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.
Reuters – Renaissance Technologies LLC, the multibillion dollar hedge fund known for delivering top returns by relying on complicated computer models, hired a new president and chief executive officer for its institutional business.
The fund firm, which manages roughly $20 billion, said on Tuesday that it has hired Matthew Scanlan to replace Stephen Robert, who retired from the firm.
Scanlan joins the firm from Barclays Global Investors where he worked for 12 years and was most recently the company’s head of institutional business in the Americas.
Am Law Litigation Daily – Remember how Linklaters’ representation of Barclays in a suit against Bear Stearns cost the firm its client relationship with JPMorgan Chase? It now looks like Linklaters sacrificed its JPMorgan work for nothing. Bloomberg is reporting that Barclays has dropped its Bear Stearns suit with prejudice.
In an amended complaint filed in June, Barclays blamed Bear Stearns and two since-indicted Bear hedge funds managers for causing Barclays to lose hundreds of millions of dollars it had invested in a Bear hedge fund with assets linked to subprime mortgages. (The fund imploded in 2007.) Barclay’s dismissal notice did not offer any explanation for why it was ending the suit. Linklaters partner Lawrence Byrne, whose name appears on the dismissal notice, did not immediately return our phone call.
Seekingalpha.com – As more investment pros warn of a bubble in Treasuries, State Street Global Advisors is launching an intermediate-term bond exchange-traded fund focused on investment-grade corporates and government debt.
The SPDR Barclays Capital Intermediate Term Credit Bond ETF started trading on Wednesday. It’s expected to come with an annual expense ratio of 0.15%. It will follow an index of more than 2,500 bonds and a weighted maturity of 5.2 years.
While ITR enters an investment-grade intermediate bond field with a few established competitors, the new ETF does track an index that offers somewhat different investment features than its rivals.
New York (HedgeCo.Net) – Billionaire and hedge fund manager extraordinaire John Paulson has reportedly pocketed $139 million by betting against the Royal Bank of Scotland, further fueling cynicism that shorting aids in driving down share prices.
Paulson is no stranger at predicting trends and shorting companies that he feels fit. Late last year, his New York-based Paulson & Co. disclosed short positions in the British mortgage lender HBOS, Barclays and Lloyds TSB.
Investors turn to Paulson because he seems to have a knack for placing bets that he feels will turn out in his favor. Paulson infamously bet against the U.S. housing market in 2007, which garnered himself a $3 billion paycheck while returns on his hedge funds continued to rise. In 2008, when most hedge funds lost an average of 15 percent on the year, Paulson’s funds kept steady, with his Advantage Plus fund up 20 percent.
While some argue that the practice of shorting is responsible for driving down share prices, many feel that is an unfair assumption. The ban on short selling that was enacted last September in the UK was finally lifted earlier this month, although short positions are still required to be disclosed. The Financial Services authority has said they would reinstate the ban if it proved to be needed.
Julie Scuderi Senior Editor for HedgeCo.Net Email: julie@hedgeco.net
Daily Mail – One of Britain’s most successful hedge funds made a fortune betting on a plunge in Barclays shares on the day the short-selling ban was lifted, it has emerged.
Lansdowne Partners sold shares in the high street banking giant last Friday when they plummeted by 25 per cent and then bought them back on Wednesday.
LONDON (Reuters) – Hedge funds may have missed out on sharp falls in banks’ shares in recent days because few rushed in after the UK’s ban on short selling financial stocks expired on Friday, data shows.
According to figures from research firm Data Explorers, the amount of stock out on loan — a good indication of how much a stock has been sold short — did not increase on Friday in Royal Bank of Scotland and actually fell in HBOS.
Stock out on loan in HSBC, Lloyds TSB and Barclays rose only slightly.
nebusiness.co.uk – LLOYDS Banking Group became the latest casualty of the bank sector sell-off yesterday as its shares plunged as much as 47%.
Royal Bank of Scotland steadied a little after Monday’s mammoth 67% fall, but doubts over the Government’s second bank bail-out and renewed fears for the sector’s health dragged its rivals lower.
Lloyds, created this week from the merger of HBOS and Lloyds TSB, was the worst hit, followed by Barclays down nearly 20%.
The falls extend losses across the sector in light of news that RBS expects to report record annual losses, but also comes in the wake of the recent expiry of the short-selling ban.
WalesOnline – Last week saw the return of the credit crunch’s bogey product: short selling.
The practice was banned by the Financial Services Authority last September after it was blamed for wiping millions off the value of bank shares, betting as it did that prices would fall as the recession bit deeper.
At the end of Friday last week, on the day of its re-introduction, a familiar pattern had re-emerged. Barclays closed down some 25% (although the bank reported that its profits would be “well ahead” of the £5.3bn predicted by some forecasts), while RBS fell by 13%.
Wall Street Journal – Experts say hedge funds are not responsible for the wholesale selloff in U.K. financial stocks which saw shares in the four remaining major banks dive to record lows earlier this week and prompted renewed calls to the U.K. financial regulator to reintroduce a ban on the short-selling of financial stocks.
While Lloyds Banking Group (LYG), HSBC Holdings PLC and Royal Bank of Scotland Group PLC (RBS) all closed in positive territory Wednesday with Barclays PLC (BCS) only down 0.07%, all four had had massive falls Monday and Tuesday.
guardian.co.uk – A hedge fund admitted yesterday it had been speculating that shares in Barclays would fall. The admission by Lansdowne Partners that it had been shorting Barclays shares on Friday – a day when the bank lost a quarter of its value – came amid concern that hedge funds could be blamed for the dramatic slide in bank shares yesterday.
Hedge funds have to disclose any short positions – where they sell shares they do not own in the hope of buying them back at a lower price to make a profit – but are no longer banned from the practice after a change to the Financial Services Authority’s rules at the end of last week.
Mena Report – The Dubai Multi Commodities Centre Authority (DMCCA) and Shariah Capital, Inc. (SCAP.L) today announced the Dubai Shariah Hedge Fund Index, the first internationally-recognised index comprised exclusively of Shariah compliant hedge funds. The Dubai Shariah Hedge Fund Index will be calculated and reported by Thomson Reuters (NYSE:TRI), the global news and financial information organisation.
The Index reflects the performance of the DSAM Kauthar Commodity Fund, Ltd. (“DKCF”). DKCF is an equally-weighted fund-of-funds comprised initially of four single- strategy, commodity-focused funds that invest exclusively in Shariah compliant long/short equity hedge funds on the Al Safi Trust platform. The Al Safi Trust is a comprehensive Shariah compliant platform designed specifically for hedge funds and launched recently by Barclays Capital and Shariah Capital. Distributed under the DSAM Kauthar label, the four funds underlying the index have been seeded with US$50 million each by DMCCA.
Bloomberg – The biggest-ever decline in commodities turned Pierre Andurand and Chris Levett into this year’s heroes for investors.
Andurand’s $1.1 billion BlueGold Capital Management LLP hedge fund in London almost tripled between its February debut and November by betting on higher oil prices in the first half of 2008 and then reversing the strategy, the 31-year-old manager said. Levett’s $3 billion London-based Clive Capital LLP returned 44 percent in the first 11 months of the year.
The first bear market in commodities since 2001, as measured by the UBS Bloomberg CMCI Index, cut investments in raw materials to $144 billion from a peak of $270 billion in the second quarter, Barclays Capital estimates. While the CMCI rose almost fivefold from 2001 to 2008, beating stocks and bonds, commodities measured by the Reuters/Jefferies CRB Index fell 53 percent since June and are heading for the worst year in five decades.
