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.
TimesOnline – Philippe Jabre spent much of last October and November flying economy. Times were tough as he tried to convince investors not to pull their money out of his hedge fund.
When he was not in the air, Jabre rarely moved from the trading floor of his Geneva office. With a phone glued to his ear, he tried to make sense of the markets.
Although he was bearish as the credit crunch began to unfold, he did not expect the markets to slump so violently. He certainly did not expect a threat to the existence of his hedge fund, Jabre Capital. “It was touch and go,” he said. “The run [on the fund] was not justified, but the large institutions and the funds of funds, those that were ticking boxes, didn’t want to stay.”
The Business Insider – FDIC Chairman Sheila Bair wants to end the too big to fail concept and extend the proposal to create the authority to shut down failing systemically important financial firms to insurers and hedge funds.
No one seems to agree on which institutions should be included, and the debate seems to be unable to move forward. Bair’s position seems to be the most aggressive.
Connecticut Post – Fixed-income trading by hedge funds slid 40 percent in 2009 as the credit-market crisis forced adjustments in their trading practices, according to a study by consulting firm Greenwich Associates.
Hedge funds are more likely than other types of firms to say they’ve cut back on the total number of securities firm used for fixed-income trading, shifted trades to dealers with the least counterparty risk and reduced the concentration of trading business held by any single dealer, according to Greenwich Associates 2009 North American Fixed Income Investors Survey.
“Perhaps the fact that hedge funds have taken these steps explains why only 12 percent of hedge fund managers say counterparty risk remains a significant concern, compared to 18 percent of institutions overall,” Greenwich Associates consultant Tim Sangston said.
Reuters – The UK Railways Pension Schemes, one of the UK’s largest plans, has invested 65 million pounds in London-based asset manager Goodhart Partners’ global long-short equity fund of hedge funds.
Railpen Investments, the fund manager of the industry-wide scheme with assets of over 15 billion pounds, has some 8 percent of its assets in hedge fund strategies.
”Goodhart’s Long-Short fund offers large institutions exposure to small and specialist hedge fund managers, with the degree of governance and due diligence these allocations require,” said Paul Jeffries, an investment analyst at Railpen.
Reuters UK – Man Group, the world’s biggest listed hedge fund firm, reported a rise in sales to private investors and said it expects to return to overall net client inflows in its second half, boosting its shares.
In a statement on Thursday, the firm said it attracted net private investor inflows in its first quarter of $1.9 billion (1.1 billion pounds) into its funds, which aim to deliver positive investment returns whether markets rise or fall. This partly offset net outflows of $3.3 billion from institutions such as pension funds.
The Guardian – The BIS said the retreat from riskier investments such as stocks in favour of safer bonds could pressure stock markets, delaying their recovery. "Similarly, the decline in the pension wealth of households participating in defined contribution plans and of employers sponsoring defined benefit plans has implications for aggregate spending," the BIS said.
Hedge funds did not play a central role in shaping the crisis but they will feel its impact, the BIS said.
After many wealthy individual investors withdrew, the funds are targeting institutions.
"Such a shift engenders demands for greater transparency about the investment strategy and greater scrutiny of risk management processes," the BIS said.
ZURICH, June 9 (Reuters) – Hedge fund outflows of $116 billion in the first quarter of 2009 were the second highest since 1994, Lipper data show, yet hedgies may yet receive a boost from some pension funds before the end of the year. Aureliano Gentilini, Lipper’s global head of hedge fund research, said on Tuesday he expected hedge fund outflows to taper off in the second quarter and that inflows could return in the third as investor confidence returns.
"Although down 21 percent from the fourth quarter of 2008, outflows were high, but partly because withdrawal restrictions imposed in the fourth quarter were lifted in Q1 of 2009," said Gentilini.
Gentilini also said that, in spite of having their worst ever year in 2008, hedge funds were seeing renewed interest from larger institutions as the dust from the financial crisis settles. Lipper is a Thomson Reuters research firm.
Marketwatch – David Einhorn, head of hedge-fund firm Greenlight Capital, called AAA credit ratings a curse and said he is betting against rating agency Moody’s, during a speech at a closely watched investment conference on Wednesday.
Einhorn said that many institutions with AAA ratings, including the U.S. government, turned that supposed benefit into a disaster by borrowing recklessly, according to a hedge-fund investor who attended the conference in New York and spoke on condition of anonymity.
The leading purveyor of AAA ratings is Moody’s (MCO), so Greenlight Capital is short that company’s shares, the investor quoted Einhorn as saying.
Stuff – Some of the biggest fund-of-fund investors expect hedge funds to lower management fees and introduce terms that let shareholders eventually claw back performance fees,
The traditional take-it-or-leave-it stance in the hedge fund world is wobbling. Investors are demanding better terms from managers after hedge funds worldwide lost an average of 19 percent last year.
Institutions and affluent families withdrew record amounts from funds last year even as a number of funds imposed bans on redemptions at the end of 2008.
Barron’s is out with its annual hedge fund 100 list and we wanted to post up all the media relating to it. Barron’s mentions that hedge fund assets plummeted from $1.9 trillion to $1.4 trillion throughout the course of 2008. That is a staggering number, but it definitely highlights the real problems the industry had during the year. While redemptions were fierce over the last year, reports are out saying that nearly 80% of redemption activity was high net worth and retail investors, rather than institutions. This will definitely be interesting as it could affect the health of the industry moving forwards. If institutions suddenly drop their allocations to hedge funds, then there will be big ramifications across the industry.
Motley Fool – Hedge funds — private investment partnerships for wealthy individuals and institutions — are thought to be managed by well-informed, talented investors. Where are they placing their stock bets in this highly volatile market? And does the investing community agree? Let’s see what CAPS has to say on the matter. The Fool’s community of more than 130,000 uses the wisdom of crowds to determine which companies might be worth investing in.
Running a screen on companies with a market value greater than $2 billion, I found that the following five are near the top in terms of the increase in the percentage of shares owned by hedge funds:
Reuters – Prominent hedge fund investor Mark Yusko on Monday warned endowments against putting the bulk of their money into stocks, arguing that these assets perform only when economies are growing.
For years most investors ranging from big institutions to average Americans saving for college and retirement have bet mostly on the U.S. stock market.
But in the wake of the worst financial crisis since the Great Depression, Yusko, who worked with two large college endowments before founding his own firm, Morgan Creek Capital, said investors need to change their thinking.
