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.
West Palm Beach (HedgeCo.net) - As investors look to independent and unbiased hedge fund risk due diligence, Pelorus Advisors has decided to launch an operational risk management service for hedge fund investors. Unlike other due diligence firms, Pelorus only offers its risk due diligence service to hedge fund investors.
“It’s an enormous conflict of interest for diligence teams to be compensated by the same hedge funds they cover,” said Jeff Rathgeber, co-founder and partner of Pelorus. “The hedge fund community has seen more than enough target-sponsored ‘independent’ report cards. We’ll let other risk management firms issue their seals of approval based on manager-supplied data.”
Pelorus is staffed by a team of hedge fund experts that have spent years operating inside complicated hedge fund structures. “It is only from this vantage point that an advisory firm gains the experience needed to identify the true risks that hide within hedge funds,” said Ken McGee, Managing Director of Pelorus’ Hedge Fund Practice Group. “It is exactly this kind of experience that is missing from most hedge fund due diligence firms. In our opinion, this lack of inside experience is what moves most firms away from being Hedge Fund Risk Experts and moves them into the category of Data Regression Analysts.”
“A clear distinction that separates Pelorus Advisors from other firms is that we don’t harvest massive amounts of publicly available data, crunch it, and issue armchair reports to investors,” said Rathgeber. “Nor do we merely rely on data that is supplied by the target hedge funds we audit. Instead, we conduct in-depth, on-site engagements to dig deep into a hedge fund’s operations and run through its control structure to ensure that our clients’ investments are properly protected.”
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West Palm Beach (HedgeCo.net) - Transport company, CSX Corporation announced that it has joined in a civil action brought by the plaintiff, shareholder Deborah Donoghue, in federal court in New York to recover so-called "short-swing" profits under Section 16(b) of the Securities Exchange Act of 1934.
The Children’s Investment Fund and 3G Capital Partners LP are there in connection with their alleged purchases and sales of CSX securities. CSX is party to the suit in name only, which was brought for the benefit of CSX.
If approved by the court, CSX will receive $10 million from TCI and $1 million from 3G and the defendants will be released from claims of violations of Section 16(b) of the Securities Exchange Act. The settlement provides that counsel for the plaintiff will seek approval by the court for attorney’s fees and costs of up to $550,000, which will be paid from the proceeds of the settlement payable to CSX.
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New York (HedgeCo.Net) - Gabriel Capital and founder Ezra Merkin have been sued for their exposure to Ponzi-schemer Bernard Madoff by a disdained investor.
Scott Berrie, who has $500,000 tied up in one of Gabriel’s funds, claims that Gabriel lied to investors when they marketed that they hold a “diverse portfolio of securities,” which “falsely implied that the general partner was actively pursuing the partnership’s strategy in a prudent manner by using numerous and diverse investments.”
Berrie also alleges that Merkin, who heads up GMC financing arm GMAC LLC, neglected at least 27 percent of its investments, the chunk of which was invested with Madoff.
Berrie filed a class-action lawsuit yesterday in a federal court in Manhattan.
Julie Scuderi Senior Editor for HedgeCo.Net Email: julie@hedgeco.net
West Palm Beach, Dec 15, 2008 – Adding to its array of new and interactive features, HedgeCo.Net has unveiled the Hedge Fund blog platform, which provides both accredited investors and the general public the rare opportunity to view the world of hedge funds through the eyes of the industry experts themselves.
The HedgeCo.Net blogs provide a much anticipated compilation of expert analysis and opinion, while giving the user a detailed look into the minds and biases of industry gurus, which are all too often absent in mainstream media.
HedgeCo has already gathered a group of experts who will be contributing their timely knowledge to HedgeCo’s audience through the blogs. Topics will include everything from regulation issues and political influence, to due diligence procedures and tips on investing.
"Over the years HedgeCo.Net has worked towards promoting transparency in the Hedge Fund industry," explains HedgeCo Co-Founder Evan Rapoport. "The HedgeCo.Net database has gone a long way to provide simple communication between accredited investors and hedge funds. The Hedge Fund blogs further promote this idea by providing a way for the general public to get a glimpse into the lives of hedge fund professionals. The traffic and response we have gotten so far has been very positive."
To peruse the blogs or post a response, visit http://www.hedgeco.net/blogs.
New York (HedgeCo.Net) - SEC Chairman Christopher Cox has launched a probe into his own agency after it surfaced that complaints made to employees regarding the possible misconduct of Bernard Madoff were never investigated.
Saying that specific allegations had been made to certain members of the SEC staff since at least 1999, Cox expressed his disdain that nobody had apparently followed up with the complaints of what eventually became a $50 billion Ponzi scheme.
“I am gravely concerned by the apparent multiple failures over at least a decade to thoroughly investigate these allegations or at any point to seek formal authority to pursue them,” Cox said.
The probe will be headed by Inspector General H. David Kotz and will look into the SEC’s internal policies and focus on areas of improvement, in addition to delving into the agency’s personal contacts with members of the Madoff family and business.
Cox also said that any agency staff members who had close personal contacts with Mr. Madoff will not participate in the SEC’s investigation of his company.
Cox confirmed in his statement what officials said last week following the arrest of Madoff; that he kept false books and other documentation to cover up his scheme to investors.
Madoff used new capital coming into his firm to pay returns to existing clients. He was arrested last week after confessing to his sons that his company, Bernard L. Madoff Investment Securities, was a “one big lie,” and a “giant Ponzi scheme," duping many large and reputable hedge funds and financial institutions.
Julie Scuderi Senior Editor for HedgeCo.Net Email: julie@hedgeco.net
West Palm Beach (HedgeCo.net) - Platts 3rd Annual European Carbon Capture and Storage (CCS) conference is assembling the CCS community to discuss and review CCS projects in their various stages and look to uncover opportunities in what will become a changed regulatory environment to ensure CCS lives up to its potential.
Some of the issues to be covered include, delivering EU Regulatory Framework, finance and investment, public perception, international CCS case-studies and storage selection and liability among others. Some leading companies are also planning to highlight their latest CCS projects.
Carbon Capture and Storage has developed in a short space of time from coal-fired power’s much-heralded saving grace, to Europe’s energy policy catchphrase to real, on-the-ground pilot project status.
With these first-stage investments underway, the energy industry is closer than ever to a genuine assessment of CCS’ viability. CSS says they are looking for updates from the major actors - how are the pilot projects progressing? Is there an adequate spread of projects in the pipeline to test all potential technologies?
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West Palm Beach (HedgeCo.net) - FactSet Research Systems Inc. announced the first quarter results ending November 30, 2008, showed revenue increase to $155.6 million, an increase of 16% compared to the prior year.
Operating income for the first quarter advanced to $51.3 million, up 21% from $42.5 million in the same period of fiscal 2008. Net income rose to $35.6 million as compared to $29.4 million a year ago. Diluted earnings per share increased to $0.73, up from $0.58 in the same period of fiscal 2008. Included in the just completed first quarter were income tax benefits of $1.4 million or $0.03 per diluted share related to the reenactment of the U.S. Federal R&D credit in October 2008, retroactive to January 1, 2008. The first quarter of fiscal 2009 marked the first full quarter of operations for FactSet Fundamentals. FactSet Fundamentals increased revenues by $0.8 million and reduced diluted earnings per share by $0.03 per share.
Philip A. Hadley, Chairman and CEO said, "Our earnings results in the first quarter clearly demonstrate the strength of FactSet’s business model. In the most turbulent three moths for our clients in decades, FactSet was able to find productivity solutions for them and grow both our ASV and EPS."
ASV increased $7.0 million when excluding currency effects during the first quarter and rose 14.5% or $78.4 million over the prior year. Including foreign exchange, ASV increased $5.2 million during the quarter.
ASV was $620 million at November 30, 2008. Of this total, 79% of ASV is derived from buy-side institutions and the remainder derives from the sell-side firms who perform M&A advisory work and equity research. Many sources are predicting that the current market turmoil will result in a reduction of the number of hedge funds. The contribution from hedge funds to FactSet’s total ASV is 6%. ASV at any given point in time represents the forward-looking revenues for the next 12 months from all annual subscription services currently being supplied to clients.
The company will host a conference call today, December 16, 2008 at 11:00 a.m. (EST) to review the first quarter fiscal 2009 earnings release. To listen, please visit the investor relations section of the Company’s website at www.factset.com.
About FactSet
FactSet Research Systems Inc. combines integrated financial information, analytical applications, and client service to enhance the workflow and productivity of the global investment community. The Company, headquartered in Norwalk, Connecticut, was formed in 1978 and now conducts operations from more than twenty-three locations worldwide.
West Palm Beach (HedgeCo.net) - Alternative money managers and hedge fund restructuring advisers, Grisons Peak and IGS, have formed a joint venture to launch the Alternative Investment Merchant Banking (AIMB). The AIMB is to advise on M&A and restructuring deals for firms in the alternative assets industry, the business will be co-led by Paul Sullivan, Partner of Grisons Peak, and John Godden, CEO of IGS Group..
“With a 30% decline in AUM and an expected 50% decrease in the number of Fund managers and no incentive fees for 2008," John Godden, CEO of IGS Group, said, "we will see a continuing surge in merger and acquisitions activity as the Hedge Fund industry goes into an accelerated Darwinian phase. The alternative assets industry has traditionally been formed of boutiques which make for particular and complex merger issues requiring specialist knowledge of both Hedge Funds and M&A expertise.”
“The reduction in AUM in 2008 and the expected continuation of this trend in 2009 will increase the pressure on the owners and managers of alternative investment firms. Many of these firms will seek partners in order to improve profitability and increase their attractiveness to investors.” Paul Sullivan, Partner of Grisons Peak, concluded.
The 50:50 joint venture AIMB targets UK and European deals deal involving single fund managers with AUM of between $250m to $750m or Fund of Hedge Fund managers with AUM of between $400m and $1bn.
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New York (HedgeCo.Net) - Just days after what could prove to be the largest Wall Street sham in history, investors that were burned by Bernard Madoff are coming forward in droves.
Spanish bank Santander, along with French bank BNP Paribas both detailed their exposure to the alleged ponzi scheme on Sunday. Santander estimated it had just over $3 billion tied up in the firm, while BNP Paribas has about $470 million at stake.
"While BNP Paribas has no investment of its own in the hedge funds managed by Bernard Madoff Investment Services, it does have risk exposure to these funds through its trading business and collateralized lending to funds of hedge funds," BNP said in a statement.
Santander’s exposure came from a sub fund of their Optimal Fund, called Optimal Strategic US Equity, which used Madoff Securities for their investments.
A handful of hedge funds have also come forward in the wake of the scandal. Fairfield Greenwich Group released a statement on Friday saying they were still trying to assess their losses, but estimated they had about $7.5 billion, or half of its total assets, tied up in Madoff’s firm as of November. Founding Partner Jeffrey Tucker said they were “shocked and appalled by this news.”
Tremont Capital Management also had a hefty amount invested with Madoff through their fund of funds. “Needless to say, our level of anger and dismay over the apparent betrayal by Mr. Madoff and his organization of his 14-year relationship with Tremont is immeasurable,” Tremont stated in a letter to investors on Friday.
Also coming forward on Friday was Maxam Capital Management, who reported losing $280 million through Madoff-linked investments.
Bernard Madoff, owner of Bernard L. Madoff Investment Securities and part founder the Nasdaq stock market, was arrested and charged on Thursday with orchestrating a $50 billion scam that targeted some of the most reputable hedge funds and affluent individuals in the business. The 70-year-old allegedly ran a large ponzi-scheme where new money coming in is used to pay off existing investors, creating the false notion of peak performance and admirable returns.
Julie Scuderi Senior Editor for HedgeCo.Net Email: julie@hedgeco.net
New York (HedgeCo.Net) - Chicago-based Citadel Investment Group has frozen redemptions from its two largest hedge funds after investors moved to withdraw $1.2 billion, according to a letter sent to clients on Friday.
The letter, signed by CEO Kenneth Griffin, informed investors that withdraws in the Kensington and Wellington Funds may resume as early as March 31st. The funds, which manage about $10 billion making them the firms largest, have lost 49.5 percent of their value this year through December 5th.
“We have not made this decision lightly,” Griffin said. “We recognize how a suspension impacts our investors, especially those with current financial obligations of their own to meet.”
The letter also stated that Citadel will absorb a large portion of the funds’ expenses, something that clients usually are responsible for, in the range of 3 to 4 percent of assets.
While Citadel’s two largest funds may be struggling to get through the year, three other funds in the Citadel family which manage about $3 billion, have climbed 40 percent this year.
This marks only the second year since the firm’s launch in 1990 that Citadel will report a loss. The only other loss was posted in 1994, at 4 percent. Hedge funds as a whole have had posted one of the worst years to date, losing 18 percent on average, according to data compiled by Chicago-based Hedge Fund Research.
Julie Scuderi Senior Editor for HedgeCo.Net Email: julie@hedgeco.net
West Palm Beach (HedgeCo.net) - Hong Kong-based hedge fund manager PMA has chosen to more than triple the number of users of PerTrac CMS in the company’s Hong Kong, Tokyo, New York, London, and Dubai offices.
PerTrac CMS is an alternative investment workflow management solution used for investor relations, capital raising and investment management workflows.
"PMA’s marketing reach has expanded significantly over the last 12 months and we now has marketing teams based in our Dubai and London offices as well as representations in New York," noted PMA Chief Technology Officer Shane McPherson.
PMA was established in July 2002 to provide investment advisory and investment with assets over $2 billion, PMA currently has over 70 professionals employed in Hong Kong, Sydney, London and Dubai, and became a member of the SPARX group in April 200, the largest publicly listed asset manager in Asia.
HedgeCo.Net is a premier hedge fund database and community for qualified and accredited investors only. Membership on www.hedgeco.net is FREE and EASY. We also offer FREE LISTINGS for Hedge Funds!
West Palm Beach (HedgeCo.net) - Vienna based hedge fund manager Salus Alpha Group Services GmbH said that any exposure to Madoff funds were systematically prevented by the proprietary investment approach of their funds at all times.
"I am not shocked that Madoff did blow up but I am shocked that so many obviously unqualified naive fund of hedge fund managers who are obviously doing no due diligence nor do they understand hedge fund strategies do manage so much amounts of money and wonder why this happened to them" said Oliver Prock, CIO of Salus Alpha.
"We never invested into US and UK hedge funds which work under the rules of ‘don’t ask, don’t tell’," the hedge fund manager said, "We always scrutinized this model by one simple question to the biggest hedge fund manager?. A ‘No’ always meant that there are problems behind such as in the Madoff situation."
The investment approach of Salus Alpha consists of state of the art due diligence and executing investments as managed accounts only, which the fund manager says has prevented and will prevent the company at from investing into Illusion Alpha.
"We did not get any inquiry form existing investors since they know that all funds Salus Alpha manages are fully regulated under UCITS III and do invest in liquid alpha strategies through managed accounts only and are therefore protected at all times," Salus Alpha concluded.
HedgeCo.Net is a premier hedge fund database and community for qualified and accredited investors only. Membership on www.hedgeco.net is FREE and EASY. We also offer FREE LISTINGS for Hedge Funds!
