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.
Bloomberg – Erik Verhaar, a former energy trader at Ospraie Management LLC and Deutsche Bank AG, started a hedge fund this week in the Netherlands as investors are returning to commodities.
His new Falckon Capital BV bets on U.K. natural gas and European power, emissions, coal and oil and has attracted one investor so far, Verhaar said yesterday in an interview.
Verhaar, 46, started at Cargill Inc. in 1987 as a cocoa trader and worked for Goldman Sachs Inc. and Nuon NV before joining Deutsche Bank in London in 2000, advancing to managing director for gas and power. He joined Ospraie’s biggest commodities fund in March 2008, six months before it closed in September last year. Verhaar’s energy investments at Ospraie gained 15 percent net of fees while he was there, he said.
June 16 (Bloomberg) — Arvind Raghunathan , former head of Deutsche Bank AG’s global arbitrage business, will open his new hedge-fund firm next month with more than $1 billion, a sign that investors are trickling back after record losses last year.
Roc Capital Management LP’s assets will include $500 million in a separate account from Deutsche Bank, according to people familiar with the New York-based firm, who asked not to be identified because the information is private. It’s the largest hedge-fund startup this year, one of at least eight expected to raise more than $250 million each, according to brokers who provide credit and lend securities to managers.
The ventures are being set up by executives who left banks that scaled back trading to conserve capital, or hedge funds whose 2008 losses will limit bonuses for at least another year. Investors see them as an opportunity to get in early with the next George Soros or Paul Tudor Jones, who have outperformed rivals for most of their careers.
Bloomberg – Boaz Weinstein, the bond trader who lost more than $1 billion last year at Deutsche Bank AG, has raised about $160 million since the end of April for his new hedge fund, according to two people familiar with the matter.
Saba Capital Management LP, based in New York, plans to start trading in August, said a third person with knowledge of the firm. The people asked not to be identified because the information is private.
Saba, Hebrew for grandfather, was the name of the credit unit Weinstein started at Frankfurt-based Deutsche Bank in 2001. Weinstein, 35, lost money in 2008 after betting on bonds of companies such as Ford Motor Co. and hedging some of those wagers with credit-default swaps, contracts to protect against or speculate on default, people familiar with the matter said in January when the plans to start his own fund were made public.
Bloomberg – Hedge fund investors’ growing demands for separate accounts may be an overreaction to increasing redemptions and fraud, participants said at an industry conference in Hong Kong this week.
Investors are demanding accounts that allow them to tailor investments, see trades and get out when they want, instead of the traditional way of pooling their money in a fund, as managers try to curb redemptions and after U.S. financier Bernard Madoff’s conviction for running a Ponzi scheme.
A record $155 billion was pulled from hedge funds last year, according to Chicago-based Hedge Fund Research Inc., while capital outflow may accelerate to $168 billion this year, a Deutsche Bank AG survey in March showed.
Bloomberg – The global hedge fund industry may shrink by 11 percent this year as funds liquidate and investor withdrawals persist, a Deutsche Bank AG survey said.
Industry assets may fall to $1.33 trillion by December, according to 68 percent of the 1,000 investors surveyed by Germany’s largest bank last month. The respondents, which hold a combined $1.1 trillion of hedge-fund assets, on average expect outflows from the industry to accelerate to $168 billion this year, 8 percent faster than last year.
The deepest financial crisis since the 1930s led to the worst average hedge-fund performance in history last year, prompting funds managed by Citadel Investment Group LLC and D.E. Shaw & Co. LP. to limit withdrawals to stem record outflows.
“If 2008 was a story about performance of hedge funds, 2009 is very much going to be a story about restructuring,” said Sean Capstick, Deutsche Bank’s London-based global head of capital introduction. “Our survey indicates redemptions will continue as a phenomenon for the foreseeable future.”
In a March 13 note to investors, Sanford C. Bernstein & Co. analyst Brad Hintz forecast hedge-fund assets to fall 18 percent this year, dropping below $1 trillion before a recovery in 2013.
The HFRI Fund Weighted Composite Index retreated 18 percent in 2008, its steepest annual decline. Still, that was less than half the 42 percent slump of the MSCI World Index.
Wall Street Journal – Some of the billions of dollars that the U.S. government paid to bail out American International Group Inc. stand to benefit hedge funds that bet on a falling housing market, according to people familiar with the matter and documents reviewed by The Wall Street Journal.
The documents show how Wall Street banks were middlemen in trades with hedge funds and AIG that left the giant insurer holding the bag on billions of dollars of assets tied to souring mortgages. AIG has put in escrow some money for at least one major bank, Deutsche Bank AG, whose hedge-fund clients made bets against the housing market, according to a person familiar with the matter. The money will be released to the bank if mortgage defaults rise above a certain level.
In essence, while the U.S. government is busy trying to prop up the housing market — by trying to limit foreclosures, among other things — it is simultaneously putting up cash that could be used to pay off investors who bet housing prices would tumble and many mortgage holders would default.
It’s unclear how much government money might eventually flow to hedge-fund investors. Overall, the government has committed up to $173.3 billion to bail out AIG. Of that amount, AIG’s housing-related bets have cost U.S. taxpayers some $52 billion.
Bloomberg - Deutsche Bank AG, Germany’s biggest bank, said it suffered no losses from its U.S. hedge funds CQ Capital and Distressed Opportunities.
The Frankfurt-based company invested no capital in the hedge funds, which are for institutional asset management clients, spokesman Tim Oliver Ambrosius said in a telephone interview today.
