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 – D.E. Shaw & Co. LP, the investment firm run by David Shaw, and Farallon Capital Management LLC limited withdrawals by clients, joining more than 80 hedge-fund managers to impose restrictions in the past two months.
D.E. Shaw, which oversees $36 billion, capped redemptions from its Composite and Oculus funds, said two people familiar with the New York-based company. Farallon, a $30 billion firm based in San Francisco, did the same with its biggest fund after investors asked to get back more than 25 percent of their money.
The firms are two of the biggest to block withdrawals, known as putting up gates, so they aren’t forced to liquidate investments at distressed prices to raise cash. New York-based Fortress Investment Group LLC said yesterday it froze an $8 billion fund after getting redemption requests for 40 percent of its assets. Tudor Investment Corp., the Greenwich, Connecticut, firm run by Paul Tudor Jones, locked the $10 billion BVI Global fund last week ahead of plans to split the fund into two.
Reuters – As many hedge funds suffer big losses and anxious investors yank out their money, the town synonymous with the riches of their recent glory is now hurting.
In Greenwich, Connecticut, the luxury car dealers are quiet, the prices of mansions are declining and the retailers who have made a good living serving its wealthy residents are complaining about a sudden drop in business.
"Everything is down. We started to see it in the summer, but October is when the bottom caved in," said James McArdle, whose family has run McArdle’s Florist and Garden Center in Greenwich for 98 years. "Housing sales are down and so that always cuts into our market. Fewer buyers, fewer makeovers."
Bloomberg – Hedge fund managers, after enduring the industry’s worst month in a decade, are seeking to explain to investors what went wrong and what they are doing about it.
“We clearly underestimated several things, most importantly the tsunami of redemptions that are being delivered to hedge funds as investors line up to get out of these funds as well as record outflows from equity mutual funds,” Jeffrey Gendell, who runs Greenwich, Connecticut-based Tontine Associates LLC, wrote in an Oct. 1 letter to clients.
“I am not a nervous person by nature, but should have been under the circumstances,” wrote Gendell, whose Tontine Partners LP fund plunged 59 percent in September, leaving it down 67 percent for the year, according to investors. Gendell, 49, had expected shares of steel, engineering, airline and chemical companies to appreciate because of falling oil prices. Instead they plummeted.
CFO.com – Even hedge funds are not immune to the credit crunch. A small hedge fund that provided short-term debt to companies has filed for Chapter 11 bankruptcy protection.
Greenwich, Connecticut-based SageCrest Finance, managed by Windmill Management, said in its Chapter 11 petition filed in U.S. bankruptcy court that it had listed assets of $50 million to $100 million, and debt between $1 million and $10 million, reported Reuters. The fund had about $1 billion in assets under management as recently as a year ago, according to hedgefund.net.
In fact, the website points out that the credit crunch put the squeeze on SageCrest’s business strategy — which is providing asset-backed specialty financing to smaller private companies that have been closed out of traditional sources of capital. Many of its projects involved extending art-, real estate-, and structured settlement-based loans.
International Herald Tribune – Do you remember a time, only a short while ago, when virtually anybody could start a hedge fund? It seemed so easy: Billions of dollars were being thrown around like confetti, even at first-time managers. Greenwich, Connecticut, the wealthy New York suburb that became an enclave for hedge fund managers, overflowed with multimillionaires and more than a few billionaires.
Anybody could make money with their eyes closed. Or so it seemed.
Ron Insana was one of the people who chased that dream. Insana spent more than a decade as one of the most prominent anchormen at CNBC, the financial news channel on cable television that has become a constant presence in just about every Wall Street office and trading room. He was a mere journalist, to be sure, but he regularly interviewed some of the titans in business, trying to make sense of the daily gyrations of the market.
In March 2006, Insana left the network to try his hand at becoming one of those titans, setting up a fund to help investors get into hedge funds, a so-called fund of funds. Paul Kedrosky, a writer and investor, said at the time that Insana’s move "reminded him a little of Lou Dobbs going to Space.com at the peak of the dot-com bubble."
Reuters- Investment firm Duff Capital Advisors said on Tuesday it acquired hedge fund group North Sound Capital.
The two firms, both located in Greenwich, Connecticut, did not disclose terms of the deal.
For Duff Capital, which launched in March with the goal of raising between $1 billion and $1.5 billion to seed investment strategies, this marks its second hedge fund investment.
For North Sound Capital, whose assets have shrunk from $2.9 billion in 2006 to $1 billion now, the deal is a chance to join forces with Philip Duff, a Wall Street veteran with a track record of growing investment firms.
