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) – Hedge funds are well positioned for a good year in 2010 and are likely to continue their momentum into the end of the year. This should lead to additional gains for investors during the month of December, Hennessee research shows. Because of this optimistic forecast, hedge fund managers are ramping up their fund raising efforts.
In an effort to match up investors with hedge funds looking for new allocations, HedgeCo held the Fall 2009 Capital Introduction Round Tables. The event attracted 65 investors and 6 hedge fund managers. The investors were separated into 6 groups, while the hedge fund managers rotated at 20 minute intervals, enabling the investors to address each manager individually.
“Unlike other capital introduction events where the ratio of managers to investors is small, we take pride that our events have a substantial qualified investor turnout.” Evan Rapoport, co-founder of HedgeCo Networks, said, “As a result of our conferences, investors have reported notable asset increases.”
“I’ve been to a lot of capital introduction events, and as a veteran hedge fund manager I can say that this has been the best event so far.” Kurt Hovan, manager of Hovan Capital Management, said of the event, “The HedgeCo team did a terrific job in putting together a group of high quality investors, and giving the managers a format which enabled direct interaction with every investor. I look forward to attending future events.”
The next event will be held mid-to-late January in NYC, it will also be a Round Table format and HedgeCo is currently accepting applications for new managers to present their funds to members of the alternative investment community.
Recognized as having the largest attendance for any type of event in the hedge fund industry, the HedgeCo Networking Events have quickly become the top destination for generating new business and meeting new industry contacts. “We hope to continue having these events and keeping the hedge fund community well networked.” Andrew Schneider, co-founder of HedgeCo Networks, said.
Bloomberg – Hedge funds are shoveling money into stocks as individuals exit at the fastest rate in a year, a sign to professional investors that the Standard & Poor’s 500 Index is poised to extend its gains.
About $37.3 billion has been pulled from U.S. mutual funds since August, according to the Investment Company Institute. Hedge funds — which lost half as much on average as the S&P 500 since stocks peaked in October 2007 — boosted bets to the highest level since the end of that year in the third quarter and have kept buying, according to data compiled by Goldman Sachs Group Inc., industry consultants and Bloomberg.
New York (HedgeCo.net) – “Hedge funds performed as advertised in October—they hedged,” said Nadia Papagiannis, Morningstar alternative investment strategist. “Though the economy may be recovering, hedge fund managers appear positioned for a reversal.”
However, hedge funds in the Morningstar Europe Equity hedge fund category had inflows of $847 million.
Hedge funds following arbitrage strategies and buying distressed securities have enjoyed a tremendous year, as they continue to profit from assets acquired at fire-sale prices in late 2008. Profits are starting to narrow, however, as the discounts on assets are diminishing.
Certain emerging market countries, such as China and Russia, posted significant gains, the performance of emerging market hedge funds depended on country allocation. In developed markets, European and Asian equity markets declined less than the U.S. equity market, but this did not carry over to hedge funds.
Hedge funds that make make macro-economic bets in equities, fixed-income, currencies, and commodities benefited from the appreciation of gold, which reached record highs in October, moves in the Australian dollar versus the U.S. dollar, and price trends in global government bonds. Price-trend-following funds were hit by a reversal in the trends in equity and currency markets in late October, though, resulting in overall losses.
Meanwhile, Eurekahedge reported global hedge fund inflows totaling $10.2 billion for October, while performance-based losses were $2.4 billion. Total hedge fund assets under management (AUM) have increased by $7.8 billion in October, bringing hedge fund AUM to a total of $1.45 trillion.
WSJ – Hedge-fund titan Kenneth Griffin lost $8 billion of his clients’ money last year. Now, he is trying to persuade investors to trust him with more.
“We showed a level of human fallibility,” he told his staff at a late-September lunch in Manhattan.
The price of fallibility: a 55% loss in the big hedge funds at his firm, Citadel Investment Group. His funds’ declines far outstripped the 19%, on average, that hedge funds lost as a whole, according to Hedge Fund Research Inc. For the past year, Citadel prevented investors from withdrawing money they wanted to take out from his two main funds, Kensington and Wellington.
New York (HedgeCo.net) – Hedge fund Hermitage Capital’s legal adviser, Sergey Magnitskiy, died on Monday night in a detention centre in Moscow, the Guardian reports.
The 37 year old father of two was held in Moscow’s Matrosskaya Tishina detention center for almost a year. “Sergey Magnitskiy was refused bail and kept in detention for a year without trial,” Hermitage said in a statement. “He was denied the ability to see his mother and his wife and speak to his children for the entire time of his detention.”
The US-born, British naturalised lawyer was arrested in 2008 after accusing senior officers in the Interior Ministry of taking part in a $230 million state-sponsored scam, leading to the theft of companies owned by Hermitage and HSBC. Hermitage has filed law suits and sent letters to Russian anti-corruption authorities, naming top-ranked officials and their role in the alleged tax scam.
The Guardian quoted David Clark, former special advisor at the Foreign Office and chairman of the Russia Foundation, a UK-based organisation that promotes a deeper understanding of Russian affairs. Hermitage’s case is “real daily life” in Russia, Clark said.
New York (HedgeCo.net) – Jean-Philippe Blochet has left Europe’s biggest hedge fund firm, Brevan Howard, Bloomberg reported today. “Following his return from sabbatical last year, Jean-Philippe Blochet has decided to cease to be an active member of Brevan Howard Asset Management LLP,” the firm said in a statement.
Blochet was co-founder of Brevan Howard and was part of the hedge fund firm’s macro team, focusing on currencies and interest rates.
Brevan Howard had $25.7 billion in assets under management as of September 2009, it returned more than 20% last year while the average hedge fund lost around 19%.
Also leaving Brevan Howard is UCITS fund manager Stephane Diederich, who was hired from Credit Suisse in 2007 to set up an alternative CDO (collateralized debt obligation) business, an area of the financial world that was hit hard by the credit crisis, Bloomberg reported.
Reuters – Hedge funds will soon play a bigger role in portfolios, but investors still worry about getting their money back and understanding what a manager is doing, according to a new survey released on Monday.
Nearly 60 percent of all financial advisers who help wealthy people invest their money and institutional investors said they expect hedge funds to be as important to much more important as traditional investments over the next five years.
New York (HedgeCo.net) – According to a regulatory filing, Hedge Fund manager John Paulson’s of the $12.5 billion Paulson & Co. bought 300 million shares of Citigroup worth $1.45 billion. This move puts Paulson & Co. alongside other hedge funds such as Appaloosa Management LP who acquired 79.7 million Citigroup shares in the third quarter of 2009.
Bloomberg.com quotes Warren Marcus a former Salomon Brother analyst who is cautious about bank plays and speculates that banks may be less profitable going forward since they are using less leverage and will have to abide by stricter regulations. “You could make a case that you have to trim back what the returns will be at a well-run, normal bank because there will be a lot more pressure on them to be run conservatively,” Marcus said.
John Paulson is best known for his bet against financial companies before the credit crisis which some have speculated earned his firm as much as $15 billion in 2007.
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New York (HedgeCo.net) – As the price of gold hits record highs, the $2.7 billion energy focused Hedge Fund Touradji drops holdings in the worlds largest gold-backed EFT the SPDR Gold Trust and brings its stake in Barrick Gold Corp up to $84.7 million.
This news comes along side the announcement from president of Barrick Gold Corp that the planet’s gold supply is running out and we are at ‘peak gold’.
“Production peaked around 2000 and it has been in decline ever since, and we forecast that decline to continue. It is increasingly difficult to find ore,” said Aaron Regent in an interview with the Telegraph. This crunch has driven gold up to a record high of $1,126 on the 13th of November, although many have attributed this climb to India and China who are quietly beefing up their national gold reserves. Suki Cooper, commodities analyst for Barclays Capital accredits much of the gains to “a change in attitude from investors towards gold”.
Despite the rush towards gold, some remain doubtful as to how high the price of gold can climb. Metal Miner states that Nouriel Roubini, Professor of Economics at New York University’s Stern School of Business is less enthusiastic saying he could see the price going a little higher “But those people who delude themselves that gold can go to $1,500 or $2,000 are just talking nonsense. The fundamentals are not justified, and those people are just talking their books.”
Hedge Funds Review – The European parliament’s committee on economic and monetary affairs held a hearing and a workshop examining the directive on Tuesday (November 10).
Meanwhile, the UK’s House of Lords EU economic and financial affairs and international trade sub-committee heard evidence from the UK Treasury’s financial services secretary Lord Myners detailing the British government’s stance on the proposals.
The European parliament hearing came after the publication of a critique of the European commission’s impact assessment for the directive. Commissioned by the economic and monetary affairs committee, the report was heavily critical of the commission’s rationale for the regulation.
New York (HedgeCo.net) – The 2010 Hedge Fund Compensation Report, released by Glocap Search LLC and HedgeWorld, shows signs that a recovery is underway. In addition to raising compensation over 2008 levels, funds have begun hiring again, the report explains.
The 2010 report shows that on average, 2009 base salaries for all investment professionals and traders were essentially flat (regardless of fund size or performance)with increases in the low single-digits.
Estimates call for 2009 cash bonuses for investment professionals (those paid in early 2010) to increase about 15% on average above suppressed 2008 levels. The highest percentage increases will go to professionals at those funds that decreased compensation the most in 2008. These bonus levels are still, on average, below 2007 levels.
The report consists of analysis of 2009 compensation paid by U.S. hedge funds including estimates for year-end cash bonuses expected to be paid for 2009.
Adam Zoia, CEO at Glocap, pointed out that in 2008, owners of hedge funds heavily subsidized employee compensation in order to keep their teams together and to help boost morale given that funds needed everyone motivated this year to dig out of the high water mark hole created from last year’s abysmal returns. This year there was some initial thought of taking back some of that subsidy from last year and paying lower bonuses than would otherwise be the norm given performance levels.
Washington, DC – November 9, 2009 – The Hedge Fund Association, HFA, today announced progress on its “Speak Up” campaign, which seeks to ensure that regulation of the hedge fund industry meets government concerns without imposing over-reaching, broad measures that makes it costly for small funds to operate, and could impede industry growth and job creation.
HFA President, David Friedland, said that the HFA was not opposed to additional regulation and registration or reporting requirements. ”The HFA is open to working with Congress to ensure that any regulation is cost effective and achieves objectives that both Congress and the industry need.” Mr. Friedland further noted that all hedge funds are already subject to certain rules and regulations, including SEC anti-fraud provisions.
Mr. Friedland said, however, that “proposals from Congress to regulate funds with assets under management of over $30 million could result in smaller hedge funds, which form the vast majority of firms, to close their doors, causing a devastating impact on an industry already suffering from the effects of the financial downturn. This will result in a loss of jobs not only within those hedge fund firms, but also at the administrators, law firms, auditors, banks and brokers who rely so heavily on smaller/startup funds for much of their business.”
The Hedge Fund Association’s “Speak Up” campaign was launched with the aim of educating lawmakers and the media of the burden that new regulations would place on smaller hedge funds. ”Some form of registration requirement and reporting requirement for firms with more than $250 million would seem to make the most sense” Mr. Friedland stated. ”Typically firms with more than $250 million have a much larger internal staff than firms managing smaller funds. The larger firms can take on the burden of increased registration/reporting requirements and an internal compliance officer in a much more economical fashion.”
As a result of this campaign, recent legislation being proposed by Congress would raise the registration requirement from assets under management of $30 million to $150 million.
“It’s not as high as we would like, but we appreciate that lawmakers have listened to the concerns of the HFA and taken steps that would protect the small managers from the burden of excessive regulation.”
The Hedge Fund Association (“HFA”) is an international not-for-profit organization made up of hedge funds (both large and small), hedge fund investors (including funds of funds, family offices and high net worth individuals) and service providers (including law firms, administrators, brokers, accountants, marketers and technology firms). Unlike other trade organizations in the industry, our membership is not made up exclusively of the largest funds in the industry. We hold frequent educational and networking events, and focus on educating the public, media and lawmakers to dispel myths about the hedge fund industry. For more information please visit www.thehfa.org.
HedgeCo.Net – November 9, 2009 – The Hedge Fund Association, HFA, today announced progress on its “Speak Up” campaign, which seeks to ensure that regulation of the hedge fund industry meets government concerns without imposing over-reaching, broad measures that makes it costly for small funds to operate, and could impede industry growth and job creation.
HFA President, David Friedland, said that the HFA was not opposed to additional regulation and registration or reporting requirements. ”The HFA is open to working with Congress to ensure that any regulation is cost effective and achieves objectives that both Congress and the industry need.” Mr. Friedland further noted that all hedge funds are already subject to certain rules and regulations, including SEC anti-fraud provisions.
Mr. Friedland said, however, that “proposals from Congress to regulate funds with assets under management of over $30 million could result in smaller hedge funds, which form the vast majority of firms, to close their doors, causing a devastating impact on an industry already suffering from the effects of the financial downturn. This will result in a loss of jobs not only within those hedge fund firms, but also at the administrators, law firms, auditors, banks and brokers who rely so heavily on smaller/startup funds for much of their business.”
The Hedge Fund Association’s “Speak Up” campaign was launched with the aim of educating lawmakers and the media of the burden that new regulations would place on smaller hedge funds. ”Some form of registration requirement and reporting requirement for firms with more than $250 million would seem to make the most sense” Mr. Friedland stated. ”Typically firms with more than $250 million have a much larger internal staff than firms managing smaller funds. The larger firms can take on the burden of increased registration/reporting requirements and an internal compliance officer in a much more economical fashion.”
As a result of this campaign, recent legislation being proposed by Congress would raise the registration requirement from assets under management of $30 million to $150 million.
“It’s not as high as we would like, but we appreciate that lawmakers have listened to the concerns of the HFA and taken steps that would protect the small managers from the burden of excessive regulation.”
The Hedge Fund Association (“HFA”) is an international not-for-profit organization made up of hedge funds (both large and small), hedge fund investors (including funds of funds, family offices and high net worth individuals) and service providers (including law firms, administrators, brokers, accountants, marketers and technology firms). Unlike other trade organizations in the industry, our membership is not made up exclusively of the largest funds in the industry. We hold frequent educational and networking events, and focus on educating the public, media and lawmakers to dispel myths about the hedge fund industry. For more information please visit www.thehfa.org.
