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.
Guardian.co.uk – Palestinian house builders on the West Bank could benefit from an influx of cash if plans by the $900m (£552m) Palestine sovereign wealth fund to invest in London-based hedge funds go ahead.
The Palestine Investment Fund (PIF) is considering switching investments into hedge funds as part of a move to expand international investments to make up 30% of its portfolio.
Social housing projects, already underway on the northern outskirts of Ramallah, will be expanded along with other projects on the West Bank if the investment grows as expected over the next few years, a spokesman for the fund said yesterday.
New York (HedgeCo.net) – In a Sunday Times article this weekend, Bryan Collings, who manages the Investment Fund for Ingnis International Hexam Global Emerging Markets, predicted an increase in the price of precious metals of 25% over the next 18 months. He forecasts that the price of gold will rise 20% to $1,200 an ounce by 2010. Remarkably, other commentators are predicting an even more significant rise to $1,500 an ounce within the next two years.
Gold was pushed to its highest level in the last six months because investors are keen to buy gold as a hedge against inflation. Gold has always been seen as a good investment in times of economic uncertainty. With continued concerns about inflation, the gold markets show no signs of cooling unlike the currency markets which continue to fluctuate.
Jason Cozens, Managing Director of Au, the online gold exchange said, “This is consistent with our predictions for the price of gold as investors are undoubtedly keen to buy gold at the moment. We are seeing an increase in enquiries from all kinds of investors. Media reports, like the Sunday Times article, are encouraging investors and we believe that it is prudent for individuals to invest up to 40% of their total portfolio in gold”.
Similarly, the price of other precious metals has soared since the beginning of the year. Silver has also strengthened with figures from the S&P GSCI Silver index showing a gain of 46.4% since the start of 2009. Copper has risen 102% since the beginning of the year and experts are predicting that with a shortage in supply and growing demand the price will continue to go up. Uranium prices are also expected to rise with an increase in demand for the metal, which is used in the production of nuclear energy.
Times Online – Investors in Cerberus are seeking the return of more than $5.5 billion (£3.3 billion) from the fund, which has made a series of poor investments, including the acquisition of GMAC, General Motors’ finance division, and of Chrysler, the bankrupt carmaker.
The collapse in confidence caps a remarkable fall from grace for Cerberus. The American investment fund, which has several hedge funds and a private equity unit that invests in distressed businesses, was once the darling of Wall Street, but it lost its way with bets on the US automotive industry.
Telegraph.co.uk – The chatter was that Harbinger, a powerful US hedge fund run by Philip Falcone, has built a small stake in African Minerals and has been talking to London brokers in recent days about picking up more stock. Harbinger declined to comment.
If Harbinger has built a stake in the company, it is not clear what the hedge fund’s intentions are for African Minerals. The group runs a variety of strategies. Sometimes the investment fund acts as a passive, long-only investor. However, Harbinger also has a reputation for being activist and occasionally bids for companies. Last year, for example, Harbinger made a takeover approach for blue-chip satellite services group Inmarsat, which slipped 6.3 to 495.2p.
Mr Falcone is well known in City circles. The trader hit the headlines when it emerged that Harbinger was one of the main hedge funds to have shorted HBOS before the Government orchestrated the bank’s emergency merger with Lloyds, now Lloyds Banking Group.
Times Online – Guardian Media Group, the owner of The Guardian and The Observer newspapers, lost £24m last year on botched currency trading as it tried to protect hedge-fund investments.
The newspaper publisher, which is considering closingThe Observer, the world’s oldest Sunday newspaper, was caught out by the dollar’s rapid rise against sterling which led to a £24m loss.
The investments were made out of a £200m investment fund designed to spread GMG’s risk away from volatile advertising markets.
Sources said the fund was never intended to make a profit in its first year and the losses were the result of a ”mark to market” valuation at the end of March. However, the scale of losses from derivatives investments, which contributed to a £90m annual group loss, will alarm its left-leaning readership.
NASDAQ – The pace of new European hedge fund launches has stalled this year after the industry’s dismal 2008 performance made investors unwilling to back new ventures.
Data provider EuroHedge Monday said just 47 funds started trading in the first six months of the year, the least in a decade and less than half the number in the same period of 2008. The new funds collectively raised $2.09 billion – a figure that in "normal" times might have been raised by one fund alone.
However, EuroHedge said there are signs the second half could be more fruitful, with several high-profile funds already started or in the pipeline. Those include Theleme, a global equities strategy being set up by Patrick Degorce, a co-founder of The Children’s Investment Fund who left to strike out on his own, and Gyldmark Liquid Macro Fund, a fund started by former BlueCrest Capital portfolio managers.
Guardian.co.uk – The secretive hedge fund manager and philanthropist Chris Hohn last year donated almost half a billion pounds to the children’s charity run by his wife, it emerged yesterday.
The £486m gift follows hefty profits at Hohn’s hedge fund TCI in 2007, and beat the previous year’s donation of £276m. The financier has now donated more than £1bn in total, more than the gross domestic product of countries including Greenland and Antigua.
The funds will be given to the Children’s Investment Fund Foundation (CIFF), the charity that Hohn co-founded with his wife Jamie to help children in poor and developing countries, mostly in Africa, Asia and Central America.
Interactive Investor – The retreat of two high-profile activist funds from Japan underscores the difficulties such funds face in squeezing value from their investments and raises worries about lax corporate governance in the world’s second-biggest economy.
The Children’s Investment Fund (TCI) and Steel Partners have been scaling back since last year, joining a growing pool of foreign funds reducing exposure to Japan.
The departure also points to rising frustration among foreign funds that managers are not interested in maximising value, while domestic shareholders, often through complex cross-holdings, want to maintain the status quo.
Wealth Bulletin – Geneva’s public prosecutor said he has launched a criminal investigation into allegations that Banco Santander SA’s hedge-fund unit misled investors when it funneled their money into Bernard L. Madoff’s Ponzi scheme.
The formal investigation was opened following a complaint by Geneva Partners, an independent investment fund that bought financial products from Santander’s Geneva-based hedge-fund unit, Optimal Investment Services SA.
Dario Zanni, Geneva’s public prosecutor, said the inquiry would look at whether Optimal’s former chief executive, Manuel Echeverria, did the fact-finding claimed in the firm’s documents. "We have some suspicion about his [work]," Mr. Zanni said. "We are not sure he was doing his job compliant with his duties."
West Palm Beach (HedgeCo.net) – British Virgin Islands based hedge fund manager Tranen Capital took the lead in the Fixed Income – Asset-Backed Lending category for March 2009 with a return of 2.49%.
In addition to the March performance, the fund, ‘Tranen Capital Alternative Investment Fund Ltd.’ posted a YTD (through April) change in NAV of 11.5%.
“Investors are keenly aware of the dismal and unstable returns from the major financial markets. They are demanding alternatives and absolute returns. The Barclay ranking certainly highlights the strategy’s excellent returns but more importantly, it demonstrates that the funds’ performance is non-correlated to financial markets. The Fund’s NAV has increased 27% since July 2008, which has been independently determined by our actuaries, Data Life, and confirmed by our Administrator Commonwealth Fund Services. Additionally, we have also recently delivered our first independent audit to investors," says Kenneth Landgaard, Portfolio Manager.
Tranen Capital’s strategy is to trade life insurance policies in the Life Markets Space, more commonly referred to as the Life Settlements Market. The Life Markets Space enables seniors to sell their life insurance contracts for more than the cash surrender value than they would otherwise receive from the Insurance Company. The credit crisis has helped create more supply as Seniors (65 or older) are looking for other ways to generate cash. In fact, the life settlements market is expected to grow to over $160 billion over the next several years, according to a Sanford Bernstein report.
Arthur Bowen, Director and in-house counsel explained, “The growth in the life settlement market confirms the validity of this asset class and we continue to see great interest from institutional investors. These sophisticated investors understand the strategy and they appreciate that Tranen has gone to great lengths to provide an institutional quality product with a great level of transparency.”
Tranen Capital offers qualified offshore investors access to the Tranen Capital Alternative Investment Fund Ltd. with a 1% acquisition fee and a 20% incentive fee. The minimum investment is $100k.
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The Independent – Bramdean Alternatives Ltd, the investment fund started by Nicola Horlick, said it shouldn’t be wound up, as proposed by one of its largest investors.
Elsina Ltd, a British Virgin Island-registered investment company controlled by UK property investor Vincent Tchenguiz’s Consensus Business Group, on May 1 said it wants to remove five Bramdean directors and appoint three of its own choices. Elsina, which controls almost 29 percent of Bramdean’s dollar-listed shares, said the fund should consider closing.
NineMSN – The trustee overseeing the liquidation of disgraced financier Bernard Madoff’s assets sued another investment fund on Tuesday, claiming it owes Madoff’s victims more than $US1 billion ($A1.32 billion) it withdrew from his firm.
The complaint in Manhattan bankruptcy court alleges Harley International Ltd knew or should have known that the fortune came out of the pockets of victims of Madoff’s giant Ponzi scheme.
Of the $US1 billion ($A1.32 billion) total, the private, overseas hedge fund withdrew $US425 million ($A560.61 million) during the three months before his arrest last year.
