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 – Brazilian hedge funds are luring more money than any type of investment pool in the country after record withdrawals last year, offering returns four times the yield from certificates of deposit.
Local hedge funds attracted a net 33.7 billion reais ($19.7 billion) this year through Oct. 15 after posting 54.6 billion reais in redemptions in 2008, preliminary data from the National Association of Investment Banks’ Web site show. Third-quarter inflows surged to 36.3 billion reais, according to the data, which are scheduled to be revised and re-published today by the association known as Anbid.
Associated Press – Delphi nearly emerged from Chapter 11 last year, but was forced to redraw its reorganization plan after a group of investors, led by the Appaloosa Management LP hedge fund, pulled out of an investment deal in April 2008.
After that, Delphi struggled to find the financing it needed to restructure. Those troubles were complicated by the collapse of investment banks in the fall and the drop-off in new vehicle sales.
Months later, those factors also helped drive both GM and Chrysler into Chapter 11.
In June, Delphi had agreed to let an affiliate of Beverly Hills, Calif.-based Platinum Equity take control of most of its businesses with the help of billions from GM. But Delphi’s lenders balked at the deal and submitted their own bid which ultimately won out over the deal with Platinum after an 18-hour auction process.
Reuters – From the edge of the abyss, most investment banks and hedge funds have roared back this year thanks to equity markets that have surged 60 percent from their March lows and healthier credit markets, said Novogratz, who manages $4.6 billion through Fortress’ Drawbridge global macro hedge funds.
But the post-crisis surge cannot last, he said. A still-shaky economy and volatile stock markets with no clear direction will suck the wind from the sails of investment banks, trading houses and the hedge funds, he said.
“Mark my words: Next year will be far harder for Wall Street to make money,” Novogratz said. “The easy meat is off the bone.”
Bloomberg – Brazilian hedge funds lured about 8.2 billion reais ($4.52 billion) in July, the biggest monthly inflow this year, as a rebounding economy and record low interest rates increased demand for stocks and other higher- yielding assets.
The investment helped the funds recoup their 2009 losses, according to data through July 30 released by the National Association of Investment Banks. Hedge funds, known as multimercados, received 3.5 billion reais this year through July 30 as the industry began to lure back some of the record 54.6 billion reais of redemptions in 2008, according to the agency.
The Washington Post – The Wall Street herd is at it again. Even as the cleanup crew is carting away the debris left by the last financial crisis, the investment banks, hedge funds and exchanges are busy working on the next one.
Forget collateralized-debt obligations and credit default swaps — the new new thing is high-frequency trading. In the last three years, this practice has boosted trading on the country’s stock exchanges by more than 150 percent, to the point where it now accounts for two-thirds of the daily trading volume.
CNN Money – John Costas, who helped make UBS AG into one of the world’s biggest investment banks, wants to build a lasting Wall Street player — and put the 2007 demise of hedge fund Dillon Read Capital Management behind him.
Costas and long-time partner Michael Hutchins have launched The PrinceRidge Group, a boutique broker-dealer that is, for now, focused on trading mortgage and corporate debt.
Over time, though, he intends to expand into a mid-size investment bank, seizing "unprecedented" opportunities created by the shake-up on Wall Street.
Reuters India – Wall Street, where hundreds of commodity traders lost jobs last year as the recession set in, is on a new hiring phase where banks and hedge funds want to pay top dollar but only to a few, highly productive people.
The actual number of hires is unlikely to match the pace seen during the commodities super-cycle from 2003 to 2008, when investment banks ran a maze of desks that handled almost everything in the energy, metals and agricultural space.
Reuters – Australian investment bank Macquarie Group Ltd has managed to quell concerns on its capital position but is now bracing for its next big challenge of the global credit crisis: how to prevent its world-renowned specialist listed-funds model from crumbling.
Macquarie pioneered the specialist listed funds model in the early 1990s, encouraging even some Wall Street investment banks to follow suit. Fees from managing specialist funds made up 13.3 percent of Macquarie’s total income in the year to March 31, 2009.
Forbes – There should be regulation for areas which have previously been excluded from supervision such as hedge funds, investment banks and derivatives, European Central Bank Executive Board Member Lorenzo Bini Smaghi said on Friday.
‘There is no problem of over-regulation at the moment but there is a need to regulate areas that are not regulated,’ he said at an event in Milan.
Forbes – Consolidation in the asset management industry is set to intensify as encroaching regulation and client demands for independence force banks to hive off fund arms, Barclays said on Friday.
Major investment banks were finding it ever harder to keep hold of their fund divisions, Barclays President Bob Diamond told a conference call after agreeing to sell Barclays Global Investors to BlackRock for $13.5 billion.
‘The investment management industry is in early days of consolidation… We’ve made a clear decision that this trend is in place for a while and that is around independence,’ he said.
FierceFinance – Not too long ago we were lamenting the trend by top investment banks to move into hedge funds and alternative investments in general. Buying hedge fund firms and launching them internally didn’t work out so well for Citigroup. It also wasn’t a home run for other firms, notably Bear Stearns.
Has JPMorgan Chase found a way to buck the trend? It has announced it will buy the portion of Highbridge that it doesn’t already own, and has shut down its proprietary hedge fund and private equity businesses. As of now, it looks like the Highbridge gambit has paid off-and then some. It remains among the biggest of the hedge fund firms, and has tripled its assets under management since JPMorgan invested in December of 2004, reports TheStreet.com. My sense is that Highbridge is one of the mega fund firms that is really well positioned to steal market share.
eFinancialCareers UK – Times are still not good for junior quants and mathematical PhDs who aspire to work in investment banks. With banks pulling back from complexity, there’s less need for their talents.
Mark Davis, a professor of maths at Imperial College, says lots of his students still want to work in finance, but they’re also being forced to contemplate defence, pharmaceutical work, and the consultancy branches of accountancy firms.
One recruiter says quants who can’t get into financial services are also to be found in “systematic gambling” at the likes of Betfair and Ladbrokes, where they analyze data in the same way hedge funds do.
