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.
HedgeCo.net (West Palm Beach) – Richard Bookbinder is launching TerraVerde Capital Partners LLC, one of the first ”green” hedge fund of funds in the United States. Bookbinder is Managing Member of Bookbinder Capital Management, a New York-based hedge fund of funds, and a founding Principal of Sandler, O’Neill & Partners, L.P.
TerraVerde allocates capital to hedge funds devoted solely to reducing carbon emissions through clean-tech, renewable energy and other environmental sectors such as carbon trading, energy, solar, wind, water, reforestation and more.
”We’re in the early stages of a long-term, multi-generational growth cycle for carbon reduction strategies,” Bookbinder said. ”TerraVerde is focused on those green strategies that are capitalizing on the business potential driven by the need for energy security and clean energy use.”
While managing one of Bookbinder Capital’s other hedge fund of funds, Bookbinder studied the emergence of investment opportunities in the ”green” space. After an in-depth analysis of the industry, including meeting with hedge fund managers, green private equity funds, scientists, historians, and others, he came to the realization: investment funds with an environmental focus offer sufficient, attractive long-term investment opportunities to dedicate an entire strategy focused solely on the “green” space.
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Stuff – Mauled by the carnage on Wall Street, mutual funds are copying hedge fund strategies in an effort to regain some of the shine they have lost this decade.
Many investors have been burned investing in a single asset class and withdrew $234 billion (148 billion pounds) from U.S. stock funds last year as the deep bear market sparked the first annual outflow of long-term investment in mutual funds since 1988.
But as stocks sank, hedge funds soared. The Standard & Poor’s 500 Index, a benchmark for the broad U.S. stock market, returned a negative 40 percent this decade through the end of 2008. Hedge funds, meanwhile, gained 55 percent over the same period, Hedge Fund Research’s fund-weighted composite index shows.
Reuters UK – Mauled by the carnage on Wall Street, mutual funds are copying hedge fund strategies in an effort to regain some of the shine they have lost this decade.
Many investors have been burned investing in a single asset class and withdrew $234 billion (148 billion pounds) from U.S. stock funds last year as the deep bear market sparked the first annual outflow of long-term investment in mutual funds since 1988.
But as stocks sank, hedge funds soared. The Standard & Poor’s 500 Index .SPX, a benchmark for the broad U.S. stock market, returned a negative 40 percent this decade through the end of 2008. Hedge funds, meanwhile, gained 55 percent over the same period, Hedge Fund Research’s fund-weighted composite index shows.
Guardian Unlimited – Tumbling markets and redemption waves have been murder on hedge funds, but the turmoil will free up top-tier talent for a quiet but well-heeled corner of the market: family offices.
The world’s wealthiest, not content to hand their fortunes to brokers and banks, can afford to build their own money management businesses. These offices, which would never be considered by top fund managers during the go-go years, suddenly look attractive thanks to their stable capital and long-term investment horizon.
"You follow the money. Right now that is leading people to family offices," said Greg Coules, a former hedge fund manager who is building a family office recruiting practice at New York-based Hunter Advisors.
Bloomberg – The head of J-Power, Japan’s largest electricity wholesaler, wants to attract long-term investors to replace its biggest stakeholder, hedge fund TCI, which exited after seeking his ouster in a feud over corporate management.
“Investors such as pension funds, which seek stable returns in this time of financial turmoil, may be one of our preferred investors, in addition to individuals, who search for vehicles for long-term investment,” Yoshihiko Nakagaki, president of the Tokyo-based utility, officially known as Electric Power Development Co., said in an interview in Tokyo.
West Palm Beach (HedgeCo.net) – Beijing-based fund manager, Lowes Wealth Management (LWM), has announced a bullish programme of stock acquisition, building on the opportunities thrown up by the global downturn.
LWM, which runs the recently launched Elite East-West Value Fund, said that its strategy of investing in what it considers to be ‘the 25-35 best value companies in the world’ will reward investors equipped with a long-term investment horizon.
“We invest solely on the basis of classical value principles, in companies strong in tangible assets that operate with low levels of debt,” said fund manager Justin Lowes.
“We moved 90% of the funds we manage into cash in the summer of 2008 and thereby protected our clients from the worst of the market falls. We are now seeing opportunities to carefully and gradually move back into the market, one stock at a time, and believe that opportunities are now presenting themselves which will, in the future, be seen as once-in-a-lifetime investment windows,” he said.
“The key is to invest in companies that are not in danger of capitulation should credit continue to be hard to come by, whose products and services will be in demand even if the global economy does take an additional downwards lurch.
“A good example would be firms operating in sustainable markets, such as those linked to Asian infrastructure development and oil. The continuing development of the likes of China and India will continue to provide support in these areas.” he added.
A longer term investment horizon is essential, said Lowes, as the US and UK/Euro-zone recessions are unlikely to be short-lived.
“Consider first the discrepancy between debt and equity markets,” he said. ”Spreads are suggesting that defaults on corporate debt are likely to be at 1930s levels. This is very much at odds with the message from equity markets.
“And, along with the still falling property markets and rising unemployment, there is almost certainly more bad news to emerge in terms of bad debt in the core US loans market.
“Here we are still seeing a huge amount of sub prime, Alt-A and even prime mortgage debt that is going to sour.
“On top of this, add massive amounts of now unsecured home-equity lines of credit, car loans, student loans and credit card debt.
“Credit card debt in the US alone tops $1 trillion, of which around $250 billion may well be written off. Remember that much of this debt was securitised and sold far and wide, so this is just not a US problem.”
And, continued Lowes, the “sheer amount” of deleveraging that is required by banks, hedge funds, governments and individuals is likely to put continued pressure on asset prices.
“We now see the bursting of two bubbles. A near decade long housing boom that ranks as the biggest asset bubble in history, combined with the bursting of a consumer credit bubble that began to inflate in the early 1980s under Reagan and Thatcher. The seeds of current market distress were long in the making. It is unlikely that a fundamental resolution of such entrenched issues can be achieved in such a short period of time.
“The UK looks particularly troubled. Massive levels of consumer debt, the ongoing impact of the collapse of the UK housing market and the sheer size of the financial services market as a proportion of the UK economy levels all mean that the UK is likely to be particularly badly hit,” he said.
But, despite the gloomy picture in the short term, Lowes is “tremendously optimistic” of the longer-term investment scenario.
“We’re bearish on global markets, but we don’t invest in ‘global markets’ – we invest in a select portfolio of the best 25-35 companies available from around the world. The fear that stalks the markets and indiscriminate selling has resulted in some superb companies being marked down to mouth-watering prices.
“Also, as value investors we approach investment from a different angle: looking at the markets over the next 12 months is short-termist in our view,” he said.
“The question should not be ‘by investing today, will I earn good returns in 6-12 months?’ The question should be, by buying into the markets at this time, am I likely to lay the foundation for superb returns over the next 3-5 years and beyond?’ And the answer to this question, we believe, is an unequivocal ‘Yes’.”
The LWM investment management team has recently invested in a number of well-established companies including Blue Scope Steel (Australia) and Aero Inventory, a UK aircraft maintenance outsourcing company. Also under consideration are US aluminium giant Alcoa and Cimarex Energy, an oil and gas company.
“We are looking to average into the markets over the next 5-9 months to take advantage of ongoing volatility,” said Lowes. “We believe that some emerging markets are likely to bounce back quickly from their current positions. We also feel that the US is likely to recover more quickly than the UK as it is further forward in the economic cycle.”
The Fund is suitable for investment for ISAs, SIPPs, SSASs and regular savers with a minimum investment level of £5,000 for lump sums or £100 per month. The Fund is also available through Transact and discussions are currently ongoing with a number of additional platforms.
Lowes Wealth Management has been managing funds on behalf of discretionary clients since October 2005. Since that period its classical value strategy has outperformed all major markets with lower volatility. With the launch of the Elite LWM East-West Value Fund on December 1st, the Lowes Wealth strategy is now made available to UK retail investors.
