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.
FP – “We see continued dedication to hedge funds,” Catherine Keating, chief executive of JP Morgan Chase’s private bank, told Reuters. “The things our clients are focused on are how does that hedge fund generate its returns? How much is correlated o the market? Clients care about transparency—what fees are they getting charged? They don’t mind paying fees as long as they’re getting value.”
Moffett Cochran, CEO of Silvercrest Asset Management, added, “The events of last year may have forever changed attitudes toward investing. It may be that their allocations to growth and equities will be lower. The vast majority of hedge funds had negative returns. The whole concept of absolute returns embedded in the hedge fund rationale was thrown out of the window.”
Bloomberg – Lucidus Capital Partners LLP, a new joint-venture of hedge fund manager Bruce Kovner’s Caxton Associates LLC, has raised about $500 million for a high-yield debt hedge fund, three people familiar with the situation said.
Darryl Green, chief executive officer of Caxton Europe Asset Management in London, will co-manage the fund with Geoffrey Sherry, a Caxton portfolio manager based in New York, said the people, who declined to be identified because the information is private. The pair will continue to run a $1 billion high-yield bond fund for Caxton, the people said.
Caxton will have a 25 percent stake in the new firm with the balance held by Green, Sherry and other staff members, the people said. The fund will use Caxton’s infrastructure and controls to help attract institutional investors reluctant to put money into a startup fund firm.
New York Times – Ahead of a scheduled trial next month, prosecutors have identified “direct evidence” that they say shows a former hedge fund manager, Ralph Cioffi, used his investment in a fund he controlled to obtain a $4.2 million line of credit for a Florida real estate project.
In a series of filings in Federal District Court in Brooklyn last week, prosecutors said Mr. Cioffi fraudulently pledged assets in the hedge fund he ran as collateral for a real estate loan from Busey Bank. Executives at Bear Stearns Asset Management, the division that housed the fund, told prosecutors they denied Mr. Cioffi’s request to pledge part of his assets for the loan because it could create a conflict of interest with other clients in the fund.
Reuters – Read Complete Article – Majedie hedge fund manager Matthew Smith has rotated his portfolio out of cyclical stocks and into value stocks with high yields, in another sign hedge funds think equities are susceptible to a pullback.
Smith, who runs the 50 million pound Tortoise long-short equity fund at Majedie Asset Management, has recently sold banks as well as shares in other companies sensitive to economic growth because he believes their valuations are now stretched.
Dow Jones – Man Group PLC said Thursday it is launching an onshore version of its AHL product, one of the largest single hedge funds with some $20 billion assets under management, in a further sign of the company’s confidence in boosting sales to private investors.
Man AHL Diversity is a managed-futures trading program, which means it follows and seeks to exploit persistent market trends. It will be managed by Man Investments, the asset management arm of Man Group, and marketed by hedge fund advisory company Dexion Capital Group.
Daily Telegraph – The funds collapsed as billions of dollars of bets made on mortgage-backed bonds and collateralised debt obligations (CDOs) unravelled, and when the time came to try to sell some of the funds’ sub-prime mortgages, no one wanted to buy them.
At the centre of those funds sat two men – hedge fund manager Ralph Cioffi and Matthew Tannin, the chief operating officer of Bear Stearns Asset Management (BSAM) – who were arrested a year later and charged with several counts of wire and securities fraud, following the loss of $1.4bn of investors’ money.
They face possible 20-year prison sentences, though both have consistently pleaded their innocence. The case against them will be set out at a trial slated to start in October. It centres on emails between the two – and with investors – in which both funds were referred to as "an awesome opportunity", despite allegations that both men knew of the problems within them.
Bloomberg ‘ Asia Genesis Asset Management Pte, whose Japan Macro Fund has outperformed peers, is closing down its two hedge funds and returning money to investors.
“I need some time to recuperate from weak health,” founder Chua Soon Hock, 50, said in an e-mailed reply to queries from Bloomberg News. “In past years, I have been doing 18-hour workdays with very active positions’ management to keep downside volatility of funds very low. I cannot do that with my current health conditions.”
The Singapore-based hedge-fund firm will return all money invested in the $761 million Japan Macro Fund and $12 million in the Asia Genesis Equity Fund to investors by mid-September, Chua said on Aug. 14.
Citywire.co.uk – Fund selector Christian Lundström, from Independent Investment Group in Sweden, is welcoming the evolution of the Ucits III space which is seeing more and more hedge fund groups entering the area.
Last week, HSBC Asset Management’s Farley Thomas warned on the trend of hedge fund groups launching Ucits-compliant funds, saying ‘Ucits is about trust, so retail fund firms in Europe should be protective of Ucits. Will the hedge fund firms be there to hold retail investors’ hands when things go wrong?’
While there may be fears for retail investors accessing such funds, many selectors are greeting the changes with open arms. Lundström is excited by the opportunity to access strategies which can ‘generate portfolio returns with low or even negative correlation to equities and commodities.’
Marketwatch – China’s sovereign wealth fund has selected Morgan Stanley and Blackstone Group LP to oversee hundreds of millions of dollars in new investments, The Wall Street Journal reported Friday.
The $200 billion China Investment Corp. has finalized an additional allocation of $500 million to Blackstone’s /quotes/comstock/13*!bx/quotes/nls/bx (BX11.42, +0.46, +4.20%) fund-of-funds unit, and an additional allocation of money has been earmarked for investment through Morgan Stanley’s /quotes/comstock/13*!ms/quotes/nls/ms (MS28.31, +1.15, +4.23%) asset-management unit, according to the report, which cited people familiar with the situation.
The sovereign wealth fund is also in discussions to potentially invest billions more in hedge funds, possibly doling out money directly to managers rather than using a fund-of-funds vehicles, the report said.
Reuters – Bayswater Asset Management, a computer-driven hedge fund shut down last year after big losses during the credit crisis, has relaunched after revamping its risk management controls, its new backers said on Wednesday.
San Francisco-based Bayswater had initially been backed at its launch in 2004 with $25 million (15 million pounds) from Man Global Strategies, part of hedge fund giant Man Group.
However, its strategy of trying to exploit inefficiencies in global markets lost 12 percent in the six months to September 2007 and it returned money to investors after being caught out by a vicious circle of deleveraging in July and August that hit many computer-driven funds.
The Guardian – Bayswater Asset Management, a computer-driven hedge fund shut down last year after big losses during the credit crisis, has relaunched after revamping its risk management controls, its new backers said on Wednesday. San Francisco-based Bayswater had initially been backed at its launch in 2004 with $25 million from Man Global Strategies, part of hedge fund giant Man Group.
However, its strategy of trying to exploit inefficiencies in global markets lost 12 percent in the six months to September 2007 and it returned money to investors after being caught out by a vicious circle of deleveraging in July and August that hit many computer-driven funds. The firm has now relaunched with large-scale changes to its risk management system and added a manual override, according to Revere Capital Advisors, which has seeded the fund with an initial $10 million and also plans to buy an equity stake in the firm, a spokesman said.
