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 – Dennis Gartman, an economist and the editor of the Gartman Letter, said he is creating his first hedge fund to speculate on assets including global equities and commodities.
The River Crescent Fund, created Aug. 17, seeks to raise $200 million over the first year, Gartman said today in an interview from Suffolk, Virginia. The fund already includes some “well-known hedge-fund managers,” he said, without identifying them. Gartman has managed guaranteed notes since 2007 and an exchange-traded fund since April in Canada.
Boston Globe – French bank BNP Paribas’s revenues from corporate and investment banking nearly doubled in the second quarter as robust investor demand boosted revenues from the bank’s fixed income business unit.
BNP Paribas’s CIB revenues totaled 3.351 billion euros ($4.82 billion) for the quarter, up 81 percent from the second quarter of 2008, and following record revenues of 3.696 billion euros in the first quarter of 2009.
”Once again, fixed income revenues were exceptional,” said David Thebault, head of quantitative sales trading, at Global Equities, in Paris.
NASDAQ – The pace of new European hedge fund launches has stalled this year after the industry’s dismal 2008 performance made investors unwilling to back new ventures.
Data provider EuroHedge Monday said just 47 funds started trading in the first six months of the year, the least in a decade and less than half the number in the same period of 2008. The new funds collectively raised $2.09 billion – a figure that in "normal" times might have been raised by one fund alone.
However, EuroHedge said there are signs the second half could be more fruitful, with several high-profile funds already started or in the pipeline. Those include Theleme, a global equities strategy being set up by Patrick Degorce, a co-founder of The Children’s Investment Fund who left to strike out on his own, and Gyldmark Liquid Macro Fund, a fund started by former BlueCrest Capital portfolio managers.
West Palm Beach (HedgeCo.net) - Bullman Investment Management (BIM), headed by Nick Bullman, has officialy launched the Bullman Global Fund, a global multi-strategy hedge fund with a minimum investment of $100,000.
"Since launch, the Bullman Global Fund has returned 0.76% compared with its benchmarks- the Tremont MS Index and MSCI World Index returns of -13.76% and -36.43% respectively over the same timeframe." Nick Bullman, Managing Partner at BIM said, "We believe there are times in the economic cycle when macro investments provide the best risk adjusted returns and liquidity. At other times, equity valuations become so compelling that they provide a better long term risk reward payoff. Our strategy is to run three distinct and separate portfolio modes. Stress Mode, Transition Mode and Benign Mode. These modes are triggered by objective external inputs. This approach allows us to control risk and preserve capital, and to search the globe for investments that meet our risk return objectives."
The fund’s objective is to seek long term capital appreciation in a broad array of quoted instruments, notably global equities, bonds, commodities and derivatives. While the fund has been managing money since June 2008, marketing of the fund has been low key until now. With the appointment of Roger Mortimer (previously Vice President of Kotak Mahindra (UK) Ltd) to Head of Sales, the firm intends to raise assets from third party investors now that a one-year track record has been achieved.
Roger Mortimer, Head of Sales at BIM, said, "I am delighted to have joined BIM, which I believe has a sensibly conservative approach to investing in the current climate with the flexibility to transit through to a higher risk strategy, as and when true market fundamentals return. The fund is aimed at long term investors, with a focus on minimising draw-downs during times of high volatility, whilst maintaining long-term appreciation for the patient investor through a value-based approach. In conjunction with Bath University, BIM is constantly developing its own Investment Risk Profiling System, which I believe will deliver significant improvements on the standard VaR models currently in use."
BIM was founded in June 2008 by Nick Bullman, was formerly Chairman and Head of Risk at Investor Select Advisors, a global fund of hedge funds. In addition to Nick’s experience in the hedge fund space, over the past 26 years in the financial industry he has also worked at Scrimgeour Vickers, James Capel and Goldman Sachs in Equity Sales and syndication. Bullman has seeded the Bullman Global Fund with a significant portion of his personal wealth, according to the launch statement.
Alex Akesson
Editor for HedgeCo.Net Email: alex@hedgeco.net
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Bloomberg – Bennelong Funds Management, an Australian fund manager with A$400 million ($271 million), will start a second hedge fund to ride through the financial crisis as it seeks to more than double funds under management.
Melbourne-based Bennelong wants to boost the assets it oversees to A$1 billion in the next three years, Jarrod Brown, chief executive officer, said yesterday in an interview in Sydney. Bennelong teamed up with Security Global Investors LLC to offer a long-short global equities fund in coming weeks to follow a long-only global fund the two began this month, he said.
SGI will manage the global funds under the Bennelong SGI name to gain access to Australia’s A$1.2 trillion dollar pool of managed funds after the $1.36 trillion hedge fund-industry shrank by more than 20 percent last year, and averaged losses of about 19 percent, the worst year on record.
West Palm Beach (HedgeCo.net) – The Blackstone Group is making changes to the single manager hedge funds businesses within its Marketable Alternative Asset Management (MAAM) segment.
Blackstone is consolidating its distressed securities fund onto a single operating platform and moving Blackstone Kailix Advisors, the investment manager of Blackstone’s long/short equities fund, which will be spun off to its management team led by Manish Mittal, who intends to form a new fund as an independent entity.
Commenting on the changes, Tony James, President and Chief Operating Officer of Blackstone, said, “We believe these measures will enable us to operate more profitably in the current environment. Although these funds have performed better than the S&P 500 and other global market averages, we expect that adverse fundraising conditions in the hedge fund industry will prevent these two initiatives from scaling up to a size where they are meaningful for our business on a stand alone basis.”
Blackstone will be an investor in the new fund and investors in the existing fund will be offered the option of investing in the new fund on a preferred basis as their interests in the existing fund are liquidated. Although the existing fund has outperformed global equities measures, its size does not make it a core strategic business for Blackstone and it is not anticipated that this will change in the near term. The fund has not imposed any gates or liquidity restrictions on investors.
“We continue to have a significant commitment to the hedge fund business," James continued, "The current market turmoil with its associated dislocation of asset prices presents us with a multitude of compelling opportunities to invest capital. It is during times like these that we need to be especially disciplined to focus both our people and our capital on the largest opportunities.”
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West Palm Beach (HedgeCo.net) – GlobeOp announced the strengthening its European-domiciled hedge fund administration services following the licensing of its Dublin office by the Irish Financial Services Regulatory Authority, expanding the company’s existing fund administration network based in the Cayman Islands and the USA.
The office is led by Jim Casey, GlobeOp’s global head of investor relations,"Ireland is a strategically important administrative center for European domiciled funds," Casey said, "Despite market turbulence this past year, the European funds sector continues to develop its long-term potential. I look forward to building a Dublin team whose best practices further strengthen our fund administration services globally.”
"The GlobeOp Ireland license allows us to directly service Irish domiciled funds and support European hedge fund clients and their investors with full fund administration services," Vernon Barback, GlobeOp president and chief operating officer said, "This includes independent and transparent fund performance reporting.”
The GlobeOp Ireland license allows GlobeOp to directly service Irish domiciled funds and support European hedge fund clients and their investors with full fund administration services.
With $108 billion in assets under administration, GlobeOp has more than 14,000 investors globally. Earlier this year the company opened a new hurricane-proof office in Caymana Bay, Cayman Islands and appointed Gary Linford, former head of the Investment & Securities Division of the Cayman Islands Monetary Authority (CIMA), to its Cayman Islands subsidiary board.
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Bloomberg – BNP Paribas SA, France’s biggest bank, won prime brokerage business in Asia with hedge fund CQS (U.K.) LLP as it seeks to lure clients in the region from rivals.
The new contract with CQS, a London-based hedge fund manager that has an office in Hong Kong and oversees about $7.5 billion, adds to BNP Paribas’s existing relationships with major hedge funds in the region, according to Talbot Stark, global head of BNP Paribas hedge fund relationships. He declined to name other existing clients.
“We have prime brokerage relationships with three or four of the market leaders in Asia that are outperforming their peers and look to be longer-term survivors in the Asian hedge fund market,” Stark, 43, said in a telephone interview yesterday. “We’re in discussions with several other key players that are making decisions to change their prime brokerage providers and are seeking alternative providers that are established and committed to the region.”
West Palm Beach (HedgeCo.net) – BNP Paribas has launched a global, transversal, multi-asset, hedge fund client service team. The team will be a single point of entry for Hedge Funds for all inquiry, according to BNP, leveraging the bank’s capabilities and focusing on operational efficiencies.
The team is headed globally by John Polivko, based in New York and reporting locally to Jean-Patrick Kaiser, Deputy Chief Operating Officer, and globally to Bernard Gavgani, Equity and Commodity derivatives COO and Francois Freyeisen, Fixed Income COO.
Polivko recently joined the firm from Merrill Lynch where he was in charge of the client service organization for Prime Brokerage and more recently worked in financing sales. Prior to Merrill Lynch, Polivko also spent 7 years as a Managing Director at Bears Stearns in Prime Brokerage.
In addition, the appointments of regional managers reporting directly to John Polivko are Victoria Baker, Neil Spice and Jacqueline Man as regional head of hedge fund client service based in Hong Kong.
Talbot Stark, global head of hedge fund relationship management said, "Hedge Funds are a very important client base for BNP Paribas, following the acquisition of Bank of America’s Prime Brokerage business as well as the growth of the hedge fund relationship managements team, the creation of this function is another step in better serving those clients."
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guardian.co.uk – Morgan Stanley survived the recent panic in financial markets, but its prime brokerage business may never fully recover.
More than a third of Morgan’s prime brokerage assets went out the door during the past month — some rivals said attrition could be as large as one-half — as investors unnerved by the credit crunch lost confidence in the bank.
Across Wall Street, hundreds of investment funds that relied on broker-dealers established accounts with commercial banks boasting stronger credit. The moves have shaken up a business long dominated by Morgan Stanley, Goldman Sachs Group Inc and Bear Stearns.
"It’s a $2 trillion business and in normal market conditions, people kill themselves to move 1 percent of market share. In recent weeks, probably 35 to 40 percent of global market share has been redistributed," said Alex Ehrlich, global head of prime services at UBS. "Never has there been a more disruptive period."
Bloomberg.com: UK & Ireland – Citadel Investment Group LLC, the $19 billion hedge-fund firm run by Kenneth Griffin, hired three senior executives from Lehman Brothers Holdings Inc. to boost its fixed-income team.
Timothy Bryan Wilkinson, former head of fixed income proprietary trading at Lehman Brothers, will work on the same business at Citadel’s proprietary trading group along with John Alexander Goodridge, the company said in an e-mailed statement today. Alex Maddox, 38, formerly head of European mortgage-bond trading, will become Citadel’s head of securitized products in Europe. The team will report to Patrik Edsparr, Citadel’s global head of fixed income and European chief executive officer.
Banks and hedge funds are hiring Lehman executives as the bankrupt U.S. securities firm cuts 750 jobs in its European fixed income division after talks to find a buyer failed.
New York (HedgeCo.Net) – David Ko, a former quantum physicist and Long-Term Capital Management employee, has set up his own hedge fund according to a report by the Wall Street Journal.
Kurtosis Capital Partners will employ a global macro strategy and hopes to attract between $100 million and $250 million initially. Ko has partnered with Stephen Cain, once the global head of currency trading at Deutsche Asset Management.
"Our strategy is to buy options when we think a market is going to become volatile. The closer to the dislocation, the better. Then, at the moment of highest volatility, sell," he said.
Global macro funds generally look for tiny discrepancies in the market using complex equations and mathematical solutions. They then capitalize on those discrepancies by betting on which way they will eventually regulate.
Ko stresses that the fund won’t be using leverage, unlike Long-Term Capital Management, which used heavy amounts of leverage that only magnified the huge losses it suffered. LTCM infamously ended up losing close to $5 billion of investor’s money.
Prior to his hedge fund career, Ko helped to author 10 academic papers on quantum physics while studying at Oxford University.
Julie Scuderi Senior Editor for HedgeCo.Net Email: julie@hedgeco.net
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