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.
West Palm Beach (HedgeCo.net) – Companiesandmarkets.com has released a report presenting views on the market for hedge fund investment based on a survey of 100 leading asset managers across Europe.
The report, which covers mass market, high net worth and institutional customer groups, forms part of a series looking at the market for alternative investments in Europe. Looking at the onshore hedge fund market in France, Germany, Italy, Spain and the UK, the report provides forecasts to 2012, analysing legislative developments and their implications for growth in the European hedge fund market. The report also identifies the primary client segments and appropriate marketing and distribution strategies for individual countries.
There will be strong growth in funds of hedge funds over the next year, the report states, with less demand for single hedge funds according to 65% of asset managers in Europe. Asset managers in Spain and Italy believe most strongly that the demand for funds of hedge funds will outstrip that for single hedge funds, followed by France, Germany and finally the UK.
Across the five core economies in Western Europe – France, Germany, Italy, Spain and the UK – institutional investors now dominate the market for hedge funds. On average, slightly more than two-thirds of asset managers confirmed that this group represents their biggest customer segment for hedge funds today. In Italy, mass market investors may also be put off by the price of hedge fund investment, according to 40% of asset managers there. In Spain, on the other hand, demand from mass market clients is being limited by competition from capital-protected and structured products and inadequate promotion of hedge fund products by banks and advisors.
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Investors Chronicle – Activist investor Laxey has sunk its claws into yet another Aim-traded overseas property fund. Having built up a 9 per cent stake in Indian township developer Hirco, it wrote to management this week demanding they take action to address the whopping 90 per cent discount to net asset value (NAV) at which the shares were trading.
Laxey is calling for Hirco to use cash held in subsidiary companies to mount a share buy-back programme to address the discount. The news caused Hirco’s shares to bounce 8 per cent to 79p, but this remains woefully below the last stated NAV of 682p, and 79 per cent lower than a year ago. Laxey’s intervention follows hot on the heels of action from fellow activist Carrousel. It is targeting Indian real estate fund Trikona, calling for a break-up and return of cash to shareholders. Trikona is trading at a 72 per cent discount to its last stated NAV.
Activists have also recently jumped on board Equest Balkan Properties, Spazio, Bulgarian Land Development and NR Nordic and Russian Properties – and these won’t be the last.
Reuters – Shares in BH Macro, a listed feeder fund to the Brevan Howard global macro fund, Europe’s biggest hedge fund with assets of $20 billion, have sunk to a 13 percent discount to net asset value as a wave of selling has swept through European financial markets.
The fund was down 2 percent at 1255 pence in afternoon trading. Earlier Tuesday, BH Macro reported in a regulatory filing that its NAV at the close of business on Oct 3 was 1411 pence per share.
"The whole sector has moved to quite considerable discounts," said Mark James, executive director at RBS. "BH Macro is trading on its widest ever discount."
BH Macro has about $1.6 billion in capital. It came to market in early 2006 to provide access to Brevan Howard’s global macro hedge fund, which was and has continued to be closed to new investors.
Reuters – Hedge funds are keeping borrowings and risk low and seeking sanctuary in safe-haven assets during the current market turbulence, but some are beginning to see opportunities to make attractive investments.
The events of the past few days — the collapse of Lehman Brothers, the $50 billion sale of Merrill Lynch to Bank of America and the $85 billion rescue of AIG — have hit funds’ returns and caused many to cut back their bets.
"Managers have been reining in leverage given the extreme volatility in the market. Sentiment is so bad, people are loath to make big bets," said Jack McDonald, chief executive of hedge fund service provider Conifer Securities.
Eclectica Asset Management, co-founded by high-profile hedge fund manager Hugh Hendry, told Reuters its hedge fund had 140 percent of net asset value invested in mid- and long-dated German bunds.
Reuters – Hedge funds are keeping borrowings and risk low and seeking sanctuary in safe-haven assets during the current market turbulence, but some are beginning to see opportunities to make attractive investments.
The events of the past few days — the collapse of Lehman Brothers, the $50 billion (28 billion pounds) sale of Merrill Lynch to Bank of America and the $85 billion rescue of AIG — have hit funds’ returns and caused many to cut back their bets.
"Managers have been reining in leverage given the extreme volatility in the market. Sentiment is so bad, people are loath to make big bets," said Jack McDonald, chief executive of hedge fund service provider Conifer Securities.
Eclectica Asset Management, co-founded by high-profile hedge fund manager Hugh Hendry, told Reuters its hedge fund had 140 percent of net asset value invested in mid- and long-dated German bunds.
The remainder of its exposure is to bond yield swaps and soft commodities.
New York (HedgeCo.Net) – RAB Special Situations hedge fund is contemplating a share buyback, after getting burned by the nationalization of Northern Rock and the plummeting of share values that followed. The fund said it may repurchase the shares and either hold or cancel them.
"Our strategy has now lost money for three straight quarters ever since the credit crunch spread from the debt markets and began to hurt equity valuations," said RAB head Philip Richards.
While he did write off the Northern Rock loss as “very regrettable,” Richards went on to explain how he believes in a twenty year super-cycle for commodities. This would be driven by urbanization and industrialization in China, India and the Gulf region; areas that he says are experiencing supply shortages stemming from decades of under-investments in the mining and energy industries.
The $1.5 billion fund lost about 37% of its NAV this year. While it was the biggest holder of Northern Rock, other sour investments would have still forced the decline in Net Asset Value. The fund posted a loss of 28.9 million pounds, or 53.8 million dollars in the first six months of this year.
Julie Scuderi Senior Editor for HedgeCo.Net Email: julie@hedgeco.net
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On Wall Street – Assets held in hedge funds grew 4.41% during the second quarter, to $2.973 trillion, according to data released Monday.
HedgeFund.net reported in its survey of hedge administrators that investors allocated $34.21 billion to hedge funds in the quarter and performance gains added $91.28 billion of asset value.
The dollar amount of fund liquidations during the quarter was larger than that of fund launchings by an estimated $8.52 billion; this was the third-highest level of fund closures on record.
Despite liquidations, large funds appear to have attracted enough capital to expand the industry overall at an organic growth rate of 11.06% from a year earlier.
The US Supreme Court has thrown out negligent audit claims made against Ernst & Young in the wake of a hedge fund collapsing.
Liquidators sued the firm’s Cayman Islands unit, accusing E&Y of performing a below-par audit of the Beacon Hill Master hedge fund after it lost $300m (£151m), almost half of its net asset value, WebCPA reported.
In his ruling, Judge Charles Ramos said that the investment managers effectively controlled every aspect of the fund’s operations and made material misrepresentations to Ernst & Young.
Accountancy Age- Thames River Capital has introduced new realisation shares on its £276m Thames River hedge fund, run by Ken Kinsey Quick, to give investors an alternative source of tax-efficient income following the government’s changes to the Capital Gains Tax (CGT).
At board discretion investors will be able to elect to redeem (or have placed) realisation shares in June and December. At the outset their redemption rate is expected to be the equivalent of 5% a year of the starting net asset value, to be paid in two approximately equal distributions.
