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.
Bloomberg: Hedge funds fell 4.9 percent last year as global stock markets slumped amid fears that the European sovereign-debt crisis would spread and managers struggled with increased market volatility.
The Bloomberg aggregate hedge-fund index (BBHFUNDS) dropped 0.9 percent in December, with long-short equity and multistrategy (BBHFMLTI) funds falling. Macro funds, which bet on global economic trends, rose last month and declined in 2011.
“Managers are probably happy 2011 is behind them,” said Emma Sugarman, global head of capital introduction at BNP Paribas SA in New York , which helps hedge funds meet clients. “The notion of absolute return has changed. In the past, some hedge funds were sold as absolute return, meaning they would always generate a positive return, and clearly that has not been possible.”
New York (HedgeCo.net) – President Barack Obama’s Financial Fraud Enforcement Task Force has gotten a conviction against Ward Onsa, the portfolio manager of New Century Hedge Fund Partners, LP. Ward pleaded guilty yesterday to securities fraud after soliciting more than $5 million as part of an investor Ponzi scheme.
According to the indictment, the defendant operated the investment firm Ward Onsa & Company until 2005 when a series of trading losses and default judgments bankrupted the entity. Thereafter, Onsa organized the New Century Hedge Fund and, between 2005 and 2010, solicited and received over $5 million in investor funds, primarily from Individual Retirement Accounts. Onsa told the investors that their retirement funds would be used to purchase securities, futures contracts and options designed to profit when the Dow Jones Industrial Average reached 10,748. Onsa’s trading theory was that the market would not go above this level. As the market surged past 10,748, however, the investments that the defendant made with his investors’ retirement money plummeted into insolvency.
While the investors were losing their money, the defendant funneled money from the Fund to himself and the defunct Ward Onsa & Company. Onsa further agreed to loan his early investors in New Century $2.6 million from newer investors’ money.
Instead of disclosing the losses, the payments to Ward Onsa & Company or the $2.6 million loan, Onsa issued fake statements to investors showing consistent and steady earnings in the market. Onsa continued to solicit additional money from investors through 2010 and used that new capital to pay back the losses of the early investors.
“Retirement accounts represent hard earned dollars set aside for an uncertain future. Through a web of lies and deceit, the defendant targeted those funds to line his own pockets and prop up his failed investments. The defendant’s criminal decision to tap investors’ IRA accounts as part of his Ponzi scheme reaffirms this Office’s resolve to vigorously investigate and prosecute fraud in the securities and commodities markets,” stated United States Attorney Lynch.
“The defendant continued to solicit investors by showing fictitious gains, both while the fund was losing money and after he had ceased to invest at all. Luring new investors to pay off earlier ones is the classic Ponzi.” FBI Assistant Director in Charge Fedarcyk said.
The defendant faces a maximum sentence of 20 years’ imprisonment on the securities fraud charge.
Opalesque - Singapore-based GFIA, hedge fund and particularly emerging market hedge fund specialists have revisited Brazil, a country that they had dropped from their intensive coverage due to lack of client interest. From 2004 to 2008, the firm were heavily involved in Latin America, advising a fund of Latin hedge funds and keeping an analyst in Sao Paulo.
However the 2008 credit crunch saw a complete change in client interest in the area, so they withdrew to only include coverage of three or four of the larger Latin American funds.
Business Insider – A bunch of hedge funds that had been profiting off the incredible rise in the Swiss franc just got burned.
This morning the Swiss Bank intervened, sending the Swissie down. The bank will buy an unspecified amount of Francs until the exchange rate with the Euro hits 1.20 francs.
Bloomberg – Daniel Loeb, the founder of Third Point LLC, started a reinsurance company that can invest in his $8 billion hedge fund, joining rival David Einhorn in seeking more permanent capital.
Third Point Re, which is based in Bermuda, hired John Berger as chief investment officer and has about $500 million in capital, according to two investors familiar with the plan. New York-based Third Point wants to raise $250 million to $500 million more and plans to eventually sell shares of the reinsurer to the public, said the investors, who asked not to be identified because the firm is private.
Reuters – Hedge funds, betting on globa lmarkets and driven by computer models, were among those hardest hit by Switzerland’s shock intervention on Tuesday to reverse profitable bets on the Swiss franc’s “safe-haven” status.
The Swiss National Bank surprised investors with an exchange rate cap, saying it would no longer tolerate a rate below 1.20 francs per euro and would defend the target by buying other currencies in unlimited quantities.
Bloomberg – A Pennsylvania man admitted to his role in a $17.6 million Ponzi scheme that defrauded more than 260 investors.
Robert Stinson Jr., 56, of Berwyn, pleaded guilty in federal court in Philadelphia today to 26 charges, including wire fraud, mail fraud,money laundering and bank fraud, the Justice Department said in a statement. There was no plea agreement, according to the plea memorandum.
Slate – After the madness of last week and the rollercoaster at the beginning of this week, the stock market recovered from its Aug. 10 rout to bounce 423 points on Aug. 11. It was the fourth day in a row in which the index moved by more than 400 points, which has never happened before in history. As I write this, stock prices are leveling off, but the big swings may not be over. Has the market gone mad? Actually, yes.
In theory, the stock market is supposed to reflect the prospects for the economy—the earnings potential of the stocks that make up the Dow Jones Industrial Average.
New Yorker – There is the current crop of Ohio Republicans, and then there are those who art in Heaven. A specimen of the former, ultimate destination unknown, is Speaker of the House John Boehner, a perpetrator (and, arguably, a victim) of the terrifying debt-limit arson that his party, on fire with ideological fanaticism, political ruthlessness, and economic heedlessness, decided to spend the summer fanning.
Aloft, the Buckeye State’s celestial choir of the G.O.P. departed includes Presidents Grant, Hayes, Garfield, McKinley, Taft, and (assuming he’s been sprung from Purgatory) Harding. Its original member, less famous than the rest but as distinguished as any of them, is Benjamin Franklin Wade.
New York (HedgeCo.net)- Altegris Advisors has launched the Altegris Macro Strategy Fund. The Hedge Fund offer access for individual and professional investors to participate in the global macro approach to investing through an actively managed mutual fund.
“Of all the investment strategies, global macro stands alone as the most flexible and opportunistic. Global macro managers assume that somewhere in the world, there’s an opportunity,” said Jon Sundt, President and CEO of Altegris and a Co-Portfolio Manager of the Fund.
“The Altegris Macro Strategy Fund allows investors to participate in what we believe is an ultimate ‘go anywhere’ macro approach to investing through the traditional format of a mutual fund, with low minimum investment requirements.”
Between January 1997 and March 2011, global macro as a category has experienced significantly lower volatility as measured by the Barclay Global Macro Index (6% on an annualized basis) when compared to the S&P 500 Index (16.5% annualized). In addition, over this same period, the global macro category achieved +9.7% annualized return, as represented by the Barclay Global Macro Index, compared with the S&P 500 Total Return Index’s +6% annualized return. Of course, past performance of any asset class or strategy is not necessarily indicative of future performance.
The Altegris Macro Strategy Fund seeks to achieve positive absolute returns in rising and falling markets by allocating its assets between global macro strategies and a fixed-income strategy. Global macro strategies include investment styles such as discretionary, fundamentals-based investing with a focus on macroeconomic analysis; dedicated currency investing that pursues both fundamental and technical trading approaches; systematic trading strategies that incorporate technical and fundamental macroeconomic variables; and other specialized approaches to market sectors such as equities, interest rates, metals, agricultural and soft commodities.
Bloomberg – The U.S. Securities and Exchange Commission opened a probe into New York hedge fund Fletcher Asset Management as three Louisiana pension systems raised questions about its liquidity, the Wall Street Journal reported, citing a person familiar with the matter.
The public pension funds are assembling a team to examine Fletcher Asset Management’s books and financial statements after redemptions requests were met with promissory notes instead of cash, the newspaper said today, citing a statement from the pension systems.
HFMWeek – The $18.2bn Texas County & District Retirement System (TCDRS) invested an additional $1bn into hedge fund strategies in March, HFMWeek has learned. The move follows a decision made by the retirement system to increase its absolute return target from 15% to 20% during the same month, also revealed by HFMWeek at the time.
TCDRS boosted its allocations to 20 funds in total, including total additional investments of $120m to three credit funds, $30m to one distressed fund, $140m to two global macro funds, $60m to two event-driven funds, $240m to six long/short equity funds and $220m to five multi-strategy funds.
