more asenio games and maneuvers, did he get rid of this guy to target heb or did he find heb after targeting this guy and examining his funds holdings.
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Talk : Biotechnology : HEB, Hemispherx Biopharma (AMEX)NEW
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To: Marty (378 )
From: Mad2 Saturday, Sep 26 1998 10:07PM ET
Reply # of 494
Marty, follows is a article from Barron's in July that I recalled on the fund manager from Dreyfus Premeir and agressive growth fund. Read it, after which I have posted the institutional holdings of HEB:
July 13, 1998
Fallout From L'Affaire Dreyfus
Allegations against Schonberg may lead to more regulation of fund managers
By SANDRA WARD
Mutual Choice | Fund Scope | Cash Track
Tracking The Giants | Scoreboard
Until now, the Securities and Exchange Commission has left it largely to individual mutual-fund companies to police the personal trading habits of their portfolio managers. That may well change in light of the latest mutual-fund scandal, which has been variously dubbed L'Affaire Dreyfus and L'Affaire Schonberg.
On Wednesday, Mellon Bank's Dreyfus unit placed portfolio manager Michael Schonberg on paid "administrative leave" amid a widening probe by federal and state authorities into his personal trading practices. The move comes months after Dreyfus effectively sidelined Schonberg by bringing in Paul LaRocco of its Founders Asset Management unit to oversee Schonberg's funds: the $57.9 million Dreyfus Aggressive Growth and $216 million Dreyfus Premier Aggressive Growth. LaRocco came on the scene following allegations that Schonberg bought shares of a stock for the two funds while he was holding the same stock in his personal account. The buying would have the effect of driving up the value of Schonberg's personal holdings.
There's no law against a portfolio manager owning the same securities in a personal account as are in the funds he manages. But it is a breach of fiduciary duty to try to manipulate share prices for personal gain. Some fund companies, anxious to avoid the kind of conflict-of-interest allegations that have arisen in the Schonberg case, have strict guidelines on how their managers may and may not trade stocks.
Schonberg loaded up his funds with small, illiquid, loss-ridden "development-stage" companies, allegedly to squeeze short positions and drive up the price of those stocks, and at the same time drive up the value of his personal account, which held the same stocks. Or at least that what's been alleged by Manuel Asensio, an active and vocal New York short- seller. The stock that is at the heart of the complaints is Chromatics Color Sciences, a tiny medical-products company that sells a light sensor for monitoring the skin color of infants with jaundice.
Dreyfus has maintained from the start that it believes Schonberg has followed its rules for personal trading. Nonetheless, as the allegations mounted and inquiries heightened, Dreyfus was forced to treat the concerns more seriously.
In a statement issued last week, the fund company said, "Given the thoroughness required by Dreyfus with respect to its previously reported inquiry and the interests of all concerned, this initiative is designed to facilitate the process and to assure that Schonberg's time will continue to be devoted exclusively to this inquiry."
Many of the stocks that Schonberg bought have ties to Janssen-Meyers, a Manhattan-based investment partnership run by Peter S. Janssen and Bruce Meyers, former brokers at D.H. Blair, a firm known for its aggressive sales tactics. In many instances, the Dreyfus funds managed by Schonberg ranked among the largest holders of these companies. This amounted to a series of risky bets on unproven companies.
Schonberg's portfolios at Dreyfus were also stuffed with stocks underwritten by Hampshire Securities, which specialized in bringing "emerging" companies public. Among the Hampshire offerings in the portfolios are: Celerity Systems, which now trades at 1 1/4 after going public last November at 7 1/2 and trading as high as 8; and A.C.S. Electronics, whose shares change hands at 4 3/8 after coming public at 5 and trading as high as 8 1/8 . Hampshire Securities was bought by Gruntal & Co. last November.
Shareholders in the Dreyfus funds are understandably angry, and some filed a class-action lawsuit Thursday.
In the irony of ironies, Michael Schonberg joined Dreyfus amid much fanfare in 1995 after stints as chief investment officer of UBS Asset Management and at Leon Cooperman's Omega Partners hedge fund. His go-go style was supposed to turn the stodgy funds around and supply Dreyfus with a much-needed superstar. But momentum investing fell out of favor, and his stock-picking has come up way short. Dreyfus Aggressive Growth was the worst performer among capital appreciation funds in the second quarter, falling 18%. In 1997, the fund fell by more than 30%. Dreyfus Premier dropped by nearly 15% in the second quarter and by 27% last year.
A Prudential Securities client stepped up Friday and forked over $105 million for 910,000 shares of SPDRS, the exchange-traded fund that mimics the S&P 500, at a price of 115 7/16. The SPDRS closed the day at 116 15/32. But it's not as bullish a move as it might seem. A Prudential insider says the client took profits in another derivative instrument, and locked them in by buying SPDRS and SPX puts, allowing for some upside potential but limiting downside risk.
Overall, heavy selling marked most of the action in the SPDR issue this week.
The ever-patient Sheldon Jacobs, publisher of the No-Load Fund Investor, is abandoning the sinking ship of emerging markets. Not that he was fully on board. He had reduced his exposure to emerging markets to 5% and as recently as late May was hanging tight.
Yet, in his most recent newsletter, which arrived hot-off-the-presses Friday, Jacobs reveals that he's dropped the asset class entirely and switched allocations to broader-based international funds. For those who've stomached the steep declines so far, he recommends dumping Montgomery Emerging Markets fund for the Montgomery International Growth fund, noting it's advanced 26.3% year-to-date on the strength of its mix: 63% exposure to Europe, 14% Japan, 8% Latin America and 8% in Southeast Asia, including Australia and New Zealand.
Jacobs also advises buying into American Century/20th Century International Discovery fund, calling it his "best non-100% European recommendation at this time." This fund has 72% of its portfolio in Europe and 9.4% in Canada. It features a small-cap bent and a minimum entry level of $10,000. So far this year it's up 29.4%.
Robert Markman long ago lost a $25 bet to Vanguard's Jack Bogle that an actively managed fund could beat a passive index fund. But only now is Markman changing his stripes.
Markman, who runs $430 million in private accounts and his Multitrust Fund of Funds from his home base in Minneapolis, is abandoning a long-held belief that diversified asset allocation is the best way to managing money successfully. Now he is using a narrowly focused portfolio of large-cap growth funds with a heavy component of indexing.
"This was a real hard decision," says Markman. "At some point, you just have to swallow your ego and what you think you know and take a look at what the evidence is showing you. Diversified asset allocation hasn't cut it and won't cut it. Markman is throwing in the towel. If you don't have the smarts, indexing is the way to go."
In the past six months, he's pared back the offerings in his private accounts from about 12 funds to just five: Marsico Focus; White Oak Growth; Papp America Abroad, Rydex Nova and Rydex OTC. As for his Multitrust funds, 70% of the assets in his Multitrust Aggressive portfolio are in Rydex Nova, Rydex OTC, Mutual Series Financial, Stein Roe Growth, Oakmark Small Cap and White Oak Growth. His Moderate portfolio is also heavily concentrated in Marsico Focus, Janus 20, Rydex Nova, Northeast Investors Trust and Papp America Abroad.
While it appears he's become a closet indexer, he maintains his new approach is designed simply to be more "market-sensitive" and, at the same time, "tax-sensitive." The outperformance of large-caps stocks is becoming too dominant a feature of the market too ignore.
Six months ago, he sold off his technology fund offerings from Pilgrim Baxter and T. Rowe Price, preferring to get his technology exposure from the Rydex OTC fund. And he's in the process of getting out of international funds, value funds and small-cap funds, mainly in his private accounts, to concentrate on more focused large-cap fund offerings.
Certainly, the performance of his funds has shown some improvement with his new strategy, after delivering mostly mediocre results for years.
One note of caution: The last time Markman tried market-timing was the spring of 1996, when he turned bearish. Unfortunately for him, the market had one of its better years.
HEMISPHERX BIOPHARMA INC(AMEX:HEB)
Top Ten Mutual Funds Shareholders
(* denotes new position) Rank Fund Name Shares Held Previous Net Chng. % Chng. % Owned Last Report
1 Dreyfus Premier Aggressive Growth 1,175,000 600,000 +575,000 +95.8% 5.4% 03/31/98
2 Dreyfus Aggressive Growth * 525,000 0 +525,000 -- 2.4% 02/28/98
Top Ten Totals: 1,700,000 600,000 +1,100,000 +183.3% 7.8%
HEMISPHERX BIOPHARMA INC(AMEX:HEB)
11 Institutions hold 9.06% of the outstanding shares as of June 30,1998.
Of these, 2 established new positions while 3 liquidated their holdings.
Overall, Institutions decreased their holdings by <29.18>% for the period.
Top Ten Institutional Shareholders
(* denotes new position) Rank Institution Shares Held Previous Net Chng. % Chng. % Owned Last Report
1 Kennedy Capital Management, Inc. 1,121,420 697,720 +423,700 +60.7% 5.2% 06/30/98
2 The Dreyfus Corporation 472,000 1,700,000 -1,228,000 -72.2% 2.2% 06/30/98
3 Gardner Lewis Asset Management, Inc. 137,900 153,800 -15,900 -10.3% 0.6% 06/30/98
4 Goldman Sachs Asset Management (US) * 100,000 0 +100,000 -- 0.5% 03/31/97
5 Barclays Global Investors, N.A. 45,987 31,787 +14,200 +44.7% 0.2% 06/30/98
6 Bear, Stearns Asset Management Inc. 41,800 49,300 -7,500 -15.2% 0.2% 06/30/98
7 Old Kent Bank (MI) (Invt. Mgmt.) * 25,000 0 +25,000 -- 0.1% 06/30/98
8 Crestar Asset Management Company 11,244 11,244 -- -- 0.1% 06/30/98
9 TradeStreet Investment Associates 10,000 10,000 -- -- 0.1% 06/30/98
10 CIBC Oppenheimer Corp. 2,000 2,000 -- -- 0.0% 06/30/98
Top Ten Totals: 1,967,351 2,655,851 -688,500 -25.9% 9.1%
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