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 – HSBC Holdings Plc’s U.S. securities division will no longer extend structured financing to hedge- fund investors to leverage their investments, according to people familiar with the company’s plans.
The bank is halting the financing by its structured-funds products division and eliminating an unspecified number of jobs in New York, said one of the people, who asked not to be identified because the information hasn’t been made public. The group reports to Steven Phan, global head of the investment access and solutions groups in London, the person said. Phan declined to comment.
“Hedge fund-linked strategies tie up a lot of capital because of the illiquidity of the underlying hedge fund,” said Keith Styrcula, chairman of the Structured Products Association, a New York-based industry group. “Those were among the very first lines of business that firms were cutting back on.”
Reuters – A global hedge fund industry group backs U.S. plans to require hedge fund advisers to register with federal regulators, a move that would align U.S. rules with those in the UK.
The Alternative Investment Management Association, in remarks to be delivered to a U.S. congressional committee on Thursday, also said registration creates a dialogue between the hedge fund adviser and supervisor that supports greater understanding of hedge fund activities.
The London-based group, which represents more than 1,100 hedge fund firms in more than 40 countries, is among those due to testify to the capital markets subcommittee of the House Financial Services Committee. Other witnesses on the registration issue include the Teacher’s Retirement System of Texas and well-known short-seller James Chanos.
West Palm Beach (HedgeCo.net) - The Opalesque South Africa Roundtable was held November 10th 2008 in their Cape Town Office. There, the participants also discussed the particularities of investing in Africa (ex-South Africa).
South Africa’s equity and fixed income markets displayed exemplary robustness during 2008. Many global allocators may not be aware that the South African financial market infrastructure matches or exceeds its "first world" counterparts in many respects.
The equity and fixed income markets demonstrated exemplary robustness throughout the turbulences of 2008: no short-selling ban, no trading halt and no failed trades. Offshore investors can benefit from efficient and proven ways to get pure South African alpha without taking currency risk.
During the Roundtable, portfolio managers explained new ways to construct hedges, and informed on new and upcoming products. How global investors can benefit from the "Africa story", which is probably the largest opportunity set in the new investment paradigm called "frontier investing"? How do you deal with restricted liquidity, and is Africa really uncorrelated?
The following experts participated in the Opalesque South Africa Roundtable: James Gubb, Founding Partner of Clear Horizon Capital St. John Bungey, Partner, Praesidium Capital Management James Addo, Portfolio Manager, Finch Asset Management Simone Lowe, Portfolio Manager, Thames River Capital Andy Pfaff, Founding Partner of Trendline Funds Ian Hamilton, Founder, IDS Group Ryan Proudfoot, Co-Head RMB Prime Broking Warren Chapman, Head of Peregrine Prime Broking Kevin Ewer, Portfolio Manager, Blue Ink Investments.
South African hedge fund managers and hedge fund investors share surprising insights. For example, – South African single strategy hedge funds offer transparency "far superior to anything anywhere else", according to investors – South African hedge funds suffered their first – and only until that point – net redemptions in October 2008, but only 2.5% of total assets – South Africa is the first country in the world that actually distinguishes between normal fund managers and hedge fund managers, with higher criteria required for hedge fund managers.
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Reuters Dubai – The outlook for investments in the oil and gas industry remains healthy as demand growth from emerging economies is expected to recover, a co-manager of a shariah compliant oil and gas hedge fund said.
"There is constant demand for these finite resources from emerging economies like China and India, even though there is some downturn in the short term," said Russell J. Lucas of U.S.-based Lucas Capital Management, co-portfolio manager of Al Safi’s Lucas Energy Fund.
"You have to eat, you have to drive, you need heat to keep your family warm, I believe those are the things that should be the core of a portfolio, especially in uncertain times."
The Dubai oil and gas hedge fund could grow to $500 million (332.7 million pounds), from its initial investment of $50 million in the next 18 months, he said.
Seeking Alpha – I’m lucky to count among my friends Charlie Michaels, owner of hedge fund company Sierra Global and portfolio manager of the Sierra Europe Fund. Charlie is among the few hedge fund managers sitting on a gain so far this year.
According to the HFRI Fund Weighted Composite Index managed by Hedge Fund Research, Inc. in Chicago, the average hedge fund dropped 5.4% last month and is down 15.5% so far this year. The industry has been losing for five months in a row, which is the longest down streak since the index began in 1990.
Charlie and his team at Sierra Global, meanwhile, gained 0.2% in September, 3.0% last month, and are up 8.6% so far this year. The only year the Sierra Europe Fund ended down was 2002, when it lost 12.3%. The FTSE 100 lost 25% that year and the DAX 42%, so even Sierra’s loss that year can be chalked up as a relative victory. All of which is to say that it’s worth paying attention to Charlie when it comes to stocks.
New York (HedgeCo.Net) – New York hedge fund Elliott International’s quest to place two members of its team on the board of New Zealand-based Telecom has officially come to an end when they failed to win the bid at the annual shareholders meeting today.
Elliot had nominated Mark Tume and Mark Cross in August, after poor performance by Telecom prompted their desire to shake up the board in pursuit of higher returns.
"In our view, Telecom’s performance languishes behind that of other key telecommunications players in the international market, and we believe this is partly due to an unclear and outdated strategy. Shareholders and customers remain dissatisfied with Telecom’s progress," Portfolio Manager James Smith had said.
Elliot is well known in the states for taking over faltering companies and engaging in proxy battles with the intentions of restructuring.
In 2006, Elliot proposed that Telecom be split into two separate entities, with each company having its own listing on the stock exchange. Telecom Chairman Wayne Boyd came to his company’s defense, saying that a split was not in the best interest of the shareholders.
Julie Scuderi Senior Editor for HedgeCo.Net Email: julie@hedgeco.net
HedgeCo.Net is a premier hedge fund database and community for qualified and accredited investors only. Membership on www.hedgeco.net is FREE and EASY. We also offer FREE LISTINGS for Hedge Funds! Be sure to check out our sister sites. For more information, visit www.hedgeconetworks.com
New York (HedgeCo.Net) – Turnberry Capital Management LP has decided to close its doors and liquidate its assets, after many investors inquired about getting their money back. The hedge fund, which specializes in purchasing distressed debt, once held approximately $800 million under management.
"We intend to take a series of steps to liquidate the Fund and redeem all Fund investors at the same pace," Portfolio Manager Jeff Dobbs wrote in a letter to his clients. “After Labor Day, we will commence a sell-down of the Fund’s security holdings in order to raise cash to fund redemptions.”
Being careful not to waste any potential marketing platform, Dobbs also added that he is planning to own a corporate bond portfolio, and that anyone who has an interest in learning more may submit a request.
About 70 percent of the credit derivative book has already been liquidated.
Julie Scuderi Senior Editor for HedgeCo.Net Email: julie@hedgeco.net
HedgeCo.Net is a premier hedge fund database and community for qualified and accredited investors only. Membership on www.hedgeco.net is FREE and EASY. We also offer FREE LISTINGS for Hedge Funds! Be sure to check out our sister sites. For more information, visit www.hedgeconetworks.com
Wall Street & Technology – Now that Apple has improved security and enterprise connectivity capabilities for the iPhone 3G, industry specific applications are starting to emerge. One of the first iPhone applications for the securities industry is a tool that provides real-time portfolio management called Lab49 Capital from Lab49, Inc. a technology consulting firm that builds solutions for the financial services.
The application helps buy-side portfolio managers track the performance of their assets in real time, and "slice and dice" positions, P&L and changes in the portfolio across multiple dimensions such as strategy, industry, country and manager, according to Marc Jacobs, director at Lab49. (See a Lab49 Capital ScreenCast demo.)
"For a portfolio manager, they don’t spend all of their time at their desks," Jacobs adds. "But their mind is always ‘where are we right now?’ Allowing portfolio managers to such visibility into their fund is a key aspect that this application provides. Lab49 Capital is inspired by several projects we have going on with a number of firms. Lab49 Capital is a representation of actual work we are doing with some of our clients."
West Palm Beach (HedgeCo.Net)- Florida based hedge fund manager INTL Consilium LLC and First City Monument Bank Plc have jointly launched the Legacy Africa Alpha Fund, a $100 million hedge fund investing in Africa and the Middle East.
"The new Legacy Africa Alpha Fund is a natural extension to our global products as we have been investing aggressively in the region for three years now." Jonathan Binder, co-portfolio manager, said.
Structured as an absolute return fund, the strategy focuses on capital appreciation and income via investments in debt and equity securities in sovereign or corporate entities located in Africa and the Middle East. The goal of the strategy is to produce consistent absolute returns while maintaining attractive risk-adjusted return profiles, irrespective of the conditions of the global markets.
The Legacy Africa Alpha Fund will place a 30% cap on its Middle Eastern weighting to ensure significant exposure to Africa’s fastest growing economies,
"INTL already has over $450 million invested in the region in both debt and equity securities in over 16 different countries as they were quick to identify value and growth opportunities at a time when many investors shied away." co-portfolio manager Charles Cassel added, "The Legacy Africa Alpha Fund is an exciting venture for our team, as it will allow us to leverage our existing knowledge and contacts within the region."
In addition to the Legacy Africa Alpha Fund, CSL is simultaneously launching two additional funds under the flagship “Legacy” brand. The Legacy 50 Fund, an index tracker of Nigeria’s top 50 companies by market capitalization and the Legacy Banking 10, driven semi active fund investing in Nigerian Banking shares will each be launched with N3 billion under management. This will bring total assets under management to N24 billion ($ 205 million), making it arguably the largest asset manager in Nigeria.
Bloomberg- Service Corp. International, the biggest U.S. funeral-home and cemetery owner, is becoming a magnet for hedge funds which see the rising death rate among Baby Boomers as the surest way to resurrect the company’s shares.
Steven Cohen’s SAC Capital Advisors LLC added almost 2 million shares in the first quarter to increase its stake to 2.2 percent, according to regulatory filings. AQR Capital Management LLC, run by Cliff Asness, also boosted holdings in Service Corp.
“There is a demographic benefit as the Baby Boom ages and the death rate rises,” said Dana Walker, a portfolio manager at Kalmar Investments Inc., which oversees $3 billion in Greenville, Delaware. “The flow-through, in a top-line and a bottom-line sense, ought to be very generous.” Kalmar owned 1.2 percent of Houston-based Service Corp. as of March 31.
After at least four decades of declines, the U.S. death rate will rise to 9.3 per thousand people in 2020 and 10.9 per thousand in 2040, according to projections from the National Funeral Directors Association in Brookfield, Wisconsin.
Reuters- Veteran U.S. lawyer Brendan Sullivan is joining the defense team of indicted former Bear Stearns hedge fund manager Ralph Cioffi, a person close to the matter said on Tuesday.
Sullivan, a trial attorney who has represented high-profile clients including Iran-Contra figure Oliver North, will be an addition to Cioffi’s existing defense team, said the person, who spoke on condition of anonymity.
Cioffi and another former Bear Stearns portfolio manager, Matthew Tannin, were charged in June with conspiracy and securities fraud related to last year’s collapse of two hedge funds linked to risky mortgage investments.
The Money Times- A $100 million here, a $100 million there, and pretty soon you’re talking about real compensation. U.K.-based hedge fund manager GLG Partners (NYSE: GLG) announced today that it has hired Goldman Sachs (NYSE: GS) partner Driss Ben-Brahim. In 2006, Ben-Brahim sent the London press into a frenzy when it was reported that he earned a $100 million payday.
With those kinds of numbers being thrown around, leaving Goldman might look like an odd decision, but Ben-Brahim can always point to the man whose shoes he’ll be filling. GLG is losing its highest-profile portfolio manager, Greg Coffey, who is walking away from a $250 million stock payday to launch his own fund.
