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.
Reuters – An increasing number of sovereign wealth funds are working in concert to make joint strategic investments in order to reduce risks and maximize returns, which could provide a stabilizing force in financial markets.
State-owned funds from China, Singapore, Malaysia, Korea, Abu Dhabi and Kuwait are among those which have recently signed agreements to form investment partnerships with each other.
These partnerships will enable state-owned funds to optimize local knowledge, leverage capital, spread investment risks and maximize returns.
Sify – Bernard Madoff, the long time Wall Street executive accused of cheating investors worldwide out of $50 billion, scrambled to find relatives or friends to guarantee his bond on Tuesday and keep him of jail.
In Massachusetts, where the disgraced investor long cultivated a loyal group of wealthy individuals, the state’s chief securities regulator subpoenaed Bernard L. Madoff Investment Securities and Cohmad Securities Corp, a firm that marketed Madoff investment products.
The two firms must hand over the names and addresses of all local residents who let Madoff invest their money by December 29. They must also deliver notes, emails, meeting agendas related to investments made since 2000, William Galvin, the state’s Secretary of the Commonwealth, said on Tuesday.
In New York, Madoff, who was arrested last week, has not yet fully met the conditions of his $10 million bond, according to court papers. He must find three co-signers to guarantee the bond.
Using commodities to hedge potential losses in stock markets has not worked lately, and the tighter link among assets these days means diversification benefits may not be as great as before.
Hedge funds, pension funds, mutual funds and wealthy individuals who invested in commodities on the theory that they move independently of other asset classes watched helplessly as the global economic nosedive turned commodities, once the top asset class, into the year’s worst performer after equities.
Those who have studied commodities and longtime investors in energy, metals and grains say that in ordinary times, these markets make good alternatives to stocks.
Washington Post – The Bush administration’s decision to drop proposed money-laundering rules for hedge funds is "inexplicable, ill-timed and unwise," Sen. Carl M. Levin (D-Mich.) said yesterday.
Hedge funds, private investment pools whose investors are often wealthy individuals, have drawn increased scrutiny during the financial crisis. But even before the market troubles, some legislators worried that the largely unregulated funds could serve as a vehicle for money laundering, perhaps for tax evaders or terrorists.
"Hedge funds are unregulated financial companies that can handle millions of dollars in offshore money without any legal obligation to check who is behind the funds or report suspicious activities," Levin said in a statement. "But instead of plugging the hedge fund regulatory gap by issuing a final rule, the Administration went the opposite way, withdrew its anti-money laundering proposal, and offered nothing in its place."
Washington Post – Seven years ago the Patriot Act required every financial institution to establish a program to combat money-laundering.
But the roughly $2 trillion hedge-fund industry today remains free of any such government restrictions, and this week the Treasury Department formally withdrew its once proposed rules.
"Hedge funds do represent some risk because their operations and the identity of investors are generally not very transparent," said Steve Hudak, a spokesman for the Financial Crimes Enforcement Network of the Treasury Department. But "that risk needs to be studied and carefully assessed prior to implementing any anti-money-laundering regulations."
Hedge funds, which are largely unregulated investment pools whose investors are often wealthy individuals or sophisticated financial firms, have drawn increased scrutiny during the financial crisis.
Wall Street Journal – With anxiety about hedge-fund woes gripping the market, funds have their own fear: their investors.
Some investors, particularly what are known as "funds of funds," are demanding their money back and may ramp up requests in the weeks ahead. That has prompted hedge-fund managers to sell securities to raise cash.
"As the hedge fund investor base broadens, hedge fund portfolio management…slips out of the hands of the portfolio managers and into the hands of the investors," wrote Andrew Redleaf, who runs Whitebox Advisors, a Minneapolis hedge fund with about $5 billion under management, in an August client letter. "It is no insult to the investors to say that this worsens performance."
Funds-of-funds select hedge funds on behalf of pension funds, wealthy individuals or other investors, and charge a layer of fees on top of the hefty fees levied by hedge funds themselves. They often ask hedge funds for the option to redeem money as often as monthly and get good terms because they can bring in big chunks of cash at once.
Reuters UK- Roughly three dozen U.S. hedge funds have opened for business so far this year, 50 percent less than the same period last year, according to data released on Tuesday that underscored how tough it is to launch one of these portfolios now.
But the data also shows investors, like pension funds, endowments and wealthy individuals, are still flocking to these loosely regulated funds in search of better returns as the credit crisis and slower economic growth dents performance.
According to numbers compiled by trade magazine Absolute Return, the 35 new funds began trading with a total of $19.5 billion (9.9 billion pounds) in the first six months of 2008. That compares with 72 funds launched with $14 billion in the first half of 2007.
Black Enterprise- A team of young managers formerly with hedge fund Brahman Capital is preparing to launch a fund in August to focus on Western European turnaround situations, the firm’s founder said.
Cara Goldenberg, a 27-year-old former star investor and partner at the $3 billion Brahman Capital, heads the new firm, called Permian Investment Partners. She is joined by former Brahman colleagues Alex Duran and Scott Hendrickson.
New York-based Permian hopes to raise some $200 million this year, mostly from wealthy individuals and families, said Ms. Goldenberg. The firm was seeded with what it said was a "sizable" investment from Privet Capital, a family investment firm.
