Each business day HedgeCo.Net keeps you informed with the top hedge fund industry news, opinion and insight from around the globe. From the latest hedge fund launches, to the impact of regulation, competition, and investor activism - we track the topics and people that make a difference to you.
PARIS: Gilles Glicenstein, chief executive of BNP Paribas Asset Management, said that hedge funds are forcing him to offer more specialist investments and consider acquisitions in emerging markets and the United States.
Glicenstein, who oversees €326 billion, or $428 billion, of assets, also wants to hire more managers who can emulate the mathematical models for investing used by hedge funds, which have taken in $1.4 trillion of client assets globally.
“What we want to do is transform our asset management operation into a much more technical, capital market type business,” Glicenstein said during a recent interview. The BNP fund unit is one of the biggest investment managers in France.
Traditional mutual fund and pension managers face intensifying pressure from hedge funds that are luring clients by aiming to make money even when markets fall.
Companies like F&C Asset Management and Schroders have suffered outflows, while Man Group, the world’s largest publicly traded hedge fund manager, said last month that new client money pushed assets above $60 billion for the first time.
Canadian hedge funds are experiencing unprecedented growth in several niche areas, reports blackenterprise.com, and foreign based funds are also becoming more active in Canadian markets.
While Canada’s hedge fund sector has been overshadowed by its American peers, the Canadian market has grown significantly in the past four years.
The consensus estimate for Canadian hedge fund assets is about $30bn, blackenterprise.com said. Toronto-based RBC Capital Markets estimates there are around 250 single manager funds, most of which are small, with only about 20 funds managing more than $100m. Funds of funds and structured notes are thought to account for the majority of the allocations.
“The Canadian market has been relatively attractive to smaller funds,†Colin Bugler, RBC’s head of equity finance, told blackenterprise.com. “It is hard to run big convertible arbitrage and risk arbitrage funds with multi-billion dollar mandates in Canada. We tend to see a lot of $50-100m funds. We also see buyside firms taking on the hedge fund sector with long/short strategies and more market neutral strategies.â€Â
A Securities and Exchange Commission proposal to sharply limit the number of Americans who can invest in hedge funds has triggered a public backlash  and the latest controversy over the boomingprivate investment pools.
The agency has received hundreds of e-mails and letters since December, when it proposed raising the financial bar for hedge fund eligibility for the first time since 1982.
The vast majority of those writing have advised the SEC to back off. Some of the comments have an angry tone, unusual for matters of securities regulation.
“This has got to be unconstitutional if not communistic,” wrote M. Joan Conrad, a Naples, Fla., resident who said she has had money in hedge funds for the last decade.
AMSTERDAM/LONDON- British hedge fund TCI believes Dutch bank ABN AMRO is significantly undervalued and should be broken up.
ABN should explore all options to merge, sell or spin off some of its assets or potentially the whole business, TCI Fund Management said in the letter to ABN.
“We believe that this strategy would not only create significant shareholder value but also would best serve all the stakeholders who otherwise would suffer over the long term from the structurally declining competitive position of ABN AMRO,” the hedge fund said in a letter obtained by Reuters.
Shares in ABN AMRO rose as much as 5.9 percent to a 6-year high of 27.45 euros and were at 27.36 by 9:52 a.m. British time.
TCI, which said it owns more than 1 percent of ABN AMRO, asked shareholders to vote on its proposals at a shareholder meeting scheduled for April 26.
ABN, the Netherlands biggest bank, said it had not yet received TCI’s letter but was aware of its contents.
Hedgeco.net-New York, February 20, 2007– Investor Analytics LLC, a leading risk analysis and risk management specialist to the hedge fund industry, today announced significant additions to its suite of risk services that reflect the company’s strong connections to innovative research. The new offering comes on the heels of an expansion of Investor Analytics’ research team, enabling faster deployment of new and future advances in risk management and portfolio management.
“Investor Analytics is committed to staying at the forefront of the field,†said Damian Handzy, Chairman and CEO. “We accomplish this through our own original research, our relationships with academic researchers, and our ongoing review of published research results. Our financial engineers are uniquely qualified to understand, vet and implement those ideas that are both useful and practical,†said Mr. Handzy. “Risk management tools will continue to advance in the coming years, and Investor Analytics will ensure that they meet the growing needs of institutional investors like pension funds and endowments,†he added.
The risk measures available in Investor Analytics’ services now include Expected Shortfall, which goes beyond the industry standard Value-at-Risk (VaR) measure and predicts how much the assets might actually lose by examining worst-case losses in greater detail. “In other words, while VaR helps determine a portfolio’s risk, Expected Shortfall goes further to assess what the expected loss may actually be – a far more meaningful piece of information for traders and portfolio managers,†said Mr. Handzy.
The emergence of risk management as a rigorous field of academic study at major universities has led to several breakthroughs in ways to determine market risk and expected losses, with many practical applications for hedge funds. With its growing research arm, Investor Analytics is well positioned to study and apply these advances and, by doing so, to raise the bar in risk services for the alternative investment industry.
About Investor Analytics LLC
Investor Analytics LLC provides portfolio and risk management services to leading hedge funds and funds of funds. The firm applies proprietary methodologies to analyze complex investment portfolios and provides its clients with a suite of customizable risk and transparency analyses. Headquartered in New York, the firm also has an office in Granville, Ohio.
LAST WEEK’S FIASCO at JetBlue left its customers enraged and its CEO “mortified.” But beyond the outrage of passengers who sat nine hours on the tarmac and went nowhere while their baggage took off for parts unknown, there are lessons for other enterprises, not the least of which, hedge funds.
While nearly a quarter of the low-cost carrier’s flights were canceled over the Presidents’ Day holiday weekend, I’m writing this at 30,000 feet on a JetBlue flight that took off Monday morning from JFK airport, on time and uneventfully. The chaos in the terminal was gone and, except for the presence of a TV news truck, one would never know that this was the scene of a full-scale meltdown just a few days earlier.
David G. Neeleman , the founder and chief executive of JetBlue (ticker: JBLU), admitted in an interview with the New York Times the low-cost carrier’s systems were inadequate to cope with the perfect storm of conditions that led to the widely reported breakdown in its operations. An ice storm just before a heavy vacation time for President’s week combined with management mistakes to expose the shortcomings of JetBlue’s information infrastructures.
LONDON – The Gartmore European investment trust, run by star manager Roger Guy, has told shareholders it faces a threat from activist hedge fund Carrousel Capital, which it says wants to restructure the fund.
The 396 million pound trust said in a circular that the ambitions of Carrousel, which owns 28.03 percent of the trust and is its largest shareholder, ‘remain unclear’ but that it had proposed putting three directors onto the trust’s five-strong board.
The trust also said Carrousel had, in informal talks, suggested restructuring it into an umbrella fund which could offer a range of investment mandates and which could take over or merge with other funds.
However, Carrousel has also recently told Gartmore European (GEO.L: Quote, Profile , Research) it plans to sell its shares by the end of the year, according to the circular.
“We have had a couple of meetings (with Carrousel), but we’ve been unable to get a clear idea of what’s being proposed,” Chairman Rodney Dennis said on Thursday.
WHEN hedge funds buy shares of a company and start agitating for changes in the way it is being managed, they may seem to be gunning for a quick killing at the expense of longer-term shareholders.
But, in fact, the evidence shows that for the most part, buy-and-hold investors ought to cheer when hedge funds jump aggressively into a stock, according to a new study. Titled “Hedge Fund Activism, Corporate Governance and Firm Performance,†it was written by Alon Brav, a finance professor at Duke; Wei Jiang, an associate professor of finance and economics at Columbia; Frank Partnoy, a law professor at the University of San Diego; and Randall S. Thomas, a professor of law and business at Vanderbilt. The study has been circulating in academic circles since the fall.
The authors examined nearly 900 instances from 2001 through 2005 of what they call hedge fund activism. The professors compiled their database in large part from the reports that hedge funds must file with the Securities and Exchange Commission whenever they acquire at least 5 percent of a company’s outstanding shares and intend to get involved in running the company.
Charlie McCreevy, the European Union internal market commissioner, on Monday rode to the defence of hedge funds and private equity groups, dismissing recent attacks on the sectors and insisting therewas no reason to tighten the rules governing their activities.
“Hedge funds and private equity are good for the market. They have given greater liquidity, they have added shareholder value and they have helped the rationalisation and innovation of companies,” the commissioner told the Financial Times in an interview.
LONDON: Warren Irwin is sticking with mining companies, even though his hedge fund, the best performer among its peers in 2006, is down 3.7 percent this year.
Gold mine investments brought Rosseau Limited Partnership a 122 percent return last year, the most among hedge funds that bet on mergers, liquedations and spinoffs, according to the most recent rankings from Hedge Fund Research. Irwin topped 240 other managers in the group, which had average returns of 15 percent in 2006.
Irwin, who is based in Toronto, buys stakes in mines before they have proven their reserves, in the hope that they will be sold. Last year, for example, he quadrupled his money when he sold his holdings in Virginia Gold Mines, a Quebec city exploration company, to GoldCorp, the second-largest Canadian producer after Barrick Gold, the world’s largest.
“It’s hard to turn our backs on the resources sector,” said Irwin, who said he almost died in a helicopter crash while scouting for gold in Ecuador last year.
“It’s extremely hard to find a drill rig in the world today because they’re all working,” he said. The odds against finding a new mineral discovery will remain substantial, he added.
Todays Zaman – US hedge funds have increased their political donations by more than two thirds in the past four years and the figure is set to rise considerably in the run-up to the 2008 presidential election.
At a time when the industry is striving to deflect intensifying regulatory scrutiny, the top 50 hedge funds contributed $ 6 million to candidates for the House of Representatives and Senate, and their political parties, in 2005 and 2006, according to the Centre for Responsive Politics in Washington.
Steven Cohen, the head of SAC Capital, Wesley Edens of Fortress Investments, and Kenneth Griffin of Citadel were among the biggest individual donors over those two years. They gave $ 105,450, $42,300 and $68,900 respectively, while total staff contributions from their funds came in at $192,200, $169,100 and $217,433.
James Lacier, a senior Washington research analyst at Prudential Securities, said: “Hedge funds are becoming more active, in large part because there are regulatory issues hanging over their heads. Also, they are looking for useful political information which can help to increase their returns as increasing competition makes it hard to sustain previous profit levels.”
Allentown Morning Call –When Goldman Sachs Group Inc. went public in May 1999, some on Wall Street figured it was a signal to bail out of brokerage stocks.
If Goldman was letting the public into its business after 130 years as a highly profitable  and secretive  private partnership, the insiders must have known that was as good as it would get.
Hardly. Goldman earned an astounding $9.5 billion last year, a 252 percent increase from its profit of $2.7 billion in 1999.
As for the stock, the $53-a-share price in the initial offering now looks like a giveaway. Goldman stock closed at $216.92 on Friday, up 309 percent from the offering price. The Standard & Poor’s 500 stock index is up all of 7.5 percent in the same period.
