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.
Forbes – The dollar edged up towards a one-month high against the euro on Friday before monthly U.S. jobs data later in the day, with investors viewing the report as a key hurdle for whether the U.S. currency can sustain its rebound.
A mixed bag of U.S. data released the previous day showing the economy expanding less than expected in the second quarter, a spike in jobless claims but a pick-up in Midwest business activity did not prove decisive for the dollar. [ID:nN31399964]
Investors are still looking for the Federal Reserve to raise interest rates later in the year, just as mounting signs of economic slowdown from the euro zone to Australia have started to take a toll on other major currencies.
Bloomberg – Just when American International Group Inc. shareholders figured things couldn’t get worse at the world’s largest insurer, profit from the company’s private equity and hedge fund investments is evaporating.
Earnings from so-called alternative holdings were probably close to zero in the second quarter, after soaring 77 percent to $1.02 billion a year earlier, said Citigroup Inc. analyst Joshua Shanker.
The drop follows the worst first half for hedge funds in almost two decades and a 73 percent decline in the value of announced leveraged buyouts, according to data compiled by Chicago-based Hedge Fund Research Inc. and Bloomberg.
ITNews- Recent second quarter figures from the Cayman Islands Monetary Authority (CIMA), have confirmed the achievement of a key milestone by the Cayman Islands financial services industry, with more than 10,000 investment funds currently registered in the jurisdiction.
At the end of June 2008 there were 10,037 funds on CIMA’s register, compared with 9,681 at the end of the previous quarter and 8,972 at the mid point of 2007. The current annual growth rate of 12% in net new hedge funds, which takes cancellations into account, is particularly striking in the context of the deterioration in global markets following the sub-prime meltdown and associated credit crunch.
"This is yet another round of impressive statistics from CIMA," said Mark Lewis, senior investment funds partner at Walkers. "The 10,000 barrier has been breached as hedge funds continue to be formed in the Cayman Islands, which remains the clear jurisdiction of choice for investment managers and their advisers around the world.
Reuters Shanghai- Ten new China-focused private equity funds raised $12 billion (six billion pounds) in the second quarter, but poor market conditions have forced foreign funds to delay exits of their investments through IPOs and secondary offerings, consultant firm Zero2IPO said on Thursday.
The second-quarter figure is up 107.6 percent from the same period of 2007 but down nearly 40 percent from the first quarter of this year, according to the firm’s quarterly report.
Some 8.1 percent of capital raised by the 10 funds in the second quarter, or $972 million, target investments in Chinese property markets despite China’s tight monetary policy, which may hurt its real estate industry.
Bloomberg- Assured Guaranty Ltd., which owns one of two bond insurers to have retained Aaa credit ratings, said its second-quarter profit would surge by more than 14 times because of gains in credit derivatives.
The company, whose second-biggest shareholder is billionaire investor Wilbur Ross, expects to post net income ranging from $515 million to $565 million, or $6.18 per share, for the quarter ended June 30, due to unrealized gains between $475 million and $525 million on credit derivatives, according to a statement today. Profit was $32.8 million, or 47 cents a share, in the same period of 2007.
The Australian- The SEC’s decision to take a hard line on the illegal practice of naked short-selling is a band-aid attempt to fix a problem that is plaguing most stock markets in various guises, but at least it is having a go.
The order lasts 30 days and covers 19 stocks, including the Wall Street jockeys Merrill Lynch, Lehman Brothers and troubled mortgage giants Fannie Mae and Freddie Mac.
In sharp contrast, the Australian Government has dragged its heels on short-selling abuses and isn’t expected to make any announcements until the second quarter of the year.
Meanwhile, stocks are being bludgeoned on the ASX as hedge funds borrow stocks from our super funds to attack companies. They are doing it with ease because there is little buyer support in the market, little transparency on covered short-selling, no capital gains tax and small fees charged on share lending.
Financial Times- A hedge fund manager who made some of the biggest profits from the global credit crisis said on Wednesday there was worse to come as evidence mounted that banks are struggling to regain their earnings power and properly value their assets.
Morgan Stanley said second-quarter profits plunged 60 per cent to $1bn and would have fallen further without $1.4bn in one-time asset sales, while revealing that it had suspended a suspected rogue trader for allegedly mismarking positions by $120m.
Times Online- Citigroup is to close an $800 million hedge fund co-founded by its chief executive Vikram Pandit, following bad returns and the loss of top managers.
The US investment bank will now buy what is left of Old Lane Partners’ assets and be forced to further write down the value of the fund in the second quarter, The Wall Street Journal reports. In the first quarter Citigroup wrote down the value of the fund by $202 million to reflect investor redemptions.
Old Lane’s closure is the latest blow for Citigroup, which has struggled with sub-prime mortgage related losses, losing nearly $15 billion in the last two quarters, forcing it to cut jobs and sell businesses.
