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.
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.
Times of India – Can the wealthy trust their wealth managers any more after losing 30 to 60% of their wealth during the current global financial crisis?
The world’s top banks including brands like Morgan Stanley, UBS, Barclays and Standard Chartered operating in Asia are desperately struggling to find a suitable answer to this question.
It is interesting to see the usually suave and self-confident community of private bankers looking dazed and fearful of survival. There is already a run on deposits with some of Asia’s wealthy pulling out money from accounts of private banks. The future looks dismal. Some of the world’s top banks have either gone bust or merged with others to stave off closure.
"Professional advisers have failed to prove their worth," Peter Flavel, senior managing director of The Standard Chartered Private Bank told a conference of wealth managers in Singapore on Friday. "The players have changed in a way that was unimaginable a few months back. They will continue to change," he said.
Caymen Net News – Insolvency lawyers in Scotland should take an interest in a bankruptcy case in the Cayman Islands involving two Bear Stearns hedge funds and an American judge with the wonderful name of Burton Lifland.
The issue is this: where did a business that has gone bust have its main commercial interests?
The two funds were involved in what is now a familiar story amid the carnage on the world financial markets. They bet heavily on sub-prime mortgages and, as defaults increased, creditors demanded their money back leaving the funds with no cash.
Bloomberg – Credit markets have fallen so far that they are providing a "once in a lifetime opportunity," and investors are still selling.
Prices of loans rated below investment grade declined to a record low 66.1 cents on the dollar, virtually guaranteeing investors get their money back, based on historical recovery rates, according to data compiled by Standard & Poor’s. Yields on corporate bonds show investors expect 5.6 percent of the market will go bust, the highest default rate since the Great Depression, according to Christopher Garman, chief executive officer of debt research firm Garman Research LLC in Orinda, California.
While central banks injected $3 trillion into the global economy, credit markets are tumbling because banks are clamping down on lending, forcing investors to unload assets they bought with borrowed money. The Federal Reserve said Aug. 11 that its quarterly survey shows most "domestic institutions reported having tightened their lending standards and terms."
Times Online – Some called it chutzpah. Some were more charitable, describing it as an exercise in putting on a brave face. Whatever it was, Michael Spencer’s claim that it was business as usual at Icap, when that company handles trades between investment banks while those same banks are falling like ninepins, was never going to work.
And so it proved. Icap, his brokerage that has become a barometer for the health of banks, was the biggest blue-chip faller yesterday, losing 89¼p, or 24 per cent, to close at 289¼p.
“Current conditions make forecasting market activity during the balance of the year much more difficult than usual,” he said. He could only say that profits this year would be higher than last. But the financial world has changed for good. Not only have Icap clients such as Lehman Brothers gone bust, but others such as Goldman Sachs and Morgan Stanley are now classified as retail banks and can go direct to the Fed rather than sell securities through Icap.
The FTSE 100 index fell 269.7 points, or 5.3 per cent, to end the day at 4,818.77, dragged down by financials as several European banks were nationalised. One senior trader lamented: “We’re seeing panic selling for the first time in this crisis.”
Daily Telegraph – Lawyers are being galvanised on behalf of a raft of hedge funds which claim the financial watchdog has illegitimately extended its powers and caused "wide-spread capital destruction."
One said: "The FSA’s remit is to maintain orderly markets – the markets were working fine, only the banks were going bust. With one swoop, the regulators have wiped out perfectly legitimate businesses and have cost some funds millions. They have gone for the big political hit without a thought for the damage they are wreaking. There may be unintended consequences but it’s outrageous and illegal."
The backlash follows a week in which the multi-billion pound hedge fund industry has been plunged into crisis. Prime brokers in London estimated that 35 per cent of European hedge funds were organising emergency measures to avoid closing funds as a ban on short-selling has hamstrung managers at a time when they need flexibility to survive.
Miami Herald – The deflating commodities bubble is claiming its first casualties as large investment funds absorb staggering losses from bad bets that prices for oil, precious metals and grains would keep going up.
Hedge fund operator Ospraie Management LLC notified investors Tuesday that it’s closing its flagship fund after it suffered losses in August on positions in energy, mining and other natural resource-related stocks that left the fund down nearly 40 percent year-to-date. It’s believed to be the first hedge fund to go bust in this latest commodities boom as prices come crashing down after a historic bull-run earlier this year.
And the bloodletting may have only begun. Wall Street analysts say similar trouble looms for other funds that got caught up in the exuberance of the boom but were too late in getting out.
Myrtle Beach Online – The deflating commodities bubble is claiming its first casualties as large investment funds absorb staggering losses from bad bets that prices for oil, precious metals and grains would keep going up.
Hedge fund operator Ospraie Management LLC notified investors Tuesday that it’s closing its flagship fund after it suffered losses in August on positions in energy, mining and other natural resource-related stocks that left the fund down nearly 40 percent year-to-date. It’s believed to be the first hedge fund to go bust in this latest commodities boom as prices come crashing down after a historic bull-run earlier this year.
And the bloodletting may have only begun. Wall Street analysts say similar trouble looms for other funds that got caught up in the exuberance of the boom but were too late in getting out.
They say Ospraie’s misfortunes illustrate one of the hard lessons emerging from the commodities bubble: Many money managers have never been through a commodities boom and so were ill-prepared for the hyper-volatility associated with hard assets.
"You’re always going to have victims when a market comes down this fast. People stayed at the party for too long," said Phil Flynn, energy analyst at Alaron Trading Corp. in Chicago.
