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 (HedgeCo.net) – According to a regulatory filing, Hedge Fund manager John Paulson’s of the $12.5 billion Paulson & Co. bought 300 million shares of Citigroup worth $1.45 billion. This move puts Paulson & Co. alongside other hedge funds such as Appaloosa Management LP who acquired 79.7 million Citigroup shares in the third quarter of 2009.
Bloomberg.com quotes Warren Marcus a former Salomon Brother analyst who is cautious about bank plays and speculates that banks may be less profitable going forward since they are using less leverage and will have to abide by stricter regulations. “You could make a case that you have to trim back what the returns will be at a well-run, normal bank because there will be a lot more pressure on them to be run conservatively,” Marcus said.
John Paulson is best known for his bet against financial companies before the credit crisis which some have speculated earned his firm as much as $15 billion in 2007.
HedgeCo.Net is a premier hedge fund database and community for qualified and accredited investors only. Membership in HedgeCo.net is FREE and EASY. We also offer FREE LISTINGS for Hedge Funds!
Reuters – Hedge fund firm Paulson & Co, which earned billions with savvy bets during the credit crisis, has doubled its stake in candy maker Cadbury Plc, according to a regulatory filing released on Tuesday.
The New York-based hedge fund now owns 28.5 million shares, or 2.08 percent, of Cadbury after it bought 14.8 million shares for 759.59 pence, the British regulatory filing shows.
Paulson’s founder, John Paulson ranks as one of the $1.5 trillion hedge fund industry’s best traders and cemented his reputation by defying conventional wisdom with bets U.S. housing prices could fall on a national scale. With that bet, Paulson became the industry’s highest-paid manager by earning more than $3 billion in 2007.
Guardian – Scottish fund firm Martin Currie is seeing investors put money into its hedge funds at a faster rate than before the credit crisis, an executive told Reuters, in another sign the industry is reviving. After $300 billion of net client outflows between October and June, there are tentative signs investors are returning to a sector where performance has turned around sharply since 2008′s record losses.
Andy Sowerby, managing director of sales, marketing and client service at Martin Currie, which runs $1.2 billion in hedge fund assets, said inflows were at or above levels seen in late 2006 and early 2007, when the industry was near its peak.
Reuters – Hedge fund manager John Paulson, who bet against financial companies after foreseeing the credit crisis, has been buying Citigroup Inc <C.N> shares over the past few weeks, the New York Post reported, citing sources.
Paulson bought around a 2 percent stake in Citigroup, a source told the paper. An investor with a 5 percent or higher stake in a company would have to make a disclosure with the U.S. Securities and Exchange Commission.
Sources told the paper Paulson believes Citigroup’s assets are undervalued. A spokesman for Paulson declined to comment to the paper on the hedge-fund manager’s investment activities.
Caribbean Net News – The UK Serious Fraud Office is investigating sales of credit-default swaps and structured-finance products, including collateralized debt obligations, prior to the credit crisis, following up an earlier investigation into a hedge fund and a related British Virgin Islands-registered company.
The SFO is looking into whether banks sold such products with flawed valuations, said Sam Jaffa, a spokesman for the government agency in London. No specific companies or credit rating agencies have been targeted under the investigation, he said.
“We’re looking generically at what might give us a cause for concern or a possible lead for finding out more,” Jaffa said in an e-mail Monday. “There’s no suggesting that across- the-board valuations were flawed. However, how valuations are arrived at, what is bundled into the funds and how they were sold are areas of interest.”
Reuters UK – Hedge fund firm RAB Capital said on Wednesday that clients had started putting money back into some of its funds helped by a recent upturn in performance, adding to signs the industry may be recovering.
The firm, some of whose funds have been hit by poor performance and illiquid markets during the credit crisis, posted a 32 percent drop in overall assets. However, it said it saw positive net flows into its single strategy funds in the second quarter and into July, excluding the effects of recent disposals.
Reuters – Bayswater Asset Management, a computer-driven hedge fund shut down last year after big losses during the credit crisis, has relaunched after revamping its risk management controls, its new backers said on Wednesday.
San Francisco-based Bayswater had initially been backed at its launch in 2004 with $25 million (15 million pounds) from Man Global Strategies, part of hedge fund giant Man Group.
However, its strategy of trying to exploit inefficiencies in global markets lost 12 percent in the six months to September 2007 and it returned money to investors after being caught out by a vicious circle of deleveraging in July and August that hit many computer-driven funds.
The Guardian – Bayswater Asset Management, a computer-driven hedge fund shut down last year after big losses during the credit crisis, has relaunched after revamping its risk management controls, its new backers said on Wednesday. San Francisco-based Bayswater had initially been backed at its launch in 2004 with $25 million from Man Global Strategies, part of hedge fund giant Man Group.
However, its strategy of trying to exploit inefficiencies in global markets lost 12 percent in the six months to September 2007 and it returned money to investors after being caught out by a vicious circle of deleveraging in July and August that hit many computer-driven funds. The firm has now relaunched with large-scale changes to its risk management system and added a manual override, according to Revere Capital Advisors, which has seeded the fund with an initial $10 million and also plans to buy an equity stake in the firm, a spokesman said.
Alibaba News Channel – European companies emerging from the credit crisis should start looking over their shoulders: activist investors are set to return from hibernation, working more closely than ever with institutions to effect change.
The activists, who favour methods such as changing balance sheet structures, ousting chairmen or selling off non-core units, had little to do during the crisis when buyers were scarce and there was little appetite for transformatory change. But now they are set to gain from a political will to drive large institutional investors towards more active investment and away from a mentality of simply selling stocks they don’t like, while a purge of more leveraged, short-termist funds has cleared the ground for activists to tap a wealth of new opportunities.
"Pushed and shoved by the regulators, mainstream institutions are beginning to countenance interaction with activist investors," said a senior figure at one activist firm.
The Guardian – Value of assets held by the world’s sovereign wealth funds fell to $3 trillion this year from $3.6 trillion at end-2007 as the credit crisis nearly halved their equity portfolio, according to Deutsche Bank.
The German bank’s report on state-owned investment funds also highlighted their positive long-term prospects, with their total assets under management likely to more than double to $7 trillion in the next 10 years.
Sovereign wealth funds (SWFs), which have replaced hedge funds and private equity as major movers of corporate mergers and acquisitions, have taken a dent in their wealth after pouring $80 billion into major banks just before the credit crisis escalated into major market turmoil.
Reuters UK – Hedge fund LNG Capital is eyeing the debt of companies at risk of running short of cash, seeing the potential for high returns at an early stage of the credit crisis when companies are still able to tap rescue capital.
When a corporate borrower raises money or sells assets to get over a liquidity hump, its discounted short-term bonds — those maturing in up to 18 months — can become a buy, said the fund’s chief investment officer and founder, Louis Gargour.
The Guardian – Hedge fund LNG Capital is eyeing the debt of companies at risk of running short of cash, seeing the potential for high returns at an early stage of the credit crisis when companies are still able to tap rescue capital.
When a corporate borrower raises money or sells assets to get over a liquidity hump, its discounted short-term bonds — those maturing in up to 18 months — can become a buy, said the fund’s chief investment officer and founder, Louis Gargour.
