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 – Alberto Micalizzi, founder of the hedge fund firm Dynamic Decisions Capital Management Ltd., said allegations that he invested in worthless bonds are unfounded and investors will recover close to 100 percent of their money.
The firm’s main hedge fund, with a net asset value of $550 million as of Dec. 31, is being liquidated in the Cayman Islands after investors raised questions about some of its holdings. The U.K. Serious Fraud Office, which prosecutes white-collar crime, opened a probe into the London-based firm last week after the matter was referred to it by the Financial Services Authority.
New York (HedgeCo.net) – Northern Trust has been named the Best Overall Hedge Fund Administrator by HFMWeek in the magazine’s inaugural U.S. Service Provider Awards. The awards recognize companies that have outperformed their peers during 2008-2009 and demonstrated financial progress, growth and genuine innovation.
“Northern Trust was recognized for the strength of its service offering and for demonstrating business momentum and product innovation during a challenging period for the hedge fund industry,” said Lucy Guest, senior publishing executive for HFMWeek.
“The importance of a Third Party Administrator is now being disseminated throughout the industry so that all funds, including start ups, are embracing the need for the service.” Joe Goldstein, Managing Partner at G&S Fund Services, said. “Prior to Madoff, start up and smaller funds were reluctant to use third party administrators even though we provided them with a higher quality of financial management at a lower cost.”
What Goldstein sees as a change in the industry is that the necessity of a hedge fund administrator is now understood by investors. “This change is contributing to the growth of the hedge fund administration business, as funds who were reluctant to use hedge fund administrators are now either turning over their financial administration to a third party, or at very least using them to review and confirm their NAV calculations.” Goldstein said.
Northern Trust has a growing hedge fund servicing business, with assets under administration of $75.5 billion as of June 30, 2009, an increase of 54 percent over the prior year. Northern Trust services nearly 300 hedge funds worldwide as of June 2009, and in the previous 12 months had provided global operations services to more than 120 new fund launches and transitions.
“We’re delighted to be recognized as best overall administrator as it validates our approach of blending innovative technology, strong process and automation with the exceptional service standards that set Northern Trust apart from our competitors,” said Matt Ward, Head of Fund Administration-North America for Northern Trust. “Ultimately this is a service business and our experienced and attentive people are the real strength of our offering.”
WSJ – Galleon Group’s liquidation of its hedge funds’ portfolios is “largely complete,” a person familiar with the matter told Dow Jones Newswires on Tuesday.
The person said that the liquidation was done under “very difficult conditions,” considering Raj Rajaratnam’s hedge fund firm had about $3.7 billion under management as recently as two weeks ago.
Some of Galleon’s largest positions were in big companies like Apple Inc. (AAPL) and Google Inc. (GOOG), but it also had positions in non-mega-cap stocks, like OSI Pharmaceuticals Inc. (OSIP).
Bloomberg – Nick Taylor, a former executive of Citadel Investment Group LLC, is preparing to open the largest Asia-focused hedge-fund startup since May 2007 after receiving the backing of Blackstone Group LP, said three people familiar with his plan.
Senrigan Master Fund is scheduled to start trading Nov. 2 with at least $220 million committed by investors, said two of the people, who declined to be identified because the information isn’t public. The fund will invest in companies whose valuations are affected by announced or possible events such as mergers, Taylor said in an interview yesterday. He declined to comment on the fund’s starting size or investors.
Bloomberg – Hedge funds in Singapore will “almost certainly” need to be licensed as the central bank seeks to tighten regulation of the industry, according to the local chapter of the Alternative Investment Management Association, the largest trade group for hedge funds.
Hedge-fund managers are currently exempt from holding a capital-markets services license, provided they manage funds on behalf of 30 or less of what the Monetary Authority of Singapore describes as “qualified” investors.
Forbes – The government cited what it claims are smoking-gun e-mails between the two fund managers. In at least one case, the government says Tannin wrote from his private Gmail account to Cioffi’s wife’s Hotmail account, declared the subprime mortgage market was going to “toast” and that its managers should “close the fund.” Prosecutors alleged these e-mails show that the defendants’ views internally were very negative at the same time they presented an optimistic front to investors.
As opening statements go, the prosecution’s was short at 45 minutes. By contrast, Cioffi’s lawyer, Dane Butswinkas, talked for two hours and used multiple charts and exhibits that sought to explain the complexities of Bear Stearns’ management structure, hedge funds and how the collateralized debt obligation market operated.
TimesOnline – Philippe Jabre spent much of last October and November flying economy. Times were tough as he tried to convince investors not to pull their money out of his hedge fund.
When he was not in the air, Jabre rarely moved from the trading floor of his Geneva office. With a phone glued to his ear, he tried to make sense of the markets.
Although he was bearish as the credit crunch began to unfold, he did not expect the markets to slump so violently. He certainly did not expect a threat to the existence of his hedge fund, Jabre Capital. “It was touch and go,” he said. “The run [on the fund] was not justified, but the large institutions and the funds of funds, those that were ticking boxes, didn’t want to stay.”
Forbes – Private equity firm Blackstone Group is planning to list up to eight of its portfolio companies, according to a source who received a letter the firm sent to investors on Friday.
The letter details that Blackstone is positioning one company — hospital staffing firm Team Health — for an IPO and evaluating the potential for seven others, the source said.
It also says that Blackstone is in the process of five realizations this year — meaning sales of companies it owns. Of these, four have already been announced and one is imminent, the source said.
Reuters – Rising markets and a fifth straight month of investors adding money pushed hedge fund assets close to $2 trillion in September, according to industry research firm HedgeFund.net.
Globally, hedge fund assets rose nearly 3 percent last month to $1.95 trillion, a net increase of $56.4 billion from August. The bulk of the increase came as stocks, bonds and other assets rose in value.
Total assets peaked at $3 trillion in spring 2008, according to HedgeFund.net, whose industry asset estimates are significantly higher than those of rival hedge fund trackers.
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.
Los Angeles Times – In the decade’s early years, high-net worth individuals and cash-flush hedge funds poured billions into Hollywood, backing independent productions and co-financing big-budget popcorn movies. But as those investors lost fortunes in the markets (and, too often, on dead-on-arrival movies), they pulled back on their show business speculating, forcing the studios to put more of their own money at risk — like homeowners undone by their mortgages.
“It does something radical to an industry when $12 billion to $14 billion suddenly goes away,” said Gill. “That places an enormous strain on the system. And nothing is replacing it. It used to be ‘let’s get the Germans’ and then the Germans went away, so it was ‘let’s get the Japanese’ or ‘let’s get the insurance companies.’ There was always going to be somebody else. Now it looks like it’s not going to be someone else.”
The Mac Weekly – Larson resigned from the board in August 2007 after the sale of his hedge fund, which had been one of the most successful in the country. Sowood Capital Management was an early, high-profile casualty of the subprime mortgage collapse that preceded the financial crisis. The fund lost more than half of its value in July 2007 when investors ran from corporate credit and traditionally safe bets became began to backfire.
“We’re very happy to have Jeff Larson back on the committee,” Aase said. “He brings a wealth of institutional investment experience with him, along with insights gained from the difficulties he encountered with his hedge fund.”
