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.
CNN Money – Hedge funds may be struggling and closing up shop in the current market environment, but Goldman Sachs Group Inc. (GS) was able to make more money tending to the funds’ needs this year than last.
The company, which on Tuesday reported its first quarterly loss since it went public a decade ago, was able to post a 19% gain in revenue in its securities services operations for the three months that ended Nov. 28, compared to the same period last year. The business also turned in record net revenues for all of fiscal 2008 at a time when Goldman’s normally high-octane trading and principal investing line was down by 71% for the year.
Goldman’s security services business is dominated by its prime brokerage operations, whose clientele comes primarily from hedge funds. Competitor Morgan Stanley (MS), which runs a similar prime brokerage business that turned in record net revenues last quarter, reports its earnings on Wednesday.
Though hedge funds have been hard-hit by customer redemptions and market losses, Goldman was able to generate more revenue this year because its securities services business mix became more profitable, Chief Financial Officer David Viniar told analysts during a conference call.
CNN Money – In another sign the financial crisis is hitting Asia’s once booming hedge-fund industry, Alexis Fosler, the head of Citigroup Inc.’s ( C) prime brokerage team in Singapore has left the company, two people familiar with the situation said Tuesday.
Fosler was leading a three-person team that was set up more than a year ago to serve hedge funds clients in the island. She had previously worked in the offshore banking industry based in the British Virgin Islands.
One person said Citigroup remains committed to the Singapore prime broking business despite Fosler’s departure.
CNN Money – Third Point Management, a New York hedge fund run by one of the country’s most outspoken and controversial investors, has come under investigation from the Securities and Exchange Commission.
The $5.6 billion fund, whose founder Daniel Loeb is well known for his pointed regulatory filings targeting chief executives he deems underperforming, informed investors in a letter last month that it has been notified that the SEC has commenced a formal investigation into its communications with other hedge funds.
The SEC’s investigation into Third Point comes at a time when hedge funds are being criticized for playing a key role in the trading of various companies as well as in the continuing financial crisis. The SEC is investigating the actions of up to 50 hedge funds in the collapse of Bear Stearns and in the continuing troubles of Lehman Brothers and mortgage guarantors Fannie Mae and Freddie Mac.
According to reports, the SEC is investigating whether hedge funds knowingly and intentionally spread falsehoods about the financial strength of these – and other – brokers and banks. According to Institutional Investor magazine, which broke the Third Point story Tuesday, Loeb told investors that the communications were uncovered during the course of a routine audit last year after Third Point became a registered investment adviser.
CNN Money – No one would dare go so far as to say that the Wall Street job market is bright.
Through June, financial firms of all stripes have shed an estimated 63,000 jobs over the past year, according to the latest employment figures from the Labor Department. That’s due in large part to the housing slump and credit crisis.
The pain is particularly acute on Wall Street. Investment banks and brokerages have shed an estimated 7,600 jobs, or roughly 4% of their workforce during the past year, according to the latest figures from the New York State Department of Labor.
If previous market downturns are any guide, analysts project that Wall Street could cut anywhere between 20% to 25% of its workers if the economy gets even worse.
But despite this, there are some financial firms hanging out the "Help Wanted" sign.
CNN Money- A listed fund of hedge funds operated by Goldman Sachs Group Inc. (GS) has lifted its assets by about 25% by raising an additional $ 221.3 million on the London Stock Exchange on Tuesday.
Goldman Sachs Dynamic Opportunities Ltd. (GSDO.LN), which invests in 20 hedge funds run by managers including New York’s Och-Ziff Capital Management Group LLC and London’s The Children’s Investment Fund Management (UK) LLP, now manages about $840.2 million, making it the second-largest fund of hedge funds trading in London.
Investors have been scooping up shares in listed funds of hedge funds as a way to diversify from traditional stocks and try to preserve capital in turbulent markets. Funds of hedge funds have historically posted flat returns in years when stock markets suffered sharp declines.
CNN Money- Two hedge funds urged shareholders of CSX Corp. on Tuesday to elect their minority slate of five board candidates, arguing that their nominees have more industry experience and a greater financial stake in the railroad operator.
The hedge funds are TCI, which manages The Children’s Investment Master Fund, and 3G Capital.
In October, TCI asked CSX’s board to separate the roles of chairman and chief executive, add new directors with railroad experience and present a plan to improve operations. In December, they jointly nominated the minority board slate.
