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Reuters UK – London-based hedge fund firm NewSmith paid its senior staff 29.4 million pounds last year despite some of its investments running into trouble during a volatile year for markets.
NewSmith, one of the hedge fund firms to appear before a parliamentary committee investigating the UK banking crisis in January, wrote down the value of its listed and private equity investments, particularly in Asia, by 7 million pounds, recently released accounts for the year to the end of November 2008 showed.
This included a 3.3 million pound writedown on its holding in FibreChem Technologies, whose shares were suspended from trading over alleged accounting irregularities.
Times Online – Alistair Darling has warned that he will impose tougher regulation to avoid a repeat of the banking crisis amid fears of a return of the bonus-driven, risk-taking culture in the City.
The Chancellor told The Independent newspaper that bankers who are too complacent will be “brought back to earth” by new legislation.
An important White Paper on the banking sector, due next week, will grant new powers to the Bank of England and the Financial Services Authority (FSA), Mr Darling said.
He promised “new tools” for the regulatory bodies to strengthen their powers, which could mean that the FSA will be able to extend its reach to hedge funds, some of the riskiest investment funds.
Reuters UK – NewSmith Capital Partners, one of the hedge fund firms to appear before a parliamentary committee investigating the UK banking crisis in January, has lost six staff as it cuts costs in a tough period for the industry.
According to a regulatory filing obtained by Reuters on Tuesday, Edward Johnson, an analyst on the firm’s resources and energy fund, and Ben Squire, an analyst on the credit fund, are no longer members of the firm.
The firm, which employs around 70 people, has also parted company with Sadiq Currimbhoy, a strategist on the firm’s Global Opportunities fund. A spokesman said investors had taken up an option to withdraw their assets from the liquid part of the fund and keep the remaining part of the portfolio as a private equity vehicle.
Bloomberg – Aozora Bank Ltd., the Japanese lender controlled by Cerberus Capital Management LP, posted its first loss in a decade, after investments in U.S. lender GMAC LLC and Bernard Madoff soured.
The bank booked a 242.6 billion yen ($2.5 billion) deficit in the year ended March 31, compared with a profit of 5.93 billion yen a year earlier, it said in a statement today. It lost 35.8 billion yen on U.S. auto financing company GMAC.
Aozora, rescued by Japan’s government during the 1990s banking crisis, has pledged to focus on domestic lending after racking up losses in the U.S. Chief Executive Officer Brian Prince, who replaced Federico Sacasa on Feb. 10 when the bank forecast a loss, declined to comment on reports he merge the company with Shinsei Bank Ltd.
New York (HedgeCo.Net) – Hedge funds gained 1.37 percent in March, according to data compiled by the Hennessee Group LLC. It was a successful month for the equity markets at well, with the S&P advancing 8.54 percent, the NASDAQ climbing 10.94 percent, and the Dow Jones advancing 7.73 percent.
"Hedge funds with a focus on the financial sector may potentially outperform in 2009," said Co-Founder of Hennessee Group Charles Gradante. "Not only did Citigroup and Bank of America announce a profitable January and February, but the borrowings at the Fed discount window have been steadily declining. It is possible that the banking crisis of confidence can unwind as quickly as it unfolded."
According to the data, the long/short equity index advanced 1.6 percent, thanks to programs launched by the U.S. government aimed at helping the banking sector. The arbitrage/event driven index gained 1.34 percent, with credit opportunities aplenty and many managers increasing stakes in bank debt, high yield and convertible bonds.
The global macro index saw a steady increase of .74 percent. The Hennessee Group pointed to the fact that many macro managers posted losses on their short-term Treasuries trade after the Fed announced they would buy $300 billion in U.S. Treasuries, which prompted buying and drove down yields.
This puts the YTD gain for hedge funds at just over 1 percent.
Julie Scuderi Senior Editor for HedgeCo.Net Email: julie@hedgeco.net
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Independent – European leaders backed major reform of hedge funds yesterday as part of structural changes to help the world’s financial institutions emerge stronger from the global economic crisis.
Short-selling by the secretive hedge fund industry — selling borrowed stock in the anticipation that the prices will fall — was blamed by some politicians for exacerbating the banking crisis and economic meltdown.
A copy of the summary from the summit hosted by German Chancellor Angela Merkel in Berlin said banks should bring in reforms to ensure they build up a buffer of resources in good times and called for sanctions against tax havens.
Reuters – NewSmith Capital Partners, one of the hedge fund firms to appear before last month’s Treasury Select Committee into the banking crisis, told Reuters on Thursday partner Jeremy Silewicz had left the firm.
Silewicz, who joined NewSmith in March 2007 as a portfolio manager on its European fund before moving to a role in marketing, left at the end of last year, a spokesman said.
He added that Andrew Irving, a member of NewSmith’s operations team, had also left the firm, but declined to comment on the reasons for their departures.
Times Online – They are the financial world’s most secretive and unaccountable men — but also among its wealthiest and most influential. Today, four of the sharpest speculators in the hedge fund industry will be thrust into the spotlight when they appear before a Commons committee to defend themselves.
Christopher Hohn, the multi-millionaire founder of The Children’s Investment (TCI) fund, and Paul Marshall, the City financier who chairs Marshall Wace, will be appearing before the Treasury Select Committee hearing into the banking crisis.
They will be joined by Douglas Shaw, the head of alternatives at BlackRock, the biggest listed asset manager in America, and Stephen Zimmerman, the former Merrill Lynch executive who co-founded NewSmith Capital Partners. John McFall, the MP who chairs the committee, will be in charge of the hearing. Mr McFall, an ally of Gordon Brown, is likely to push his witnesses hard on short-selling.
