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) – RBC Capital Markets today reported that for the month of July 2009 the RBC Hedge 250 Index(R) had a net return of 2.10 percent. This brings the year-to-date return of the Index to 13.04 percent. These returns are estimated and will be finalized by the middle of next month. The return for June 2009 has been finalized at 0.33 percent.
Comprised of approximately 250 actual hedge funds, the RBC Hedge 250 Index is positioned as a diversified and representative investable index. The Universe on which the Index is based currently consists of 5,242 hedge funds (excludes funds of hedge funds) with aggregate assets under management of $952 billion.
Since its inception on July 1, 2005 through the end of June 2009, the RBC Hedge 250 Index has had an annualized net return of 2.56 percent. In comparison, over the same period, other investable indices have averaged -1.44 percent while non-investable indices have averaged 4.25 percent, according to information reported by the sponsors of those indices.
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Caymen Net News – The CAYS Foundation is continuing its work with the Cayman Islands’ youth, raising awareness and addressing the issues of child abuse and neglect, through funding from a Hedge Funds Care Cayman (HFCC) grant.
Among the many projects the CAYS Foundation has developed is the Family Reunification Programme (FRP), which is designed to strengthen vulnerable families during the period when a child is preparing to return home after a stay at one of CAYS Foundation’s two residential homes. The programme has been in existence since the CAYS Foundation’s inception in 2003.
Seeking Alpha – In a 13G filing made with the SEC due to activity on June 9th, 2009, Lone Pine Capital has disclosed a 7.7% ownership stake in Smithfield Foods (SFD). This is a brand new position for Stephen Mandel’s hedge fund and it now owns 11,116,850 shares. Lone Pine previously did not show a position in SFD when we looked at its entire portfolio, so it has just recently entered the position over the past 2 months or so. In terms of other big bets Lone Pine has made recently, we saw that Mandel likes Strayer Education. He presented this choice at the 2009 Ira Sohn Conference where numerous hedge fund managers each presented an investment idea.
His $7 Billion fund has returned over 25% annually since its inception in 1997, but had a rough year in 2008. The term ‘lone pine’ comes from Mandel’s days at Dartmouth College, where the school has a historical lone pine tree. He is well versed in the ways of finding undervalued companies and he typically likes to sniff out solid companies with good management that are trading below their intrinsic value. In Alpha’s 2009 hedge fund rankings list, Lone Pine was ranked 21st.
Bloomberg – William Ackman’s hedge fund that invests solely in Target Corp. fell 33.3 percent in February, bringing the loss since inception to 93 percent, according to an e-mail sent to investors.
The decline in Pershing Square IV fund was more than three times that of Target shares in February. Ackman made his bet using options rather than the underlying stock, which can magnify gains or losses on an investment. Target tumbled about 9 percent last month.
Ackman last month told investors seeking redemptions that they would get their money back in March.
Seekingalpha.com – Since inception, its funds have returned on average 40% annually, which explains how they can charge a 50% performance fee to investors, compared to the normal 20% that most hedge funds charge. They are very active traders and at any given time can account for up to 3% of the volume on the New York Stock Exchange and up to 1% on the Nasdaq. And, if you’re curious, you can see a picture of Cohen’s house here.
Before beginning, we do want to stress that since SAC actively trades positions quite frequently, tracking it via its13F is not necessarily beneficial and we advise that those reading take this with a grain of salt. We are simply covering the fund since it’s a prominent fund and many of our readers were curious about what it was up to these days.
Bloomberg – Jeffrey Gendell, whose investment firm Tontine Associates LLC is liquidating two hedge funds after losses of more than 60 percent this year, plans to start a new fund in February.
The Tontine Total Return Fund will invest in stocks believed to be undervalued and won’t use borrowed money, Gendell said in a letter to investors. Steve Bruce, a spokesman for Greenwich, Connecticut-based Tontine, declined to comment.
Tontine, started by Gendell 12 years ago, had been one of the industry’s best performers, with its four funds returning an average of 38 percent annually since inception through 2007. The firm last month said it was unwinding Tontine Capital Partners LP, a fund that plunged 77 percent this year through October, and Tontine Partners LP, which fell 67 percent through September.
Reuters – Even hedge-fund managers with portfolio gains are in trouble this year.
Dozens of managers who are outperforming the market and their troubled rivals with gains of as little as a few percent or as much as nearly 100 percent are facing a surge of withdrawals as investors try to exit during the worst bear market since the Great Depression.
Connective Capital, a Palo Alto, California-based hedge fund, treated investors in its short strategy to an eye-popping 85 percent gain this year as its benchmark Nasdaq Index slumped 42 percent. Still, clients asked manager Robert Romero to return roughly 20 percent of their capital.
Bloomberg – Brazilian hedge funds saw a record 14.3 billion reais ($6.7 billion) in withdrawals last month after returns trailed a fixed-income benchmark even while defying a 25 percent plunge in the Bovespa stock index.
The redemptions brought total outflows this year to 48.9 billion reais, shrinking the industry by 16 percent, according to data released by the National Association of Investment Banks yesterday. The rate of withdrawals is similar to hedge funds globally, even though the worst-performing Brazil funds lost a third as much on average as their overseas rivals.
Brazilian managers avoided declines even as the Bovespa plunged 43 percent this year. Investors withdrew money because they compare performance against fixed-income indexes, said Luiz Felipe Andrade, a director at the association known as Anbid. Bond yields in Brazil are among the highest in the world.
Bloomberg – Brazilian hedge funds saw a record 14.3 billion reais ($6.7 billion) in withdrawals last month after returns trailed a fixed-income benchmark even while defying a 25 percent plunge in the Bovespa stock index.
The redemptions brought total outflows this year to 48.9 billion reais, shrinking the industry by 16 percent, according to data released by the National Association of Investment Banks yesterday. The rate of withdrawals is similar to hedge funds globally, even though the worst-performing Brazil funds lost a third as much on average as their overseas rivals.
Brazilian managers avoided declines even as the Bovespa plunged 41 percent this year. Investors withdrew money because they compare performance against fixed-income indexes, said Luiz Felipe Andrade, a director at the association known as Anbid. Bond yields in Brazil are among the highest in the world.
KEZI – Most Asian stock markets recovered Monday after last week’s historic sell-off as governments around the world intensified efforts to boost the ailing financial system.
Hong Kong’s Hang Seng Index, which tumbled more than 7 percent Friday, opened over 2 percent but shed its gains to trade about 360.50 points higher, or 2.44 percent, at 15,157.37.
In Australia, the S&P/ASX200 index was up 4 percent in response to a government plan to guarantee bank and other lender deposits for three years. The benchmark plunged over 8 percent on Friday, its biggest single-day fall ever.
South Korea’s benchmark gained more than 2 percent and Singapore’s key stock measure was up about 1 percent. But China’s key Shanghai index traded 2 percent lower, while Taiwan’s benchmark lost more than 3 percent.
Globe and Mail – Goodwood Inc., a value-oriented manager, briefed investors Thursday on a dismal September. There’s a lot of these letters going out from hedge fund managers. Goodwood’s funds were down 16 per cent last month, bringing the year-to-date loss to 32 per cent. Year-to-date, the S&P/TSX benchmark is down 13 per cent.
Goodwood executives Peter Puccetti and Cam MacDonald used their September letter to unitholders to explain the madness of markets, and plead for patience and perspective. They certainly deserve a hearing. But investors who bought into hedge funds on the basis of absolute returns – making money in good markets and bad – are going to struggle with these pleas.
“We have seen many well-known investment management operations badly harmed as a result of their leverage exacerbating the effects of the ongoing credit crunch and deleveraging we are currently living through,” said Goodwood’s team.
Bloomberg – Tantallon Capital, founded by Merrill Lynch & Co. former head of sales Nicholas Harbinson, closed one of its hedge funds after bad bets on Asian stocks, three people familiar with the matter said.
The Singapore-based firm shut its Tantallon Smaller Companies Fund, managed by Steve Sun, after it lost 25.6 percent this year, according to data compiled by Bloomberg, more than twice a benchmark that tracks similar funds. Assets shrank to $18 million as of end July, from as much as $29 million in February, the people said, asking not to be identified because details are private.
The market turmoil has wiped $19 trillion off global stock markets in the first nine months of this year. That has hurt even the most experienced managers, said Jennifer Carver, who runs the Asian business of 3A SA, the alternative investment unit of Geneva-based Banque Syz & Co.
“There are a lot of funds out there that are effectively net long that are getting killed this year,” said Hong Kong- based Carver, adding that 3A doesn’t invest in Tantallon’s funds. “The bigger funds have lost a lot of assets too, their performance has been bad; smaller funds have to close quicker because they don’t have the depth of the larger funds to keep going.”
