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) – Two UK hedge fund managers have timed the launch of their new hedge fund so that investors subscribing before 1 December will see their returns subject to Capital Gains Tax rather than income tax ahead of the changes to the taxation of offshore funds currently being drafted.
Launched by UK hedge fund managers, Aramid Asset Management and Thomas Funds, the long and short multi-asset hedge fund, which will invest across equities, bonds and commodities, will be jointly managed by Aramid co-founder Sean Flanagan and Thomas Funds’ Glen Cremer.
“Our first step is to set up a target for maximum loss that we can tolerate in the next 30 to 60 days on which we base our allocation to each asset class and the level of hedges.” Cremer says.
“We also hedge at all times because we believe market timing is almost impossible to achieve. There is no free lunch – you can only make money by taking residual market, credit or liquidity risk. The key is to identify that residual risk and minimise it using risk management overlay.”
The Cayman Islands-domiciled fund can be accessed through both a closed-ended Jersey feeder fund, the Aramid All Asset Capital Preservation Fund Limited or a Cayman- domiciled open-ended feeder fund, the Aramid/Thomas All Asset Preservation fund.
Bloomberg – Gennaro Pucci, formerly head of trading at credit manager Credaris, has started a $100 million hedge fund that will trade mostly European corporate debt, credit derivatives and asset-backed securities.
Christian Evans and Rachel Barnard, both formerly at UBS AG, will help manage the Matrix-PVE Global Credit Fund from London as a joint-venture with Matrix Group Ltd., Pucci said in a telephone interview. The fund will use Matrix infrastructure, operations, compliance and sales.
Rival hedge fund managers have also been raising capital to trade European debt on expectations the region’s recovery from its worst recession since World War II will create opportunities to make money. Pucci left Credaris, a London-based credit specialist asset management firm that manages more than $1 billion in credit and derivatives, in April.
Bloomberg – Hedge fund managers are trailing benchmark commodity indexes by the widest margin in four years after copper doubled and oil surged 58 percent.
Touradji Capital Management LP, the second-biggest in commodities, earned 7 percent in its largest fund in the first nine months, according to an investor with knowledge of the result. Krom River Trading AG, which has $590 million, lost 8.1 percent in its raw materials fund. Commodity hedge funds lost 3.2 percent through September, according to Hedge Fund Research Inc. of Chicago. All lag behind the 12 percent gain in the S&P GSCI Enhanced Total Return Index.
AP – The arrest of a billionaire in an insider trading case last week drew new attention to hedge funds — investment firms that, for many, evoke an exclusive world where the super rich use exotic investing techniques to grow yet richer.
The understanding usually stops there.
In the case against Raj Rajaratnam, federal prosecutors accused the portfolio manager for the Galleon Group of using a powerful Rolodex of contacts to acquire insider information to trade securities. Five other hedge fund managers and corporate executives were charged in the case, and prosecutors suggested the problem could be more widespread.
On Thursday, a lawsuit was filed claiming that Rajaratnam also used his money to help finance Sri Lankan rebels.
New York (HedgeCo.net) – Broker dealer BTIG LLC, has expanded its Capital Introduction team with the addition of Jennifer Bloom and Catherine Wagner as Vice Presidents to help drive the firm’s services to its Prime Brokerage and Outsource Trading clients.
The Capital Introduction team, which is led by Peter Tarrant, Managing Director and Head of Business Development at BTIG, works with a wide range of managers and has a particular expertise in new and emerging hedge fund managers. Through the firm’s network and existing client base of over 1,200 institutional clients, the Capital Introduction team looks to provide clients with effective and targeted introductions.
“Our ability to offer our Prime Brokerage and Outsource Trading clients an enhanced capital introduction team is an important move in BTIG’s strategic growth plan,” said Justin Press, Managing Director and Co-Head of Prime Brokerage at BTIG. “We are a client-led business and strive to provide added value at every stage of the client’s relationship with us.”
Ms. Bloom joins BTIG from Credit Suisse’s Private Fund Group where she was an Analyst. Prior to Credit Suisse, she was with Merrill Lynch’s Real Estate Investment Banking team. Ms. Bloom is responsible for capital introduction on the East Coast and across Europe. She is a graduate of Yale University.
Ms. Wagner joins BTIG from UBS where she was an Associate Director in the Prime Brokerage Sales team. Prior to UBS, she was an Investment Analyst for FirstWorthing. At BTIG, Ms. Wagner is responsible for delivering capital introduction coverage for the Western United States region. She is a graduate of The University of Texas at Austin.
“Our strong network of senior level executives across the hedge fund industry and with institutional investors means that we can provide our clients with the most appropriate, high quality introductions to help further their growth,” added Tarrant.
Boston.com – Federal investigators plan to charge at least 10 securities professionals with insider trading, some linked to the criminal case against billionaire hedge fund manager Raj Rajaratnam that shook Wall Street last week, people familiar with the matter said yesterday.
The pending crackdown, more than two years in the making and among the biggest undercover operations into insider trading, may yield charges against hedge fund managers and their associates as early as this week, the people said, declining to be identified because the cases aren’t public. Authorities had planned to arrest Rajaratnam this week as part of a broader sweep, expediting it after learning he had bought a plane ticket to travel to London on Friday, one person said.
New York Times – Several hedge fund managers currently in legal hot water apparently have more in common that their judicial woes: they were all former Bear Stearns alumni.
William D. Cohan reports in Fortune that that Mark Kurland and Danielle Chiesi, who have been charged in the government’s insider trading case against Galleon Group chief Raj Rajaratnam, both previously worked at Bear Stearns Asset Management.
That puts them in the same camp with Ralph Cioffi and Matthew Tannin, who are currently on trial for fraud related to the collapse of the Bear Stearns hedge funds they managed.
New York (HedgeCo.net) – The SEC’s case against Raj Rajaratnam and his hedge fund Galleon Management LP, is sending ripples throughout the industry, as the use of wiretapping and its effects are emerging.
According to Bloomberg, an unidentified informant began setting up interviews and taping the conversations, leading to the uncovering of the alleged massive insider trading scheme that generated more than $25 million in illicit gains.
The SEC also charged six other hedge fund managers with insider trading, including senior executives at major companies IBM, Intel and McKinsey & Company.
“This complaint describes a web of fraud that has been unraveled,” said SEC Chairman Mary L. Schapiro.
“What we have uncovered in the trading activities of Raj Rajaratnam is that the secret of his success is not genius trading strategies. He is not the astute study of company fundamentals or marketplace trends that he is widely thought to be.” said Robert Khuzami, Director of the SEC’s Division of Enforcement. “He cultivated a network of high-ranking corporate executives and insiders, and then tapped into this ring to obtain confidential details about quarterly earnings and takeover activity.”
Boston.com – Hedge fund managers – a secretive, lightly regulated group portrayed by some as villains in last year’s financial meltdown – appear to have a new degree of clout on Capitol Hill in shaping legislation that will determine how they will be regulated.
To gain that clout, industry leaders are using a congressman-turned-lobbyist, a major increase in campaign donations, and a strategy that relies heavily on advancing their own reform ideas, making them active players in the legislative process and perhaps staving off more rigorous regulation measures.
Boston – The state pension fund climbed 2.6 percent in September to finish the month with a $41.5 billion balance, according to a preliminary staff assessment.
“I feel a lot better this year than I did a year ago. Last year, Lehman had gone bankrupt, we were on the eve of the worst thing I’ve seen in my life as far as investments go,” said Stan Mavromates, chief financial officer of the Pension Reserves Investment Trust, which funds benefits for state retirees, at a Tuesday meeting. “All arrows are pointing up. We didn’t emotionally react to anything.”
Reuters – Massachusetts will remove $1.6 billion from hedge fund managers Blackstone, Crestline, EIM Management, and Strategic Investment Group as it shifts its investment strategy after suffering recent heavy losses.
Trustees for the roughly $40 billion fund voted on Tuesday to pull out of four firms that used portable alpha, a once popular technique employed by pension funds to beat markets that underperformed during the financial crisis.
“This is a strategic shift and not a dissatisfaction with the individual managers,” said the pension fund’s chief investment officer, Stanley Mavromates.
New York (HedgeCo.net) – The jury selection has begun for the trial of two former Bear Stearns hedge fund managers, Matthew Tannin and Ralph Cioffi, over the alleged hedge fund securities and wire fraud.
Although the prosecution alleges that the hedge fund managers misled investors, they are not being charged with having contributed to the collapse of Bear Stearns. They could face up to 20 years in prison if convicted. Cioffi is charged with an additional count of insider trading for withdrawing $2m from one of the hedge funds.
Tannin’s personal Email, which he used as a diary, is being used to prove that he was worried about a possible “blow up” and was under some stress. The evidence also alleges that he had trouble sleeping and was taking some anti-anxiety medication.
The trial is expected to last six weeks. Tannin and Cioffi have denied the charges.
