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.
Alibaba News Channel – European companies emerging from the credit crisis should start looking over their shoulders: activist investors are set to return from hibernation, working more closely than ever with institutions to effect change.
The activists, who favour methods such as changing balance sheet structures, ousting chairmen or selling off non-core units, had little to do during the crisis when buyers were scarce and there was little appetite for transformatory change. But now they are set to gain from a political will to drive large institutional investors towards more active investment and away from a mentality of simply selling stocks they don’t like, while a purge of more leveraged, short-termist funds has cleared the ground for activists to tap a wealth of new opportunities.
"Pushed and shoved by the regulators, mainstream institutions are beginning to countenance interaction with activist investors," said a senior figure at one activist firm.
Alibaba News Channel – Hedge fund firm 36 South said on Monday it had launched a "high risk/high return" fund designed to protect investors’ portfolios against a surge in global inflation. The Excelsior fund will target returns of five times the rate of inflation in the G5 group of economies, if that inflation rate exceeds 5 percent, by buying long-dated out-of-the-money options across assets such as equities, commodities, currencies and interest rates, the firm said in a statement.
However, if the rate of inflation stays below 5 percent then investors could lose all their money, a spokesman said.
"Inflation is the single greatest risk facing the world economy at present," said 36 South director and founder Jerry Haworth.
"Whilst the prevailing view is that a sustained period of significant global inflation is unlikely, investors need to be attuned to this risk and the devastating effect it will have on their portfolio should this scenario come to pass."
Alibaba News Channel – Aggressive government action can hurt the market, but regulators should clamp down on leverage among banks and investors to prevent another credit crisis, veteran hedge fund manager Paul Singer said at a conference.
Singer said the current "anti-capitalist" fervor, inspired by last year’s market meltdown and the ongoing recession, will likely lead to increased regulation. These measures would only prolong the problem, he told some 1,200 hedge fund executives at the Ira Sohn Investment Research Conference on Wednesday.
By the same token, he observed that highly regulated banks fueled last year’s market implosion because they ramped up their use of leverage, or borrowed money, for trading and investments. High levels of leverage in a downturn can multiply losses and throw markets into chaos.
