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.
New York (HedgeCo.Net) – Hedge fund investor Thomas H. Lee may downsize or shut the door to two of his funds after posting losses of about 40 percent this year, according to the Wall Street Journal.
The funds, which together manage about $1.5 billion, suffered losses that were multiplied by Lee’s heavy use of leverage, according to the sources who estimated he sustained losses of as much as $3.2 billion.
The funds were actually set up as funds-of funds, meaning Lee distributed investor’s money to approximately 110 other funds. When investors moved to withdraw cash from the hedge fund, it sparked a wave of redemption requests from the original funds, creating a domino effect of losses.
Funds that Lee invested in include SAC Capital Advisors and D.E. Shaw Group, according to the report.
Lee’s private equity firm was launched in 1974 and has grown to be one of the largest in the country. Lee now heads up his hedge fund business, Thomas H. Lee Capital Management LLC and his new private equity firm, Lee Equity Partners. Lee currently manages about $2.7 billion in capital.
Julie Scuderi Senior Editor for HedgeCo.Net Email: julie@hedgeco.net
New York Post – Fed up with misbehavior in the hedge-fund industry, respected hedge-fund investor Sandra Manzke is fighting back.
A pioneer in hedge-fund investing and best known for founding Tremont Capital Management, Manzke sent an angry missive to hundreds of her peers earlier this week, calling on them to join together to push for reform in the $1.5 trillion industry.
"I am appalled and disgusted by the activities of a number of hedge-fund managers," said the letter, which raises a fist against what Manzke sees as a general degradation of ethics in the industry.
Boston Globe - Hedge funds usually thrive when markets turn volatile. But even these fast-money investors are struggling to cope with the wild swings in the markets, raising concern that some may not survive.
Even before the Bush administration proposed its vast bailout for financial institutions, the hedge funds – those secretive, sometimes volatile investment vehicles for the rich – were on course for their worst year on record. The average fund is down nearly 5 percent so far this year.
One major hedge fund investor said he had started to buy Morgan Stanley at $23 on Wednesday, convinced the rumors of Morgan Stanley’s demise were unfounded. But as the stock began to plummet, he canceled his trade and watched with amazement as the stock sank to a low of $12 on Thursday.
Boston Globe – Hedge funds usually thrive when markets turn volatile. But even these fast-money investors are struggling to cope with the wild swings in the markets, raising concern that some may not survive.
Even before the Bush administration proposed its vast bailout for financial institutions, the hedge funds – those secretive, sometimes volatile investment vehicles for the rich – were on course for their worst year on record. The average fund is down nearly 5 percent so far this year.
One major hedge fund investor said he had started to buy Morgan Stanley at $23 on Wednesday, convinced the rumors of Morgan Stanley’s demise were unfounded. But as the stock began to plummet, he canceled his trade and watched with amazement as the stock sank to a low of $12 on Thursday.
New York (HedgeCo.Net) – Hedge fund TCI has won two more seats on the board of railroad operator CSX, in what looks to be the finale of a year-long proxy battle.
A U.S. Court of Appeals judge ruled yesterday in New York upheld an earlier ruling that the court did not have the power to stop both TCI and fellow hedge fund investor 3G Capital Partners from voting shares at CSX’s annual meeting. The ruling came despite the fact that the funds had supposedly violated certain disclosure agreements through their accumulation of equity swaps.
The June 25 shareholders meeting in Jacksonville, Florida was anything but decisive, with the head of CSX Michael Ward telling reporters that the vote was too close to call. While CSX did concede two of the seats to 3G Managing Director Alexandre Behing and Gilbert Lamphere, former head of Canadian National Railway Co., the hedge funds claimed that they had in fact won four of the 12 seats.
"It is time for the entire duly elected Board, including Chris Hohn and Tim O’Toole, to get to work and make progress on the shareholder mandate they received in June,” the hedge funds said in a statement after yesterday’s ruling.
The four new board members will be seated when the company’s annual meetings reconvene on September 24th.
Julie Scuderi Senior Editor for HedgeCo.Net Email: julie@hedgeco.net
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Wall Street Journal – With anxiety about hedge-fund woes gripping the market, funds have their own fear: their investors.
Some investors, particularly what are known as "funds of funds," are demanding their money back and may ramp up requests in the weeks ahead. That has prompted hedge-fund managers to sell securities to raise cash.
"As the hedge fund investor base broadens, hedge fund portfolio management…slips out of the hands of the portfolio managers and into the hands of the investors," wrote Andrew Redleaf, who runs Whitebox Advisors, a Minneapolis hedge fund with about $5 billion under management, in an August client letter. "It is no insult to the investors to say that this worsens performance."
Funds-of-funds select hedge funds on behalf of pension funds, wealthy individuals or other investors, and charge a layer of fees on top of the hefty fees levied by hedge funds themselves. They often ask hedge funds for the option to redeem money as often as monthly and get good terms because they can bring in big chunks of cash at once.
Times Online- Shares in Inmarsat, the mobile satellite communications group, plunged 12.2 per cent today after it emerged that Harbinger Capital, the activist American hedge fund investor, has suspended talks over a possible takeover.
While both parties left the door open to a future deal, Inmarsat’s stock lost 62.75p to fall to 449.75p in early trading.
Harbinger, which owns 28 per cent of Inmarsat, has put talks on hold to consider the lengthy regulation involved in such a deal, which could take up to 18 months.
The hedge fund would have to gain clearance from the Federal Communications Commission, the US industry watchdog that oversees the sector in a similar way to Ofcom in Britain.
West Palm Beach (HedgeCo.net)- Winners of Alternative Investment News’ 6th Annual Hedge Fund Industry Awards were announced on Wednesday evening June 25th at a black-tie dinner and ceremony at Cipriani Wall Street in New York City. The awards recognized hedge funds, fund of funds, consultants, endowments, foundations and corporate and public funds that stood out for excellence in alternatives investing during the year.
Nearly 500 leaders and luminaries from every facet of the industry were in attendance to see winners announced and awarded ‘Oscar-Style’. Michael Steinhardt, a pioneer in the hedge fund world, and Phil Goldstein, Founder of Bulldog Investments were in attendance to accept their respective awards for Lifetime Achievement and Outstanding Contribution to the Industry.
Winners were awarded in nine other categories, and included Paulson & Co. for Hedge Fund Leader.
Also recognized and awarded were the 2008 Rising Stars of Hedge Funds, 20 up-and-coming, talented young professionals poised to be future leaders of the industry.
This year’s award winners were as follows:
Hedge Fund Leader of the Year: Paulson & Co.
Fund of Hedge Funds Leader of the Year: Harcourt Investment Consulting
Emerging Manager of the Year: Algebris Investments
Hedge Fund Launch of the Year: AdultVest
Institutional Manager of the Year: The Blackstone Group
Public Fund Investor of the Year: Teacher Retirement System of Texas
Corporate Pension Fund of the Year: Railway Pension Trustee Company
Nonprofit Investor of the Year: Texas Christian University
Hedge Fund Consultant of the Year: Jaeson Dubrovay, NEPC
West Palm Beach (HedgeCo.net)- AdultVest was nominated among others for the ‘Hedge Fund Launch of the Year’ Award, the alternative investment fund is the world’s first Investment Community designed specifically for the Adult Industry.
Other nominees include, Brevan Howard Asset Management, Citadel Investment Group, Odey Asset Management and Paulson & Co. for the ‘Hedge Fund Leader of the Year’ award.
Th winners will be celebrated ‘Oscar-style’ at a gala awards dinner and ceremony this evening, June 25th at Cipriani Wall Street, NYC. The award ceremony will be held in conjunction with Institutional Investor Conferences’ Hedge Fund Investor Symposium, and will host more than 400 leaders in the hedge fund industry.
The 6th Annual Hedge Fund Industry Awards recognizes the hedge funds, fund of funds, endowments, foundations, and corporate and public pension funds that have stood out for their notable accomplishments in alternative investments during the past year.
Winners will be selected by the staff of Alternative Investment News and Institutional Investor Magazine.
West Palm Beach (HedgeCo.Net)- Hedge Fund Investor AIG and Advisor Larch Lane have announced the formation of a joint venture to make seed investments in hedge funds. The joint venture seeks to capitalize on synergies between AIG Investments’ global alternative investment and hedge fund capabilities and Larch Lane’s specialization in hedge fund seeding.
Targets may include hedge fund start-ups, teams leaving established hedge funds, and established hedge funds in need of restructuring. They anticipate investing $50-200 million per deal across a wide range of hedge fund strategies and geographies.
"Talented investors are leaving large hedge funds to start their own businesses, but many of them have not been able to reach their capital targets." Mark Jurish, Larch Lane’s CEO said, "The current supply/demand imbalance for start-up hedge fund capital represents the best seeding opportunity I’ve ever seen"
AIG Investments manages over $10 billion of hedge fund assets and has been investing in hedge funds for 26 years. AIG is currently invested in more than 130 hedge funds, including emerging managers. Larch Lane, the alternative investment affiliate of Old Mutual Asset Management, is among the pioneers in the hedge fund seeding business and has made a total of 22 seed investments over the course of the last seven years.
