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Seeking Alpha - It’s a tough world out there - I saw in the Wall Street Journal the average hedge fund lost 18% in October. Considering what their mandate is i.e. hedge - that is amazing. September was awful as well. We see stories of hedge funds that are performing well (in this market losing 10% in a year is "great") and still facing redemptions because their investors need the cash…. as Ross Perot famously said… there is a "giant sucking sound" in our capital markets.
In a world hard up for cash, even hedge-fund winners can wind up losers. Such is the fate of major credit fund Blue Mountain Capital Management, whose investors have begun yanking investments despite the fund’s performance this year, a modest 2.4% loss, compared with an average 20% loss across all funds. Blue Mountain is a major player in the credit markets, with assets of $5.5 billion invested in bank loans, bonds and credit-default swaps. Its primary fund, the $3.1 billion Credit Alternatives Fund, had lost 2.4% this year through Friday.
Performance was largely beside the point for many Blue Mountain investors, who need access to cash. Theperverse effect is that some investors have begun raiding their better-performing investments, giving the laggards a chance to recover.
CFO.com - At 12:01 a.m. this morning, the Securities and Exchange Commission pushed out a new "emergency" disclosure rule that requires hedge funds and other large investors to disclose their short positions. The mandate is one of three new SEC investor protection rules that went into effect early this morning in response to widespread drops in stock prices in the wake of a liquidity crisis exacerbated by this week’s Lehman Brothers bankruptcy and sale of Merrill Lynch.
In a joint statement, SEC chairman Christopher Cox and SEC Enforcement Division director Linda Chatman Thomsen said that the rule, which is designed "to ensure transparency in short selling," will affect funds with more than $100 million invested in securities. Those fund managers, who are currently reporting their long positions, will now be required to "promptly begin public reporting of their daily short positions."
CityWire - Premier Asset Management has hired former Thames River hedge fund specialist Chris Wright to take control of the Premier Dividend Fund from Paul Branigan.
Branigan, who also manages an absolute return growth mandate and is chief investment officer of Premier, is handing over to Wright as he wishes to concentrate on his other duties at the group.
Wright, who managed a number of hedge funds for Thames River, joins Premier on 1 September.
Wright is expected to restructure the Dividend Fund when he arrives, which could see it employ a similar strategy to the one used by the Schroder Income Maximiser Acc fund.
Managing director of sales and marketing, Simon Weldon, said: ‘Chris brings a lot of pan European equity experience with him and has been on both sides of the buy-sell fence so we are confident he will make an excellent addition to the team.
New York Post- If the Securities and Exchange Commission expands its clampdown on short-selling, it is widely expected to slam hedge funds like Stephen Cohen’s SAC Capital and James Simon’s Renaissance Technologies, which profit from fast-and-furious trading, experts predicted.
That’s because under the long-accepted rules of the short-selling game, these hedge funds, which often trade through sophisticated computer programs, have been able to skip the process of borrowing the shares needed to cap off their short positions.
But that luxury is now being challenged by the SEC’s mandate requiring investors who short 19 financial stocks, including Fannie Mae and Freddie Mac, to borrow the shares they short before they bet against the stock whose price they predict will fall.