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.
Bloomberg – Philip Falcone, who runs the $7 billion Harbinger Capital Partners LLC, is starting a hedge fund that draws on his background in distressed securities, even as investors are locked into his biggest fund.
The Credit Distressed Blue Line Fund will buy troubled loans and bonds, and bet against higher-rated debt, the New York-based firm said in a March 16 letter to investors. The firm’s flagship $5 billion Harbinger Capital Partners Fund I limited withdrawals to 65 percent of its assets last year because of private-equity investments, which are harder to sell than publicly traded stocks.
Bloomberg – MBIA’s split of its bond- insurance business was challenged by hedge funds alleging the move hurts owners of about $240 billion of debt while benefiting stock investors, executives and some policyholders.
The reorganization, in which MBIA stripped $5.4 billion of assets and its U.S. municipal business from a unit that now mainly insures only structured-finance bonds, “represents the height of insidious greed,” the Aurelius Capital Management and Fir Tree Partners funds said in a lawsuit filed today.
Reuters – Fund managers who buy U.S. life insurance policies to cash in the death benefits have predicted a bumper year in 2009 as investors seek uncorrelated alternatives to mainstream markets.
Supply is also is expected to increase as more individuals, stung by tumbling investment portfolios, could sell their policies at discounted prices.
Managers of funds investing in traded life policies (TLP) are forecasting that assets under management could as much as double as mandates pour in from other fund managers, hedge funds and high net-worth individuals seeking steady returns uncorrelated to equities and bonds.
Bloomberg – Before I quit my job trading bonds for my former Wall Street employer and set up my first hedge fund, I thought long and hard.
I stared at the ceiling every night, unable to sleep, and asked myself, over and over, many difficult questions. For example: “How sincerely do I want to grow my net worth from $10 million to $100 million?” And: “How much pleasure might be had from the envy of others?”
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.
Seattle Times – With their investment records in tatters, some mutual-fund companies are pinning their hopes on products with an old-fashioned ambition: delivering steady returns.
Many of these funds are doing just that, while others are falling short of the mark.
Putnam Investments recently introduced four "absolute return" funds that use such strategies as buying foreign securities or bonds to smooth out their performance and aim to earn investors 1 to 7 percent a year above inflation.
BusinessWeek – The market for exotic securities hasn’t entirely gone away. It’s just gone underground—-six feet under, to be precise.
Hedge fund Davidson Kempner Capital Management is plunging into life settlements—a market in which speculators buy-up unwanted life insurance policies from wealthy individuals looking to score some quick cash. The $10 billion New York-based fund is planning on selling so-called “death bonds” to overseas investors, as part of a plan to potentially raise cash to finance its life settlements acquisition business.
Wall Street & Technology – Global investors boosted their equity holdings for the second month running in December and cut bonds, thanks to signs of stabilising stock markets and tumbling government bond yields, Reuters polls showed on Monday.
Surveys of 44 leading investment houses in the United States, Japan, continental Europe and Britain showed an average mixed-asset portfolio holding 56.0 percent in stocks, up from 54.8 percent in November. However, it still remained below the long-term average holding of almost 60 percent.
Bond holdings fell to 33.0 percent in December from 34.3 percent the previous month, above the long-term average of around 32 percent.
Cash rose to 5.4 percent from 5.3 percent.
A rise in the respondents’ equity holdings comes as world stocks, measured by MSCI, rose nearly 20 percent after hitting a 5-1/2 year low on November 21.
A round of central bank interest rate cuts worldwide and the introduction of fiscal stimulus packages in major developed and emerging economies have helped convince many investors that stock markets might bottom before long.
BusinessWeek – What did investors do when the Dow Jones industrial average plunged 777.68 points, or 7%, on Sept. 29, to 10,365.45? Head for the nearest bar for a double? Or rush to double up, or down, on their stocks?
Either way, the Dow’s sharp response to the unexpected rejection by the House of Representatives of the Treasury’s buyout plan reminded investors yet again of how unpredictable and volatile the market can be.
"You’ve got to have a steel stomach to confront these types of markets—to survive or win," says William Harnisch, president of hedge fund Peconic Partners, which manages some $1.5 billion in assets. And a winner he’s been at a time when most other hedge funds are struggling to avoid sinking. In 2007, Peconic posted a 64% gain, and this year is up 8% though Sept. 29, vs. a decline of more than 20% for the Standard & Poor’s 500-stock index. So Harnisch wasn’t one of those who scurried to the nearest tavern: He dared to buy stocks as the market plummeted.
