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.
Hemscott – UK-based fund firm Augustus Asset Managers said on Tuesday assets under management in its fixed income and currency macro hedge fund have bucked market trends and doubled in the year to end-October.
Augustus, formed from the management buyout of Julius Baer Investments, said assets at the JB Global Rates Hedge Fund have grown to $308.8 million in the year to end-October, up from $134.8 million.
During the period the fund, which takes directional bets in fixed income and currency, has returned 13.56 percent.
Augustus has assets under management of about $12 billion in long-only, absolute return and hedge funds.
Bloomberg – Artradis Fund Management Pte, RAB Capital Plc’s Northwest unit and Cannizaro (Hong Kong) Ltd. are cutting fees and locking up investors’ money for longer in new hedge funds that will buy bonds after prices fell in Asia.
Merrill Lynch & Co.’s prime brokerage unit has been approached by at least eight money managers about starting such funds in Asia to buy beaten-up fixed-income securities such as convertible bonds, said Eddie Guillemette, the firm’s regional co-head of global markets financing and services. Some of the hedge fund managers are offering to reduce management and performance-based fees by as much as 50 percent, he said.
Bloomberg – Parkcentral Capital Management LP, an investment firm that manages money for the family of former U.S. presidential candidate H. Ross Perot, is liquidating a fixed-income hedge fund because it’s “no longer viable.”
Parkcentral Global Hub Ltd.’s assets fell as much as 40 percent to $1.5 billion this year through October. The fund is selling remaining holdings to pay creditors, Eddie Reeves, a spokesman for the Plano, Texas-based firm, said in an e-mailed statement today. Perot, 78, who ran unsuccessfully for U.S. president in 1992, and members of his family are the fund’s biggest investors.
Bloomberg – Brazilian hedge funds saw a record 14.3 billion reais ($6.7 billion) in withdrawals last month after returns trailed a fixed-income benchmark even while defying a 25 percent plunge in the Bovespa stock index.
The redemptions brought total outflows this year to 48.9 billion reais, shrinking the industry by 16 percent, according to data released by the National Association of Investment Banks yesterday. The rate of withdrawals is similar to hedge funds globally, even though the worst-performing Brazil funds lost a third as much on average as their overseas rivals.
Brazilian managers avoided declines even as the Bovespa plunged 43 percent this year. Investors withdrew money because they compare performance against fixed-income indexes, said Luiz Felipe Andrade, a director at the association known as Anbid. Bond yields in Brazil are among the highest in the world.
Bloomberg – Brazilian hedge funds saw a record 14.3 billion reais ($6.7 billion) in withdrawals last month after returns trailed a fixed-income benchmark even while defying a 25 percent plunge in the Bovespa stock index.
The redemptions brought total outflows this year to 48.9 billion reais, shrinking the industry by 16 percent, according to data released by the National Association of Investment Banks yesterday. The rate of withdrawals is similar to hedge funds globally, even though the worst-performing Brazil funds lost a third as much on average as their overseas rivals.
Brazilian managers avoided declines even as the Bovespa plunged 41 percent this year. Investors withdrew money because they compare performance against fixed-income indexes, said Luiz Felipe Andrade, a director at the association known as Anbid. Bond yields in Brazil are among the highest in the world.
Bloomberg – Permal Group temporarily blocked clients from taking money out of two hedge funds that invest with NWI Management LP while NWI changes its redemption rules, according to two people familiar with the matter.
The firm, based in London, froze the $700 million Permal Fixed Income Special Opportunities Ltd. and $350 million Permal Global Opportunities Ltd. funds, said the people, who asked not to be identified because the decision wasn’t publicly disclosed. Both Permal funds reinvest with NWI.
NWI, which oversees $2.8 billion, was hit with a surge in redemptions, the people said, in part because the New York-based firm allows investors to pull their cash each month. Most hedge funds limit withdrawals to every 90 days, and NWI is now changing its policy, the people said. Hari Hariharan, who runs NWI, declined to comment.
New York (HedgeCo.Net) – After a disappointing year, Citadel will launch several new hedge funds in hopes of countering the losses of their main hedge fund.
The multi-strat $10 billion Kensington Global Strategies Fund has fallen over 30 percent this year. CEO Ken Griffin attributed some of that loss to the temporary ban on short selling, saying it “created material dislocations across many of our portfolios and disrupted our ability to assume and manage risk.”
After much speculation and some bad press, Griffin warned investors last week that returns on the fund would experience “significant volatility” in the next few weeks.
The new funds will focus more on global macro, convertible arbitrage and fixed income strategies, according to the Wall Street Journal.
Griffin told investors, "The financial crisis dramatically raised the cost of borrowing and reduced the availability of credit to market participants, materially reducing the value of cash assets as compared to the value of derivative instruments.” He went onto explain how he did not foresee the financial crisis that has unfolded this past year.
While the Kensington Fund will still be available to investors, many clients are interested in allocating their assets across numerous strategies.
Citadel was founded in 1990 and manages over $20 billion in capital.
Julie Scuderi Senior Editor for HedgeCo.Net Email: julie@hedgeco.net
Street.Com – Zoe Cruz, the Morgan Stanley co-president pushed out by the firm late last year, is eyeing a role at an asset management firm, or possibly raising money to start a hedge fund, according to a person familiar with her thinking.
Cruz would prefer to join an existing business, as she enjoyed being a high-level manager at a large prestigious firm, the person says.
The Greek native was seen as a possible successor to CEO John Mack after spending her entire 25-year career at Morgan Stanley, starting as a foreign exchange trader, until her exile last year. She was shown the door following heavy losses in Morgan Stanley’s fixed income division, which she oversaw.
Reuters - An unprecedented cash crunch is choking the ability of banks to lend and creating an opportunity for hedge funds to launch, or ramp up corporate lending facilities.
Companies that have relied on bank borrowing to grow, or even maintain their business, are turning to hedge funds in a move that some say may signal a broad shift of lending from banks to asset managers.
"I have a very strong belief that the new investment banks will be the absolute return hedge funds and the managers of private equity," said Thomas Priore, Chief Executive at ICP Capital, an investment firm that manages $13 billion in fixed income assets, in New York.
Bloomberg.com: UK & Ireland – Citadel Investment Group LLC, the $19 billion hedge-fund firm run by Kenneth Griffin, hired three senior executives from Lehman Brothers Holdings Inc. to boost its fixed-income team.
Timothy Bryan Wilkinson, former head of fixed income proprietary trading at Lehman Brothers, will work on the same business at Citadel’s proprietary trading group along with John Alexander Goodridge, the company said in an e-mailed statement today. Alex Maddox, 38, formerly head of European mortgage-bond trading, will become Citadel’s head of securitized products in Europe. The team will report to Patrik Edsparr, Citadel’s global head of fixed income and European chief executive officer.
Banks and hedge funds are hiring Lehman executives as the bankrupt U.S. securities firm cuts 750 jobs in its European fixed income division after talks to find a buyer failed.
Reuters Tokyo – Japanese government bond futures soared by their daily limit of 3 full points on Tuesday and 10-year yields hit a five-month low on safe-haven buying in the wake of the collapse of Lehman Brothers.
Global stock markets and crude oil prices plunged on Monday after Lehman, crushed by losses from the U.S. mortgage crisis and unable to find a buyer, sought bankruptcy protection.
"A pretty sharp increase in credit risk and worries about credit seems inevitable," said Naomi Hasegawa, senior fixed income strategist for Mitsubishi UFJ Securities.
Growing expectations that the U.S. Federal Reserve may lower interest rates at a policy meeting later on Tuesday were also giving a lift to JGBs and euroyen futures, Hasegawa said.
Daily Telegraph – Stanley Fink, the former boss of Man Group, who became one of the City’s best-known financiers, is teaming up with Lord "Cashpoint" Levy to make a spectacular comeback to the hedge fund industry he quit last year.
Known as the "Godfather" of British hedge funds, Fink is to become chief executive of International Standard Asset Management (ISAM), a small London-based commodities trader. Lord Levy, the former Labour treasurer who was Tony Blair’s special envoy to the Middle East, is to be chairman of the group.
It will be Levy’s first high-profile role since being embroiled in Labour’s cash-for-honours’ scandal two years ago.
The pair plan to build ISAM, which currently has two funds trading in gold and fixed income, into a substantial player in the hedge fund world.
The return of Fink will be a major talking point in the City.
