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.
Reuters – A portfolio run by Man Group, the world’s biggest listed hedge fund firm, has invested $50 million (30 million pounds) in a new start-up fund run by three former Brevan Howard traders.
Man’s RMF Global Emerging Managers strategy has put money with 5:15 Capital Management, a Greenwich, Connecticut-based fixed income arbitrage firm set up this month and named after a song from The Who’s 1973 album Quadrophenia.
Man will take a share of revenue from the firm, whose founders also worked together at Greenwich Capital Markets.
Reuther – A group of wealthy clients who invested $50 million with two hedge funds felled by last year’s credit crisis are accusing Highland Capital Management’s partners of having lied about key facts.
LV Highland Credit Feeder Fund LLC, an investment vehicle managed by Long Vue Advisors in Boston, and several charitable foundations and wealthy individuals filed the lawsuit on Wednesday in a U.S. district court in Dallas.
The group is charging that the Dallas-based hedge fund firm and its co-founders James Dondero and Mark Okada and three other partners were dishonest about other clients’ requests to exit the funds at a time of increasing market turmoil.
Bloomberg – Three traders from Brevan Howard Asset Management LLP and RBS Greenwich Capital Markets started a government-bond hedge fund named for one of their favorite songs by the Who.
5:15 Capital Management LLC, named for the track “5:15” on the British rockers’ 1973 album “Quadrophenia,” will begin trading today with about $60 million, according to Morris Sachs, one of the founders, who said the fund will grow to $100 million. Joining him at the Greenwich, Connecticut-based fund are E.G. Fisher, 40, and Rob Wahl, 42.
“We’re all Who fans and love that tune,” Sachs, the fund’s chief risk officer, said in a telephone interview. “What are we going to do, try to find another name for the Greek god of money?”
GlobeSt.com – Locally based direct private lender Silo Financial Corp. has formed an alliance with a New York City-based private equity fund to concentrate on non-performing loans, says Silo founder Jonathan Daniel. The fund has earmarked $100 million "for opportunistic real estate lending, acquiring non-performing loans, lending against nonperforming loans and potentially even doing some strategic preferred equity," Daniel tells GlobeSt.com.
The time is ripe for such a venture, in the view of Daniel and the founders of KPO Ventures, two former partners at multi-billion-dollar hedge funds. "Obviously, the current environment is very conducive for private lending, due to the fact that there’s no capital out there," says Daniel.
Reuters – Three former executives at JPMorgan Asset Management plan to launch a Greater China hedge fund via a start-up in Hong Kong, tapping rising investor demand for Asian equities amid the global financial crisis.
"Greater China may be the first region to recover from the global economic crisis, and will certainly attract global fund flows," Lu Jun, one of the co-founders said in a telephone interview. "I think it’s good timing to launch the new fund."
Lu, previously a star fund manager at JPMorgan’s China fund venture, has teamed up with Man Wing Chung, former head of JPMorgan’s Greater China team, and Joseph Tang, who focused on Taiwan investment, to co-found JTM Capital Partners. The partners will start running a hedge fund in mid-June.
Herald Tribune – Partners of failed hedge fund trader Arthur Nadel said they were shocked to learn after Nadel disappeared on Jan. 14 that the six hedge funds for which he did the trading had been emptied of their purported $300 million in assets.
But what seems mysterious to them raised red flags in 2005 for the founders of HedgeCo.Net, a West Palm Beach hedge fund database site. HedgeCo dropped three funds run by Nadel’s Scoop Management Inc. — Valhalla Investment Partners LP, Viking Fund LLC and Viking IRA LLC. The concerns were: reported returns that were considerably higher than normal, no outside firm to verify the numbers and no outside administrator to monitor the accounts and send out statements to investors.
New York Post – The founders of a New York hedge fund at the center of the Bernard Madoff scandal have begun selling assets as their firm faces massive losses and a slew of lawsuits, sources told The Post.
Walter Noel and Jeffrey Tucker, co-founders of Fairfield Greenwich Group, a New York hedge fund that lost a whopping $7.5 billion to Madoff’s alleged Ponzi scheme, have been forced to curb their lavish lifestyles amid mounting doubts that the firm can survive the firestorm.
The pair recently dumped a shared interest in a Cessna 560XL private jet, according to a person close to the firm.
West Palm Beach (HedgeCo.net) – Deephaven Capital Management signed a deal on Tuesday to sell the assets of its flagship hedge fund, Knight Capital Group Inc., to Stark Investments.
The founders, Brian Stark and Mike Roth, will give Deephaven investors the option to become investors in Stark Funds by contributing their share of their Deephaven Fund portfolio positions, they said in a letter to shareholders. Deephaven in October suspended withdrawals from its $1.6 billion Deephaven Global Multi-Strategy funds after being overwhelmed by investor redemption requests.
"We believe this agreement is advantageous for Stark’s and Deephaven’s investors, and we are excited about the prospect of retaining their high quality investor base," Mike Roth said, "In strategically managing the business, we have put ourselves in a position to capitalize upon these types of situations. We will continue to be on the lookout for additional opportunities that complement our strategic plan and strengthen our organization."
Stark has headquarters in Milwaukee, Miami, London and Hong Kong.
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!
New York (HedgeCo.Net) – As the investigation continues into what has turned out to be the largest fraud in history, more and more investors are coming forward who saw the red flags early, refusing to do business with Bernard Madoff.
According to a report published by the Independent, investigators are now hearing stories from many banks and investors who believed early on that Mr. Madoff had been faking his stellar track record. These investors complained to the Securities and Exchange Commission, only to have the agency merely give him a slap on the wrist.
According to a complaint sent to the SEC in 2005 by Boston accountant Harry Markopolos, a few hedge fund managers who did business with Madoff Investment Securities were weary that Madoff was “eating the losses” and doctoring returns.
Markopolos also allegedly warned the SEC that Madoff was in fact, running a giant Ponzi scheme. This of course, turned out to be the case when he was arrested last week after confessing to his sons that Madoff Investment Securities was essentially “one big lie,” and had bilked about $50 billion out of trusting investors.
Other red flags included the fact that his returns were steady and always on the up and up, posting returns of over 10 percent a year, while most legit funds experience some sort of down time. In addition, his company used a small, relatively unknown auditing firm whose list of clients was not very impressive.
The SEC forced Madoff to register as an investment advisor in 2006, which he did while avoiding further scrutiny. Investment advisors are not subject to routine SEC investigations; rather they are performed based on their potential risk.
Many believe he was able to evade investigations due to in part to his high-profile role on Wall Street. As one of the founders of the Nasdaq stock exchange, he regularly advised the SEC on electronic trading issues.
Julie Scuderi Senior Editor for HedgeCo.Net Email: julie@hedgeco.net
Bloomberg – Van Biema Value Partners LLC, led by a former Columbia Business School professor, started a new fund to invest in Asian hedge funds while plunging markets and client withdrawals force rivals to scale back investments.
The Cayman Islands-domiciled van Biema Asia Value Fund Ltd. started on Aug. 1 with about $215 million from one of the company’s institutional clients, van Biema said in a statement issued through PR Newswire yesterday.
“Our niche, the value discipline, has demonstrated, over the long term, significant outperformance over market benchmarks,” the statement said.
Michael van Biema, who taught finance subjects including value investing at Columbia Business School from 1992 before founding his partnership in 2004, started the Asia fund as market declines and the worst hedge fund performance in 19 years force other funds of hedge funds to reduce investments and switch to cash to cope with investor redemptions.
