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 – John Meriwether, who roiled global markets when Long-Term Capital Management LP collapsed in 1998, plans to shut his current hedge fund, according to a person familiar with the matter.
JWM Partners LLC is closing its main Relative Value Opportunity II fund after losing 44 percent from September 2007 to February 2009. Meriwether, credited with generating billions of dollars of revenue at the former Salomon Brothers in the 1980s through so-called relative value trades, returned an average of 1.46 percent a year with his new fund since opening in 1999, compared with 2.4 percent for the Credit Suisse/Tremont Hedge Fixed-Income Arbitrage Index.
HedgeCo.net (West Palm Beach) – Viathon Capital, LP has officially launched the Whitewater Master Fund, LP, a credit opportunity fund focused on non-correlated absolute returns.
Employing a fundamental, credit-intensive research process in order to identify long and short investment opportunities in the United States and Europe, the hedge fund’s objective is to seek long term capital appreciation by investing in high yield and investment grade corporate bonds and bank debt.
As part of this launch, Viathon Capital has affiliates of Citigroup Alternative Investments, LLC (CAI) as its seed investor in this new fund. The fund launched in May of 2009 with $50 million in capital and had a net return of +0.92 % for the month of May and estimates +2.10% for June bringing it’s inception to date return to approximately +3.02%.
Viathon Capital’s team includes four investment professionals and two trade support/back office personnel with backgrounds from Marathon Asset Management, Goldman Sachs, Merrill Lynch, Neuberger Berman, SAC/Sigma, Providence Investment Management and Lehman Brothers.
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Guardian.co.uk – No single hedge fund today poses a systemic risk to the global financial system, said a former partner at Long Term Capital Management (LTCM), as lawmakers continue to hammer out rules to control the industry.
Even though many funds are now much larger than LTCM, which collapsed in 1998 and received a $3.5 billion bailout to avert widespread financial chaos, Hans Hufschmid, currently chief executive at fund servicing firm GlobeOp, said prime brokers now act as an effective brake on hedge fund risk. "I find it hard to believe — I don’t think a hedge fund today is big enough to pose a systemic risk," he said.
CNNMoney.com – When the headhunter first called Richard Baker in late 2007 and asked him if he was interested in becoming president and CEO of the Managed Funds Association – the hedge fund trade group – Baker thought it was a joke. "My reaction was, ‘You want me to do what?’"
An 11-term Republican Congressman from Louisiana, Baker was about as likely a candidate to run the MFA as Bill Gates is to run an Apple in his home office.
Over the years, Baker had emerged as a fierce and independent critic of the financial services industry – pushing for tougher regulation of hedge funds after the 1998 collapse of Long Term Capital Management.
Bloomberg – The steepest plunge in crude prices on record may be setting up oil investors for a rally this year, if history is any guide.
The so-called forward curve of futures contracts traded on the New York Mercantile Exchange suggests oil will rise 30 percent to $60.29 a barrel by December. The curve looks almost the same as 10 years ago, after Russia’s default and the collapse of the Long-Term Capital Management LP hedge fund raised concerns that a global economic slowdown would reduce energy demand. Crude prices fell 25 percent in the final quarter of 1998, the steepest drop in seven years.
Sify – Bernard Madoff, the long time Wall Street executive accused of cheating investors worldwide out of $50 billion, scrambled to find relatives or friends to guarantee his bond on Tuesday and keep him of jail.
In Massachusetts, where the disgraced investor long cultivated a loyal group of wealthy individuals, the state’s chief securities regulator subpoenaed Bernard L. Madoff Investment Securities and Cohmad Securities Corp, a firm that marketed Madoff investment products.
The two firms must hand over the names and addresses of all local residents who let Madoff invest their money by December 29. They must also deliver notes, emails, meeting agendas related to investments made since 2000, William Galvin, the state’s Secretary of the Commonwealth, said on Tuesday.
In New York, Madoff, who was arrested last week, has not yet fully met the conditions of his $10 million bond, according to court papers. He must find three co-signers to guarantee the bond.
Reuters HK – Triple A Partners, an alternative fund firm specialising in seeding new managers, said on Tuesday it would invest an initial $20 million in a new hedge fund launched by Hong Kong’s Enhanced Investment Products Ltd.
Triple A, also known as Asia Alternative Asset Partners, said it had bought a minority equity interest in EIP as well and signed a deal to distribute their existing and future funds globally.
EIP, which has more than $200 million of assets under management, operates using a rare marriage of passive and alternative investing, creating market tracking index funds its EIP Overlay Fund can use to source stock for complex trades.
West Palm Beach (HedgeCo.net) – Preparations are underway for the creation of a new European hedge fund association, hedgemeetings.com, which has the objective to communicate the public utility of this industry for wealth creation and risk management. A first meeting for founding participants will take place this Friday, November 14, in Paris.
Rene Friedrich, 45, who has analyzed and selected hedge funds since 1996, is launching the initiative, as he sees the industry’s advantages undervalued, "There a many opinions about the risks of hedge funds and about the wealth created for their managers, but one sees rarely a balanced view of the general public utility of better asset management in general and of hedge fund work in particular. The realness of the benefits only seems to become apparent when the opposite occurs and wealth is lost in financial markets. The fact is that effective asset management contributes wealth to the economy."
"The initiative aims to give the hedge fund industry a more just image: While individual hedge funds can have more risks than other investment products and investors may lose all or part of their invested capital, the industry overall has, so far this year, avoided the degree of wealth loss of equity investments in general. And a notable number of funds even has avoided losses altogether, no small achievement. It can be argued that future regulations, which could facilitate a greater diversification into hedge funds and funds of hedge funds, may ultimately help to reduce the sum of wealth destructions in cyclical downturns."
"Asset management is not a zero sum game, financial investments are the source of capital in projects, and any wealth created, or not lost, is added, or maintained, in the economy. These are basic principles, and for all the criticisms of financial markets, some just and some not, the objective must be to use what is helping," Friedrich concluded.
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West Palm Beach (HedgeCo.Net)- Sidley Austin has further expanded its hedge fund practice in London by hiring a new counsel in the Investment Funds, Advisers and Derivatives practice.
Barry Breen has joined the firm’s London office and will focus his practice on hedge funds and further expand Sidley’s fund capabilities in London. "Barry is a talented and experienced hedge fund lawyer and we are pleased to have him join us to enhance our growing fund capabilities in Europe," said Bruce Gardner, head of the hedge fund practice in London.
Breen will advise clients on the organization of offshore and onshore hedge funds, including master/feeder,fund of funds and side by side investment structures, commodity pools, registered fund of funds and mutual funds, ETFs, and the registration, regulation and governance of registered management investment companies.
"I am thrilled to join a firm with such a respected and renowned global investment funds practice," said Breen. "I look forward to working with Bruce, David and the other partners in the practice to continue to build and strengthen the funds team in London, Europe and globally."
Breen previously was with Tannenbaum Helpern Syracuse & Hirschtritt LLP in the Financial Services, Hedge Funds and Capital Markets practice operating out of their New York and London offices.
Sidley has a international practice in structuring and advising investment funds and advisers. In 2006 and 2007, the Alpha Awards(TM) for hedge fund service providers ranked Sidley as the number one onshore hedge fund law firm. Additionally, in 2008, the firm was named "Investment Funds Team of the Year for the U.S." by Chambers and Partners. In 2007, Sidley also was named Investment Funds Law Firm of the Year by Asian Legal Business. The Investment Funds, Advisers and Derivatives practice group consists of more than 100 lawyers in Chicago, Hong Kong, London, Los Angeles, New York, San Francisco, Singapore and Tokyo.
Reuters – Man Group Plc, the world’s biggest listed hedge fund company, said demand for its fund products had remained strong in the first quarter and it was confident about its prospects for the full year.
Sales in the three months to June 30 were $5.0 billion (2.5 billion pounds) while funds under management increased to $79.5 billion from the $74.6 billion seen at the end of March.
"Demand for our fund products has remained strong, both from private investors and institutions," Chairman Jon Aisbitt said in a statement prepared for the annual shareholder meeting on Thursday.
"This success in asset raising reflects the group’s broad geographic presence and the continued attraction of conservatively structured alternative investment products," he added.
West Palm Beach (HedgeCo.net)- Global Hedge fund Man Group has increased their assets under management from $74.6 billion at 31 March 2008 to $79.5 billion at 30 June 2008.
"Demand for our fund products has remained strong, both from private investors and institutions, with sales in our first quarter to 30 June 2008 totalling $5.0 billion." Jon Aisbitt, Chairman of Man Group said in a statement, "This success in asset raising reflects the Group’s broad geographic presence and the continued attraction of conservatively structured alternative investment products."
Overall product performance was positive, with AHL, Glenwood, Man Global Strategies, and RMF all showing positive returns. Redemptions for the three months to 30 June 2008 totaled $2.5 billion, of which private investor were $1.5 billion.
Man is one of the worlds largest alternative investment management companies, originaly founded in 1783, Man is now ranked in the top 40 companies of the FTSE 100 Index with a market capitalisation of about $20 billion.
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