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 – Ramius Capital, an activist hedge fund, is informing its investors that it will close four funds with a combined $550 million in assets, the Wall Street Journal said, citing people familiar with the fund.
The assets of the four funds are focused in convertible bonds, distressed credit and securities of merging companies, the paper said.
Ramius’ biggest fund, the $2.1 billion multistrategy Ramius Fund, could shrink by about $500 million or more if investors stick with plans to pull out money, the paper said citing people familiar with the fund.
"Going forward, these strategies will continue to be important allocations in our multistrategy funds and will continue to be managed by the same portfolio teams," a spokesman for Ramius told the paper.
CNNMoney.com – On a gloomy morning in early August, more than a month before Wall Street and the world’s financial system seized up, a senior aide to Iceland’s Prime Minister paid a visit to the Russian embassy in Reykjavík to make a controversial request: Bail us out.
Iceland had one of the richest economies in Europe, but it had a problem. Its three main private sector banks had become so large that their assets amounted to more than ten times the gross domestic product of the country – and there were signs that they might run into trouble.
Iceland had asked its traditional allies for help, but to its consternation, its pleas to the U.S. Federal Reserve, the Bank of England, and the European Central Bank went unheeded. Instead, the answer was always, "Ask the International Monetary Fund" – a drastic step Iceland didn’t want to take.
New York (HedgeCo.Net) – New York City-based Ramius Capital will close four of its hedge funds that manage about $550 million in capital, the Wall Street Journal reports citing people familiar with the matter.
The closing hedge funds are concentrated in convertible bonds, distressed credit and securities of merging companies.
Some of the money in these funds could be transferred to Ramius’ largest, $2.1 billion multi strategy fund. However, as the company deals with a wave of redemption requests, the multi strategy fund could be in danger of losing about $500 million of its value.
“Going forward, these strategies will continue to be important allocations in our multi-strategy fund and will continue to be managed by the same portfolio teams,” Ramius told the Wall Street Journal.
Ramius currently manages about $10 billion in capital. It recently offered its main hedge fund clients lower management fees to keep their loyalty with the firm.
Julie Scuderi Senior Editor for HedgeCo.Net Email: julie@hedgeco.net
Computerworld Australia - The collapse of Wall Street may help make computer science and other IT careers attractive to students who abandoned those fields in droves after the dot-com bust of 2001.
William Dally, chairman of the computer science department at Stanford University, says that for the past several years, he has watched some students interested in technology go into banking and finance because those fields could be more lucrative.
"Many thought they could make more money in hedge funds," Dally says. He notes that students are returning to computer science because they like the field and not because it will necessarily make them rich.
Barron – In the 1980s, Carl Icahn loomed large as a corporate raider, in the mold of the Gordon Gekko character in the movie Wall Street. Icahn made a lot of money but was vilified for what some considered a slash-and-burn approach to taking over companies.
Twenty years later, Icahn has morphed into a shareholder activist and rails against what he considers to be incompetence among senior executives and on boards. "They call me raider. They call me an activist," says Icahn, who, at 72, shows no sign of slowing down. "I don’t know what those labels mean. All I know is that something should be done to improve corporate governance and management. If we don’t, managements will remain unaccountable and our economy will suffer."
West Palm Beach (HedgeCo.net) – A survey conducted by Job Search Digest, publishers of Hedge Fund Jobs Digest, revealed a shift in the hedge fund industry. Given the current state of the market, the results tell an interesting story and show that key players in hedge fund careers knew trouble was on the horizon earlier this year.
Some findings of interest are that despite no significant increase in compensation, there was a substantial increase in satisfaction with hedge fund compensation. This indicates that well before Wall Street’s meltdown, hedge fund employees knew the market had shifted. This year’s report reveals that 42% of hedge fund employees are happy with their current level of compensation – up from a mere 25% last year.
The survey also found that pay is not correlating with fund performance. When the fund performs well, employees are paid well – most of the time. The hedge funds reporting this year performed well with the majority reporting more than 10% return (and many reporting over 25% return). firms reporting flat performance (that is, zero return) had the highest average pay.
Although the hedge fund industry is often referred to as a meritocracy, many respondents to the survey indicated their bonus is disconnected from their individual performance and, instead, based on overall firm performance.
Job Searcg Digest also found that people are attracted to hedge fund careers because of a huge potential upside. Last year, dissatisfaction with compensation was primarily driven by the desire for greater upside. Now, with all the nervousness in the market, many hedge fund employees feel lucky simply to still be working in the industry.
Alex Akesson
Editor for HedgeCo.Net 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!
Washington Post – New Jersey’s pension fund is under fire over a series of hedge-fund investments, the Wall Street Journal said.
New Jersey made the investments last month, to funds run by BlackRock Inc <BLK.N>, Canyon Capital Advisors LLC and GoldenTree Asset Management LP, as they were "facing the equivalent of margin calls," William Clark, director of the New Jersey Division of Investment, told the paper in an interview.
In effect, the funds, which had borrowed money for investments, either faced or anticipated facing demands from lenders for cash as the value of those investments fell, the paper said.
State legislators, upon learning of the investments, are questioning both the wisdom of the decisions as well as the process, according to the paper.
The Australian – Hedge funds who invested in Channel Nine’s owner PBL Media are unhappy about a rescue package to refinance the group’s $4.3 billion in debt, The Asian Wall Street Journal has reported.
Private equity group CVC Asia Pacific, the owner of 75 per cent of PBL Media, is "scrambling" to prevent PBL Media from defaulting on its $4.3 billion in debt, the paper said. If the group did default, PBL Media (the owner of Channel Nine and Australia’s largest magazine group ACP) could be placed in the hands of its bankers.
The Australian last week revealed CVC was trying to negotiate a rescue package, which included raising an extra $325 million from its banks, of which about $250 million would go towards repaying PBL’s debt.
PBL Media’s debt is held by nearly 40 creditors, including global banks and hedge funds.
Reuters – Blackstone Group LP has cut the size of its planned Asia-focused hedge fund because the global financial crisis has led to redemptions, the Wall Street Journal said citing people familiar with the situation.
Blackstone, which manages private equity, real estate and hedge funds, would cut the fund size to about $200 million from a range of $500 million to $1 billion, the paper said.
New York-based Blackstone, about one-10th owned by China’s sovereign wealth fund, has scaled back its plans for the fund at a time when hedge funds around the world are facing redemption pressure, with some forced to shut down, the Journal said.
Forbes – Major Wall Street firms placed large bets against Morgan Stanley using credit-default swaps, two days after Lehman Brothers Holdings Inc sought bankruptcy protection, the Wall Street Journal said, citing trading records.
The firms included Merrill Lynch & Co, Citigroup Inc, Deutsche Bank AG and UBS AG, according to the paper.
The paper said that a close examination of the trading revealed that the swaps played a critical role in magnifying bearish sentiment about Morgan Stanley.
Wall Street Journal – In 2006, Lawrence Summers resigned as president of Harvard University and took a position as a part-time managing director with D.E. Shaw Group, a New York hedge fund with a reputation as one of the most secretive trading outfits in the world.
D.E. Shaw is known for using sophisticated computer-based quantitative strategies to make money on fleeting movements in the stock and bond markets. The fund has been a top performer, returning 15% to 20% a year over the long term, and in two decades has grown into a global powerhouse. But like many funds, it has taken hits in the credit crisis.
USA Today – It is last call for investors to ask for their money back from poorly performing hedge funds. Whether that is a bullish or bearish sign for battered stocks is anyone’s guess.
Wall Street hopes the passing of the Nov. 15 deadline — the last day for many investors to make a request to redeem hedge fund shares payable at year’s end — could mark the beginning of the end of "forced selling" by funds to raise cash. If the selling recedes, it could help lift some of the downside pressure on stocks. Forced selling has been blamed for sharp stock price swings and plunging asset values in the financial crisis.
Investors have redeemed an estimated $85 billion from hedge funds through the end of the third quarter, says Charles Gradante, co-founder of hedge fund adviser Hennessee Group.
