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.
New York Times Blogs – The biggest regulatory changes since the 1930s are bearing down on the U.S. securities and investment industry, and many firms are ill-prepared, according to a new study by research firm TowerGroup.
From derivatives and hedge funds to capital standards and short selling, the range of issues “encompasses almost every line of business and every functional area,” TowerGroup senior research director Dushyant Shahrawat told Reuters.
Business models will adapt or perish in the new order, which regulators aim to make more transparent, accountable and globally consistent, according to the report released on Thursday.
Reuters – Integrated Asset Management said on Wednesday it is repositioning as a pure play brokerage business after agreeing to sell a 51 percent stake in its French fund of hedge funds business.
The firm, listed on London’s AIM market, is selling the stake in Altigefi to Sal. Oppenheim in a deal which will also see the private banking group exit as Integrated’s major shareholder.
The move is evidence of smaller asset management players being forced to reexamine their business models as the financial crisis changes the market place. A spokesman said Integrated’s decision to concentrate on brokerage came because it had become more and more difficult to achieve the scale thought necessary to successfully run a fund of funds business.
Reuters – Integrated Asset Management said on Wednesday it is repositioning as a pure play brokerage business after agreeing to sell a 51 percent stake in its French fund of hedge funds business.
The firm, listed on London’s AIM market, is selling the stake in Altigefi to Sal. Oppenheim in a deal which will also see the private banking group exit as Integrated’s major shareholder.
The move is evidence of smaller asset management players being forced to reexamine their business models as the financial crisis changes the market place. A spokesman said Integrated’s decision to concentrate on brokerage came because it had become more and more difficult to achieve the scale thought necessary to successfully run a fund of funds business.
Atlanta Journal Constitution – Unlike the nation’s banks, hedge funds haven’t been lining up for government bailouts in the wake of losses they can’t handle. But the funds do share one Wall Street problem: a huge mismatch between the short-term funds they take in and the long-term bets they make. Without a rethink of their business models, many in the hedge fund business risk going the way of the investment banking dodo.
Recall the nightmare on Wall Street. Going into 2008, America’s five big investment banks held trillions of dollars in long-term and illiquid assets that were financed largely by short-term borrowings. That did not work out so well. Two of them disappeared. Another was swallowed by a traditional bank, and the last two had to don the sober garb of regulated, deposit-taking banks to survive.
First Post – There’s no doubt which was the most popular reading material in the blogosphere this weekend – the extraordinary ‘farewell letter’ from Andrew Lahde, one of the most successful hedge fund manager in the world, who has said goodbye – and good riddance – to his old life in spectacular fashion.
Lahde became famous a year ago when his Santa Monica-based fund, Lahde Capital, returned a staggering 1000 per cent plus during 2007. The fund made its profit by shorting US suprime mortgages, which Lahde correctly predicted were a ticking time-bomb.
He was doing well this year, too, claiming a return of 400 per cent plus until he suddenly announced last month that he was bowing out. Then, on Friday, he decided to write an open letter to his former investors.
Daily Telegraph – As short-selling is banned to protect Britain’s banks, Gordon Rayner names the men who have made millions from the financial crisis
As 70,000 employees of HBOS wonder which of them will still have jobs this time next month, they will no doubt be looking for someone to blame for the extinction of their once great employer.
As the dust settled yesterday on the ruins of Britain’s fifth-biggest banking group, there was little doubt as to the immediate cause of their misery – the hedge fund billionaires who have made a killing by playing poker with their livelihoods.
West Palm Beach (HedgeCo.net) – Privately owned asset manager, Unigestion, has appointed Konstantinos Iordanidis as Managing Director and Head of Hedge Funds. Unigestion has $11 billion invested in hedge funds, private equity funds and quantitative equity strategies.
Iordanidis is a co-founder of Z.I. Investment, LLC, a global macro hedge fund in Chicago and former Head of Asset Allocation at Julius Baer Asset Management in Zurich from 2003 to 2005. He joins from Olympia Capital Management in Paris where he has been Co-Chief Investment Officer since 2005.
Based in Geneva, his role will be to lead the development of Unigestion’s fund of hedge funds business which comprises 43 investment professionals based in Geneva, London, New York, Paris, Singapore and Guernsey.
The arrival of Iordanidis will provide the opportunity for Bernard Sabrier, Chairman of Unigestion, and Patrick Fenal, CEO, to devote more time to the overall management of the Group focusing on the strategic direction of Unigestion over the next decade. Both will continue to have a key involvement in the fund of hedge fund business, including close relationships with hedge fund managers and Unigestion’s clients.
"It is a natural move for us to reinforce our management structure as we continue to build a multi-disciplinary, multi-cultural and multi-geographic hedge fund team delivering superior quality products to our clients in a consistent and disciplined way." Patrick Fenal, CEO of Unigestion said.
"We are proud to have attracted such a talented individual to strengthen our team." Chairman of Unigestion Bernard Sabrier added, "No doubt he and the team will build on our existing expertise and continue to provide our clients with a combination of products and client service at the leading edge of the fund of hedge fund industry."
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Seeking Alpha – In a recent interview, Mr. Stanley Goldstein announced the creation of an industry watchdog group, led by the New York Hedge Fund Roundtable. Its goal is to self-enforce otherwise voluntary and "weak" hedge fund practices. (As I wrote in "Doris Day, Scarlett O’Hara and Financial Market Tumult," July 19, 2008, a July 17, 2008 Financial Times editorial refers to such guidelines as cosmetic, meant to attract institutional investors and to keep regulators at bay.)
Goldstein, a CPA and founder of several hedge funds, explains that the aim is "not to start a separate organization but to use the existing one to compile and disseminate standards for hedge funds to follow," adding that "We do not see enforcement as practical or desirable but rather, hope that ‘industry usage’ will evolve along the lines which we, and others like us, deem appropriate."
Goldstein’s support of the free market to act as the ultimate enforcer is laudable, especially at a time when global regulators are far from silent about the need for more stringent rules. Will Adam Smith’s "invisible hand" really work? Let’s hope so. As this blogger has written many times before, regulations no doubt change the way market participants behave, often leading to the "Law of Unintended Consequences."
Bloomberg – Dai-ichi Mutual Life Insurance Co., with more than 30 trillion yen ($274 billion) in assets, will invest more money with hedge funds to safeguard returns as financial markets falter.
Tokyo-based Dai-ichi Mutual, Japan’s second-largest life insurer, currently invests in more than 100 hedge funds as well as funds of hedge funds, Yuji Hirai, manager of the firm’s structured and alternative investment department, said in an interview in Tokyo yesterday. He declined to provide specific targets for hedge fund allocations.
“Our goal is to increase our allocation to hedge funds,” said Hirai, 40. “We’re in a difficult market, no doubt, but for hedge funds chasing absolute returns, this is the time to prove their outperformance.”
News.com.au- Iron ore tycoon Andrew Forrest is under attack from international hedge funds in a co-ordinated short-selling blitz against his Fortescue Metals Group — a campaign that has caused the company’s stock, and the executive’s paper fortune, to slump by more than 37 per cent in just over a month.
The company’s broker, Southern Cross Equities, has sent a note to clients that leaves no doubt as to why it considers the stock has fallen: "FMG shares have been subject to an aggressive and co-ordinated shorting campaign from a high of $13.15."
The stock went as low as $7.91 on Tuesday but by Thursday had rebounded to a $8.70 close on a day of particularly heavy trading, with 45.5 million shares going through.
