pandemic, Postmedia saw a falloff in advertising, once the lifeblood of newspapers. Soon after, he crossed the Hudson River to set up his own hedge fund in Chatham, N.J. Mr. Melchiorre manages over $4 billion in assets for clients through various funds, including some listed under a Cayman Islands address, where more favorable tax rates apply. The company regrets any distress that may have been caused to the Grimstads by the public filing of the litigation against them, Chatham-controlled iPayment said at the time. Sad. Here are some repayment options, Streaming giants required to contribute to Canadian content as Bill C-11 becomes law, How becoming common-law or getting hitched changes tax-filing season, {{data.symbol | reutersRICLabelFormat:group.RICS}}, {{ stock | formatPrefix }}{{ stock.netChng | formatNetChange }}, Katherine Burton, Sridhar Natarajan and Shahien Nasiripour. Chathams tabloid publisher possesses a treasure trove of Trumps secrets, his former fixer Cohen told Congress last month. Journalists employed by McClatchy, as well as the mayors in Lexington, Ky.; Sacramento; and Miami three cities served by McClatchy papers pushed for local, civic-minded ownership of the chain. Its a huge problem, and its getting to the point where its unacceptable.. House in Cabris, Provence-Alpes-Cte d'Azur, France. CHATHAM ASSET HIGH YIELD OFFSHORE FUND, LTD. CHATHAM ASSET PARTNERS HIGH YIELD FUND, L.P. Chatham has never had any relationship with, spoken to or compensated Michael Cohen, a representative for the firm said in response to queries from Bloomberg. The SEC has increased its focus on the valuation of securities across the market, said Jacob Frenkel, a lawyer at Dickinson Wright. McClatchy, the publisher of The Miami Herald, The Kansas City Star, The Charlotte Observer and its flagship publication, The Sacramento Bee, filed for Chapter 11 bankruptcy protection in February. Hedge funds are certainly profit-oriented, Mr. Longo said. The firms assets have doubled in the past three years. As a subscriber, you have 10 gift articles to give each month. The matter has been resolved and we are focused on generating returns for our investors.". Chatham is led by Anthony Melchiorre, a Chicago-area native who has earned a reputation on Wall Street as a tough negotiator. Recent cases brought by the regulator show its trying to ensure that investors have a full and fair understanding of how instruments in the market are being priced.. John Longo, a professor at Rutgers Business School, said such ownership did not necessarily mean a disregard for journalism. Products. Despite the macroeconomic warnings of a recession and job[], A Cherry Hill-based financial institution is back on top of Small Business Administration lenders in New Jerse[]. American Media now owes debtholders in excess of $1 billion, more than the book value of its assets. The hedge fund also has officials who serve as directors at AMI. . The state has said its exploring its options in light of Bezoss claim that American Media tried to blackmail him. In all, the two companies closed 36 of the 41 newspapers that were part of the unusual deal, resulting in 291 job losses. Last year, barely three months before Christie left office, his administrationsteeredanother $200 million to another Chatham vehicle. They make money for their clients.. Blue Sky Digital Outdoor Advertising Fund Fund Data, Sarasin Ie Global Equity Opportunities (Usd) Fund Data, Themelios Ventures Ii-A, L.P. Fund Data. The guy who will be drawing the blood, Anthony Melchiorre, apparently is a piece of work. Apr 3, 2023. Thanks, Tracy. I love your lead sentence, Fitz. Chatham Asset Management Sends Letter to R.R. Donnelley Board of Grimstad claimed in filings that Chatham had manipulated iPayment bonds to seize control of the company. A similar story has unfolded at newspaper publisher McClatchy, which has posted annual losses since 2015. We give you the access and tools to invest like a Wall Street money manager at a Main Street price. This much is sure: Chatham founder Melchiorre, 51, has a formidable reputation. In the same period, it spent nearly $127 million on debt payments. A Chicago-area kid who studied economics at Northwestern and got an MBA from the University of Chicago, his high-toned education didnt reduce the intensity of the former high-school football star. Quantifying sustainability the numbers, the data, and the people, Valuing Banks: Hidden Losses Versus Assets, Research for Institutional Money Management, Global Fixed Income: Volatility and Uncertainty Here to Stay, For institutional investors, ETFs can make meeting liquidity needs easier, Gold: the most effective commodity investment, 2021 Investment Outlook | Investing Beyond the Pandemic: A Reset for Portfolios, Ten ways retirement plan professionals add value to plan sponsors. They are scrappy, and they arent afraid of litigation to defend their investments, said Leon Cooperman, a recently retired hedge fund mogul who is a Chatham investor and part owner of American Media, the Enquirers publisher. Since Chatham took a majority stake in Postmedia, the company has cut its work force, shuttered papers across Canada, reduced salaries and benefits, and centralized editorial operations in a way that has made parts of its 106 newspapers into clones of one another. Chatham and the Enquirers publisher, David Pecker, had turned to Trumps fixer as a mediator. The SEC order found that these trades were executed at prices Chatham and Mr. Melchiorre proposed and had the effect of increasing the price of the AMI bonds at a significantly higher rate than the prices of similar securities. All Rights Reserved. Your California Privacy Rights/Privacy Policy. Chatham is not a newcomer to the news industry. SEC employees have questioned the firm on subjects including its pricing of bonds and conversations with various bond dealers. Anthony Ralph Melchiorre is an employee with Chatham Asset Management, LLC, a hedge fund company. Chatham investment firm moves to acquire Vericast for $2.85B. The private equity fund Fortress Investment Group controls the largest American newspaper chain, Gannett, which publishes USA Today, The Arizona Republic and 250 other dailies. Best known for its luridEnquirerheadlines (Aliens Are Living in My Toilet), AMI has been beset by a difficult environment for print publications. 5.Anthony Melchiorre, age 55, resides in Short Hills, New Jersey. This much is sure: Chatham founder Melchiorre, 51, has a formidable reputation. As a subscriber, you have 10 gift articles to give each month. That made it one of the best performing bonds in the world at the time. Within weeks, the notes were back at about par. A Chicago-area kid who studied economics at Northwestern and got an MBA from the University of Chicago, his high-toned education didn't reduce the intensity of the former high-school football star. It is mandatory to procure user consent prior to running these cookies on your website. Shortly after, Postmedia announced it would shut down all 24 newsrooms it had acquired, except for one, according to public filings. Chatham took on more American Media debt in recent months, getting Seaport to arrange a deal after Credit Suisse Group AG got cold feet amid public furor over the publishers antics in the 2016 presidential election. The hedge fund has become a major player in the news industry. National Enquirer owner during Trump payoffs charged with bond price The family-owned publisher of The Sacramento Bee and The Miami Herald announced the winner of its bankruptcy sale: Chatham Asset Management, the owner of The National Enquirer. Its bonds staged an improbable rally last year, charting a steady climb over 50% from 80 to 125 cents on the dollar. After working at investment banking firms Donaldson, Lufkin & Jenrette and Goldman Sachs, he went to Morgan Stanley in 1998, where he worked his way up to heading the firms junk-bond trading group. There are people who dont like him. During the coronavirus shutdown, Postmedia has made further cuts, laying off 80 employees and closing down 15 community papers. Before long, the Chatham camp would make good on its threat against that executive, unleashing a tale of sex and money worthy of the Enquirer. I have no regrets whatsoever about going with the monthly pension. Use of this website is subject to its Terms of Use | Privacy Policy | Your California Privacy Rights/Privacy Policy | Do Not Sell My Info/Cookie Policy. While he was wrangling with Chatham, news trucks were parked outside his house for days. This post has been updated with additional information from Calpers and the Ohio pension system. Then theres American Media. I wouldnt even begin to consider owning it at that level. Washington D.C., April 3, 2023 . In addition to being a principal owner of American Media Inc., the parent company of The Enquirer and other tabloids, it is a major investor in Postmedia, the publisher of Canadian newspapers including The National Post, The Montreal Gazette and The Ottawa Citizen. The number of journalists at its Vancouver papers the Vancouver Sun and The Province has been cut in half, according to Mr. Gibson. There, they tried to prevent him from pursuing a lawsuit accusing Chatham-backed iPayment and its board member Pecker of ousting him unfairly. SEC employees have questioned the firm on subjects including its pricing of bonds and conversations with various bond dealers. SEC form, multiple filers or classes of filers, and much more.***. What it does, apparently, is make its clients lots of money. In the interest letter to Vericast CEO John OMalley, Chantham Managing Member Anthony Melchiorre detailed CAMs longstanding investments in the company, including: We are prepared to support any financing requirements for this transaction by subordinating some of our debt interests into subordinated notes or equity, thereby reducing the companys net leverage by up to 2.0x, Melchiorre wrote. Chatham Asset Management, a New Jersey-based hedge fund, and its founder, Anthony Melchiorre, have agreed to pay a $19.3 million fine for tampering with the sale process for bonds of. It even offered lower yields than some blue-chip companies. Apr 3, 2023 11:40 AM PDT. In 2018, American Media announced the sale of the tabloid to the family that founded the Hudson News chain of newspaper and magazine shops. Finra, the brokerage industrys main watchdog, subsequently concluded its review, and its unclear what if anything resulted from it. The companys main office is on the second floor of a nondescript, two-story office building in Chatham, NJ, 28 miles west of the Manhattan skyscrapers. Chatham haswarnedthat its investments are risky and that a client may lose its entire investment in a troubled company. In early 2018, private equity giant BlackstoneremovedChatham from one of its major investment funds. 2023 BridgeTower Media. State pension funds invested millions in hedge fund that controls Something other than fundamentals are playing a huge factor in those bonds., In response to questions about the prices, Melchiorre sent a statement through a representative: We have tremendous conviction in our fundamental thesis on late stage media consolidation in North America and competitors are free to express opposing views.. Seaport Global defended its practices. Over time, Chatham has increased its investment (and sunk its teeth?) How do I update this listing? Get our free e-alerts & breaking news notifications! Along with the public pension funds, four other private pension fundsincluding those for Ford and Toyota Motors employeeshave had investments with Chatham, according to financial research firm Preqin. At Hedge Fund That Owns Trump Secrets, Clashes and Odd Bond Math The deal was partly financed by one private equity fund, Apollo Global Management, and Gannett is now controlled by another private equity fund, Fortress Investment Group, which is owned by the Japanese conglomerate SoftBank. Its bonds rarely change hands. The Christie administrations shift of $500 million into Chatham makes New Jersey retirees a substantial investor in the hedge fund, which manages $3.2 billion in assets, according tostate records. After several stints at elite firms like Goldman Sachs and Morgan. Melchiorre, 55, owned roughly 70 percent of the company during the relevant period and is the managing member of the general partner entity for each of the funds. House in Cabris, Provence-Alpes-Cte d'Azur, France. Since 2017, Postmedia has paid out over $6.2 million Canadian, or about $4.5 million, in bonuses to its five top executives, including Mr. MacLeod, the chief executive, and Paul Godfrey, the executive chairman of the board. Subscribe to Well Adjusted, our newsletter full of simple strategies to work smarter and live better, from the Fortune Well team. Sanjay Wadhwa, deputy director of the SEC's enforcement division, said in a statement that Chatham's trading in AMI bonds had the effect of "increasing the prices of those generally illiquid securities in a way that was disconnected from economic reality. Non-U.S. residents banned from purchasing tickets to Maple Leafs road games in Florida, Nearly one-third of Canadians worried about their vehicle getting stolen amid spike in thefts, Owe money to the CRA this tax season? Yet its recent focus on tough-to-trade investments has given some clients pause, and initially drove off investors such as the Ohio state pension fund. Yet its recent focus on tough-to-trade investments has given some clients pause, and initially drove off investors such as the Ohio state pension fund. That kind of showing helped the firm attract $300 million from investors this quarter, a person familiar with the matter said. The SEC would like to thank the Financial Industry Regulatory Authority for its assistance with this matter. Those zero-coupon bonds maturing in 2024 offered lower yields than five-year U.S. government bonds over several months last year. At least five other traders whove looked at the bonds say their prices seem too good to be true. Chatham Asset Management provides investment advisory services. The state has said its exploring its options in light of Bezoss claim that American Media tried to blackmail him. Enjoy your pension, which is fleeting. All text and design is copyright 2020 WhaleWisdom.com. Im always for local ownership whenever possible, and local support, said Sree Sreenivasan, professor of digital innovation at Stony Brook Universitys School of Journalism, sounding a note of caution regarding finance-industry ownership. His behavior infuriated some senior executives, according to former colleagues. In 2016, the Financial Industry Regulatory Authority opened a review of the brokerage Seaport Global Securities that, while focusing on that firm, included an examination of its relationship with Chatham, people familiar with the matter said. Chatham Asset Management's Role in Tabloid-Worthy Stories - Fortune The guy who will be drawing the blood, Anthony Melchiorre, apparently is a piece of work. You know a little about ledes (leads) yourself. As part of it, Postmedia traded 17 of its papers to Torstar in exchange for 24 Torstar papers.
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