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.
New York Times – Dubai’s once-heralded trophy assets now look more like lead weights, Breakingviews says. Istithmar World, one of the investment vehicles controlled by the emirate, has a portfolio that was estimated to be worth $9 billion last year. It includes a stash of big Western names, including Cirque du Soleil, Standard Chartered, GLG Partners, Perella Weinberg and Barneys New York.
Now they could all be sold as part of a restructuring. The fund picked up most of its assets at the height of the boom, but the portfolio itself is of mixed quality. Istithmar spent $825 million in 2007 to snap up Barneys, the retailer now on the cusp of bankruptcy. It holds 20 percent of the Canadian acrobatic performance group Cirque du Soleil and stakes of about 3 percent each in Standard Chartered, the global bank; a hedge fund, GLG; and the investment boutique Perella Weinberg. These are still valuable, even if they might be under water.
BusinessWeek – After contributing their fair share to the more than $1 trillion in estimated global financial industry losses in this credit crunch, hedge funds appear to be on the mend. However, the alternative investment vehicles known for returns that are uncorrelated to broad market indexes will, in Standard & Poor’s Ratings Services’ opinion, likely require more than deft trading strategies to return to their former glory days and once again attract investors.
We believe investors will consider other key differentiating factors. Transparency, for instance, appears to have surpassed performance as a criterion for choosing hedge funds.
West Palm Beach (HedgeCo.net) – The Cayman Islands Monetary Authority (CIMA) was formally admitted as the 189th member of the International Organization of Securities Commissions (IOSCO) at the meeting of the Presidents’ Committee at IOSCO’s 34th Annual Conference in Tel Aviv, Israel.
With the admittance, CIMA also officially becomes a party to the IOSCO Multilateral Memorandum of Understanding Concerning Consultation, Cooperation and the Exchange of Information. CIMA signed the MMOU, which is the benchmark for international cooperation among securities regulators, on 24 March 2009.
"Some countries either do not allow investment vehicles from non-IOSCO member countries to be sold in their jurisdictions or will require greatly enhanced due diligence which makes it more difficult to do business with those jurisdictions." CIMA’s Deputy Managing Director, Mr. Langston Sibblies said, "IOSCO membership will remove these impediments and open up these markets for Cayman-domiciled securities providers. This is a development our private sector has looked forward to for a long time. It will be welcomed by the private sector."
IOSCO is the principal global standard setting body for the regulation of securities markets. Its objectives encompass cooperation and information exchange, standard setting and surveillance, and mutual assistance.
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A hedge fund fraud that involved a pair of funds claiming to hold more than $800 million in assets has been halted, according to the US Securities and Exchange Commission.
In a statement, the regulatory body said the two funds lost money and contain less than $1 million.
Bradley Ruderman is alleged to have raised more than $38 million from investors via the two hedge funds, Ruderman Capital Partners and Ruderman Capital Partners A.
He is accused of falsely claiming that the investment vehicles held positions in established securities such as Wal-Mart Stores, Apple and Microsoft, as well as stating prominent people were investors in his funds, when they were not.
Blueridgenow.com – Hedge funds have been in the news recently, usually with a watered down description of the characteristics of these investment vehicles. Most folks know that Chelsea Clinton works for a hedge fund (Avenue Capitol), and that John Edwards pulled down a hefty $500,000 consulting fee from another hedge fund, Fortress Investment Group. The odious George Soros, a contributor to hard left political groups, manages a hedge fund called Quantum Fund.
Edwards said he wanted to learn more about poverty. And where better to learn about poverty than working for an investment company that requires its clients to have at least a million dollars net worth (Since then, Fortress has navigated enough legal hurdles to offer its services to the general public through a listing on the New York Exchange, but that’s unusual.)
Business Intelligence Middle East – As the eye-popping profits of hedge funds dry up amid the financial crisis, the industry looks set to shrink substantially in its European headquarters of London over the next year.
Discretion is everything in London’s exclusive Mayfair district which is quietly home to a third of the world’s hedge funds, the highly speculative investment vehicles often blamed when markets plunge.
A small brass plaque on a door tucked in between Chanel and Versace boutiques is often the only sign of their existence. But those highly polished doors cannot hold back the same chaos that has swept through the rest of the finance world.
John Godden, CEO at hedge fund consultancy IGS Group, is one of the rare figures in a secretive world to speak openly about the scale of the problems.
He was in the process of drawing up next year’s aims for his group when US investment bank Lehman Brothers collapsed in September, and panic buttons were pressed all over the financial world.
Reuters – Belgian banking and insurance group KBC said on Monday that it will discontinue some of its hedge fund-related activities and that the move could lead to some redundancies.
KBC said it will also close its Alternative Investment Management service.
"KBC FP (Financial Products) has conducted a strategic review of operations and decided to discontinue some of its hedge fund-related activities," KBC said in a statement, adding that the remaining positions of existing investors will be managed until they reach maturity.
"This decision has already led to and could lead to further internal transfers and, where no suitable alternatives are available, to redundancies," the company said.
West Palm Beach (HedgeCo.net) - Alternative money managers and hedge fund restructuring advisers, Grisons Peak and IGS, have formed a joint venture to launch the Alternative Investment Merchant Banking (AIMB). The AIMB is to advise on M&A and restructuring deals for firms in the alternative assets industry, the business will be co-led by Paul Sullivan, Partner of Grisons Peak, and John Godden, CEO of IGS Group..
“With a 30% decline in AUM and an expected 50% decrease in the number of Fund managers and no incentive fees for 2008," John Godden, CEO of IGS Group, said, "we will see a continuing surge in merger and acquisitions activity as the Hedge Fund industry goes into an accelerated Darwinian phase. The alternative assets industry has traditionally been formed of boutiques which make for particular and complex merger issues requiring specialist knowledge of both Hedge Funds and M&A expertise.”
“The reduction in AUM in 2008 and the expected continuation of this trend in 2009 will increase the pressure on the owners and managers of alternative investment firms. Many of these firms will seek partners in order to improve profitability and increase their attractiveness to investors.” Paul Sullivan, Partner of Grisons Peak, concluded.
The 50:50 joint venture AIMB targets UK and European deals deal involving single fund managers with AUM of between $250m to $750m or Fund of Hedge Fund managers with AUM of between $400m and $1bn.
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West Palm Beach (HedgeCo.net) - Hong Kong-based hedge fund manager PMA has chosen to more than triple the number of users of PerTrac CMS in the company’s Hong Kong, Tokyo, New York, London, and Dubai offices.
PerTrac CMS is an alternative investment workflow management solution used for investor relations, capital raising and investment management workflows.
"PMA’s marketing reach has expanded significantly over the last 12 months and we now has marketing teams based in our Dubai and London offices as well as representations in New York," noted PMA Chief Technology Officer Shane McPherson.
PMA was established in July 2002 to provide investment advisory and investment with assets over $2 billion, PMA currently has over 70 professionals employed in Hong Kong, Sydney, London and Dubai, and became a member of the SPARX group in April 200, the largest publicly listed asset manager in Asia.
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West Palm Beach (HedgeCo.net) - US-based Stream Asset Management announced the launch of a credit dislocation fund and a multi-strategy credit hedge fund, the company said in a press statement.
The move is part of Gulf Stream’s aggressive expansion strategy to capitalise on current market opportunities. To further support the firm’s growth, Gulf Stream has also opened a New York City office, the statement added.
Earlier this year, Istithmar World Capital, the private equity and alternative investment arm of Istithmar World, acquired a majority stake in Gulf Stream. Gulf Stream Asset Management is majority owned by Istithmar World Capital.
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West Palm Beach (HedgeCo.net) - In an interview with Geneva based Forex trader and currency specialist Robert Paulson, he said; "Trading the Forex market is for serious investors seeking alternative investment opportunities."
Clients pulling out of hedge funds due to the current state of affairs has raised questions about short term options and the possibility that investors may find a managed account more suitable.
"Understanding the dynamics of diversification and proper asset allocation is an easy formula to understand. To some investors currency trading is considered a “must” and a “cannot do with out” investment class. In Forex there are no “bull markets” or “bear markets”, having the mobility to trade virtually anywhere in the world is essential when it comes to proper investing.”
Currently operating a managed account program in Geneva, Paulson said he is looking to Dubai and the UAE for the next wave of investors, "The dynamics of the current investment environment offers opportunity for those with a realistic appetite for risk. The Foreign Exchange (Forex) markets have been an asset class most enjoyed by the informed. With over a trillion dollars being traded each day opportunity is mentioned often. In the current financial environment we hear about stock markets falling, commodities selling off and real estate prices dropping. What we don’t hear much about is where serious money is being made."
Making money has never been easy and respectable returns are often taken for granted. To achieve consistency one must thoroughly analyze, track, and monitor economic conditions around the globe.
Paulson also warned, "There is an enormous amount of time needed to ensure intelligent representation in a fast moving environment. One should understand that where there is a loss there is also a profit, zero-sum is not a game but a way of life. It is also a breeding ground for those who understand."
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West Palm Beach (HedgeCo.net) - Top financial industry leaders and more than 200 attendees gathered in New York late last week discuss the volatile hedge fund market and provide insights on distressed funds.
Sponsored by global offshore law firm Walkers, the "Fighting the Tape" seminar included a wide variety of speakers offered a comprehensive look at the changes in the market over the past year, as well as predictions for what the alternative investment funds industry can expect in the months ahead.
The experts anticipate a new era of hedge fund regulation, greater flexibility and versatility in hedge fund offering documents, broader discretion for fund managers, and continued growth in many of the world’s key economies such as China, India, Russia, Brazil, the Middle East, and South Korea.
Investment manager George Hall, founder and president of The Clinton Group gave his personal views on the financial crisis and what the market might see under President-elect Barack Obama. While he felt it was too early to say how the "Obama factor" might influence the hedge fund industry, Mr. Hall said that he hoped the new President would make good choices when selecting his Treasury Secretary and a leader for the SEC.
"The true impact of the US credit crisis will not be tangible for many months to come," Yolanda McCoy, head of the Investments and Securities Division at the Cayman Islands Monetary Authority (CIMA) said, although she was able to confirm that to date they were aware of a total of 340 Cayman funds that had been impacted by the problems with Lehman Brothers, Merrill Lynch, and AIG, with more than 200 of those affected by issues with Lehman.
Professor Jeffrey Rosensweig, director of the Global Perspectives Program at Goizueta Business School at Emory University, closed the seminar with insights into the investment opportunities presented by this current stage in the cycle, shifting the focus from New York and London to emerging markets such as Brazil, Russia, China, the Middle East and India.
"The world adds 100 people every 42 seconds," Professor Rosensweig said, "and 98% of that population growth is in the emerging markets." Pointing to the expectation of long-term continued economic expansion in these regions, Professor Rosensweig said this massive population growth, combined with a move out of poverty in these regions, presents real future opportunities for investors.
