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 — The U.S. Court of Appeals for the Second Circuit has affirmed a district court’s decision that dismissed a securities fraud case against New York-based hedge fund investment adviser Hennessee Group LLC. In the 36-page opinion issued July 14, 2009, the Second Circuit upheld in its entirety the August 2007 ruling by Judge Colleen McMahon of the U.S. District Court for the Southern District of New York that dismissed claims of breach of contract and securities fraud in South Cherry Street, LLC. v. Hennessee Group. All of South Cherry’s arguments on the appeal were found to be without merit.
The claims were in connection with Hennessee’s investment advice regarding Bayou Management’s hedge funds that were uncovered as part of a large Ponzi scheme, for which Bayou’s principals were found guilty of securities fraud in 2005.
“We are delighted with the Second Circuit’s decision that finds all claims of breach of contract and securities fraud against Hennessee are without merit. Bayou’s Ponzi scheme caused many unfortunate events, but the Court’s decision establishes that Hennessee was not a participant on any level,” said Bennett Falk, Hennessee’s trial counsel and a partner in the securities litigation and regulatory practice group in the Florida office of Bressler, Amery and Ross, P.C.
Center for Research on Globalization – The second wave of the world economic depression is coming soon. Larry Summers, the economics czar of the Wall Street puppet regime currently in power in Washington, recently confessed to the Financial Times in an unguarded moment: "I don’t think the worst is over .."
A few weeks earlier, Jacques Attali, who served in the 1980s as the main economics adviser to French President Mitterrand, told an audience at the International Economic and Financial Forum (FIEF) in Paris that the world might well soon face a planetary Weimar "in the form of a hyperinflationary depression similar to the German events of 1922 – 1923.
Bloomberg – Let’s say you hand a million dollars or more to an investment advisory firm that boasts a sterling reputation, grand results and a promise to thoroughly investigate hedge funds before recommending them.
For all the claims of super due diligence, this fine firm sinks your money into what turns out to be a Ponzi scheme.
Now your money is gone and the hedge fund founder who lost it is serving 20 more than years. Federal regulators belatedly find that your adviser didn’t actually do that much due diligence.
The Bayou Group hedge fund it put you into hadn’t had an independent audit almost since its beginning when an initial auditor noticed consistent losses and was let go, according to the Securities and Exchange Commission.
Bloomberg – China Investment Corp., the nation’s $200 billion sovereign wealth fund, may invest as much as $500 million in hedge funds including those run by Blackstone Group LP, said two people familiar with the matter.
CIC aims to allocate $6 billion to hedge funds by the end of 2009, company adviser Felix Chee said two days ago at the GAIM International hedge fund conference at Monaco’s Grimaldi Forum. Chee, who is a special adviser to the chief investment officer of CIC, said he will initially run CIC’s hedge fund and proprietary trading effort.
The move adds to signs of improved confidence by CIC Chairman Lou Jiwei, who said in December that he didn’t “dare to invest in financial institutions” after losing money on investments in Blackstone and Morgan Stanley. CIC raised its stake in Morgan Stanley earlier this month by buying an additional $1.2 billion shares.
Bloomberg – Felix Chee, an adviser to China’s $200 billion sovereign wealth fund, said it aims to make investments in hedge funds.
“We will have a preference for managed accounts,” he said in an interview today at the GAIM International hedge fund conference at Monaco’s Grimaldi Forum. “The platform would like a core of single-manager funds and fund-of-funds.”
Chee, who said he will initially run China Investment Corp.’s hedge fund and proprietary trading effort, is a special adviser to the chief investment officer of CIC.
“It’ll be across the spectrum of strategies,” he said. “We’re looking for the best managers and a handful of fund of funds, and when I say handful I mean five or less.”
June 17 (Bloomberg) – Felix Chee, an adviser to China’s $200 billion sovereign wealth fund, said it aims to make investments in hedge funds.
“We will have a preference for managed accounts,” he said in an interview today at the GAIM International hedge fund conference at Monaco’s Grimaldi Forum. “The platform would like a core of single-manager funds and fund-of-funds.”
Chee, who said he will initially run China Investment Corp.’s hedge fund and proprietary trading effort, is a special adviser to the chief investment officer of CIC.
“It’ll be across the spectrum of strategies,” he said. “We’re looking for the best managers and a handful of fund of funds, and when I say handful I mean five or less.”
Chee previously managed the University of Toronto’s endowment, where he managed a portfolio of about $1 billion in hedge fund assets. Asked if he was daunted by the prospect of running a $200 billion portfolio, he said “I try not to look at the zeros.”
Bloomberg – Alphex Investments Co., the adviser to Japan’s first short-biased hedge fund, plans to sell exporters’ shares, wagering they’ll fall on a rising yen and weak global economy, boosting the fund that started in March.
“What we’re seeing right now is nothing more than a bear- market rally,” Ichiro Takamatsu, 44, chief executive officer of the Tokyo-based hedge fund advisory firm, said in an interview yesterday. “We’re going to see a really bad yen rally this year, and that will create an opportunity to profit on exporters.”
The firm started its ASB Opportunity Fund on March 3 with $25 million of seed funding from a New York fund-of-funds seeking to diversify its portfolio, said Takamatsu. The ASB fund, with a net short position at all times, is the first of its kind in Japan, he said.
Reuters – A global hedge fund industry group backs U.S. plans to require hedge fund advisers to register with federal regulators, a move that would align U.S. rules with those in the UK.
The Alternative Investment Management Association, in remarks to be delivered to a U.S. congressional committee on Thursday, also said registration creates a dialogue between the hedge fund adviser and supervisor that supports greater understanding of hedge fund activities.
The London-based group, which represents more than 1,100 hedge fund firms in more than 40 countries, is among those due to testify to the capital markets subcommittee of the House Financial Services Committee. Other witnesses on the registration issue include the Teacher’s Retirement System of Texas and well-known short-seller James Chanos.
Albany Times Union – A group of upstate unions claims it lost nearly $1 billion in pension and other benefit funds after an investment manager placed the money with Bernard Madoff Investment Securities LLC.
Now, the unions have filed a class-action lawsuit against the adviser, Syracuse-based J.P. Jeanneret Associates Inc. and against White Plains-based Beacon Associates Management, which operated funds that invested pension money with Madoff.
Indianapolis Star – Paul Volcker, an adviser to President Barack Obama, urged "fundamental changes and reform of the financial system" that will help the U.S. economy recover from its crisis and promote future growth.
The former chairman of the Federal Reserve called for "particularly close regulation and supervision" of large commercial banks and other financial institutions whose failure would cause a breakdown in the banking system. Volcker, testifying to the Senate Banking Committee on Wednesday, reprised recommendations from the Group of 30 last month. Volcker spearheaded that report.
Bloomberg - Atsuko Tsuchiya, the Japanese hedge- fund adviser who left Merrill Lynch & Co. to found her own firm, led Atom Japan Equity Fund to an 18 percent return in 2008, beating rivals who suffered the worst year on record.
Tsuchiya, 36, achieved the gains in the fund’s first full year of trading, withstanding market losses and investor withdrawals that ravaged the $1.5 trillion hedge-fund industry, Bloomberg data shows. The Eurekahedge Hedge Fund Index fell a record 12 percent in 2008.
One of the nation’s few female hedge-fund advisers, Tsuchiya combined so-called event-driven and equity long-short strategies in the Japan-focused, 3 billion yen ($33 million) fund. Bets on companies that launched buyouts or bought affiliates to combat Japan’s first recession in seven years helped Atom dodge a 33 percent slide in assets at Japan-focused hedge funds last year.
North by Northwestern – By the start of his 9 a.m. class, Weinberg freshman Brian Levin has begun watching his investments.
When the markets open, he checks his models to try to predict what will happen in the markets, and then starts formulating investment positions. He calls other professionals and traders on the floor of the Chicago Board of Trade to see what they’re doing that day, or if there are any rumors going around the trading community. He adjusts his investment positions throughout the day until 3 p.m. when the equity market closes.
Levin has been investing since he was 13 years old. Three years ago, he took on clients and founded the hedge fund BDL Capital Advisors, which he still runs today — when he’s not in class. Levin has over forty clients, an office in Vernon Hills, IL, and a snazzy website. Despite the current economic downturn, 2008 was BDL Capital Adviser’s best year yet financially.
