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West Palm Beach (HedgeCo.net) – In the wake of the Madoff scandal, Tuckerbrook Alternative Investments is offering its hedge fund investors the daily market value of assets in their capital accounts.
"In light of the impact 2008 is having on the hedge fund business, transparency is the most important enhancement the industry can embrace," John Hassett, Managing Principal of Tuckerbrook, said, "Tuckerbrook has always used third-party prime brokers, administrators and auditors in order to provide independent verification of fund activity, so it made sense to us to have daily asset transparency reports distributed directly from Citi Hedge Fund Services, to underscore the importance of both independent asset pricing and more frequent transparency. Although unique in the industry now, we would expect this level of reporting to become standard practice in the future."
Moses Grader, Chief Operating Officer of Tuckerbrook, said, "Ninety percent or more of all hedge fund investments are in commingled fund structures, with only the largest investors having daily accountability through separately managed accounts. Daily transparency at the client-account level, delivered by a trusted third party, is a major step up in accountability to those investors that don’t have an SMA."
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Reuters – Blackstone Group LP said on Tuesday it plans to liquidate two hedge funds as a lack of outside investing amid tight credit markets will prevent them from getting big enough to be meaningful to the company.
The private equity firm plans to consolidate its distressed securities fund with GSO Capital Partners, a hedge fund manager it acquired in March for $10 billion.
Blackstone also plans to spin off Blackstone Kailix advisers, the investment manager of its long/short equities fund, to a management team led by Manish Mittal, who plans to form a new fund as an independent entity.
"We believe these measures will enable us to operate more profitably in the current environment," Chief Operating Officer Tony James said.
West Palm Beach (HedgeCo.net) – The Blackstone Group is making changes to the single manager hedge funds businesses within its Marketable Alternative Asset Management (MAAM) segment.
Blackstone is consolidating its distressed securities fund onto a single operating platform and moving Blackstone Kailix Advisors, the investment manager of Blackstone’s long/short equities fund, which will be spun off to its management team led by Manish Mittal, who intends to form a new fund as an independent entity.
Commenting on the changes, Tony James, President and Chief Operating Officer of Blackstone, said, “We believe these measures will enable us to operate more profitably in the current environment. Although these funds have performed better than the S&P 500 and other global market averages, we expect that adverse fundraising conditions in the hedge fund industry will prevent these two initiatives from scaling up to a size where they are meaningful for our business on a stand alone basis.”
Blackstone will be an investor in the new fund and investors in the existing fund will be offered the option of investing in the new fund on a preferred basis as their interests in the existing fund are liquidated. Although the existing fund has outperformed global equities measures, its size does not make it a core strategic business for Blackstone and it is not anticipated that this will change in the near term. The fund has not imposed any gates or liquidity restrictions on investors.
“We continue to have a significant commitment to the hedge fund business," James continued, "The current market turmoil with its associated dislocation of asset prices presents us with a multitude of compelling opportunities to invest capital. It is during times like these that we need to be especially disciplined to focus both our people and our capital on the largest opportunities.”
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The Independent – Judy Woodruff: You write in your new book, The New Paradigm for Financial Markets, that “we are in the midst of a financial crisis the likes of which we haven’t seen since the Great Depression.” Was this crisis avoidable?
George Soros: I think it was, but it would have required recognition that the system, as it currently operates, is built on false premises. Unfortunately, we have an idea of market fundamentalism, which is now the dominant ideology, holding that markets are self-correcting; and this is false because it’s generally the intervention of the authorities that saves the markets when they get into trouble.
Since 1980, we have had about five or six crises: the international banking crisis in 1982, the bankruptcy of Continental Illinois in 1984, and the failure of Long-Term Capital Management in 1998, to name only three. Each time, it’s the authorities that bail out the market, or organize companies to do so. So the regulators have precedents they should be aware of. But somehow this idea that markets tend to equilibrium and that deviations are random has gained acceptance and all of these fancy instruments for investment have been built on them. There are now, for example, complex forms of investment such as credit-default swaps that make it possible for investors to bet on the possibility that companies will default on repaying loans. Such bets on credit defaults now make up a $45 trillion market that is entirely unregulated. It amounts to more than five times the total of the US government bond market. The large potential risks of such investments are not being acknowledged.
MSN MoneyCentral- A British hedge fund said Monday it will accept the Japanese government’s rejection of its proposal to raise its stake in a major utility — although it added that it still doesn’t agree with the reasoning behind the order.
The Children’s Investment Master Fund had proposed raising its stake in J-Power — Japan’s largest electricity wholesaler — to as much as 20 percent from 9.9 percent. The government rejected that proposal earlier this year, citing potential disruptions to public order.
The fund has contested the decision as lacking transparency and including incorrect information and false premises.
But it said the government was unlikely to change its mind. The fund will now instead focus on improving corporate governance at J-Power, it said in a statement.
