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.
Forbes – A year ago, Conrad Levy was a player in one of the most spectacular blow-ups in hedge fund history. Peloton Partners, the fund at which Levy was chief compliance and operating officer, collapsed after an outsized bet on subprime securities went horribly wrong, resulting in the fund losing $17 billion in a matter of days. Now Levy is profiting from that experience.
Since mid January, Levy has been working as a consultant for PricewaterhouseCoopers, helping hedge funds restructure themselves when they have hit a landmine.
London Stock Exchange – Hedge funds that short stocks as part of their investment strategy should be forced to pay a levy to support research into the impact of the tactic on the markets, according to a new manifesto for the "fundamental reform" of corporate governance.
The document, published by corporate oversight and social responsibility consultancy PIRC, calls for the charge to be introduced alongside enhanced disclosure of listed companies’ pay and benefits, as well as binding shareholder votes on audit committee reports and remuneration policies.
Daily Freeman – Bard College said on Thursday that it lost about $3 million in investments tied to disgraced Wall Street financier Bernard Madoff.
Bard spokesman Mark Primoff said the losses came in the Northern Dutchess school’s $270 million endowment fund.
Primoff said the college invested in the Ariel Fund run by J. Ezra Merkin, who was a governor of Bard’s Levy Economics Institute until his recent resignation. Primoff said Merkin never told the board he was investing the money with Madoff.
West Palm Beach (HedgeCo.net) – In a letter to investors, Hedge Fund manager Pentwater Capital announced that due to a number of unexpected redemption notices for year-end they have suspended redemptions and withdrawals, effective immediately.
"The entire hedge fund industry is bracing for large redemptions at year-end so as not to become forced sellers in the midst of a severe market crisis," says the Pentwater letter, "In turn, this has put additional pressure on hedge fund investors to find liquidity wherever they can, because they have to fund their own potential redemptions."
"If the Fund were to meet the year-end redemption requests we have received, the Fund would be forced to sell more of its investments into one of the worst markets since the great depression."
The fund has instead opted to create two new classes that have modified liquidity, fee and expense provisions as compared with the current classes. Investors will have the choice to transfer all or part of their investment into one or both of the new classes or remain in the existing classes.
"We will allow investors that wish to invest new capital to do so in one of these new classes and until further notice allow them to retain the benefit of their existing high water mark on any new investment. Further, investors that have already submitted a redemption notice will have a one-time option to rescind that notice, reduce the size of their redemption request, and/or choose to participate in one of our new classes."
Pentwater was not immediately available for comment.
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Reuters UK – Dozens of hedge funds have told investors they cannot get their money back right now as managers try to limit a wave of redemptions to safeguard all their clients’ investments — as well as their own futures.
Only a few months ago, hundreds of the world’s estimated 9,000 hedge fund managers made it tough for wealthy investors to put money into their funds by requiring high investment minimums of $1 million (617,500 pounds) or more and charging heavy fees.
Now managers are making it hard for investors to get out.
"Everyone is looking at their gate provisions (mechanisms that limit redemptions) and what rights they have to close their gates," said Timothy Mungovan, a partner who advises hedge funds at law firm Nixon Peabody LLP. "It is a phenomenon that has been occurring for some time and is picking up pace now."
