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.
New York Times Blogs – A move by the European Commission to adopt proposed regulation for hedge funds could end up igniting a transatlantic regulatory war, one of Britain’s hedge fund veterans warned in an interview with The Financial Times.
Stanley Fink, the former chief executive of Man Group dubbed the “godfather” of the British hedge fund industry, told the newspaper that tightened regulation being proposed by the commission would be “very restrictive” for non-EU funds, and could provoke retaliation by large swaths of the industry located outside the EU.
Stuff – The beleaguered hedge fund industry is rife with talk of consolidation, as dwindling asset bases eat into firms’ profits, with the key barriers likely to be hedge fund managers’ egos and poor rewards for sellers.
Man Group and RAB Capital have both indicated they are in the market for smaller hedge funds, while Cheyne Capital and GLG have separately announced deals in recent months.
Reuters – International Standard Asset Management, the hedge fund firm headed by former Man Group chief executive Stanley Fink, has hired former RAB Capital director Rod Barker to help build the business.
Barker, who resigned from RAB at the end of 2007 to become co-chief executive of Renaissance Investment Management, started at ISAM on Monday as a director and partner with responsibility for business development, ISAM said in a statement on Tuesday.
eFinancialCareers UK – Man Group has been spending freely on technology over the last year, and is expected to continue to do so going into 2010. To carry out the new projects, it’s been hiring an ever-growing team of contractors, a tactic other hedge funds are also employing.
Operating costs amounted to $275m in the financial year to March 2009, and the hedge fund giant incurred a "significant increase in technology costs", with projects being rolled out to "increase the scalability and robustness of our infrastructure and to support the growth of our business in the future".
Evening Standard – This year could see the bounceback of the hedge fund industry after a pretty disastrous 2008, Peter Clarke , chief executive of the world’s largest publicly quoted hedge fund manager Man Group , said today.
But news that the group took a $900 million (£565 million) hit on its funds in the final week of March, just after its most recent trading update, pushed the shares 10% or 25p lower to 225p.
Despite confirming a 40% fall in Man’s dollar profits for the year to the end of March and a 37% drop in funds under management, Clarke said: "Certainly 2009 has begun very well for the hedge fund industry with positive returns across the industry overall."
Reuters – Man Group, the world’s largest listed hedge fund firm, is likely to extend the independent valuation of its flagship AHL strategy to calm investors spooked by Madoff, sources familiar with the matter said.
AHL, a $25 billion (16 billion pounds) family of managed futures funds which bet on trends in global futures markets, currently uses a mixture of internal and external administrators to value its constituent funds, which tend to be in liquid and easier-to-value markets.
However, with investors more focused than ever on independent administration in the wake of the fraud by U.S. financier Bernard Madoff, Man is ready to embrace a greater balance of third party input.
CNBC – Man Group , the world’s largest listed hedge fund firm, said funds under management are $47.7 billion, down 11 percent from end-December, as clients pulled out assets in the face of falling markets.
The firm said net client outflows for the three months to March are estimated at $3.2 billion, with both private investors and institutions pulling out assets.
Bloomberg - Man Group Plc, the largest publicly traded hedge-fund manager, said it will cut its workforce by about 15 percent after fiscal year profit dropped and assets under management declined by a third.
Assets fell to $48 billion in the period ending March 31, from $75 billion the previous year, London-based Man Group said in a trading statement. Pretax profit will be $1.2 billion, down from $2.1 billion. The median estimate from four analysts surveyed by Bloomberg News had forecast assets of about $48.6 billion and a $1.14 billion profit.
Marketwatch – Shares in hedge fund manager Man Group jumped around 11% Thursday after the firm maintained its dividend payout and launched a new investment management business.
The firm said it expects adjusted pretax profit for the year ending March 31 to fall around 43% to $1.2 billion from $2.1 billion due to the impact of falling markets and withdrawals by institutional investors.
CNBC – Shares in Man Group, the world’s biggest listed hedge fund firm, slid on Wednesday after it said funds under management fell 21 percent and that it would sue over its exposure to the Madoff scandal.
Man said its assets totalled $53.3 billion at the end of last year, below Citi analysts’ expectations and down from $67.6 billion at the end of September. Part of the drop was due to net redemptions, which reached $3.2 billion in the three months to December.
Man Group’s shares were down 5 percent at 214 pence at 1014 GMT, up from a trough of 200 pence earlier. The blue chip FTSE 100 Index was 1.6 percent lower
Motley Fool – What does the turmoil in the hedge fund world mean to most investors? Losses and more losses. Over the past few weeks, the forced deleveraging of the industry, combined with redemptions by frantic clients, has led to hundreds of billions in stock sales (redemptions in the third quarter amounted to $117.3 billion, according to a new report out by HedgeFund.Net), creating horrific declines in many stocks — but interestingly, not in all stocks.
According to an equity strategist for one of the most successful fund-of-funds outfits in the country, stock holdings among equity hedge fund managers are and have been highly concentrated. Described as "crowded longs," these most-favored stocks tanked in September and October as funds scrambled for cash. Overall, equity long-short funds are down 25% year to date, according to Hedge Fund Research, compared with a near-40% slide in the S&P 500. While hedge funds have outperformed, the showing certainly is disappointing for an industry that is supposedly hedged. The shortfall is because so many managers own the same stocks, and all rushed to sell at the same time. (There were more than 8,000 hedge funds operating at the start of 2008.)
New York (HedgeCo.Net) – Those who push for greater transparency of the hedge fund industry had a victory this week, when an EU official all but declared that funds in the European Union will be regulated.
Charlie McCreevy, the bloc’s internal market commissioner, launched a public discussion on whether or not hedge funds need stricter oversight. Though McCreevy has said in the past that no greater oversight is needed for hedge funds, the majority of those present disagreed.
“We don’t need more consultation. We need regulation. We know exactly what are the problems,” said ex-Prime Minister of Denmark Poul Nyrup Rasmussen, who shares the view that short-selling by hedge funds have had a hand in prompting turmoil in the market.
The results of the consultation, which is still underway, are expected to be known in early 2009. Though most hedge funds fall outside the EU, London is home to several large hedge funds and many portfolio managers.
Julie Scuderi Senior Editor for HedgeCo.Net Email: julie@hedgeco.net
