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 – Geneva banks, which began investing client money in funds of hedge funds during the 1960s, are struggling to rebuild the business after market losses and Bernard Madoff’s Ponzi scheme cut assets by 72 percent.
The assets of funds of funds managed from Geneva slumped to $15 billion in May from $54.2 billion at the end of 2007, according to data compiled by Singapore-based Eurekahedge Pte. Almost 25 percent of the 227 funds operating in the city at the end of last year shut in the first five months of 2009 and only six opened, less than a fifth of the 2008 number.
Bloomberg – Geneva banks, which began investing client money in funds of hedge funds during the 1960s, are struggling to rebuild the business after market losses and Bernard Madoff’s Ponzi scheme cut assets by 72 percent.
The assets of funds of funds managed from Geneva slumped to $15 billion in May from $54.2 billion at the end of 2007, according to data compiled by Singapore-based Eurekahedge Pte. Almost 25 percent of the 227 funds operating in the city at the end of last year shut in the first five months of 2009 and only six opened, less than a fifth of the 2008 number.
Bloomberg – The Children’s Investment Fund Management UK LLP, a $9.5 billion London-based hedge fund, has about $1.2 billion of short positions in Japanese stocks including Toshiba Corp., according to exchange filings.
The fund, better known as TCI, has shorted 13 Japanese stocks, data based on exchange filings compiled by Bloomberg show. Mizuho Financial Group Inc., Japan’s second-biggest bank by revenue, and Sony Corp., the world’s second-biggest consumer- electronics maker, are also among the short positions.
The bets against Japanese stocks by activist fund TCI, which lost a proxy battle with Japanese utility Electric Power Development Co. last year, come as the Nikkei 225 Stock Average completed its worst fiscal year since March 2001, losing 35 percent. TCI’s fund fell 43 percent in 2008, as global hedge funds were battered by client withdrawals and the worst market losses since the 1930s.
Bloomberg – Japan’s attempts to end financial turmoil failed to lure hedge funds back to its swap markets, leaving premiums paid by domestic borrowers near a record, RBS Securities Japan Ltd. said.
Hedge funds, which lost more than $400 billion through withdrawals and market losses since June, pulled out of Japan’s swap markets after the failure of Lehman Brothers Holdings Inc. led to a seizure in global credit, said Tatsuo Ichikawa, a senior strategist at RBS in Tokyo. Japan’s banks were charged record premiums this month to swap London borrowing rates for those set in Tokyo as a slumping economy exacerbated concern about the health of the nation’s companies.
Bloomberg – Ray Dalio’s Bridgewater Associates Inc. overtook JPMorgan Chase & Co. to become the biggest U.S. hedge-fund manager, even as the firm lost assets during the industry’s worst year, according to a survey.
Bridgewater, based in Westport, Connecticut, managed $38.6 billion on Jan. 1, down 11 percent from July, according to Absolute Return magazine. New York-based JPMorgan, which owns Highbridge Capital Management LLC, ranked second at $32.9 billion, a decline of 26 percent.
“The bulk of hedge funds were delivering returns that were highly correlated with the market,” said Sharath Sury, chief executive officer of S4 Capital LLC, a Chicago-based firm that advises clients on investing. “So when the markets fell, so did their assets.”
Investment returns dropped an average of 19 percent last year, the most on record, according to data compiled by Chicago- based Hedge Fund Research Inc. Hedge-fund assets shrank to $1.2 trillion at the end of 2008 from the June peak of $1.9 trillion on the market losses and investor withdrawals, according to Morgan Stanley analyst Huw van Steenis in London.
Assets at U.S. hedge funds that managed at least $1 billion each fell 32.3 percent in the second half to $1.1 trillion, according to Absolute Return, which is published by London-based HedgeFund Intelligence Ltd.
West Palm Beach (HedgeCo.net) – Independent forensic professionals, Chris McConnell and Eric Steinwald are finding themselves in increasing demand as hedge funds and other investors turn to experts for help in recovering from losses caused by fraud, Ponzi schemes, stock market or real estate market losses.
"Any asset, at any time, may bercome subject to fiduciary duty standards, "McConnell said, "Fiduciary duty is not simply a good idea or a best practice; rather, it’s the highest standard known under the law."
McConnell, AIFA of Fiduciary Forensics, has over 25 years of experience in the field and is an acknowledged fiduciary expert in the securities, compensation and valuation fields based upon actual, inside hands-on Wall Street securities industry experience. Steinwald is a principal of Steinwald and Kaufmann, a Brentwood/Los Angeles, California tax and forensics accounting CPA firm, and also has 25 years of experience of serving financial clients. Together, the two bring over 50 years of unmatched expertise to plaintiffs who experience suspicious investment losses of any kind.
"Courts often hold trustees and/or third party investment fiduciaries (banks, brokers, trust companies, investment advisers, hedge funds, and even custodians) may be liable, measured against the expert investment standard regarding personal liability. "McConnell said, "The amount of potential fraud, loss of income, and/or insurance claims looks to increase dramatically as investors face staggering losses. We are ready to help as many people as we can to avoid potential financial catastrophe."
The difference between proving liability and recovering damages and loss is in the actual details, which often provide the edge for success.
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Bloomberg - Atsuko Tsuchiya, the Japanese hedge- fund adviser who left Merrill Lynch & Co. to found her own firm, led Atom Japan Equity Fund to an 18 percent return in 2008, beating rivals who suffered the worst year on record.
Tsuchiya, 36, achieved the gains in the fund’s first full year of trading, withstanding market losses and investor withdrawals that ravaged the $1.5 trillion hedge-fund industry, Bloomberg data shows. The Eurekahedge Hedge Fund Index fell a record 12 percent in 2008.
One of the nation’s few female hedge-fund advisers, Tsuchiya combined so-called event-driven and equity long-short strategies in the Japan-focused, 3 billion yen ($33 million) fund. Bets on companies that launched buyouts or bought affiliates to combat Japan’s first recession in seven years helped Atom dodge a 33 percent slide in assets at Japan-focused hedge funds last year.
Business Report – Hedge funds lost more money last year than any year on record. It may get worse this year, forcing fund managers to overhaul investment strategies, reduce fees and make it easier for clients to withdraw cash.
The $1.2 trillion (R12 trillion) industry might shed as much as $450 billion in assets, or 37 percent, through market losses and client withdrawals this year, Morgan Stanley analyst Huw van Steenis said on Friday.
That was on top of the $600 billion that disappeared last year, and would leave hedge funds with $750 billion, the lowest since 2002. "It’s hard not to be bearish in this environment," said Van Steenis.
Bloomberg - Sparx Group Co., Asia’s biggest hedge-fund manager, will likely miss its asset management target of 5 trillion yen ($57 billion) by March 2011 because of redemptions and losses amid the global market rout.
The firm has cut costs to counter the biggest market losses since the Great Depression, an effort that hasn’t prevented its total assets under management shrinking to 753 billion yen as of Dec. 31 on a preliminary basis, or about a third of the peak of 2 trillion yen in August 2006.
“Realistically, it’s going to be extremely tough” to meet the target, Shuhei Abe, the chief executive officer of the Tokyo- based firm, said in an interview on Jan. 23. “There is still room to cut more costs, while we also have to prepare for other unexpected events going forward.”
Bloomberg – Hedge funds lost more money in 2008 than any year on record. It may get worse in 2009, forcing fund managers to overhaul investment strategies, reduce fees and make it easier for clients to withdraw cash.
The $1.2 trillion industry may shed as much as $450 billion in assets, or 37 percent, through market losses and client withdrawals this year, according to Morgan Stanley analyst Huw van Steenis in London. That’s on top of the $600 billion that disappeared last year and would leave hedge funds with $750 billion, the lowest since 2002.
Asbury Park Press – The end of the George W. Bush era brings some Grateful Dead lyrics to mind: "What a long, strange trip it’s been."
The first Bush term opened following the bursting of the tech bubble, which had been inflated by cocktail-napkin business plans for dot-coms. Stocks plummeted. The economy contracted dramatically in the third quarter of 2000, followed by a full-blown recession in March 2001 and the horror of Sept. 11. Federal Reserve Chairman Alan Greenspan cut interest rates down to practically nothing and, with help from the Bush administration’s tax cuts and unbridled spending by Congress, created easy-money housing and credit bubbles during the Age of Froth.
Falcone, 46, has been dubbed the "Midas of misery" for taking lucrative short positions in the shares of struggling banks including HBOS and Wachovia. He lives in a 27-room townhouse on Manhattan’s Upper East Side bought for $49m. The youngest of nine children, he grew up in Minnesota and was a young ice hockey star dubbed "the phantom" for his ability to elude defenders.
Kenneth Griffin
The Boy Wonder As a Harvard University student Griffin installed a satellite dish on his dorm to help him trade options. His Citadel Investment Group, founded in 1990, has 1,200 staff and was tipped as the next Goldman Sachs, but its two main funds have lost 35% of their value in the market turmoil. Griffin, 40, was a high-profile donor to the presidential campaign of fellow Chicago resident Barack Obama.
James Simons
The Mathematician Born in 1938, Simons was a maths prodigy. He worked as a codebreaker for the US defence department in the 1970s and set up his Renaissance Technologies fund, which has some $20bn under management, in 1988. Known as a "black box" fund, it uses opaque quantitative techniques. Its core Medallion fund rose 49% in the year to September. Simons has a $600m charitable foundation.
John Paulson
The Sub-Prime King Low-profile Paulson made $3.7bn last year betting against sub-prime mortgages. A 52-year-old father of two, he was raised in the New York borough of Queens, gained an MBA from Harvard and has a $41m lakeside retreat in the Hamptons. His firm, Paulson & Co, manages $35bn and its advisers include Alan Greenspan. Reports suggest a bumper year, with the firm’s main funds rising by between 15% and 25%.
