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 – Switzerland’s asset managers and private bankers haven’t drawn much mirth from investing this year, making the timing of the “Art of Money” show in Lugano ironic.
The exhibition by New York-based artist Jenna Lash features a dozen brightly colored images based on currencies, some so familiar they’re taken for granted, and others extinct. Works on display feature pensive soldiers from the Lithuanian litas, a haunting Mahatma Gandhi from an Indian rupee, and a red, white and blue George Washington imitating the U.S. dollar.
“To finish a year that will go down as the ‘annus horribilis’ for money with a collection like this has beautiful irony,” said Klaus Muhlhausser, a German artist whose studio in a former typography factory a few blocks off Lake Lugano hosts the show through Dec. 13. “I’m one of the few people in Lugano not in the financial business, and this seemed a fun way to participate.”
West Palm Beach (HedgeCo.net) – Derivatives exchange group CME has hired Mark H. Thompson Jr. as Director of hedge funds. Thompson, 37, will be responsible for serving as the company’s primary liaison to the East Coast hedge fund community and developing hedge fund business within the region across all CME Group product lines. He will be based out of New York and will report to Tina Lemieux, Managing Director of hedge funds and broker services.
Thompson joins CME Group from UBS Securities LLC where he most recently served as a member of the macro/cross asset sales team. In this role, he was responsible for serving as the single point of contact for macro, long/short, transition and asset managers for all derivatives and cash products and performing cross-asset idea generation and research for clients. He also served as a member of the bank’s global futures and options sales team. His background also includes operations and analyst roles with Moore Capital Management and Banque Paribas.
CME Group is the world’s largest and most diverse derivatives exchange. Building on the heritage of CME, CBOT and NYMEX, CME Group serves the risk management needs of customers around the globe. As an international marketplace, CME Group brings buyers and sellers together on the CME Globex electronic trading platform and on trading floors in Chicago and New York.
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Hemscott – UK-based fund firm Augustus Asset Managers said on Tuesday assets under management in its fixed income and currency macro hedge fund have bucked market trends and doubled in the year to end-October.
Augustus, formed from the management buyout of Julius Baer Investments, said assets at the JB Global Rates Hedge Fund have grown to $308.8 million in the year to end-October, up from $134.8 million.
During the period the fund, which takes directional bets in fixed income and currency, has returned 13.56 percent.
Augustus has assets under management of about $12 billion in long-only, absolute return and hedge funds.
Reuters – Hedge funds using technical indicators are likely to fare better in the next two years than those purely basing their strategy on economic fundamentals, a survey of around 200 investors showed on Wednesday.
The survey of asset managers, institutions, and high net worth investors at the Global Alternative Investment Management (GAIM) Fund of Funds conference in Geneva showed 36 percent saw such trading-based strategies set to outperform in 2009-2010.
These strategies generally use technical indicators or a combination of technical and fundamental indicators to make short or medium-term bets on market movements.
Long/short equity strategies were chosen by 16.7 percent. Long/short managers vary their overall market exposure via long positions in those equities that they expect to outperform the broader market and short positions in those expected to underperform.
New York (HedgeCo.Net) – Citadel Investment Group announced yesterday it will shut down its $1 billion fund of hedge funds portfolio and use the capital to invest in other businesses.
The Fusion fund was launched a year and a half ago, with nearly 95 percent of the capital coming entirely from Citadel. The money will be used to invest in businesses that finance new asset managers. The remaining 5 percent of capital will be returned to investors.
"We have seen strong interest in the incubation and seeding strategies that we’ve developed," Katie Spring, spokeswoman for Citadel told Bloomberg News. "We believe these will be important components of expanding investment talent over the years to come.”
This move comes after months of swirling rumors that the $18 billion firm, headed by Kenneth Griffin, may not be able to weather this year’s credit crisis. Citadel’s largest fund, the $10 billion Kensington Global Strategies, has fallen 30 percent this year stemming from losses tied to convertible bonds.
Seeding has seen a spike in popularity in recent years. It involves focusing on new and emerging funds and fund managers in hopes of someday partaking in profit sharing once the fund experiences success. Seeding is something that new hedge funds generally seek out if start-up capital isn’t readily available, to help get their fund off the ground. New hedge funds may receive anywhere from half a million dollars to several hundred million dollars.
Julie Scuderi Senior Editor for HedgeCo.Net Email: julie@hedgeco.net
Reuters - An unprecedented cash crunch is choking the ability of banks to lend and creating an opportunity for hedge funds to launch, or ramp up corporate lending facilities.
Companies that have relied on bank borrowing to grow, or even maintain their business, are turning to hedge funds in a move that some say may signal a broad shift of lending from banks to asset managers.
"I have a very strong belief that the new investment banks will be the absolute return hedge funds and the managers of private equity," said Thomas Priore, Chief Executive at ICP Capital, an investment firm that manages $13 billion in fixed income assets, in New York.
NEW YORK – Deals involving asset managers rose in the July to September 2008 period, with the global credit crunch as the backdrop for a jump in divestitures to almost 40% of total sales, up from 23% a year earlier, according to Jefferies Putnam Lovell, the investment banking group of Jefferies & Company, Inc. focused on the asset management and financial technology industries.
Sixty-nine asset manager transactions worldwide were announced in the third quarter of 2008, 33% above the total of 52 in the July to September 2007 period, according to preliminary data from New York-based Jefferies Putnam Lovell. Total assets under management changing hands amounted to $1.0 trillion, more than three times the $300 billion total in the third quarter of 2007. Total disclosed deal value in the third quarter of 2008 increased to $6.4 billion from $6.1 billion a year earlier.
‘’As we anticipated, tremors transforming the global financial landscape have served as a catalyst to asset management deal flow,’’ said Aaron Dorr, a New York-based Managing Director at Jefferies Putnam Lovell. ‘’In the short-term, we expect more banks and other cash strapped financial institutions to retreat from owning money managers, private equity firms to step up their growing involvement in the sector, and consolidation among hedge fund companies and other alternative asset managers as firms grapple with investor redemptions and lack of liquidity. Consistent with the broader financial services industry, the asset management sector is quickly reshaping.’’ Highlights from asset management M&A activity in the third quarter of 2008 include:
• The announced sale of Lehman Brothers fund units, including Neuberger Berman, to Bain Capital and Hellman & Friedman.
• Allianz’s takeover of Cominvest as part of a swap of its Dresdner Bank unit to Commerzbank.
• Fortis’ purchase of the minority stake it didn’t already own in Artemis Asset Management.
• Lazard’s acquisition of the remaining interest in Lazard Asset Management held by the unit’s executives.
• Nippon Life’s purchase of 5% of Russell Investments.
About Jefferies Putnam Lovell
Jefferies Putnam Lovell, the division of Jefferies & Company, Inc. focused on the financial institutions industry, offers a wide range of corporate advisory services, including mergers and acquisitions advice and capital raising. Jefferies Putnam Lovell’s global client base is comprised of diversified financial services firms, institutional and mutual fund managers, alternative investment managers, banks, broker-dealers, insurers, and financial technology firms. Putnam Lovell was founded in 1987 and today operates from offices in New York, San Francisco, and London. Since July 2007, Putnam Lovell has been a division of Jefferies & Company, Inc., the principal operating subsidiary of Jefferies Group, Inc. (NYSE: JEF). For more information please visit www.jefferies.com/jpl
About Jefferies
Jefferies, a global investment bank and institutional securities firm, has served growing and mid-sized companies and their investors for 45 years. Headquartered in New York, with more than 25 offices around the world, Jefferies provides clients with capital markets and financial advisory services, institutional brokerage, securities research and asset management. The firm is a leading provider of trade execution in equity, high yield, convertible and international securities for institutional investors and high net worth individuals. Jefferies & Company, Inc. is the principal operating subsidiary of Jefferies Group, Inc. (NYSE: JEF; www.jefferies.com)
West Palm Beach (HedgeCo.net) – Reflecting a growth in corporate activities, Vodia Group has rebranded as Finadium. The move was made, the re-named Finadium says, to showcase an ability to develop new ideas and create products and marketing strategies in financial markets, expanding beyond the original scope of Vodia Group.
The Finadium name comes from the abbreviation Fin for finance and the latin word Aedium, meaning house. As Finadium, the firm emphasizes its core value proposition – providing ideas, product development and marketing strategies to the securities and investments industry.
Based on proprietary surveys and market knowledge, the company is looking multiple market sectors such as institutional investors, hedge funds and traditional asset managers.
As part of the rebranding, the company are launching a monthly newsletter for portfolio managers, traders and others looking for briefings on prime brokerage, securities finance and custody but who do not need the detail of our full reports.
Also expanding into frontier and emerging markets, Josh Galper, Managing Principal, says “As Finadium, we are pleased to expand our audience in prime brokerage, securities finance and custody to include a broader range of market professionals. We also look forward to tackling the complex subject matter of financial services in frontier and emerging markets.”
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Forbes – In an op-ed in the Financial Times on Monday , I described the unraveling and demise of the shadow banking system that started with non-bank mortgage lenders, structured investment vehicles (SIVs) and conduits, major independent monoline broker dealers and money market funds. I then argued that the next leg of this unraveling would be hedge funds and private equity firms and their reckless leveraged buyouts (LBOs).
Let me now discuss in more detail this unraveling of parts of the hedge fund industry.
First, note that too much of the shadow banking system was about "Schmalpha" rather than "Alpha" (i.e. the returns that fund managers and asset managers–with their ridiculously high management fees of 2% or more–were getting by parting investors from a good chunk of their assets, rather than by superior absolute returns). In fact, the hedge-fund math of "2/20" was, most of the time, 2% for the fund managers and not 20% (sometimes single digit returns and, this year, actual negative ones) for investors. This scam is now unraveling.
West Palm Beach (HedgeCo.net) – Hedge Fund manager Gartmore Investment Management Limited is launching the Gartmore European Absolute Return Fund, to be co-managed by Roger Guy and Guillaume Rambourg, subject to regulatory approval.
The new fund will be a UCITS III limited issue vehicle with capacity set at £200 million, the fund’s three week offer period starts on 6th October before its launch on 31st October 2008.
The Gartmore European Absolute Return Fund, the first in a series of absolute return offerings planned by Gartmore, will seek to deliver positive absolute returns over the long-term in all market conditions by taking long and short positions in equities and derivatives. It will be managed using a similar strategy to Gartmore’s flagship European equity long/short hedge fund – the Gartmore AlphaGen Capella Fund.
Commenting on the proposed launch, Richard Pursglove, Head of UK Retail at Gartmore, said: "Over the last decade we have transformed our business into a specialist provider of long-only and alternative products. This latest development is an important strategic addition to our retail fund range, and has been driven by substantial client interest from discretionary asset managers, wealth managers and IFAs seeking uncorrelated, positive returns."
He concluded: "Gartmore’s substantial experience in shorting, combined with it long established hedge fund infrastructure, will be attractive to investors looking for absolute returns."
Gartmore is a leading provider of long-only and alternative investment solutions and one of the pioneers of managing hedge funds on behalf of institutional investors. Since entering the hedge fund arena in 1999, Gartmore has built an $11billon** hedge fund business and is one of the largest hedge fund providers in Europe.
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West Palm Beach (HedgeCo.net) – Hedge fund broker MF Global Ltd. has appointed Michael Roseman as its new chief risk officer.
“Michael has very broad experience managing risk around the asset classes that this company brokers,” said Kevin R. Davis, chief executive officer, MF Global. “I’m delighted that he has decided to join MF Global and believe he will make a strong addition to our executive management team.”
Mr. Roseman is responsible for the overall management of MF Global’s risk department worldwide including market, credit and operational risk. He will also oversee the company’s compliance function and will report directly to the CEO.
Prior to joining MF Global, Mr. Roseman served as chief risk officer for the Americas at Newedge Group. He joined Newedge, then Fimat, USA, in 2004 prior to its merger with Calyon where he oversaw all aspects of risk related to their Americas brokerage business.
MF Global Ltd. is diversified across products, trading markets, customers and regions. Its worldwide client base of more than 138,000 active accounts ranges from financial institutions, industrial groups, hedge funds and other asset managers to professional traders and private/retail clients.
MF Global operates in 12 countries on more than 70 exchanges, providing access to the largest and fastest growing financial markets in the world. It is the leader by volume on many of these markets and on a single day averages eight million lots, more than most of the world’s largest derivatives exchanges.
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West Palm Beach (HedgeCo.net) – AA platform for asset managers and advisers to create SICAV SIF funds in Luxembourg has been launched by KMG SICAV SIF. The platform caters to all asset classes, including hedge funds. There are no restrictions on leverage.
Thee process allows managers to focus on investment management, the process allows managers to focus on investment management. . The platform takes care of incorporation, custody, transfers and administration. In addition it can also offer a Luxembourg address and office for the fund, organise annual general meetings of shareholders and supply investors with statements, day-to-day management and general organization as well as order placing and execution, investment performance reports, promotion and distribution and corporate branding.
The open-architecture platform provides a faster route to market with funds established and open for capital within a few weeks rather than months, which it usually takes for a traditional fund. The platform can also provide all back office support, administration and other services for funds.
The KMG SICAV SIF platform is an off the shelf solution, licensed and regulated in Luxembourg. Entities establishing a fund through the platform do not have to apply for additional licences.
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