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.
New York (HedgeCo.net) – Union Bancaire Privee, UBP SA, one of the leaders in Switzerland’s hedge fund industry, has signed a definitive agreement to acquire Nexar Capital Group, a global alternative investment manager.
The combined UBP-Nexar alternative investment group will have offices in Geneva, New York, London, Paris, Jersey, Tokyo and Hong Kong and form a new division reporting to UBP’s Chief Executive Officer Guy de Picciotto. The deal, the terms of which were not disclosed, is subject to the requisite regulatory approvals.
UBP launched its first fund of hedge funds in 1986. Over the years, it has built up a strong hedge fund advisory service and runs several pooled funds as well as mandates tailored to individual clients’ requirements. The Bank had CHF 72 billion ($77 billion) in assets under management as at 31 December 2011.
Nexar Capital Group had approximately $3 billion in assets under management as at 31 December 2011. Founded in 2009 by industry veterans Arie Assayag (Global CEO), Eric Attias (Global CIO) and Bernard Kalfon (Head of Volatility Strategies), Nexar specialises in creating forward-looking, actively managed investment solutions to meet clients’ objectives. The Nexar senior team has an average of more than 20 years of experience in portfolio management and proprietary trading and has worked together as a global team for more than 10 years.
New York HedgeCo.net) – On February 14, 2012, the Federal Communications Commission (FCC) moved to bar LightSquared’s planned national broadband network saying it would interfere with current GPS services.
“From day one, it has been my vision to build a wireless network that increases competition and connectivity that will lower prices for every American.” Philip Falcone, CEO of hedge fund Harbinger Capital said in a statement regarding the ruling, “I made this multi-billion dollar investment in LightSquared in reliance on FCC’s stated conditions for our receiving a license. Today’s Public Notice by the FCC not only disregards this decade old regulatory order but also reverses a policy adopted by Republican leadership in 2005. In doing so, it jeopardizes private enterprise, jobs and telecom investment in America’s future.”
Falcone continued: “What’s more, the FCC’s recent statement contradicts itself. On the one hand it has ordered LightSquared to build a $14 billion wireless system and on the other hand it has told the company that it cannot proceed. This was not a decision based on science or technology but was a politically motivated decision fueled by special interest groups in the GPS and telecom industry. “
“Nevertheless, there are solutions to this problem that can and will address the needs of the GPS community and allow all Americans to enjoy the benefits of new competition in the wireless industry, resulting in lower prices, and innovative service, if rational public policy prevails. ” Falcone concluded.
In 2011, LightSquared announced that it had signed a 15-year agreement with Sprint to build and operate its wireless network. LightSquared planned to help smaller, regional wireless operators compete and provide nationwide 4G service to rural and underserved areas. The hedge fund founder ruled out filing for bankruptcy.
Among the issues being raised is if political contributors and investors received favorable treatment by the Obama administration. Conservative media sources have reported that an Air Force General claimed in a closed congressional hearing that he had received political pressure to soften his testimony regarding the negative effects of LightSquared technology. However, the General’s spokesperson has denied there was any improper influence and said that the General’s testimony was reviewed appropriately by the Office of the Secretary of Defense and other executive agencies via the established OMB (Office of Management and Budget) process.
New York (HedgeCo.net) – Koch Industries is being sued in relation to the biggest Ponzi scheme in U.S. history. The hedge fund fraud that Bernie Madoff pulled off received money from a Koch feeder fund, according to Irving Picard, the Trustee for the liquidation of Bernard L. Madoff Investment Securities LLC.
The company run by billionaire brothers Charles and David Koch, is being sued for $21.5 million, according to the complaint filed Feb. 9 in U.S. Bankruptcy Court in Manhattan. Madoff is currently serving 150 years in federal prison.
“The Koch entity involved made an investment in an entirely separate fund,” Melissa Cohlmia, a spokeswoman for Koch Industries said in an e-mail, according to Bloomberg. “That Koch entity no longer exists and its investment was redeemed in 2005, long before anyone knew of Madoff’s fraud.”
The case is Picard v. Koch Industries Inc., 12-01047, U.S. Bankruptcy Court, NY.
New York (Hedge Co.net) – Hedge fund manager Douglas Whitman and his California-based firm have been charged by the SEC with illegally profiting from insider tips on Google and Polycom, making $980,000 in the process.
The SEC alleges in a complaint dated February 10, that Whitman and Whitman Capital obtained insider information on Google and Polycom from an individual investor named Roomy Khan. The two conducted their business on Skype to avoid detection, the SEC said. Whitman Capital hedge funds reaped approximately $980,000 in ill-gotten profits.
In addition to tipping Whitman, the SEC says that Khan also passed the material nonpublic information that she obtained concerning Polycom and Google to investment professionals at other hedge fund advisers, including Raj Rajaratnam of Galleon Management LP., and Jeffrey Yokuty and Robert Feinblatt of Trivium Capital Management LLC. Like Whitman and Whitman Capital, both Galleon and Trivium used this information to reap sizable profits for the hedge funds they managed.
The SEC seeks permanent injunctions against each of the defendants, enjoining them from engaging in the transactions, acts, practices, and courses of business alleged in the SEC complaint; disgorgement of ill-gotten gains or losses avoided from the unlawful insider trading activity, together with prejudgment interest and civil penalties.
New York (HedgeCo.net) – Hedge fund gian Man Group plc announced today that it has signed the United Nations-backed Principles for Responsible Investment (PRI).
“This step is a signal of Man’s continued commitment to responsible investing.” Peter Clarke, Chief Executive of Man, said. As a leading alternative asset manager, we hope that by signing up to the UN PRI we will encourage others in the hedge fund industry to follow our lead.”
The PRI is a framework designed to encourage sustainable investing by incorporating environmental, social and governance issues into investment decision-making and ownership practices. Globally, there are 988 signatories, with 126 of these in the UK. Man is the largest UK-based manager of alternative assets to become a signatory.
“Investing sustainably enhances long-term value and reduces risk which is clearly good for all concerned: investment managers, their clients, society and the environment.” Pierre Lagrange, Executive Committee member of Man and Senior Managing Director of GLG, said. “GLG’s efforts predate today’s formal partnership with UN PRI: addressing the UN General Assembly in 2008 on sustainable investing, implementing technology to enable portfolio managers to make more informed investment decisions using ESG and launching a specific Global Sustainability Equity Fund, aimed at reconciling sustainability and economic returns. We are pleased to be able to commit to widening these efforts by signing up to the PRI.”
Some PRI objective that Man has taken on:
• Investing in technology and training to enable investment managers to take ESG factors into account and encourage listed companies to improve on ESG criteria
• Running the GLG Global Sustainability Equity Fund and managing a climate change strategy on behalf of Virgin Money Unit Trust Managers, both UCITS long-only strategies
• Running an effective Corporate Responsibility programme, as judged by inclusion in the Dow Jones Sustainability Index
• By being a signatory to the Carbon Disclosure Project and a member of the FTSE4Good
• By support for independent academic teaching and research at the Oxford Man Institute 2
• By supporting charities and local communities through the Man Charitable Trust, as well as sponsorship of the Man Booker literary prizes
Principles for Responsible Investment
1. We will incorporate ESG issues into investment analysis and decision-making processes.
2. We will be active owners and incorporate ESG issues into our ownership policies and practices.
3. We will seek appropriate disclosure on ESG issues by the entities in which we invest.
4. We will promote acceptance and implementation of the Principles within the investment industry.
5. We will work together to enhance our effectiveness in implementing the Principles.
6. We will each report on our activities and progress towards implementing the Principles.
“Man’s support recognises our commitment to help advance the UN PRI agenda, and attests to the positive effects that normative, international frameworks like the PRI bring to the investment community.” Jason Mitchell, Portfolio Manager, GLG Global Sustainability Equity Fund said. “It also marks the next step in a process that began with our legacy in environmental funds, expanded into broader global sustainability themes and is driving our current work developing the application of sustainability across alternative strategies.”
New York (HedgeCo.net) – Cayman Island based hedge fund Trinity Fund Administration (Cayman) Ltd. is expanding its global network with the opening of a new office in New York City.
“North America is a key market for us, and we are absolutely delighted to be opening up a New York office which will further support our existing clients in the region, as well as bring in new prospective investment managers to our global business.” John McCann, Managing Director of the Trinity Group said. ”We have no doubt that the opening of this office is a significant step in respect to Trinity’s presence within North America and its continued growth prospects”.
The New York office will be primarily a local contact point enabling the firm to better facilitate its North American clients and business partners. The Trinity Group provides a comprehensive range of hedge fund and managed account administration services to investment firms based around the globe, operating fund structures domiciled in several jurisdictions including Ireland, Cyprus, Cayman Islands, Bahamas, Bermuda, BVI, Malta and the Channel Islands.
Trinity now operates globally from offices in Dublin, Cayman, Cyprus and New York.
New York (HedgeCo.net) – Covenant Financial Services, LLC., the management company for the Covenant family of target-return, global macro hedge funds and separately managed accounts, has changed its trade name to “Covenant Global Investors.”
The change was made to better reflect the firm’s current position in the market and the completion of its evolution from a boutique advisory firm started in 1984 to the $320 million AUM global macro investment manager that it is today.
Over the past year, as Covenant Global Investors has expanded its focus from high net worth investors to include institutions and as its assets have grown to approximately $320 million, it wanted to emphasize the firm’s global macro, target-return strategy where investors risk preferences are matched with funds and separate accounts that strive to deliver returns within a targeted range, regardless of market conditions. The term “global” is also deliberate, as Covenant Global Investors explores investment opportunities anywhere in the universe of assets in its quest to deliver alpha. The one word that the firm never considered changing was the first and most defining in their brand, “Covenant.”
“We’re wired differently at Covenant,” said Steve Shafer, CIO and Portfolio Manager of Covenant Global Investors. “Because of the firm’s history as a private wealth manager and our fiduciary responsibility to our clients, we have an uncommonly strong relationship with our investors – whom we call ‘partners’. This covenant with our investors is the defining feature of our corporate DNA and the reason that we continue to keep that word front and center in our branding.”
The name change took effect on January 1st, 2012. The firm’s website, www.CovenantInvestors.com will remain the same.
New York (HedgeCo.net) – Rothstein Kass has released “Women in Alternative Investments – Industry Outlook and Trends,” a new report focused on trends impacting core business functions at alternative investment firms.
The research features the investment and operational insights gained through a third quarter survey of 189 executive-level women investing capital through hedge funds, private equity funds or venture capital funds. The report highlights the industry, capital-raising and investment insights of women fund managers and explores whether gender impacts core business functions such as capital-raising.
Findings indicate that while nearly 70 percent of respondents anticipate that the next 18 months will be challenging for the industry, they are more optimistic about investment outlook and new fund launches within that same period. Nearly 65 percent of respondents are confident that there will be attractive investment opportunities, and slightly more than half of respondents indicated that they plan to launch a new investment fund within the next 18 months.
“Over the past decade, there has been a significant increase in the number of successful women in the alternative investment community. Women have attained leadership roles in every niche and have added to the rich diversity of the hedge fund, private equity and venture capital sectors, to the benefit of investors and partners. These women are having a major impact on the direction of the industry,” said Kelly Easterling, a Principal in the Financial Services Practice at Rothstein Kass and Principal-in-Charge of the Firm’s Walnut Creek office.
Most survey respondents believe it is more difficult for women-run funds to attract capital. Slightly more than 40 percent of respondents believe capital-raising is more difficult for women-run funds because women often lack the investment track record their male peers have. About a third of respondents believe that women’s capital-raising efforts are hindered by the stereotype that women are more committed to family and personal responsibilities than their career. Slightly over 30 percent believe it is harder for women to raise capital because they have less access to investor networks.
Other notable findings include:
Nearly 70 percent of the women surveyed expect the next 18 months to be more difficult than the preceding period. In spite of this, slightly over 60 percent of survey respondents anticipate an increase in new fund launches over the same period.
Although most respondents believe fund launches will increase in the next 18 months, respondents were divided as to whether more women would participate in these launches. Yet more than half of our survey respondents are planning to introduce a new fund themselves in the next 18 months.
Over 70 percent of respondents plan to raise capital in the next 18 months.
Family offices (52 percent), pension funds (52 percent), high-net worth individuals (50 percent), foundations (41 percent) and endowments (35 percent) are seen as most likely sources of new capital. Sovereign wealth funds (25 percent) and “other foreign sources of capital” (18 percent) were also viewed as significant sources of capital.
In an uncertain economic climate, over 65 percent of participants are confident that there will be attractive investment opportunities in the next 18 months.
A majority of respondents expect terms for new capital to be less favorable to fund managers in the next 18 months.
To help facilitate women’s advancement in the industry, respondents noted that women need greater access to roles which enable them to establish an investment track record, more women need to be recruited into the industry, and institutional investors should consider women’s representation in investment roles when making allocations.
The report also identifies the factors most critical to respondents’ success in the industry. The most important factors were having a strong professional network, having strong mentoring relationships, willingness to take risks, strategic career planning, and strong support networks.
“One of the goals of 85 Broads is to use our platform to match great ideas with great talent,” explainedJanet Hanson, Founder and CEO of 85 Broads. “In recent years, we’ve seen greater numbers of senior-level women strategically investing significant capital in start-up companies and funds led by women. Senior women are making these investments, in ventures often led by young women, not out of an obligation to give back or for charitable purposes, but because they are investing in real talent. I think this trend will continue, and that we’ll see more women with capital investing in funds directly. This is an encouraging development for the industry as a whole.”
Emerging-hedge-fund managers are getting more attention from institutional investors because they tend to produce better returns than larger, more established funds, but industry insiders disagree about the extent of the outperformance.
Hedge fund investment consultants and early-stage fund-of-hedge-funds managers are critical of industry-produced and academic analyses that don’t correct for survivorship and backfill biases found in the various public databases that aggregate self-reported hedge fund returns. They contend that statistical studies including these two biases produce artificially high returns for both small/young and large funds.
One of the industry’s most widely read performance comparison studies, by PerTrac Financial Solutions LLC, showed that small hedge funds — managing less than $100 million — each produced 360 basis points of annualized outperformance over large funds — those managing more than $500 million each — over the 15-year period ended Dec. 31.
Over the same period, hedge funds in business less than two years returned an annualized 526 basis points more than those in operation for more than four years, PerTrac researchers found.
Hedge funds boosted wagers on higher commodity prices for the first time in three weeks as the outlook for the U.S. economy improved.
Money managers increased combined bullish positions across 18 U.S. futures and options by 0.7 percent to 566,494 contracts in the week ended Nov. 29, Commodity Futures Trading Commission data show. Investors trimmed their bearish holdings in copper for the first time in four weeks, and pared bets on lower wheat and soybean prices.
The value of world equities rose more than $2.2 trillion last week as the MSCI All-Country World Index climbed for five consecutive days, the longest rally since October. The Federal Reserve and five other central banks made it easier and cheaper for banks to obtain dollars in emergencies and China, the biggest consumer of everything from energy to copper to soybeans, lowered banks’ reserve requirements for the first time since 2008. The U.S. jobless rate fell to a two-year low in November.
“We’re more on a moderate growth path, not the death spiral people feared two months ago,” said Michael Strauss, who helps oversee about $27 billion of assets as the chief investment strategist at Commonfund in Wilton, Connecticut. “That puts a little bit more support into commodities.”
(Bloomberg) — Hedge funds retreated from bearish oil bets as rising tension with Iran, OPEC’s second-largest producer, pushed crude to more than $100 a barrel.
The funds and other large speculators increased wagers on rising prices by 2.6 percent in the seven days ended Nov. 29, according to the Commodity Futures Trading Commission’s Commitments of Traders report on Dec. 2. They had cut so-called long positions, bets on rising oil, by the most since August the previous week, the Washington-based CFTC said.
Oil snapped a two-week losing streak as the U.S., U.K., Canada and the European Union targeted Iran’s financial sector and crude exports to deprive it of cash that might be used in nuclear or missile programs. Futures rose 4.3 percent last week, partly on optimism that European leaders are moving closer to resolving the region’s debt crisis.
“Hedge funds were caught flatfooted” by the previous week’s trades, Phil Flynn, a senior market analyst at PFGBest in Chicago, said in a telephone interview on Dec. 2. “They’re scrambling to get back in on the long side.”
New York (HedgeCo.net) – Former President Bill Clinton is reportedly teaming up with two of his former aides, Declan Kelly and Douglas Band, starting a private equity fund and global hedge fund consulting company. Also said to be involved is former British PM Tony Blair.
The State has already approved Clinton’s involvement in the private equity fund Teneo Capital, The Huffingtom Post reports:
“President Clinton is involved purely in an advisory capacity, and his compensation is confidential,” Matt McKenna, a Clinton spokesman, told the Huffingtom Post. Kelly confirmed that Clinton will be compensated but declined to go into details.
The new venture is to be based in Northern Ireland and “Seems well-poised to build on its access to and knowledge of Irish government.” The paper reports.
“During a summit at Ireland’s Dublin Castle in October, the former president announced plans to hold a Global Irish Economic Forum in New York in 2012, to be sponsored by Teneo Capital. Gathered at the Dublin summit were Bono, Irish Prime Minister Enda Kenny and Irish Foreign Minister Eamon Gilmore.
Kelly, Teneo Capital’s cofounder, was named in 2009 by Secretary of State Clinton to be special economic envoy to Northern Ireland. Kelly had previously founded another hedge fund, Financial Dynamics, which he sold in 2006 to the company now known as FTI Consulting.
“We don’t have an equity fund, and we don’t have a hedge fund. We’re looking to establish one, but we haven’t done it yet,” Kelly said.
New York (HedgeCo.net) – Union Bancaire Privee, UBP SA, one of the leaders in Switzerland’s hedge fund industry, has signed a definitive agreement to acquire Nexar Capital Group, a global alternative investment manager.
