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 – Australian hedge funds will attract a net inflow of cash in 2009 after record redemptions by overseas investors led to the closure of at least 10 funds in the fourth quarter, the local arm of the Alternative Investment Management Association said.
Funds that survived will see some of that money invested in March once December quarter redemptions are returned to investors, AIMA Australia Chairman Kim Ivey said in an interview.
“Getting through this period is the defining time for managers because new money in March and April may keep them afloat,” said Sydney-based Ivey, who is also managing director of private hedge fund Vertex Capital Management. “Those that came out of 2008 and showed that they could still add value are in a very good position in 2009.”
Reuters – Two activist hedge funds of Dillard’s Inc are demanding access to inspect the retailer’s books and records, seeking greater transparency from the department store chain’s executives and family members.
Dillard’s shares jumped 18 percent in Monday morning trading.
Barington Capital has been calling on the Little Rock, Arkansas retailer to take steps to improve financial results and governance practices since at least June 2007.
The hedge funds own around 5 percent of Dillard’s class A stock. The Dillard family own most of the company’s class B stock, which allows them to nominate eight of the company’s 12 directors.
New York (HedgeCo.Net) – Those who push for greater transparency of the hedge fund industry had a victory this week, when an EU official all but declared that funds in the European Union will be regulated.
Charlie McCreevy, the bloc’s internal market commissioner, launched a public discussion on whether or not hedge funds need stricter oversight. Though McCreevy has said in the past that no greater oversight is needed for hedge funds, the majority of those present disagreed.
“We don’t need more consultation. We need regulation. We know exactly what are the problems,” said ex-Prime Minister of Denmark Poul Nyrup Rasmussen, who shares the view that short-selling by hedge funds have had a hand in prompting turmoil in the market.
The results of the consultation, which is still underway, are expected to be known in early 2009. Though most hedge funds fall outside the EU, London is home to several large hedge funds and many portfolio managers.
Julie Scuderi Senior Editor for HedgeCo.Net Email: julie@hedgeco.net
New York Post – The days of hedge funds operating behind a curtain may soon be over.
Bruised and bloodied by unprecedented losses, hedge-fund investors are rebelling, demanding lower fees, greater transparency and, in a growing number of cases, unfettered access to their dough.
They’re doing this through separately managed accounts (SMAs), which basically act as a portfolio for individual investors.
SMAs are common with brokerage firms but have long been shunned by hedge-fund managers.
Mike Murray of Shoreline Trading Group, which acts as a prime brokerage for small hedge funds, said he’s seeing such a spike in demand for SMAs among hedge fund investors that he expects them to double by next year.
As hedge fund titans face an intense grilling by congressional committees and thousands of hedge funds around the world close their doors, perhaps it is time to consider a new approach.
A hedge fund structure offers investors many advantages such as maximum flexibility, but the model is sure to change under all the heightened scrutiny.
After specializing in country-specific exchange-traded funds since 2002, I am convinced that there would be strong demand funds with new structures that address some of the current drawbacks of hedge funds, namely liquidity, transparency, leverage, risk management and fees.
Sydney Morning Herald – The hedge fund industry says it supports federal government plans to ban naked short selling and impose a disclosure regime for covered short selling.
The Australian arm of the Alternative Investment Management Association (AIMA) said the group had been in talks with regulators and the federal government about legislation to go to parliament on Thursday.
But while it supported the naked short selling ban, moves to create greater transparency of covered short selling activity on the Australian stock exchange did not go far enough.
Newark Star-Ledger – Prompted by criticism from a prominent state lawmaker, the head of the state’s Division of Investment yesterday defended his decision to invest $144 million in pension funds in a BlackRock Inc.-managed hedge fund in the past two weeks, saying the state needed to act quickly to protect its stake and possibly reap big returns.
Senate President Richard Codey (D-Essex) questioned the transparency of the process, taking issue with the state putting $49.5 million in the hedge fund on Oct. 17 — an amount just shy of the $50 million threshold that requires a review by the state Investment Council. On Friday, the state invested another $94 million in pension funds in the BlackRock venture, following a special meeting of the Investment Council.
Tehran Times – "We do have to have much more government oversight and involvement than we’ve seen in the last decade or so,” said Waxman, a California Democrat.
“A lot of people didn’t either know what they were getting into or much care because they weren’t going to be the ones holding the bag,” Waxman said in an interview on Bloomberg Television’s "Political Capital with Al Hunt,” airing.
Hedge funds need regulation "to make sure the incentives are right for them and others to do the right thing,” said Waxman. "Certainly we need more transparency.”
His House Oversight and Government Reform Committee will take testimony next month from representatives of hedge funds and from Freddie Mac and Fannie Mae, the biggest buyers of U.S. mortgages.
West Palm Beach (HedgeCo.net) – According to a recent survey conducted by the Association of Investment Companies (AIC), a poll of 1,300 sophisticated private investors showed that 15% believed that hedge funds offer the potential for strong returns in the current environment. However they are also concerned about their perceived lack of transparency (17%) and riskiness (17%).
Investors are also cautious about hedge funds because they believe that they are not regulated (14%), and are concerned about the reputation for high charges (12%). Some investors also find them confusing (11%) and believe they are only accessible to the wealthy (5%).
Although some sophisticated private investors are wary of hedge funds, 6% of those surveyed are already investing in hedge funds, 5% have invested in the past and 3% are planning to invest in the future. Interestingly, nearly half (46%) of investors believe they may possibly invest in hedge funds in the future whilst only 29% of investors surveyed would never invest in hedge funds.
"Many of these investors’ concerns over hedge funds are addressed through the listed hedge fund and fund of hedge funds sectors," Annabel Brodie-Smith, Communications Director of the Association of Investment Companies (AIC) said, "The listed structure of closed ended hedge funds and fund of funds means investors have access to a much higher level of transparency. Shares in listed funds are available on the stock market just like any other share so they are available to those of modest means as well as the super wealthy."
"This is a real growth area of the industry with the hedge fund sector making up 65% of the assets raised this year in the investment company sector. However, it is still a young sector, so long-term performance records are not available for the majority. Investors need to do their homework to make sure they select the right fund for them in this diverse sector and if they are unsure they should take independent financial advice," she concluded.
Ian Plenderleith, Chairman of BH Macro, said, "Hedge funds who can maintain the necessary standards of investment expertise and risk management have demonstrated that they can deliver superior returns on a consistent basis. Listed hedge fund vehicles give a wider range of investors access to alternative investment strategies through an avenue they are familiar with. They get the benefit of the regulatory safeguards and disclosure obligations, and the secondary market liquidity that go with stock exchange listing."
Robin Bowie, Chairman of Dexion Capital, said: "When dislocation in financial markets reaches the present level, it provides an ideal environment for hedge funds, which are well-placed to make opportunistic investments where they recognise value and can hedge out the market risk. Some of those positions will be illiquid, which will be unsuitable for most managers of open-ended funds. Closed-ended funds employ ‘permanent capital’, raised on the stock exchange, which allow managers to blend liquid and illiquid assets and take advantage of the current mismatch in the markets. In essence, closed-ended funds bring liquidity to illiquid situations."
HedgeCo.Net is a premier hedge fund database and community for qualified and accredited investors only. Membership on www.hedgeco.net is FREE and EASY. We also offer FREE LISTINGS for Hedge Funds!
Times Online – The European Parliament will support calls tomorrow for Europe-wide legislation aimed at making the inner workings of hedge funds and private equity more transparent.
The proposals – championed by Poul Nyrup Rasmussen, the Socialist MEP and a former Danish Prime Minister – call for clear rules for these financial players, whose influence on the economic landscape is increasing.
MEPs want the European Commission to present, before the end of the year, legally binding minimum transparency rules on how investments are financed. These rules would also cover the qualifications of managers, possible conflicts of interest, registration of hedge funds and disclosure of ownership structures.
Peter Skinner, a Labour MEP and the party’s spokesman on financial services, said yesterday: “Current self-regulation attitudes are not enough to arrive at satisfactory conclusions, especially in the light of the current crisis. This is an important step to tackle current problems, including lack of transparency.”
West Palm Beach (HedgeCo.net) – FINCAD is hosting a webinar specifically targeted towards hedge funds titled, ‘Hedge Funds: Scenario and Risk Analysis for your OTC Derivatives Portfolio’ and will feature analysts from FINCADs professional services team.
"This is a rapidly growing and important customer sector for FINCAD, in the last year alone we have sold analytics software and support to nearly 100 hedge funds," said Bill Stewart, Global VP of sales. "Clearly, market conditions combined with investor demands for pricing transparency and consolidated risk assessment are all driving a growing need for comprehensive, easy to use analytic solutions."
The hour long webinar will include a demonstration of how to use some of FINCAD XL’s latest pre-built workbook solutions to perform scenario and risk analysis on multi-asset class portfolios. It is being held on September 04, 2008 at 11:00am EDT.
"This a great opportunity for anyone in the derivatives industry to not only preview what our software has to offer but also see what FINCAD Professional Services has to offer," said Ben Clum, Director of Professional Services.
HedgeCo.Net is a premier hedge fund database and community for qualified and accredited investors only. Membership on www.hedgeco.net is FREE and EASY. We also offer FREE LISTINGS for Hedge Funds!
HedgeFund.Net – According to Joseph Biden, the hedge fund industry and private equity deserve the blame for the global credit crisis.
The Delaware senator and running mate of Democratic presidential nominee Barack Obama made that assertion in a primary debate last year when he was himself running for president. Obama, a senator from Illinois, is running for president against Arizona Sen. John McCain.
During that debate Biden, named vice president on the Obama ticket over the weekend, characterized the hedge fund industry and private equity as “no transparency, no accountability.”
The alternative space was “causing this thing to go under,” he said in the debate.
