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.
Reuters – A switch by some big investors chastened by the Madoff scandal and the credit crisis into managed accounts at hedge fund firms could end up penalising smaller clients in mainstream funds.
Managed accounts offer greater visibility and flexibility for larger investors such as funds of funds and big institutions by giving them direct ownership of underlying assets and the option to sell the portfolio if they want to get out quickly.
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.
Seattle Times – Bill Fleckenstein, a well-known Seattle investor who bets exclusively on falling stocks, is shutting his 12-year-old fund and starting a new one that will buy equities, too.
Fleckenstein said he doesn’t think the worse is over in the U.S. stock market. Yet he no longer wants to limit himself to so-called short bets.
"I’m not wildly bullish right now," he said. "The market hasn’t reached its ultimate lows, but we might be in a trading range for a long time."
Short sellers have been the best-performing hedge funds this year, up 32 percent through November, according to Chicago-based Hedge Fund Research, whose data show an industry average decline of 18 percent during that period. Fleckenstein, founder and president of Fleckenstein Capital, declined to comment on the fund’s size or its returns.
Forbes – It’s hard to fathom. But as lousy returns start pouring in, managers of some of the most successful hedge funds in recent years are apologizing for their dismal showing.
"The last quarter has been abysmal," wrote TPG-Axon Capital Manager Dinakar Singh, highlighting the sentence in bold and underlining the word abysmal. "And we are sorry to have let you down with the terrible performance of the portfolio." TPG-Axon is down about 20% through September, say market players. A spokesman declined to comment.
Greenlight Capital, well-known for its long-time bearish position on Lehman Brothers, acknowledged to investors that "we made some mistakes. … In hindsight, our suggestion from last quarter’s letter to go to cash and go to the beach would have been the better option."
Zawya – The Lionhart Group, an alternative investment management group that specialises in global multistrategy arbitrage, aims to attract $2 billion (Dh7.4bn) of investment from the Gulf in the next few years through its new branch at the Dubai International Financial Centre.
The regional office has two main roles. The first is to pull in cash from the Middle East and North Africa (Mena) for its investment and hedge funds, and the second is to expand the group’s investments in regional markets.
"We have had relations with GCC investors for a long time," Jim Quinn, Chief Operating Officer of Lionhart Middle East, told Emirates Business. "Around 10 per cent of our assets under management are from the region and these relations started 10 years ago.
"We are planning to build on these relations to attract around $2bn of GCC investments into our funds during the next two to three years. "We are opportunistic and the Mena region is witnessing major economic developments. We have two flagship investment funds with total assets under management of $500m.
Reuters UK- Spanish property firm Martinsa Fadesa’s demise is a sign hedge funds are pushing hard to make profits out of ailing companies and may cause insolvencies in Spain to speed up.
Hedge funds which bought Martinsa Fadesa debt at discounts of as much as 50 percent of its value could now profit from its administration process, because an expected sale of assets may pay them back at a price closer to face value.
Martinsa Fadesa said on Monday it would file for administration after it failed to raise funds and meet debt payments, marking one of the biggest corporate failures in the country’s history.
Such vulture funds may not care if a company goes bust, teaching Spanish companies — used to cosy long-time relationships with regional savings banks such as La Caixa — a painful lesson in modern finance.
Business24-7- When oil prices were as low as $10-20 a barrel two decades ago, the UAE seriously considered borrowing from the local market to finance its swelling budget deficit. But the plan was shelved in favour of painful spending cuts.
Such reductions, however, could not be maintained for a long time because of the rising domestic development needs and a seven per cent growth in the population. As a result, the deficit in the country sharply widened.
Yet authorities still never considered borrowing or introducing income taxes for two reasons: the country’s petrodollar income was swelling and a gigantic overseas investment empire was taking shape.
