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Investment Week - Castlestone Management is set to launch a hybrid fund investing in both equities and hedge funds.
The group claims managed futures have maintained decent returns throughout the market turmoil and predict the asset class will work well in tandem with equities, which have yet to see a turnaround.
Managed futures use trading processes to access the global futures markets.
Castlestone is currently testing the market appetite for the Defensive Equity fund, with a view to launching the vehicle at the end of January.
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.
Reuters - Hedge funds around the world extended their losses last month when the average portfolio declined 1.41 percent amid fresh stock market turmoil, data released on Friday shows.
The average hedge fund lost 17.70 percent in the first 11 months of 2008, figures from Hedge Fund Research show.
These numbers mark the worst-ever returns in an industry that once wooed investors with promises of strong returns in all market conditions and whose only unprofitable year was 2002, when the HFRI index lost 1.45 percent and the S&P 500 dropped 23 percent.
EasyBourse.com - Global securities regulators have formed three task forces targeting short selling, hedge funds and unregulated financial trading, in an effort to take "urgent action" to coordinate responses to current market turmoil, Securities and Exchange Commission Chairman Christopher Cox announced Monday.
The newly formed short-selling task force, chaired by the Securities and Futures Commission of Hong Kong, will work to eliminate different approaches to "naked" short sales, including delivery requirements and disclosure of short positions, while minimizing any harm to legitimate securities lending, hedging and other transactions. Read Complete Article
AFP - Is it more painful to see the value of your fund disappear as the global economy crumbles, or for another man to punch you as hard as he can in the face?
For Elliot "The Machine Gun" Odell, a 32-year-old Briton working in the hedge fund industry in Hong Kong, the chance to find out was irresistible.
Odell, whose fierce-looking arms are plastered with tattoos normally hidden under his three-piece bespoke suit, was one of a dozen finance workers who recently bashed their way through "Hedge Fund Fight Nite," a charity boxing match.
After five months of training, he was left in little doubt about how easy it was to escape the whirl of the current market turmoil spooking the world’s financial markets.
"Boxing is pretty much the most stress-relieving thing you can do," said Odell, in his strong Essex accent.
Falcone, 46, has been dubbed the "Midas of misery" for taking lucrative short positions in the shares of struggling banks including HBOS and Wachovia. He lives in a 27-room townhouse on Manhattan’s Upper East Side bought for $49m. The youngest of nine children, he grew up in Minnesota and was a young ice hockey star dubbed "the phantom" for his ability to elude defenders.
Kenneth Griffin
The Boy Wonder As a Harvard University student Griffin installed a satellite dish on his dorm to help him trade options. His Citadel Investment Group, founded in 1990, has 1,200 staff and was tipped as the next Goldman Sachs, but its two main funds have lost 35% of their value in the market turmoil. Griffin, 40, was a high-profile donor to the presidential campaign of fellow Chicago resident Barack Obama.
James Simons
The Mathematician Born in 1938, Simons was a maths prodigy. He worked as a codebreaker for the US defence department in the 1970s and set up his Renaissance Technologies fund, which has some $20bn under management, in 1988. Known as a "black box" fund, it uses opaque quantitative techniques. Its core Medallion fund rose 49% in the year to September. Simons has a $600m charitable foundation.
John Paulson
The Sub-Prime King Low-profile Paulson made $3.7bn last year betting against sub-prime mortgages. A 52-year-old father of two, he was raised in the New York borough of Queens, gained an MBA from Harvard and has a $41m lakeside retreat in the Hamptons. His firm, Paulson & Co, manages $35bn and its advisers include Alan Greenspan. Reports suggest a bumper year, with the firm’s main funds rising by between 15% and 25%.
West Palm Beach (HedgeCo.net) - OTC Valuations Limited, provider of independent derivatives valuation and risk reports for illiquid and hard-to-value securities, structured products, and exotic derivatives, has strengthened its team with the appointment of Dr. Paul Bergbusch to lead the organization’s technology function.
Paul comes to the OTC Val team from BlueCrest Capital Management, one of the largest hedge funds in Europe, he joins OTC Val as Chief Technology Officer, and will lead the effort to introduce the next generation of solutions further expanding the coverage for structured products and exotic derivatives under the OTC Val portfolio.
As an expert in financial derivatives and systems engineering, Dr. Bergbusch brings a wealth of data analysis, derivatives modeling and systems development experience for pricing and processing all derivatives products. He holds a Ph.D. in Experimental Particle Physics from the University of British Columbia.
"Before joining OTC Val I reviewed the market for independent derivatives valuations and realized that structured products and exotic derivatives are not being handled in a transparent and scalable way," Paul Bergbusch said, "The recent market turmoil and the push towards increasing regulation of the derivatives markets highlight the need for independent and transparent pricing."
Bob Sangha, COO, OTC Val, commented, "The fact that Paul joined OTC Val is also a great compliment to our service offering. His deep knowledge of data, models, and systems will enable OTC Val to deliver flexible and responsive solutions."
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Because of the recent market turmoil, many hedge-fund investors have questions regarding what regulations are applicable to hedge funds, and how to withdraw their money from their hedge-fund investments if they want out. Indeed, hedge funds often present many different barriers to withdrawal, and there are essentially no regulatory prohibitions on these barriers.
Perhaps the best way to understand the regulations that apply to hedge funds is to compare them with mutual funds. Mutual funds are investment companies that are required by law to register with the U.S. Securities and Exchange Commission (SEC) and, therefore, are subject to stringent regulatory oversight. Virtually every aspect of a mutual fund’s structure and operation is subject to regulation under four federal laws, including the Securities Act of 1933, the Investment Company Act of 1940, the Securities Exchange Act of 1934 and the Investment Advisers Act. The Investment Company Act regulates the structure and operation of mutual funds and forces funds to safeguard their portfolio securities.
Reuters - Goldman Sachs could post its first ever quarterly loss as a public company in December, as market turmoil weighs on revenue for investment banking businesses and forces asset writedowns.
One Wall Street analyst, Glenn Schorr at UBS, predicted a loss for the bank on Friday. The potential for a quarterly loss, combined with the generally weaker environment for financial institutions, has some investors wondering if Goldman Sachs really deserves to trade at a higher valuation than Morgan Stanley, the other major independent investment bank that is now a commercial bank.
Goldman’s shares trade at about 1.1 times their tangible book value, while Morgan Stanley’s shares trade at less than half their tangible book value. A spokesman for Goldman declined to comment.
Goldman Sachs is legendary for its risk management expertise. In early 2007, it saw the storm clouds gathering above the subprime mortgage market and positioned itself to profit from the expected home loan downturn.
New York (HedgeCo.Net) - Halbis Capital Management of HSBC is upping the exposure in their European Alpha hedge fund thanks to cheap stock prices. Bill Maldonado, head of alternative investments, believes it is finally the right time to buy.
"Lots of stocks are trading on increditbly low multiples of 4 to 5 times 2009 earnings," Maldonado said in an interview with Reuters. "They’re pricing in quite a bad recession.”
The $300 million market neutral hedge fund takes both long and short positions. After cutting the gross exposure in recent months, the fund is now buying back into stocks after recent market turmoil made the prices even more attractive.
“We’re rebuilding now because we think the opportunities are definitely there, but we’re being very cautious,” he explained. Even if we see opportunities that are very, very appetizing, they can easily go against you another 10, 20, 30 percent.”
This move comes at a time when hedge funds are trying to recover from one of their worst years ever and when hedge funds across the board are freezing redemptions in hopes of staying afloat. Just last week, Deephaven Capital Management halted withdraws on two of their funds. Other reputable names that have imposed recent restrictions include Drake Capital Management, Citadel and Pardus Capital.
Maldonado explained that while returns on his European Alpha are already admirable at 3 percent, they are likely to improve because there is less hedge fund money competing for profitable trades thanks to reduced leverage and redemptions.
Julie Scuderi Senior Editor for HedgeCo.Net Email: julie@hedgeco.net
Seeking Alpha - Investors pulled at least $43bn from U.S. hedge funds in September as market turmoil led to unprecedented withdrawals, an analysis by a leading research house shows.
The data from TrimTabs Investment Research – which was to be sent to clients late on Wednesday – come as hedge funds are working to prevent far bigger redemptions by the end of the year, when many funds give investors a chance to take out money.
Withdrawals can lead to a vicious circle in the markets, as funds sell holdings to return money to clients, depressing prices and prompting further redemptions.
The chief executive of a leading alternative investment manager said he expected the hedge fund industry to shrink by 50 per cent in coming months – with half the decline coming from withdrawals and half coming from investment losses.
Conrad Gunn, chief operating officer of TrimTabs, said the $43bn in September withdrawals would mark “the beginning of what we expect to be a series of outflows for the remainder of the year. We expect October outflows to be larger.”
The industry, which manages close to $2,000bn, has experienced outflows during only a handful of months previously, including a small outflow in April of this year.
West Palm Beach (HedgeCo.net) - UK asset management group and hedge fund investor Aviva plc ("Aviva") is holding an investor and analyst briefing to announce the strengthening of its protection against further falls in global equity markets through increased hedges.
Such that even in the event of a further 40% fall in equity markets, its surplus regulatory capital would only be reduced by £0.7 billion ($1.1 billion). This is a significant improvement when contrasted with the position as at 30 June 2008 when a 40% fall in equity markets would have reduced the surplus regulatory capital by £1.3 billion ($2.2 billion).
"We are focused on accelerating transformational change to deliver a unified and more profitable company," Andrew Moss, CEO, commented, "This is clearly demonstrated both by the creation of Aviva Investors and the reshaping of our UK General Insurance business to focus on insurance excellence and deliver the promise of scale."
Moss also said, "We are pleased to confirm that in the face of the recent market turmoil, Aviva’s capital position remains strong. Our active capital management ensures the group remains robust in the face of the current economic adversity, providing security for our customers and investors alike, and ensuring that the group is well positioned as confidence returns."
Moss will take the opportunity to provide an update on Aviva’s continuing strong position in the current economic environment with Aviva’s surplus regulatory capital estimated to be £1.9 billion ($3.2 billion) at 30 September 2008, compared to £1.8 billion ($3 billion) at 30 June 2008.
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