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 – Billionaire Nelson Peltz and former Countrywide Financial Corp. President Stanford Kurland are among at least six investors turning to the public markets to finance purchases of distressed home loans and corporate debt.
The investors, most of whom previously relied on private partnerships for funding, have proposed since May 1 to raise $2.6 billion through public stock sales. They plan to use the money, along with government financing in some cases, to acquire mortgages and below-investment grade loans to companies that fell in value amid the collapse of the real estate and credit markets starting in mid-2007.
Newsday – The latest development in the mortgage market fomenting outrage in the streets and condemnation across the media spectrum is the spectacle of rich investors — Wall Street traders, hedge fund operators, even former executives of the detested Countrywide Financial Corp. — buying up delinquent home loans, reworking terms for borrowers, and selling them off to new investors at a handsome profit.
Reuters – British hedge fund manager Man Group Plc said on Tuesday banks were more highly geared than hedge funds and bank deleveraging had been the main driver of asset-price declines.
"Hedge fund deleveraging has put pressure on asset prices as clients have redeemed. But the main point is banks are deleveraging and they are many times more leveraged than hedge funds," said Man Group Chief Executive Peter Clarke.
Speaking at the Hedge Funds World conference in Zurich, Clarke also said leverage across the hedge fund industry is now at around a third of leverage levels in 2007.
Bloomberg – The global hedge fund industry lost $100 billion of assets in October, according to an estimate from Eurekahedge Pte, as firms including Sparx Group Co. and Man Group Plc were hammered by investor redemptions.
Funds fell an average 3.3 percent, based on preliminary figures from the Singapore-based data provider, as measured by the Eurekahedge Hedge Fund Index, which tracks the performance of more than 2,000 funds that invest globally. That compares with a 19 percent slide in the MSCI World Index last month.
The biggest market losses since the Great Depression and investor withdrawals hurt the $1.7 trillion hedge funds industry that manages largely unregulated pools of capital. The index of global funds has lost 11 percent this year, set for the worst performance since 2000 when Eurekahedge began tracking the data.
Interactive Investor - Man Group aims to win more business from big Asian investors such as pension funds and insurers even as global financial turmoil spurs some existing clients to redeem holdings and seek safety in cash.
The world’s largest listed hedge fund group recently hired an institutional salesperson in South Korea because of the potential it saw there and was studying the long-term opportunity in China, said Tim Rainsford, managing director, Asia Pacific for Man Investments.
"It’s certainly a challenging time. At the same time, the brakes are not on in the business. We will launch products when they’re appropriate," he told the Reuters Finance Summit on Monday.
Times Online – Hedge funds are supposed to like risk and to love leverage. However, in the current markets, it has all got too much for Man Group.
The world’s biggest quoted hedge fund manager – and historically one of the most successful – shocked investors yesterday by announcing plans to unwind all the leverage in its $8.6 billion (£5.5 billion) Man Global Strategies fund. It also surprised shareholders by a sharper than expected fall in assets under management which slipped to $67.6 billion, compared with a forecast $70.3 billion.
That was enough to knock almost a third off its share price.
Many hedge funds are being forced to cut leverage by their lenders, but in Man’s case the move is voluntary. Because markets are so difficult, it has decided to pay back its lenders and put MGS’s holdings in cash.
Reuters – Man Group plans to be a consolidator in the hedge fund industry in the long-term, said Chief Executive Peter Clarke, who thinks the industry could see redemptions of between a third and a quarter at the year-end. "Consolidation is undoubtedly going to happen … Longer-term we’d expect to be a consolidator in these markets," he told Reuters in an interview on Thursday.
However, he said the firm was "doing nothing in these markets, there’s too much uncertainty."
Clarke also said redemptions in the $1.7 trillion hedge fund industry of between a quarter and a third at the end of the year would be "the right sort of figure."
"The year-end is seeing significant levels of redemptions," he said.
Daily Mail – Man Group, the world’s biggest listed hedge fund manager, saw profits slide 24 per cent in the last six months as its managed funds fell and fee income dwindled.
It took $107million (£67.4million) hit on upfront commissions for one of its top funds, Man Global Strategies.
Sales to end-September, at $10.2billion, outstripped redemptions of $6billion.
Guardian Unlimited - Lights flicker and numbers flash up on small dials at the front of two computer servers nicknamed Meg Ryan and Jamie Lee Curtis by traders at the London headquarters of hedge fund giant Man Group.
The shiny new technology is part of the nerve centre of AHL, one of Man’s most successful hedge funds, which has notched up returns of 7 per cent in the past month alone, despite the financial turmoil.
Others in the industry have been less fortunate. Analysts warn that global hedge funds are facing the biggest bloodbath since their rapid expansion in the early 1990s, especially in Britain, where about half of 2,000 firms are expected to be taken over by larger rivals or liquidated.
But don’t expect the funds to shout from the rooftops about their travails. They are notoriously secretive, preferring to work quietly in a sector conservatively estimated to account for around $2trn at the height of the boom.
Bloomberg - Man Group Plc, the largest publicly traded hedge-fund manager, rose in London trading after its biggest pool reported gains for a fourth consecutive week.
“It increases the probability that they will be earning performance fees on the fund,” said Gurjit Kambo, an analyst at Numis Securities, who rates the stock an “add.”
AHL Diversified Plc gained 1.9 percent in the week to Oct. 20, and is up 12 percent in the past 12 months, Man said in a statement yesterday. AHL, whose computer-trading program dictates about a third of Man’s investments, is now closer to its so-called high-water mark, the level above which the firm begins to collect performance fees.
London-based Man rose as much as 6.1 percent and was up 14.5 pence at 368.5 pence by 10:10 a.m. The stock has gained 16 percent so far this week, valuing Man at about 6.3 billion pounds ($10.3 billion).
Reuters UK – Recent sharp moves in global currencies are the start of longer trends set to produce strong money-making opportunities for trend-following hedge strategies, according to Insch Capital Chief Executive Chris Cruden.
Cruden, whose Insch Interbank Currency Program is up 7.96 percent over the year to end-September before fees compared with a 27.6 percent fall in the MSCI World index, points to the rise of the Australian dollar versus the U.S. dollar between 2001 and 2008 as an example of previous long-term currency moves.
"I imagine the nature of the shakeout will produce sustained moves lasting many months if not years," said Cruden, a former director of Adam, Harding and Lueck Asset Management AHL.L, now the flagship hedge strategy of Man Group.
Reuters – The Hedge Fund Standards Board, the body set up to develop voluntary standards in the industry, said on Wednesday it now represents about half of hedge fund assets in Europe.
The announcement comes as hedge funds attempt to head off tougher regulation in the wake of turmoil in the global financial system.
The industry has come under intense scrutiny, most notably for the impact of short-selling employed by many managers. In September, regulators in the U.S. and Europe imposed a temporary ban on shorting financial stocks.
Ten new signatories to the HFSB include Blackrock Investment Management UK, New Star Asset Management and Sabre Fund Management. They join 14 existing members including Man Group Plc, the world’s largest hedge fund manager, GLG Partners and Marshall Wace.
