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.
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.
Free Internet Press – With the leveraged-buyout business on life support, major private-equity firms such as the Carlyle Group are taking a closer look at the battered banking sector as a way to make money for their clients.
Last September, Washington, D.C.-based Carlyle invested $75 million in Boston Private Financial Holdings. Last month, it was part of a group that injected $900 million into Florida’s BankUnited. Carlyle was part of a group looking to buy Atlanta, Georgia-based Silverton Bank earlier this month, until regulators decided to liquidate the institution instead.
Private-equity firms have long eyed the financial services industry, but the sector took a back seat over the past two decades as private equity pursued fat returns fueled by leveraged-buyout deals. Until recently, those buyouts helped Carlyle generate an annual net return of 26 percent across the firm..
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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CNN Money – They pray for recessions and smile a little wider when a company climbs onto its death bed.
Welcome to the world of distressed, or so-called "vulture" investors, an often-ignored corner of the market that has increasingly taken center stage as more businesses slip into bankruptcy or look to shed assets.
There has been no shortage of corporate ruin lately. Lehman Brothers, which sent a shockwave across the financial system. Outside of the banking sector, electronics retailer Circuit City and media giant Tribune Co both filed for bankruptcy.
Business Spectator – European shares jumped for a fifth straight session on Monday, led higher by financials, as investor sentiment improved following further assurances over the health of the US banking sector.
At 0948 GMT, the FTSEurofirst 300 index of top shares was up 2.3 per cent at 718.41 points, extending the previous session’s gain of 0.8 per cent. But it is still down 14 per cent this year after plunging 45 per cent in 2008.
The broader STOXX 600 was up 2.1 per cent at 172.15 points, with banks and insurers topping the gainers list.
Forbes – Qatar launched new measures to support its banking sector on Monday with the government saying it would purchase listed shares within banks’ investment portfolios, according to a statement by the Doha bourse.
The news sent shares in Qatari banks soaring, with Qatar National, Qatar Islamic and Qatar Commercial banks rising the limit of 10 percent.
Reuters – State regulators urged Congress on Thursday to restore their authority to protect investors from fraud in the banking sector and to beef up oversight of hedge funds.
Hedge fund advisers should be subject to the same kind of scrutiny as investment advisers, the North American Securities Administrators Association told reporters.
The NASAA said Congress should give the Securities and Exchange Commission explicit authority to regulate the $1.4 trillion industry, which has the potential to destabilize markets.
Financial Times – Hedge funds charging hefty fees for sophisticated trading strategies aimed at outperforming the wider market have collectively parked $100bn in simple money market funds typically used by investors seeking safe rather than spectacular returns.
Citigroup estimates that hedge funds have now placed $600bn in cash, and that $100bn of this is held in money market funds, normally seen as some of the safest places to invest cash.
However, last week, those money funds became embroiled in the wider financial crisis to the point that the US Treasury was forced to offer a blanket guarantee on them as part of its attempts to prevent the spillover of the financial crisis into the $3,400bn sector.
The extreme measures taken by the Treasury followed mounting fears that retail investors in the sector could be starting to panic and might withdraw funds on a large scale.
DealBreaker.Com- If your memory stretches past last summer, you might recall that before the current debacle settled on Wall Street there was a lot of sound and fury raised about hedge funds. The rise of hedge funds was said to create systemic risk, where the collapse of one or more hedge funds would somehow topple the financial system.
There were cries of anguish when early attempts to harass and regulate hedge funds were thrown out by the courts. Right up until the mortgage mess began to tear through Wall Street, there were plenty of new schemes being hatched with the aim of tying down hedge funds.
