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 – Foreign exchange trading volume in Japan has fallen 16 percent this year after many hedge funds closed out investments during the global financial crisis, and Tokyo’s turnover in spot trading now lags behind Singapore.
But steady turnover in FX swaps has helped Tokyo remain ahead of Singapore, its key rival as Asia’s dominant FX trading hub, in overall foreign exchange product trading, data on traditional FX instruments from the Bank of Japan showed.
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.
AP – The head of the government agency that packages federally backed mortgages into investments is stepping down for a new job, people familiar with his plans said.
Joseph Murin, president of the Government National Mortgage Association, known as Ginnie Mae, is leaving his job this week after 13 months. The people declined to be identified because his departure was not yet official, and would not say where Murin is going to work next.
Ginnie Mae sold more than $200 billion in mortgage securities in the first six months of 2009, double last year’s level.
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.
Bloomberg – The European Union’s plan to regulate hedge funds will cost the bloc’s pension industry about 25 billion euros ($36 billion) a year, the Alternative Investment Management Association said.
The proposed law would drive pension funds toward more traditional assets such as equities and bonds or cut the returns on their investments in hedge funds and private equity, London- based AIMA, the largest trade group representing the industry, said in a statement today.
“This is an estimated figure but it shows the potentially enormous impact that the directive could have on Europe’s pension funds and in the longer term, Europe’s pensioners,” AIMA Chief Executive Officer Andrew Baker said in the statement.
Reuters – Rumours of an acquisition spree by Fortress Investment Group are greatly exaggerated and may disappoint investors who jumped into the stock during the past week.
The private equity and hedge fund giant last week named director and former Fannie Mae Chief Executive Daniel Mudd as its new CEO. The move frees co-founder Wesley Edens and his partners to focus on buying assets and companies made cheap by what he calls the "Great Deleveraging" of the past year.
Last week, the Financial Times reported Edens told employees during a meeting that Mudd would spearhead the firm’s acquisition efforts.
Seeking Alpha – This is the latest edition in a new series of posts we’re doing here entitled, ‘hedge fund news summaries.’ And, as as the title obviously states, the goal is to give you the quick hits of everything that is happening in hedge fund land. So far, reader response has been very positive and we thank you for the feedback. As such, we will continue posting them since many have found them useful. You can check out our most recent hedge fund news summary to catch up to speed as well.
Seth Klarman (Baupost group) – The value master himself has recently been "up to no good." And, by that, we simply mean he has been active making investments. Intriguingly enough, Klarman’s latest target has been CIT Group. Before you avid Klarman-ites become appalled and outraged at this move, settle down… this is a pretty good deal for him. (Obviously, right? Why else would he do it?) Klarman’s hedge fund Baupost Group was part of the assembly of funds that provided financing for CIT.
Bloomberg – Larry Powell, deputy investment chief for the $16 billion Utah Retirement Systems, was convinced in January that hedge funds finally would buckle under the pressure of record losses in 2008 and lower their fees.
He figured it was appropriate to insist on a reduction in the standard industry charge of 2 percent of assets and 20 percent of gains on investments as low as $25 million, according to a memo Powell circulated with hedge funds and investors. Performance fees should be assessed only after a minimum return is exceeded and paid over several years rather than annually, he said.
Marketwatch – China’s sovereign wealth fund has selected Morgan Stanley and Blackstone Group LP to oversee hundreds of millions of dollars in new investments, The Wall Street Journal reported Friday.
The $200 billion China Investment Corp. has finalized an additional allocation of $500 million to Blackstone’s /quotes/comstock/13*!bx/quotes/nls/bx (BX11.42, +0.46, +4.20%) fund-of-funds unit, and an additional allocation of money has been earmarked for investment through Morgan Stanley’s /quotes/comstock/13*!ms/quotes/nls/ms (MS28.31, +1.15, +4.23%) asset-management unit, according to the report, which cited people familiar with the situation.
The sovereign wealth fund is also in discussions to potentially invest billions more in hedge funds, possibly doling out money directly to managers rather than using a fund-of-funds vehicles, the report said.
Bloomberg – It was a crisp autumn day in November 2005 when hedge fund manager John Ho entered the half- century-old Electric Power Development Co.’s headquarters in Tokyo, betting that Japan’s corporate attitudes were ripe for change.
Ho, then director of Asia-Pacific investments at the Children’s Investment Fund Management UK LLP, also known as TCI, was ushered into a conference room with a worn carpet to meet with Masayoshi Kitamura, then executive vice president of the utility. The visitor, who was offered a bottle of water, told Kitamura he wanted to learn more about the company’s plans for growth.
European Voice – Europe may be laying the foundations for the next financial bubble, through its monetary, industrial and regulatory policies.
In the midst of the worst crisis in half a century, it is easy to forget that the real problem is not the bust but what preceded it: a boom filled with bad investments.
The boom was a natural consequence of too much easy money for too long. That policy was itself a response to the bursting of the dotcom bubble, to which Alan Greenspan and the Federal Reserve responded by cutting interest rates from 6.5% to 1% – and keeping them that low for a whole year. The result was a market drowned in cheap money.
Reuters UK – Lansdowne Partners, one of the country’s largest hedge fund managers, has stopped accepting investments in its flagship fund with several other big funds set to follow suit, according to the Financial Times.
It said the 4.9 million pound Lansdowne UK equities fund, which is up around 18 percent so far this year, was no longer accepting new money after more than $1.2 billion (728 million pounds) was withdrawn in record redemptions.
