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) – Chris Gillick, currently an associate editor with Trader Monthly and Dealmaker magazines, has agreed to join NetSalonFX as an adviser, principal/branch manager, and regulatory liaison, having just completed his NASD Series 30 exam.
As an editor for Trader Monthly and Dealmaker, he has covered the hedge fund industry, brokerages, private equity and investment banking. In 2008, he helped produce several widely followed industry lists such as the Trader Monthly 100, the Trader Monthly Top 30 Under 30, the Dealmaker Top 40 Under 40, and Dealmaker’s Party Crashers, featuring the top women in private equity.
"I am happy to have Chris aboard," Says Lance A. Perry, CEO of NetSalonFX and its parent company, NetSalon Software Development Inc, "He brings great credibility as a financial professional with deep knowledge of the foreign exchange market, and as a journalist covering so many sectors of the financial world. He’s going to be a great asset to our clients."
"I’m very much looking forward to working with the NetSalonFX team," says Gillick. "I’m excited to get my into the trading world while still pursuing my passion of journalism."
NetSalonFX’s clients are all accredited investors, whom Gillick is accustomed to conversing with regularly in his coverage of the world of high finance. "I have had the privilege of meeting people in every corner of the world of finance, including introducing brokers in the foreign exchange market. Unfortunately not all IBs have the best intentions when selling their products. However, NetSalonFX has done a great job of screening out unqualified investors and building a community of traders who understand fully the great risks, and rewards, of the foreign exchange market."
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New York Post – Back-to-back bruising months in September and October have shaved more than 10 percent of hedge funds’ value, translating into hundreds of billions in losses, according to research and advisory firm Hedge Fund Research.
After weathering a brutal September that saw fund managers lose nearly 6 percent, hedge funds suffered further erosion last month, shedding 5.4 percent, according to HFR.
This year, hedge funds are down through Oct. 31 by about 15.5 percent.
TIMES – The ups and downs of the Dow are making Wall Street’s so-called "smart money" look dopey. Hedge funds lost nearly $300 billion due to bad investments in the first nine months of the year, according to an analysis of return data by TIME.com.
If the losses stand it would be by far the worst year for these funds, which are unregulated and open only to high-net worth investors, since their returns began being tracked in the mid-1970s. "It’s not going to be a good year," says Peter Laurelli, vice-president at HedgeFund.net. "We can be pretty sure of that."
The calculation does not include gains some of the funds may have made in Monday’s rally, but analysts say that won’t be nearly enough to erase the hundreds of billions of dollars the funds are down. "The losses should concern every investor because these are supposed to be the smartest guys out there," says Charles Gradante, who is the co-founder of hedge fund advisory firm Hennesse Group. "If they can’t manage their investments how is average person with a 401(k) supposed to cope?"
Bloomberg – Wolver Hill Japan Multi-Strategy Fund, run by Deutsche Bank AG’s former prime brokerage sales chief in Tokyo, resisted the worst month for the nation’s stocks in almost 15 years to be little changed in September.
The $11 million fund of hedge funds, which invests in 14 hedge funds with a combined $5.8 billion of assets, slipped 1.4 percent in September based on preliminary figures, said Ed Rogers, chief executive officer of Wolver Hill’s local advisory firm, Rogers Investment Advisors Y.K. The Topix index of 1,714 companies tumbled 13 percent.
Foreseeing a decline in equity prices, Wolver Hill made a shift during the past year into hedge funds that use trading- focused strategies, and away from so-called long-short funds that depend on rising and falling stock prices, Rogers said. Trading- focused funds, including so-called event-driven strategies, trade securities of companies going through events such as mergers, acquisitions and management changes.
JP Morgan Chase & Co and Citadel Investment Group resumed trading with each other on Friday, one day after the bank had cut off the hedge fund over a hiring dispute, a person familiar with the matter said.
"The dispute has been resolved," a person familiar with the hedge fund said on Friday.
Citadel’s officials could not be reached for comment at the office.
Citadel, one of the world’s largest hedge fund firms with roughly $20 billion in assets, clashed with JP Morgan because it had hired a string of executives from America’s second largest bank this year, people familiar with the matter said.
They said JP Morgan told employees to stop trading stocks, bonds and currencies with Citadel on Thursday morning, essentially prohibiting anyone from buying or selling with the hedge fund.
By Friday, the differences had been resolved and business was back to normal, the person said.
West Palm Beach (HedgeCo.net) – Hedge fund advisor and manager American Pegasus LDG, LCC., is seeing the 36th subsequent month of positive returns for the Pegasus Auto Loan Fund, which invests in US subprime auto loans.
The fund has returned an average of 1.55% per month with 100% positive months since inception in September of 2005.
Providing the opportunity to profit from stable high yields via sub-prime auto loans with collateral in the form of automobiles, the fund currently has $89 million under management and uses no leverage.
"In the $200 billion auto industry there is high demand for auto loan originations." The Pegasus preformance sheet shows, "In 2005, 4.7% of U.S. workers used public transportation and 90% workers own a car; 1/3 households own > 1 car; Average 1.9 cars/household"
That number rises and falls with energy fluctuations, according to the Energy Information Administration, "Transportation costs have increased due to many factors related to travel and prices paid for transportation fuel, while being somewhat offset by improved fuel economy." But the numbers remain viable ant the US now has 765 motor vehicles per 1000 capita.
The American Pegasus Auto Loan Fund directly sources fully, collateralized sub prime US auto loans. Underwriting criteria is strictly enforced along with well designed risk controls.
Pegasus was founded in 1997 as an investment advisory firm focusing on equity investment in managed accounts. The advisory firm launched first equity long–short hedge fund was established in the same year. In 2001, Pegasus began to manage portfolios in currencies and commodities, launching a series of life settlement funds., followed by the American Pegasus Auto Loan Fund in 2005. American Pegasus Investment Management is registered with the SEC as an investment advisor.
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West Palm Beach (HedgeCo.net) - Hedge fund advisory firm D5 announced the launch of two new accounts, with each promising capacity of $50 million, for a possible $ 100 million on additional capital for the firm. The new accounts coincide with the hiring of mathematician and scientist Andrew Vizcarra as Director of research.
"Andrew’s 10 years in the study and teaching of mathematics and statistics is a great asset to our research department and is a wonderful compliment to the fundamental nature of our strategy." Theodore Dumbauld, founder of D5 said, "Mr Vizarra will focus on both the enhancement of our current strategy and the exploration of universe expansion."
D5′s strategy utilizes a relative value strategy, trading only a unique set of securities for which net asset values can be calculated.
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Bloomberg- Mitsubishi Asset Brains Co., an investment advisory firm of the Mitsubishi financial group, plans to start a fund of hedge funds as it seeks to invest in managers that can make money in falling markets.
The company aims to start advising a fund in the next “two- to-three years” with the aim of raising “several tens of billions of yen,” Akihiro Nishi, executive director at the Tokyo-based company’s investment advisory division, said in an interview in Tokyo. The company has hired a hedge fund manager who will start in August, he said.
Mitsubishi Asset Brains aims to tap growing demand for funds of hedge funds since the credit crunch that stemmed from U.S. subprime loan problems prompted investors to seek diversified investments to secure steady returns. The money managed by funds of hedge funds has grown more than 800 percent since 2003, according to Singapore-based research firm Eurekahedge.
Greenwich Time – A Greenwich-based investment management and advisory firm has launched a new hedge fund geared toward lending capital to underserved and niche businesses.
Sands Brothers Asset Management, with offices on Valley Drive in Greenwich, recently unveiled their Genesis Merchant Partners fund, an asset-based lending fund that provides capital despite the tight credit markets, fund officials said.
"It’s very difficult for companies to obtain capital post credit crunch," said Jonathan Feniak, director of marketing and business development and investment for Sands Brothers. "We’re providing loans through Genesis Merchant Partners that are ultimately much cheaper than selling equity at depressed prices."
Asset-based lending is any kind of lending that is secured by an asset. If a loan is not repaid, an asset is taken in exchange.
Genesis, which has 11 employees, will be working with businesses that may otherwise scare more traditional lending sources during the current credit crunch.
For example, according to some published reports, Genesis has been linked to providing financing for the fur trade and animal pelts.
"We look at a broad array of industries that offer up hard assets as collateral and diversification for the portfolio," Feniak said. "We’re filling a need for smaller companies. The niche markets have been the first ones to be excluded by traditional lenders."
Houston Business Journal – A noisy, contentious proxy battle ended quietly Wednesday when shareholders of Vaalco Energy Inc. voted in the company’s chosen slate of board directors.
Houston-based Vaalco (NYSE:EGY) had spent the past three months fending off an attack from a New York hedge fund that was formed in January and built up a substantial position of shares — 4.7 million — on the open market before disclosing its position in March.
Nanes Delorme Partners I LP had proposed its own slate of three directors for election at the meeting and demanded big changes at the exporation and production company, which has most of its holdings in West Africa.
Vaalco had filed a lawsuit against the hedge fund as part of its response to the coup attempt but has dropped the proceedings as part of an agreement cobbled together late in the evening of May 23 to end the dispute. Nanes Delormes in turn agreed to vote in favor of Vaalco’s director nominees.
Proxy advisory firm Glass Lewis & Co. weighed in a day earlier, recommending that shareholders withhold support for Vaalco board nominees W. Russell Scheirman, president and chief financial officer, and Arne Nielsen. The proxy firm said it agreed with many of the corporate governance and stock performance issues raised by Nanes Delormes.
West Palm Beach (HedgeCo.net)- New York based fund of hedge funds (FoHF) Ginepri Capital, and SAGA Capital, a New York alternative investments advisory firm, announced a newly formed venture, the SAGA/Ginepri Alpha Fund.
"Film investors will increasingly employ new techniques commonly used by investment banks, advisory firms and hedgers to analyze the risk/return profiles of potential securities investments." S.K. Dean, Managing Partner of Ginepri Capital said.
SG Alpha Fund will focus on the financing, analysis and securitization of mid to high budget independent films with committed distribution.
Both FoHF’s contributed significant proprietary risk capital to the new venture. SG Funds will be syndicating $400 million in debt, between a group of New York and European investment banks, to leverage the committed capital. The company will only green-light investments using the proprietary Movie Alpha Model.
"We are very enthusiastic about our association with Ginepri for the design, valuation, production and distribution of film portfolios and related acquisitions." Ralf Voellmer, SAGA President stated.
With a strong emphasis in analyzing the risk/returns in developed economies and emerging markets, the management team of SAGA has significant expertise in financial modeling, including analysis and securitization of deals with embedded credit risk, market risk, and operational risk.
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