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West Palm Beach (HedgeCo.net) - In the monthly report from Dow Jones Indexes on the performance of Hedge Fund Strategy Benchmarks, only one of four strategies, merger arbitrage, posted net-of-fee gains in November.
After hedge funds experienced two of the most volatile months in market history, merger arbitrage emerged with a small positive net-of-fee gain in November, returning 0.15%. The small gain held YTD performance for merger arbitrage at approximately the same level as last month, down about -9%.
Convertible arbitrage was hit the hardest with a loss of -4.80%, followed by event driven and distressed securities, which were down -6.35% and -7.47%, respectively, for November.
The equity market neutral and equity long/short benchmarks were suspended at the start of the month as a result of the temporary risk mitigation measures taken by the investment manager of the managed account platform that supports the Dow Jones Hedge Fund Strategy Benchmarks. It has not been determined when calculation of these benchmarks will resume.
On a float-adjusted basis, the Dow Jones Wilshire 5000, the only broad measure of the domestic equity market, lost -8% (-8.15% on a full-cap basis) in November decreasing its YTD return to -38.30% (-38.37% on a full-cap basis).
The fixed income asset class, as measured by the Dow Jones Corporate Bond Index was up 4.88% this month and its cumulative return is down -5.99% for the year. Finally, the Dow Jones Wilshire Global Index, the broadest measure of global equity market, lost -6.73% for the month decreasing its YTD return to -44.68% for 2008.
November 2008 figures for the Dow Jones Hedge Fund Strategy Benchmarks are based on daily estimates net of fees.
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Bloomberg – Investors withdrew a record $43 billion from hedge funds in September as they fled distressed-securities and stock funds because of poor performance, TrimTabs Investment Research said today.
The estimated outflows were the most since TrimTabs started tracking the industry in 2000, Chief Executive Officer Charles Biderman said in an interview. Investors pulled $14.4 billion from funds focused on troubled securities and $8.4 billion from equity long-short funds, which bet on rising and falling stocks, the Sausalito, California-based company said in a statement.
“We’re told from some of our clients that most of the hedge funds have sold enough equities to cover the redemptions,” Biderman said. “There shouldn’t be more forced selling.”
Telegraph.co.uk – In the biggest-ever round of redemptions, funds around the world are braced to give back between 10pc and 50pc of their assets under management.
Hedge funds were faced with a slew of redemption notices at the start of the quarter, but investors were prepared not to withdraw their money if returns improved, according to one prime broker. He said many would now be forced to close.
None of the strategies used by hedge funds produced a positive return in September. According to the Dow Jones Hedge Fund Indexes , equity market-neutral funds, which often try to manage risk by shorting a stock in one sector and going long on one if its competitors, have fallen 1.85pc this month, while convertible arbitrage securities have dropped 7.96pc and distressed securities by 7.34pc. That compares with a 9pc decline by the FTSE 100. Hedge fund of funds, which are designed to spread risk, are expected to face the biggest redemptions.
Editor & Publisher – Polar Securities, a Toronto-based hedge fund, disclosed Tuesday that it has purchased a big stake in troubled Sun-Times Media Group (STMG).
In two filings with the U.S. Securities and Exchange Commission (SEC), Polar said it has made big purchases of the stock in recent days, and now owns 8,718,163 shares of STMG common stock, or approximately 13.3% of shares outstanding.
Among the Polar entities making the buys is South Pole Capital, which Polar’s Web site describes as a "Canadian distressed securities fund."
STMG, publisher of the Chicago Sun-Times and dozens of other Chicago-area publications, has said it is exploring strategic alternatives including the sale of all or some of the company.
STMG shares were de-listed from the New York Stock Exchange earlier this month and now trade over-the-counter on the Pink Sheet. Shares of the stock (OTC: SUTM.PK) were trading in the early afternoon at 42 cents, down 1 cent, or 2.33%, from its opening.
Polar is headed by Canadian John Paul Sabourin.
STMG Director of Investor Relations confirmed the size of the stake, but declined further comment.
