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 – Och-Ziff Capital Management Group LLC, the New York-based hedge-fund manager that went public last year, eliminated at least 10 jobs in Asia, including partner Raaj Shah, said two people familiar with the matter.
The cuts made last week, out of a global workforce of about 460, included employees in the firm’s credit and distressed- investment units, said the people, who asked not to be identified because the information wasn’t publicly announced.
“We have made some minor reductions in Asia, and we remain committed to the region,” the company said today in an e-mailed statement. Hong Kong-based Shah referred calls to the company.
Citadel Investment Group LLC, the Chicago-based firm run by Kenneth Griffin, and New York-based Ramius LLC have also laid off staff in Asia as hedge funds suffer their biggest annual loss and highest investor withdrawals since at least 1990. The HFRX Global Hedge Fund Index declined 23 percent this year through Dec. 5 amid a global credit squeeze and a more than 40 percent decline in the MSCI World Index.
New York (HedgeCo.Net) – Chicago-based Citadel Investment Group lost 13 percent in November, according to a report published by the Wall Street Journal. This brings the hedge fund firm’s total losses to 47 percent for the year.
The losses stem in part from the company’s two largest funds, the Kensington and Wellington, which together manage about $10 billion in assets. Investor redemption requests totaling around $1 billion and plummeting values of bonds were the catalysts behind the losses.
This is the first year since 1994 that Citadel will post a loss. It is only their second loss since CEO Kenneth Griffin launched the firm in 1990. All is not grim, however. Bloomberg News reports that three other Citadel funds, who together manage about $3 billion, have climbed about 40 percent this year.
Hedge funds as a whole have posted their worst record to date this year. According to data by Chicago-based Hedge Fund Research, hedge funds have lost an average of 22 percent this year.
Julie Scuderi Senior Editor for HedgeCo.Net Email: julie@hedgeco.net
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 Times – Hedge funds are facing many agonies. They are tortured by redemptions. Then there are “high water marks,” another now-troublesome part of their model. They need to fix such flaws if they are to fight another day.
The list of funds blocking investors from withdrawing their money is growing daily. Tudor Investment, the Fortress Investment Group and dozens of others have done so, at least temporarily. The rationale is to protect the fund’s remaining investors, who can be harmed if the fund needs to deplete its cash balance or sell assets at fire-sale prices.
Reuters UK - Hedge funds are suffering "tremendous" reputational damage because promises to make money whichever way markets move have not been fulfilled, although in the long run the industry will benefit from the shake-out, Veritas Asset Asset Management manager Ezra Sun said.
Hedge fund "cowboys" boosting returns with lots of borrowing rather than smart strategies were the main culprits for the reputational damage, with investors blaming them for charging high fees and blocking them from withdrawing their money, he said.
"The market in the past few years has been rewarding people who’ve been running basically leveraged long-only funds," Sun told Reuters in an interview.
Forbes – Fortress Investment Group pulled up the portcullis on its Drawbridge funds Wednesday, but it’s stock is under seige.
Fortress Investment Group‘s directors voted to temporarily suspend pending redemptionsafter investors asked to pull out roughly $3.5 billion by year’s end from its Drawbridge funds, nearly as much as the vehicles have in assets.
Reuters – British hedge fund manager Man Group Plc said on Tuesday banks were more highly geared than hedge funds and bank deleveraging had been the main driver of asset-price declines.
"Hedge fund deleveraging has put pressure on asset prices as clients have redeemed. But the main point is banks are deleveraging and they are many times more leveraged than hedge funds," said Man Group Chief Executive Peter Clarke.
Speaking at the Hedge Funds World conference in Zurich, Clarke also said leverage across the hedge fund industry is now at around a third of leverage levels in 2007.
Bloomberg – Artradis Fund Management Pte, RAB Capital Plc’s Northwest unit and Cannizaro (Hong Kong) Ltd. are cutting fees and locking up investors’ money for longer in new hedge funds that will buy bonds after prices fell in Asia.
Merrill Lynch & Co.’s prime brokerage unit has been approached by at least eight money managers about starting such funds in Asia to buy beaten-up fixed-income securities such as convertible bonds, said Eddie Guillemette, the firm’s regional co-head of global markets financing and services. Some of the hedge fund managers are offering to reduce management and performance-based fees by as much as 50 percent, he said.
Straits Times – EU nations on Monday reached a compromise agreement on new rules to cut CO2 emissions from new cars from 2012, with penalties for automakers who fail to comply, a negotiator said.
The deal, part of wider EU efforts to tackle global warming, was reached during talks between representatives of the 27 EU nations, the European parliament and the European Commission, following months of detailed and sometimes heated negotiations.
‘It isn’t the commission’s initial proposal, but there is some compensation thanks to a (new) long-term objective’ on cutting emissions and ‘with very strong penalties’ for non-compliance, the source said.
West Palm Beach (HedgeCo.net) – The Energy Hedge Fund Center (EHFC) announced that it has added a ‘green’ hedge fund directory to its product inventory. EHFC’s Directory of Energy Hedge Funds was launched four years ago, but with the interest in ‘green’ hedge funds, the company has created a new green directory for investors. The directory includes carbon, renewable, cleantech, forestry, water and weather derivative funds.
"We decided that now was the time for a standalone green directory and will be offering it for prepublication in January 2009," said Peter Fusaro, co-principal of the EHFC. "The market is now large enough and growing to warrant this service with over 100 green hedge funds."
"EHFC has received innumerable requests for such a product this last 12-months or so as investor appetite for environmental and alternative energy has increased," reports Dr. Gary M. Vasey, Co-Principal, EHFC. "As a result we have complied with that demand and have now added a new directory that focuses on just the ‘green’ hedge funds."
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!
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!
New York (HedgeCo.Net) – Citigroup Inc. will be liquidating its Corporate Special Opportunities fund after losing over half its value last month, according to a report by the Financial Times.
The hedge fund had frozen redemptions for almost a year before deciding to shut it down. Many funds freeze redemptions in hopes that market conditions will improve and to prevent a liquidity crunch that may just be fueled by fear.
According to the report, Citigroup infused the hedge fund with $450 million in credit and about $320 million in equity. In its heyday, the fund managed about $4.2 billion.
October was a rough month for hedge funds as a whole, with the average fund down almost 5.5 percent according to data from Hedge Fund Research. With only two months to go, 2008 looks to be the worst year ever recorded by hedge funds, with the average fund down almost 15.5 percent.
Julie Scuderi Senior Editor for HedgeCo.Net Email: julie@hedgeco.net
