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.
Bloomberg – FRM Capital Advisors Ltd., a unit of London-based asset manager Financial Risk Management Ltd., plans to make as much as $300 million of strategic investments in hedge funds this year, including its first in Asia.
FRM Capital may invest in six more managers in 2009, with two expected by June and its first Asian deal in the third quarter, Chief Operating Officer Patric de Gentile-Williams said. The London-based company makes strategic investments in hedge funds for two to four years in exchange for a share of their fee incomes for as long as 10 years.
Record losses and redemptions have cut hedge funds’ assets and fee revenue, making them more reliant on so-called seeders like FRM Capital. Some investment banks, insurers and private equity houses have exited the hedge fund seeding business amid the credit crisis, said de Gentile-Williams.
Reuters – Lasair Capital, a hedge fund industry newcomer that boasts General Electric Co as its blue-chip backer, said on Tuesday that it has hired a senior investment officer to help put $180 million to work.
Carrie McCabe, who founded Lasair as a "next generation" hedge fund firm earlier this year, told investors that Jennifer Coffey will now help select hedge funds as well as infrastructure and timber assets for clients.
"Jennifer will report directly to me and I will continue to oversee all investment decisions," McCabe, who cemented her reputation in the hedge fund industry while running Blackstone Alternative Asset Management and FRM Americas, told clients.
Bloomberg – U.S. regulators are investigating whether investors manipulated end-of-day stock prices to avoid being forced by their brokers to sell holdings.
These gaps, which caused the Dow Jones Industrial Average to swing as much as 104 points this month in the final minute of trading, suggest investment firms faced with client redemptions and plunging markets may be gaming the closing-auction system. The discrepancies spurred the Financial Industry Regulatory Authority, which oversees 5,000 brokerages, to look for evidence that investors are improperly swaying prices.
General Electric Co., McDonald’s Corp. and the 28 other Dow companies swung 0.6 percent on average at the close the last two weeks, according to data compiled by Bloomberg. That’s almost eight times greater than the average three months ago. Because of the swings, the New York Stock Exchange plans to distribute information on the closing auction more often to help mitigate volatility.
Reuters – General Electric Co plans to raise $15 billion through stock sales — including $3 billion from Warren Buffett — to improve liquidity and give it the option of more acquisitions at a time of intense market turmoil, the U.S. conglomerate said on Wednesday.
The news helped to erase some of the day’s slide in GE shares, which fell more than 9 percent earlier, but was not enough to push them into positive territory. Investors remained worried about the troubles at GE’s vast finance arm — which has businesses ranging from loans to mid-sized business to investing in real estate.
It was the second big strategic investment by Buffett’s Berkshire Hathaway Inc in the battered finance sector in as many weeks. Last week Berkshire said it would invest $5 billion in Wall Street’s Goldman Sachs Group Inc.
BusinessWeek – Not many stocks were left standing when the Dow Jones industrial average crashed by 504 points on Sept. 15—the worst drop since the September 11 terrorist attacks. One stock that did stand firmly was Coca-Cola, the world’s largest soft drink company. When the tsunami-like wave of selling was done on that frenzied day, Coca-Cola’s stock stood at 54.75, up from the previous session’s closing price of 54.50.
True, it was a razor-thin rise, but considering the devastation in the marketplace that day, just staying upright was a mighty accomplishment, as the financial giants lost some 20% to 94% of their value. Nonfinancials also got ravaged, including General Electric, which tumbled 8.04%, ExxonMobil 5.48%, Sprint Nextel 5.70%, Intel 3.97%, and Merck 3.25%.
For a while there, Coke seemed to have lost its fizz. From 2003 through 2006, its shares traversed a narrow range, meandering between 37 to 50. In 2007, the stock came back, trading up to a high of 65 by early January 2008. But then the stock got caught in the market’s subprime-mortgage-driven decline in July, which yanked Coke down to a 52-week low of 49.60. Since then, it’s eased back to the mid-50s.
Buffett’s Beverage
That’s because Wall Street appears to have rediscovered Coca-Cola. Of the 17 analysts who follow Coke, not one recommends selling the stock, and all but two tag the stock a buy. Two analysts rate it a hold. (It’s also reassuring that Coke’s largest stakeholder is Warren Buffett’s Berkshire Hathawa, which owns an 8.6% stake.)
Asia Times – In olden days, explorers sailing the world’s oceans in search of new profit opportunities navigated the unknown by means of looking to the heavens and guiding by the stars. Today, investors still attempt to navigate the dark waters of turbulent economic times with guidance from the stars, namely the satellites in the heavens that carry the world’s three major international financial information broadcast networks, General Electric’s CNBC, Bloomberg’s Bloomberg TV and News Corp’s Fox Business Channel.
Fox Business is under a year old; Bloomberg TV is basically an adjunct of the company’s core data terminal business on every trader’s desk in the world; CNBC, on the air in one form or another for about two decades now, is insanely profitable; advertisers pay a lot more to reach its audience of millionaires with money to burn than they do to reach the people at home in the afternoon.
Turkish Daily News – Hedge funds, which have reached an estimated asset volume of $2 trillion globally by attracting investor’s interest with their rapidly changing asset allocation and high risk appetite, are about to be accessible to investors in Turkey.
Oyak Securities, Garanti Bank, the Turkish lender co-owned by General Electric Co., and İş Investment are the first institutions that have obtained approval to establish hedge funds since the introduction of the permit in March.
Preparations for the necessary infrastructure are now complete and hedge funds will be available to investors in Turkey this autumn, said Emrah Yücel, fund manager at İş Investment. Fluctuation of global markets for the past year will not have a negative impact on hedge funds, Yücel added, noting that the current economic situation makes such funds even more attractive to investors.
Bloomberg- When Blackstone Group LP, the world’s biggest buyout firm, was pursuing the takeover of the Weather Channel cable network earlier this month with General Electric Co. and Bain Capital LLC, Wall Street balked at providing financing.
So the New York-based company turned to GSO Capital Partners LP, the hedge-fund manager it acquired in March, to pull off the largest U.S. leveraged buyout this year.
Blackstone can’t wait for banks, stuck with almost $100 billion of debt from earlier LBOs, to start lending again. Instead, it’s pushing deeper into deal financing with GSO. The strategy may hurt the hedge-fund unit’s returns — some approaching 40 percent — if slowing economies lead companies taken private by Blackstone to default on their debt.
Bloomberg- When Blackstone Group LP, the world’s biggest buyout firm, was pursuing the takeover of the Weather Channel cable network earlier this month with General Electric Co. and Bain Capital LLC, Wall Street balked at providing financing.
So the New York-based company turned to GSO Capital Partners LP, the hedge-fund manager it acquired in March, to pull off the largest U.S. leveraged buyout this year.
Blackstone can’t wait for banks, stuck with almost $100 billion of debt from earlier LBOs, to start lending again. Instead, it’s pushing deeper into deal financing with GSO. The strategy may hurt the hedge-fund unit’s returns — some approaching 40 percent — if slowing economies lead companies taken private by Blackstone to default on their debt.
