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.
Seeking Alpha – If at first you don’t succeed, try, try again. This cliché is the root of folly on Wall Street and in the hedge fund industry in general. Perfect example: The Ospraie Fund’s Dwight Anderson is set to start two new hedge funds in July. Okay, new hedge funds, what’s the big deal? Well, the problem here is that Dwight Anderson lost 39% in his Ospraie Fund in 2008 and had to liquidate the fund. At its peak, Ospraie managed $3.8 billion in commodities. But if at first you don’t succeed, try, try again. And, that’s exactly what Anderson is set to do.
Anderson will open two new hedge funds in July of 2009, the first of which will focus on stocks of commodity and basic materials companies (The Ospraie Equity Fund). He will also open a fund focused on commodities and derivatives (The Ospraie Commodity Fund). Anderson said that he is starting these funds because he sees significant opportunities in this market, as significant as he has ever seen in his 15 years of investing. These funds will have reduced fees where investors will pay half as much as the typical hedge fund. His new funds will charge a 1% management fee and a 10% performance fee.
Bloomberg – Dwight Anderson, the commodities investor who liquidated his main Ospraie Fund last year after losing 39 percent, is planning a comeback with two new hedge funds set to open July 1.
The Ospraie Equity Fund will buy and sell stocks of commodity and basic-materials companies in industries such as chemicals, mining, paper and natural resources, Anderson said in a May 12 letter to investors. The Ospraie Commodity Fund will invest in commodities and related derivatives, according to the letter, a copy of which was obtained by Bloomberg News.
West Palm Beach (HedgeCo.net) – Preparations are underway for the creation of a new European hedge fund association, hedgemeetings.com, which has the objective to communicate the public utility of this industry for wealth creation and risk management. A first meeting for founding participants will take place this Friday, November 14, in Paris.
Rene Friedrich, 45, who has analyzed and selected hedge funds since 1996, is launching the initiative, as he sees the industry’s advantages undervalued, "There a many opinions about the risks of hedge funds and about the wealth created for their managers, but one sees rarely a balanced view of the general public utility of better asset management in general and of hedge fund work in particular. The realness of the benefits only seems to become apparent when the opposite occurs and wealth is lost in financial markets. The fact is that effective asset management contributes wealth to the economy."
"The initiative aims to give the hedge fund industry a more just image: While individual hedge funds can have more risks than other investment products and investors may lose all or part of their invested capital, the industry overall has, so far this year, avoided the degree of wealth loss of equity investments in general. And a notable number of funds even has avoided losses altogether, no small achievement. It can be argued that future regulations, which could facilitate a greater diversification into hedge funds and funds of hedge funds, may ultimately help to reduce the sum of wealth destructions in cyclical downturns."
"Asset management is not a zero sum game, financial investments are the source of capital in projects, and any wealth created, or not lost, is added, or maintained, in the economy. These are basic principles, and for all the criticisms of financial markets, some just and some not, the objective must be to use what is helping," Friedrich concluded.
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Reuters – The Turtle Fund, an $80 million Swiss-based hedge fund trading volatility, has stopped trading and will let investors exit after sharp losses, following a disagreement between the fund’s managers. In a note to investors, seen by Reuters, the fund said it lost 8.7 percent in September and 14 percent in October — its worst-ever monthly performance.
That took year-to-date returns, which had been in positive territory, to around a 13 percent loss.
On October 10 alone, there was a 14-percent loss, which the note said was caused by a "disagreement within the team concerning the hedging strategy."
"Our third partner … by virtue of his majority stake in the company revoked our trading authority and liquidated all existing positions at the … worst possible moment, arguing to protect his clients from further losses," it said.
Reuters – Man Group plans to be a consolidator in the hedge fund industry in the long-term, said Chief Executive Peter Clarke, who thinks the industry could see redemptions of between a third and a quarter at the year-end. "Consolidation is undoubtedly going to happen … Longer-term we’d expect to be a consolidator in these markets," he told Reuters in an interview on Thursday.
However, he said the firm was "doing nothing in these markets, there’s too much uncertainty."
Clarke also said redemptions in the $1.7 trillion hedge fund industry of between a quarter and a third at the end of the year would be "the right sort of figure."
"The year-end is seeing significant levels of redemptions," he said.
West Palm Beach (HedgeCo.net) – According to a recent survey conducted by the Association of Investment Companies (AIC), a poll of 1,300 sophisticated private investors showed that 15% believed that hedge funds offer the potential for strong returns in the current environment. However they are also concerned about their perceived lack of transparency (17%) and riskiness (17%).
Investors are also cautious about hedge funds because they believe that they are not regulated (14%), and are concerned about the reputation for high charges (12%). Some investors also find them confusing (11%) and believe they are only accessible to the wealthy (5%).
Although some sophisticated private investors are wary of hedge funds, 6% of those surveyed are already investing in hedge funds, 5% have invested in the past and 3% are planning to invest in the future. Interestingly, nearly half (46%) of investors believe they may possibly invest in hedge funds in the future whilst only 29% of investors surveyed would never invest in hedge funds.
"Many of these investors’ concerns over hedge funds are addressed through the listed hedge fund and fund of hedge funds sectors," Annabel Brodie-Smith, Communications Director of the Association of Investment Companies (AIC) said, "The listed structure of closed ended hedge funds and fund of funds means investors have access to a much higher level of transparency. Shares in listed funds are available on the stock market just like any other share so they are available to those of modest means as well as the super wealthy."
"This is a real growth area of the industry with the hedge fund sector making up 65% of the assets raised this year in the investment company sector. However, it is still a young sector, so long-term performance records are not available for the majority. Investors need to do their homework to make sure they select the right fund for them in this diverse sector and if they are unsure they should take independent financial advice," she concluded.
Ian Plenderleith, Chairman of BH Macro, said, "Hedge funds who can maintain the necessary standards of investment expertise and risk management have demonstrated that they can deliver superior returns on a consistent basis. Listed hedge fund vehicles give a wider range of investors access to alternative investment strategies through an avenue they are familiar with. They get the benefit of the regulatory safeguards and disclosure obligations, and the secondary market liquidity that go with stock exchange listing."
Robin Bowie, Chairman of Dexion Capital, said: "When dislocation in financial markets reaches the present level, it provides an ideal environment for hedge funds, which are well-placed to make opportunistic investments where they recognise value and can hedge out the market risk. Some of those positions will be illiquid, which will be unsuitable for most managers of open-ended funds. Closed-ended funds employ ‘permanent capital’, raised on the stock exchange, which allow managers to blend liquid and illiquid assets and take advantage of the current mismatch in the markets. In essence, closed-ended funds bring liquidity to illiquid situations."
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New York Daily News – A hedge-fund hottie who sued Vibe and Diddy after the mag published a topless picture of her at the music mogul’s Hamptons blowout has had her case tossed out.
Maria Dominguez, a money manager for a hedge fund, filed the $3 million invasion-of-privacy suit when a shot of her with two other bare-breasted sirens ran in the November 2006 issue of Vibe next to the caption, "Mermaids gone wild."
"When that picture came out, she wasn’t too happy about it, that’s for sure," said her lawyer, Albert Maimon. He would not identify the hedge fund for which Dominguez works.
Justice Doris Ling-Cohan threw out the suit, saying Dominguez couldn’t expect privacy once she doffed her top at Sean (Diddy) Combs’ star-studded 2003 East Hampton White Party.
"Sean Combs and his renowned annual White Party are subjects of tremendous public interest, attracting the steady attention of the public and many news organizations," Ling-Cohan wrote.
West Palm Beach (HedgeCo.net) – Avalon Capital Holdings Corporation, and its wholly owned subsidiary, Traders Development LLC, announced that it has initiated alpha testing of its proprietary ECN system.
The Avalon ECN is a liquidity aggregator, which takes the best prices from an unlimited number of price providers, and allows traders to execute off the best prices in the market. The system will be ideal for traders seeking to execute large orders of a billion or more across many banks and hedge funds simultaneously.
"The overall goal of the Avalon ECN is to significantly improve the institutional liquidity in the Forex Market by applying the latest software technologies in the Foreign Exchange Industry." Dr. Vladimir Karpenkov, Chairman of Avalon Capital Holdings Corporation said. "Additionally, the Avalon ECN is designed to reduce the cost for Retail Forex brokerages that are seeking interbank liquidity."
"The Forex Market is about reducing overhead, managing risk and acquiring new trading clients. With Avalon technology, companies ought to increase their profitability while reducing risk." Alex De Khtyar, President of Avalon Capital Holdings Corporations added.
West Palm Beach (HedgeCo.Net) – The global Equities business of UBS announced the launch of Direct Market Access (DMA) for international clients to trade securities on the Bovespa stock exchange in Brazil. UBS is among the first broker-dealers to offer non-Brazilian clients direct electronic equities trading and execution in this major market.
Recent market regulation enacted in Brazil allows for non-domestic investors access to direct electronic trading on Bovespa (Bolsa de Valores de Sao Paulo), a Sao Paulo-based stock exchange. Bovespa is the second-largest stock exchange in the Americas, and the third largest in the world.
"We have a longstanding commitment to providing clients with seamless, direct, electronic access to the major markets all over the world." Mario Campos, Head of Latin America Sales & Trading, said, "We are pleased to be one of the first brokers to offer global clients with DMA in Brazil."
"International DMA is one milestone in providing advanced electronic trading in this market – other tools and strategies will follow very soon," said Will Sterling, Head of Institutional Electronic Trading. "Making DMA available for clients trading into Brazil is particularly exciting, given our global buy-side clients’ increasing focus on this region."
With offices in 50 countries, UBS is present in all major financial centers worldwide. Its shares are listed on the Swiss Stock Exchange (SWX), the New York Stock Exchange (NYSE) and the Tokyo Stock Exchange (TSE).
West Palm Beach (HedgeCo.net)- Hedge funds Sequoia Capital, Sherpalo Ventures, Kleiner Perkins Caufield & Byers, and DAG Ventures were led by Crosslink Capital in investing $15 million in entertainment network MEVIO.
Adam Curry, co-founder and president of the company said, "MEVIO is building a full-scale entertainment network that incorporates all of the positive elements of traditional media along with the benefits of scale and insight offered by the Internet."
"The first wave of online video was a total failure for brand advertisers," said Ron Bloom, co-founder and chief executive officer, MEVIO. "In order to attract the billions of dollars of brand advertising spending that is still dedicated to television programming, online companies will have to provide audience and frequency at a scale to compete with traditional broadcast, and build it around brand-safe content that is relevant and entertaining. MEVIO is building that network."
In May of 2008, the company attracted over 9 million unique monthly visitors, up over 800 percent in the last twelve months. For the second quarter of 2008, MEVIO estimates page-views to exceed 140 million, up over 1,800 percent quarter over quarter. With the launch of its vertical entertainment networks, the company is exploring syndication opportunities that management believes will dramatically enhance MEVIO’s already impressive reach.
