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.
Memphis Commercial Appeal – It was only a few years ago, but to William Kenley, those were the good old days.
"That was a time when you could throw a dart at what you were going to invest in and do pretty well," Kenley, 44, said of the "fringe" money he used to manage himself. "It’s a whole different ballgame today."
Because the game has changed, Kenley, CEO of Methodist North Hospital, now relies heavily on Chirag Chauhan, a partner in The Barnett Group.
"Chirag and I have had numerous conversations" about strategy, said Kenley. "It’s a frustrating time. We’ve had a diversified approach and it’s good to be diversified, but the whole universe is down."
Opalesque – In the newly released research report by Massachusetts-based firm Finadium "Trends in US Equity Finance Costs for Hedge Funds and Other Borrowers" author Josh Galper notes that the current cost of securities borrowing has many funds looking at their financing costs with fresh eyes.
"Firms just looking into the situation are behind the game, but not all is lost; there will be many opportunities to make, and lose, money in equity finance in the years to come," says Galper.
The growth of various fund fees such as equity borrowing comes at a time when many funds have seen decreases in budget resources due to investor redemptions and/or negative performance.
AP – CNBC’s Jim Cramer has another feud on his hands.
Just weeks after "The Daily Show" host Jon Stewart took Cramer to task for trying to turn finance reporting into a "game," famous bear economist Nouriel Roubini criticized Cramer on Tuesday for predicting bull markets.
"Cramer is a buffoon," said Roubini, a New York University economics professor often called Dr. Doom. "He was one of those who called six times in a row for this bear market rally to be a bull market rally and he got it wrong. And after all this mess and Jon Stewart he should just shut up because he has no shame."
Market Rap – On his program, Jon Stewart played a Jim Cramer video from "Wall Street Confidential" done for the internet in 2006, where Cramer admitted to spreading rumors and manipulating markets as part of the "game".
It was a breath of fresh air for thousands of investors across the country who were begging for Mr. Cramer to be challenged.
Seekingalpha.com – First, the veteran can lose money just as easily as the rookie.
Second, and more perniciously, just because a young money manager has been humbled does not mean he now shares your thinking about risk. And in a few years’ time, when young hedge fund managers are back raising money for new funds, and they boldly advertise "I’ve learned my lesson," don’t be so quick to believe them.
The game of institutional investment management (especially for family offices) is largely about the Old and the Rich entrusting their capital to the Young and the Poor. But as every older person, no matter how wealthy, knows, the young will always be richer in the one thing that matters most–time. It’s perfectly rational for a younger person to take more financial risks because if things don’t work out he can always start over.
Voiceof San Diego – San Diego County’s pension fund is slashing its $1 billion hedge-fund portfolio and acknowledging that the investments it once championed have become too risky and no longer make sense.
The board of the San Diego County Employees Retirement Association voted unanimously Thursday to reduce the size of its hedge-fund portfolio by more than half. That will free up $600 million, half of which will be held as cash. The rest will be reinvested in the portfolio.
The pension board also agreed to curb the aggressive strategy the $7.5 billion fund used to finance its hedge fund investments. Under the "alpha engine" strategy, the county bought financial derivatives known as swaps that were essentially bets on the market. Much like bets on a Chargers game, the swaps cost nothing initially, which freed up cash for hedge fund investments. When the market rose, the swaps made money, but in recent months, they cost the pension fund millions of dollars. Last month, the board voted to free up $100 million in cash to protect against further declines.
U.S. Daily- Belgian-Dutch financial services group Fortis received $630 million in capital from Russian billionaire Suleiman Kerimov as part of its recent share issue, the Wall Street Journal said, citing people familiar with the matter.
Fortis, which last week raised 1.5 billion euros ($2.4 billion) from the heavily discounted share issue, secured the money from Kerimov’s Swiss-based investment vehicle, Millennium Group, as part of the share issue, the people told the newspaper.
