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WSJ – The Church of England has emerged as an unlikely defender of the hedge-fund industry against the prospect of new regulations from the European Union.
Only last year, the Archbishop of York was calling hedge funds “bank robbers” for profiting from the fall in bank stocks.
Now, a group of six of the U.K.’s largest charitable foundations, including the Church of England, has told a House of Lords committee that a proposed EU directive would “significantly restrict our ability to generate funds to pursue our charitable missions and thus reduce our impact for public good.”
West Palm Beach (HedgeCo.net) – Morningstar reported a sharp decline in credit and equity markets as the U.S. government announced its stimulus package and financial stability plan. February saw a huge sell-off in U.S. and European bank stocks caused by concerns of financial health and nationalization.
U.S. bank stocks hit a 17-year low and spreads on corporate bonds widened, according to the report.
"Hedge fund managers, like other investors, are nervous about the efficacy and unpredictability of government involvement in the economy. They just don’t know what the U.S. government will do next, and this uncertainty is wreaking havoc in the markets," said Nadia Papagiannis, Morningstar hedge fund analyst.
Widening spreads hurt hedge funds that invest in distressed debt, as lower-quality credits became cheaper. The Morningstar Distressed Securities Hedge Fund Index was one of the worst-performing category indexes, falling 4.1%. The Morningstar MSCI Specialist Credit and Relative Value Hedge Fund Indexes fell only 0.5% and 0.1%, respectively, as some areas of the credit market, such as leveraged loans, performed better than others.
Global non trend funds, those that make macro-economic bets, and global trend funds, those that bet on price trends in commodity and financial futures, showed mixed results in February. These funds took advantage of the rise in gold and the depreciation of the Japanese yen against the U.S. dollar, but volatility in other commodities such as oil caused declines.
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Guardian Unlimited – Billionaire hedge fund manager John Paulson has made a £100m profit by betting that the Royal Bank of Scotland’s share price would fall dramatically, according to calculations by the Guardian, adding fuel to the debate about the impact of short-selling on bank stocks.
New York-based Paulson, who made more than $3bn by betting against the US housing market, now appears to be profiting from positions placed on the assumption that bank shares would tumble in the aftermath of the market chaos caused by the demise of the sub-prime mortgage industry.
His hedge fund, Paulson & Co, was one of the few to trade through the ban imposed on short-selling by the Financial Services Authority in September to protect the rescue takeover of HBOS by Lloyds TSB.
guardian.co.uk – Secretive hedge fund barons, blamed by many for undermining Britain’s financial stability, will be unmasked on Tuesday when they are forced into the public spotlight by the powerful Treasury select committee.
As suggestions grow that hedge funds have made huge sums shorting UK bank stocks and sterling, the billionaire Chris Hohn and Liberal Democrat-supporting tycoon Paul Marshall will be quizzed on whether the predicted decimation of hedge funds as a result of the financial crisis could destabilise the global economic system further.
Hedge fund bosses will argue that they manage "only" £1.3 trillion of cash, which is less than a large fund manager, and that not one hedge fund has received a public bail-out. In addition, of the 150 bans or censures levelled by the Financial Services Authority since 2005, only two have involved hedge funds. They will also say that there have been numerous examples of hedge funds shorting sub-prime assets ahead of the credit crunch.
Reuters – Suspected insider trading cases reached an all-time high last year, driven less by hedge funds and more by pillow talk between relatives and friends, the head of surveillance at the New York Stock Exchange said on Wednesday.
In a year when bombshell revelations rocked bank stocks, governments outlawed short-selling, and panicked investors brought on the worst market rout since the 1930s, there was much to tempt those with privileged information.
NYSE Regulation, the Big Board’s oversight body, referred 146 cases of suspected insider trading to the U.S. Securities and Exchange Commission in 2008, five more than in 2007, the previous record year, and more than twice as many as in 2004.
Reuters – British hedge fund manager Man Group Plc said on Tuesday banks were more highly geared than hedge funds and bank deleveraging had been the main driver of asset-price declines.
"Hedge fund deleveraging has put pressure on asset prices as clients have redeemed. But the main point is banks are deleveraging and they are many times more leveraged than hedge funds," said Man Group Chief Executive Peter Clarke.
Speaking at the Hedge Funds World conference in Zurich, Clarke also said leverage across the hedge fund industry is now at around a third of leverage levels in 2007.
Reuters UK – British listed hedge fund manager Man Group Plc said on Monday first-half sales rose by about 25 percent to $10 billion, but its shares fell as market turbulence hit its funds under management.
Funds under management fell by $5.0 billion to about $70.3 billion — 12 percent down on the $79.5 billion at end-June — reflecting negative investment movement, Man said. Net inflows for the period rose 14 percent at $4.1 billion.
Shares in the group, which have lost 32 of their value over the last month, were down a further 5.4 percent at 353.5 pence, valuing the group at about 6.35 billion pounds, at 0737 GMT.
