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.
Reuters - U.S. hedge fund Citadel Investment Group LLC plans to roll out several new funds, including one with lower fees that will aim to make money on currencies, interest rates and other trades based on broad economic trends, the Wall Street Journal reported.
Citadel could not be reached for comment.
The firm hopes to raise $2 billion in coming months and could raise $5 billion for its new Citadel Global Macro Fund Ltd, the paper said citing marketing documents.
San Diego Union Tribune - The county pension board’s chief investment officer has resigned a week after a second hedge fund collapse in which employee retirement investments could lose as much as $78 million.
David Deutsch, who held the job for five years, oversaw a $2.5 billion loss in pension assets since June 30.
He had pushed the San Diego County Employees Retirement Association – which manages retirement benefits for 35,000 county retirees and current employees – to invest heavily in hedge funds.
The association’s board accepted his resignation in closed session yesterday. His last day will be March 19.
Brian White, the association’s chief executive, said Deutsch didn’t give a reason for his departure and wasn’t given a severance package.
Asked if Deutsch was under any pressure because of investment losses or hedge fund problems, White said, “I think we’re all under a lot of pressure because of the market.”
West Palm Beach (HedgeCo.net) - Specialist asset management firm, Silk Invest Ltd, has acquired Danfonds Frontier Fund SPC., a Cayman based hedge fund, in an all equity deal, Silk Invest also bought majority share in Danfonds Frontier Fund SPC, which will be renamed Silk Invest Frontier Fund SPC, Danfonds Investment Management (Cayman) Limited will be renamed Silk Invest (Cayman) Limited.
The new team will launch two Luxembourg UCITS funds, African Lions and Arab Falcons, in the first quarter of 2009. The Silk Invest Frontier Fund SPC will be relaunched in the second quarter of 2009 after finalizing the new offering memorandum and the various counterparty agreements.
Zin Bekkali, CEO of Silk Invest, comments that “the deal is a uniquely structured combination of talents that complements our new African and Middle Eastern fund platform.” Following the transaction, Daniel Broby, CEO of Danfonds, will become the Chief Investment Officer of Silk Invest.
Daniel Broby says that the deal “is perfectly timed from an investor perspective. There is now immense opportunity in frontier markets as a resultof the dramatic declines caused by the credit crisis; to which these economies are partially immune.”
Dr Heinz Hockmann, the Chairman of Silk Invest, notes that “The synergies between the Silk African Lions Fund, the Silk Arab Falcons Fund and the Danfonds Frontier Fund were immediately obvious. Our aim was always to become the most credible frontier markets specialist. With this deal we can demonstrate to our investors, more than ever, that we have an unrivalled frontier markets team, managing a unique investment offering across different asset classes.”
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Bloomberg - Jeffrey Gendell, whose investment firm Tontine Associates LLC is liquidating two hedge funds after losses of more than 60 percent this year, plans to start a new fund in February.
The Tontine Total Return Fund will invest in stocks believed to be undervalued and won’t use borrowed money, Gendell said in a letter to investors. Steve Bruce, a spokesman for Greenwich, Connecticut-based Tontine, declined to comment.
Tontine, started by Gendell 12 years ago, had been one of the industry’s best performers, with its four funds returning an average of 38 percent annually since inception through 2007. The firm last month said it was unwinding Tontine Capital Partners LP, a fund that plunged 77 percent this year through October, and Tontine Partners LP, which fell 67 percent through September.
West Palm Beach (HedgeCo.net) - Alternative money managers and hedge fund restructuring advisers, Grisons Peak and IGS, have formed a joint venture to launch the Alternative Investment Merchant Banking (AIMB). The AIMB is to advise on M&A and restructuring deals for firms in the alternative assets industry, the business will be co-led by Paul Sullivan, Partner of Grisons Peak, and John Godden, CEO of IGS Group..
“With a 30% decline in AUM and an expected 50% decrease in the number of Fund managers and no incentive fees for 2008," John Godden, CEO of IGS Group, said, "we will see a continuing surge in merger and acquisitions activity as the Hedge Fund industry goes into an accelerated Darwinian phase. The alternative assets industry has traditionally been formed of boutiques which make for particular and complex merger issues requiring specialist knowledge of both Hedge Funds and M&A expertise.”
“The reduction in AUM in 2008 and the expected continuation of this trend in 2009 will increase the pressure on the owners and managers of alternative investment firms. Many of these firms will seek partners in order to improve profitability and increase their attractiveness to investors.” Paul Sullivan, Partner of Grisons Peak, concluded.
The 50:50 joint venture AIMB targets UK and European deals deal involving single fund managers with AUM of between $250m to $750m or Fund of Hedge Fund managers with AUM of between $400m and $1bn.
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Forbes - In light of the higher risks which are sweeping global markets, Finvest Asset Management is set to launch a new capital protected offering for investors who are seeking to generate annual returns of between 12-20 percent in a low risk structure.
The total offering is for $500 million and is open to non-U.S. investors only. It is anticipated, based on early interest in the product, that the product will be oversubscribed. The capital protected investment vehicle will be protected by a AAA institution which will not have any association with an investment bank or exposure to sub-prime which has been a crippling factor to global markets, and an issue of concern through the current credit crunch crisis. In an environment where cash is king, and several high profile hedge funds have experienced blow outs, this capital protected product offers investors an alternative possibility of security and the ability to earn above average risk adjusted returns.
Financial Times - RAB Capital is planning to restructure its flagship hedge fund, which plunged more than a third this year, and offering investors lower fees in return for agreeing not to withdraw their money for three years.
It is unclear how much of the $1.4bn that RAB Special Situations had at the end of June will be locked up for three years.
But any agreement to limit withdrawals could be good for the London-based fund, much of which is invested in hard-to-sell Aim-listed shares and private equity.
RAB is the latest in a series of hedge funds to offer discounts to investors who agree to stick with a poorly performing manager. Others include Ore Hill, the New York credit fund half-owned by London’s Man Group.
According to people familiar with the requests, RAB could announce the restructuring within a few days.
Bloomberg - Kenneth Heebner, manager of the top-ranked U.S. stock mutual fund, is seeking as much as $5 billion for his first hedge fund.
Heebner, who has worked in the mutual-fund business almost four decades, formed a private investment partnership in June called Wayfarer Capital LP, according to Aug. 14 regulatory filings. The size of the fund, which had raised $73 million from wealthy investors and institutions, may vary from the target, Wayfarer Capital said in the filings.
A private fund would free Heebner from most regulatory oversight and allow him to buy or sell any assets, unlike mutual funds, which are more tightly controlled. Hedge funds also charge higher fees, including a cut of investment profits.
“He has wanted to do this for a long time,” said Janine Hermsdorf, who retired in December as the head trader at Heebner’s Boston-based Capital Growth Management LP after working with him for 27 years. “This was just the time to go ahead.”
Martha McGuire, a spokeswoman for Capital Growth Management, declined to comment on the filings by Wayfarer Capital with the U.S. Securities and Exchange Commission and state regulators. Stephen McShea, an attorney in the Boston office of Dechert LLP, the law firm that helped set up the partnership, also declined to comment.
Heebner’s CGM Focus Fund had the best performance among diversified U.S. stock mutual funds this year through June 30, gaining 17 percent including dividends, compared with the 12 percent decline by the Standard & Poor’s 500 Index, according to data compiled by Chicago-based Morningstar Inc. The fund has since fallen 29 percent, while the benchmark index is off 3.9 percent, illustrating the swings that often accompany Heebner’s approach to stock-picking.
HedgeFund.Net - Swiss funds-of-funds firm Gottex Fund Management is launching a fund that will emulate the investment principles of U.S. “super endowments.”
The new fund will emulate the investment principles of successful U.S. university endowment funds, such as Harvard and Princeton. It will allocate about 65% to alternative investments. The alternative part of the portfolio will cut across all asset classes: hedge funds, private equity, commodities, long-only equity, fixed income, real estate and other real assets.
Harvard Management, long the model for university endowment funds currently with about $35 billion in assets, increased more than 20% year over year in 2007.
William Landes is helming the new fund. Landes joined Gottex from Boston-based 2100 Capital, his hedge fund specialty firm that Old Mutual Asset Management bought in 2005. Before that Landes was a money manager at Putnam Investments, which helped incubate 2100 Capital.
New York (HedgeCo.Net) - Fortress Investment Group, who oversees more than $18 billion in assets, is starting a new hedge fund that will invest in markets throughout the Middle East and North Africa.
The new fund, Fortress MENA, is set to launch near the end of September and seeks returns of 20 percent annually, according to insider documents obtained by Bloomberg. Headed by Philippe Peres, who has run the company’s Drawbridge Global Macro funds for the past five years, the fund will use a “significant” amount of its employee’s personal capital to launch. The documents did not state how much money the fund aimed to raise up front.
Fortress MENA will deal with equities, fixed-income securities and currencies throughout regions seeking to reduce their oil dependencies. This includes countries such as Lebanon, Qatar, Pakistan and Turkey.
This will be the fifth hedge fund in the company’s portfolio. Fortress went public in February, but has seen shares decrease 36 percent this year compared to the 13 percent decline of the Standard & Poor’s 500 Index. Shares are trading almost 50 percent below their initial offering of $18.50.
Julie Scuderi Senior Editor for HedgeCo.Net Email: julie@hedgeco.net
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West Palm Beach (HedgeCo.net) - Hedge fund advisory firm D5 announced the launch of two new accounts, with each promising capacity of $50 million, for a possible $ 100 million on additional capital for the firm. The new accounts coincide with the hiring of mathematician and scientist Andrew Vizcarra as Director of research.
"Andrew’s 10 years in the study and teaching of mathematics and statistics is a great asset to our research department and is a wonderful compliment to the fundamental nature of our strategy." Theodore Dumbauld, founder of D5 said, "Mr Vizarra will focus on both the enhancement of our current strategy and the exploration of universe expansion."
D5’s strategy utilizes a relative value strategy, trading only a unique set of securities for which net asset values can be calculated.
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West Palm Beach (HedgeCo.net) - California based Martin Asset Management (MAM) is replicating hedge-fund-like returns and risk factors through its ETF strategies without the heavy fees, lockups and non-transparent holdings, the boutique alternative investment firm said.
"Our approach allows investors to obtain the very same benefits as they would with a hedge fund without the limitations usually associated with hedge funds", says Francisco Martin, Senior Managing Director and Founder of Martin Asset Management.
"We use a similar investment philosophy as you would with ‘Global Tactical Asset Allocation’." Martin said, "It is an investment strategy that attempts to exploit short-term market inefficiencies by taking positions in various markets with a view to profiting from relative movements across those markets."
The approach focuses on general movements in the markets rather than on performance of individual securities within them Positions are generally taken with a relatively short-term time horizon (3 – 6 months) – hence the term Tactical Asset Allocation – and in markets across the globe – hence the term Global.
"Our philosophy is simple; we don’t charge any management fees but participate with a 10% performance fee and a High Water Mark. The transparency of a separate managed account and the elimination of all hedge fund imposed barriers make our approach much more attractive to the investor," says Martin.
MAM is expected to launch its new product by August of 2008.
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