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.
Insurance Journal – Demand for disaster derivatives is surging as insurers seek alternatives to scarce reinsurance and expensive catastrophe bonds, with the forthcoming North Atlantic hurricane season likely to give a further boost.
Prices are at record levels for Industry Loss Warranties (ILWs) and derivatives such as catastrophe futures, used by insurers to cover their potential losses from natural disasters.
"People are trying to purchase as much cover as they can, be they insurance companies in Florida or reinsurers in Bermuda, and obviously pricing has been driven up considerably," said Stephen Breen, Executive Vice President at Tradition Re, which brokers traditional reinsurance and catastrophe derivatives.
Seeking Alpha – If at first you don’t succeed, try, try again. This cliché is the root of folly on Wall Street and in the hedge fund industry in general. Perfect example: The Ospraie Fund’s Dwight Anderson is set to start two new hedge funds in July. Okay, new hedge funds, what’s the big deal? Well, the problem here is that Dwight Anderson lost 39% in his Ospraie Fund in 2008 and had to liquidate the fund. At its peak, Ospraie managed $3.8 billion in commodities. But if at first you don’t succeed, try, try again. And, that’s exactly what Anderson is set to do.
Anderson will open two new hedge funds in July of 2009, the first of which will focus on stocks of commodity and basic materials companies (The Ospraie Equity Fund). He will also open a fund focused on commodities and derivatives (The Ospraie Commodity Fund). Anderson said that he is starting these funds because he sees significant opportunities in this market, as significant as he has ever seen in his 15 years of investing. These funds will have reduced fees where investors will pay half as much as the typical hedge fund. His new funds will charge a 1% management fee and a 10% performance fee.
Bloomberg – Dwight Anderson, the commodities investor who liquidated his main Ospraie Fund last year after losing 39 percent, is planning a comeback with two new hedge funds set to open July 1.
The Ospraie Equity Fund will buy and sell stocks of commodity and basic-materials companies in industries such as chemicals, mining, paper and natural resources, Anderson said in a May 12 letter to investors. The Ospraie Commodity Fund will invest in commodities and related derivatives, according to the letter, a copy of which was obtained by Bloomberg News.
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.
Business24-7 – Stability, and not necessarily an upward move by economies, would be enough to attract investors back to alternative investments such as hedge funds, says Dr Frank Gerhard of Barclays Capital.
The crisis has made investors focus more on due diligence and, at the same time, turned attention back to fundamentals and to issues such as the integrity of managers. "Those managers are going to benefit going forward if they address structural issues of leverage, transparency and uncertainty around liquidity," said Gerhard, the company’s Director and Head of Product Strategy for Fund-Linked Derivatives.
Times Online – Weavering Capital, one of London’s oldest hedge funds, was today in the hands of liquidators just a week after it discovered that its flagship fund’s main investment was a derivatives trade with an offshore company controlled by its founding chief executive.
PricewaterhouseCoopers, the auditor and consultancy, confirmed this morning that it had been appointed as Weavering Capital’s liquidator.
It is understood that PwC is investigating suggestions that fraudulent activity may have taken place.
It is not known whether the Financial Services Authority has been contacted. The FSA did not immediately return a call seeking comment.
Given the string of problems created by hedge funds, derivatives, investment funds, insurance companies, pension funds, mortgage securities and hairy bank loans over these few years, it is becoming increasingly apparent that high flying investment managers and financial whiz kids are not as great as they seem in spite of their insistence in paying themselves billion dollar bonuses.
As if these were not enough, Gordon Brown the architect of the British economic miracle of the Blair years is now thinking of printing money – ₤150 billion worth. This sort of makes him roughly equivalent in competence to the whole Japanese Occupation Government in Malaya from 1942 – 1945.
Hedge Week.com – Eiger Asset Management is planning to launch four coffee-related funds, comprising two index tracker funds, a hedge fund and a vehicle investing in the physical commodity.
Eiger is being assisted by London-based alternative investment consultancy firm Laven Partners.
Eiger is to launch tracker funds, one long and one short, that will follow the International Coffee Organization composite index. The trackers will trade coffee through derivatives and futures and offer investors a highly liquid strategy at a low cost.
Houston Chronicle – Hedge funds, historically an investment reserved for big-ticket investors, are seemingly like mutual funds in that they typically invest in stocks and bonds. They have the added glamour and allure, however, of taking significant risks and gambles with their investments. Hedge funds may take risks by purchasing derivatives, or they may bet on the fall in price of particular securities by selling the securities short. (When you short sell, you borrow a security from a broker, sell it and then hope to buy it back later at a lower price.) Some hedge funds even invest in other hedge funds.
Earlier this decade, hedge funds got lots of attention, and plenty of wealthier investors were throwing big bucks into them. The allure was hedge funds claiming to have sidestepped the bear market in the early 2000s.
