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Dallas Morning News - It’s every SMU grad’s dream: to be young, handsome, and closely involved with deciding how to spend $700 billion.
Attention, Class of 2000: Your fellow alum, Jeb Mason, is living it.
Mr. Mason, 32, has spent his entire career inside the Bush administration. His first assignment: running the mailroom for President George W. Bush’s transition office. His latest: overseeing the Treasury Department’s contacts with Washington’s influential community of lobbyists, trade groups and think tanks.
Mr. Mason is the gatekeeper to Henry Paulson, considered the most powerful treasury secretary in more than a decade.
Bloomberg - JO Hambro Capital Management Ltd., which oversees about $3.5 billion of assets, will close one of its two hedge funds partly because a bet against Volkswagen AG shares backfired, people familiar with the situation said.
The $240 million Trident European Fund dropped 25 percent in October, its worst month since starting a decade ago, mainly after a bet on a drop in Volkswagen shares went awry, said the people, who declined to be identified because the firm doesn’t disclose returns. The fund has slumped 39 percent this year after posting average returns of 8.4 percent annually since its inception.
Poor performance, dollar gains sapping European investment returns and investors moving assets from medium-sized companies all contributed to the fund’s closure, Suzy Neubert, a spokeswoman for JO Hambro in London, said in an e-mailed statement.
Bloomberg - It used to be that we searched for economic icebergs in Asia. Now we are on the lookout for Icelands.
Last week, Iceland became the first developed economy to seek aid from the International Monetary Fund since 1976. It needed a $2.1 billion bailout after investors realized it wasn’t running an economy, but a hedge fund.
While Ukraine, Belarus, Hungary and Pakistan are also lined up at the IMF’s door, Iceland’s woes are getting special attention. The thought that even a western European economy that once had an AA rating could implode are bringing back uncomfortable memories about Asia’s crisis a decade ago.
The question zooming around markets is this: If the worst- case scenario plays out and the crisis continues, could Asia experience another 1997? Equally important, will investors know it when they see it?
Watch the banks, say analysts such as Mark Matthews of Merrill Lynch & Co. in Hong Kong. “Bank shares are the canary in the coalmine,” he says.
Bloomberg - Hedge fund managers, after enduring the industry’s worst month in a decade, are seeking to explain to investors what went wrong and what they are doing about it.
“We clearly underestimated several things, most importantly the tsunami of redemptions that are being delivered to hedge funds as investors line up to get out of these funds as well as record outflows from equity mutual funds,” Jeffrey Gendell, who runs Greenwich, Connecticut-based Tontine Associates LLC, wrote in an Oct. 1 letter to clients.
“I am not a nervous person by nature, but should have been under the circumstances,” wrote Gendell, whose Tontine Partners LP fund plunged 59 percent in September, leaving it down 67 percent for the year, according to investors. Gendell, 49, had expected shares of steel, engineering, airline and chemical companies to appreciate because of falling oil prices. Instead they plummeted.
Bizjournals.com - A Minneapolis hedge fund has sued Petters Group Worldwide, alleging it was defrauded out of $60 million in a deal involving “imaginary televisions.”
Interlachen Harriet Investments, a Cayman Islands-based unit of Minneapolis-based Interlachen Capital Group, filed the suit Wednesday, saying that it gave $60 million to Petters Co. Inc. to purchase electronic merchandise such as televisions. PCI, a unit of Petters Group Worldwide, was to resell the televisions at a profit. Interlachen alleges that PCI never purchased any merchandise, and used the investment to fund former CEO Tom Petters’ other business ventures, pay down debt and for personal use.
The suit is similar to federal allegations made last week that Petters and several associates bought and sold nonexistent goods with investors’ money for more than a decade by creating the image of a successful retail business.
New York Post - Billionaire Tom Petters fancied himself the next Warren Buffett - that is until his empire starting crashing down like a house of cards.
The feds accuse Petters, one of Minneapolis’ fastest rising business stars, of secretly being at the center of an elaborate $2 billion corporate ruse, stretching over the past decade, while he hobnobbed with billionaires and movie stars.
Petters stepped down from his Minneapolis-based Petters Group Worldwide after federal agents raided his offices in several cities, acting on a tip from a disgruntled insider.
Independent - Hedge funds could have an unprecedented level of cash pulled out by investors this quarter, according to insiders, just as they faced millions of pounds of losses from last week’s shock regulation of short selling. It has been a tough year for the industry with high-profile funds blowing up, clients increasing redemptions, as well as public fury over short selling and increased threats of regulation.
One hedge fund expert pointed to The Hedge Fund Implode-O-Meter (HFI) as how he judges the state of the industry. The HFI was set up online in the wake of the credit crunch "to track as hedge funds learn the double-edged-sword nature of the often extreme leverage they use".
The group’s "imploded funds" list has hit 51 companies since the sub-prime mortgage crisis in the United States kicked off a widespread downturn. That compares with its historical list, stretching back more than a decade to the end of 2006, of just 14, including the collapse of Long-Term Capital Management and Amaranth.
One hedge fund expert pointed to The Hedge Fund Implode-O-Meter (HFI) as how he judges the state of the industry. The HFI was set up online in the wake of the credit crunch "to track as hedge funds learn the double-edged-sword nature of the often extreme leverage they use".
The group’s "imploded funds" list has hit 51 companies since the sub-prime mortgage crisis in the United States kicked off a widespread downturn. That compares with its historical list, stretching back more than a decade to the end of 2006, of just 14, including the collapse of Long-Term Capital Management and Amaranth.
Reuters - More hedge funds have called it quits worldwide in the first half of 2008 than a year ago, as tumbling markets and finicky investors take a heavy toll on the $1.9 trillion industry, new data show.
Liquidations rose by 15 percent during the first six months of 2008 when 350 funds closed their doors compared with 303 a year earlier, according to numbers released by Hedge Fund Research (HFR) on Thursday.
"This year, the industry will likely see more funds shut down than start up," said Phil Duff, who runs Duff Capital Advisors.
In the first eight months of the year, hedge funds lost an average 4.83 percent, making for the worst returns in a decade.
Times Online - People who run hedge funds hate the way the press describe them as “secretive”. A quick Google of “hedge funds” shows what a cliche it has become. Hedge funds are “notoriously secretive” and “super-secretive”; they live in a “secretive world”.
But sadly, for an increasing number of them, the secret is finally out.
The promise behind this $2 trillion universe was that its managers would make money whether markets went up or down. But the turmoil in the financial world is proving too much for many of them. All of a sudden the Masters of the Universe are failing fast.
The average hedge fund has lost more than 4% this year, according to Hedge Fund Research, putting the industry on course for its worst year on record. New investments in hedge funds for the first six months of 2008 fell below $30 billion, compared to $118 billion for the same period last year.
The hedge fund manager has become the Gatsby figure of our era. But his fall will be felt by more than Manhattan estate agents, art galleries and Porsche dealers. Over the past decade, the hedge fund industry has grown fivefold, pumped up with billions from corporate and public pension funds and university endowments looking for market-beating returns.
The hedge fund manager has become the Gatsby figure of our era. But his fall will be felt by more than Manhattan estate agents, art galleries and Porsche dealers. Over the past decade, the hedge fund industry has grown fivefold, pumped up with billions from corporate and public pension funds and university endowments looking for market-beating returns.
Reuters UK - Balyasny Asset Management LP recruited more than 30 money managers and analysts from competing hedge funds in the first eight months of the year, exceeding its total for all of 2007.
“We have been aggressively looking for talent, and in a year like this, there are a lot more candidates out there,” said Barry Colvin, vice chairman of the Chicago-based firm, which oversees $2.5 billion. Hires came from New York-based Satellite Asset Management LP and Magnetar Capital LLC in Chicago, which have both lost money this year.
While more than 200 hedge funds shut down this year, Balyasny, SAC Capital Advisors LLC and Citadel Investment Group LLC are taking advantage of the industry’s worst performance in a decade to go on a hiring spree. Hedge funds, diminished by a scarcity of credit and enfeebled stock markets, fell by an average 4.7 percent as of Aug. 28, according to data compiled by Hedge Fund Research Inc. in Chicago.
Sixty-one percent of the 2,795 funds managing more than $100 million that are in New York-based HedgeFund.net’s database are losing money in 2008.
Bloomberg - Balyasny Asset Management LP recruited more than 30 money managers and analysts from competing hedge funds in the first eight months of the year, exceeding its total for all of 2007.
“We have been aggressively looking for talent, and in a year like this, there are a lot more candidates out there,” said Barry Colvin, vice chairman of the Chicago-based firm, which oversees $2.5 billion. Hires came from New York-based Satellite Asset Management LP and Magnetar Capital LLC in Chicago, which have both lost money this year.
While more than 200 hedge funds shut down this year, Balyasny, SAC Capital Advisors LLC and Citadel Investment Group LLC are taking advantage of the industry’s worst performance in a decade to go on a hiring spree. Hedge funds, diminished by a scarcity of credit and enfeebled stock markets, fell by an average 4.7 percent as of Aug. 28, according to data compiled by Hedge Fund Research Inc. in Chicago.
Do you remember a time, only a short while ago, when virtually anybody could start a hedge fund? It seemed so easy: billions of dollars were being thrown around like confetti, even at first-time managers. You could make money with your eyes closed. Or so it seemed.
Ronald G. Insana was one of the people who chased that dream. Yes, that Mr. Insana — the man who spent more than a decade as one of CNBC’s most prominent anchormen, interviewing some of the biggest titans in business and trying to make sense of the daily gyrations of the market.
In March 2006, Mr. Insana left the network to try his hand at becoming one of those titans, setting up a fund to help investors get into hedge funds, a so-called fund of funds. Paul Kedrosky, the writer and investor, said at the time that Mr. Insana’s announcement “reminded him a little of Lou Dobbs going to Space.com at the peak of the dot-com bubble.” Mr. Dobbs’s adventure, you may recall, didn’t turn out well; he’s back on TV.
Two weeks ago, Mr. Insana announced that he was throwing in the towel. Though his career detour doesn’t rank on the flameout scale anywhere approaching the Space.com debacle, it is an unusually instructive and cautionary tale.