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.
Globe and Mail – Math whiz Ravi Sood has ridden the highs and lows of the wild world of hedge funds.
The president of Lawrence Asset Management Inc. made a name for himself running the firm’s flagship hedge fund with stellar returns such as his 75-per-cent gain in 2007.
But the stock market crash has dealt a blow to Lawrence Partners Fund, which suspended redemptions this week after plunging 65 per cent for the first 10 months of this year.
The investment firm “believes it is in the best interests of all shareholders to suspend redemptions for 60 days,” the 32-year-old manager told investors in letter on Monday.
New York (HedgeCo.Net) – In an ironic turning of the tables, divorce lawyer Raoul Felder has lost $200,000 at the hands of a hedge fund, or so he says.
According to the New York Times, the “Duke of Divorce,” is accusing AllianceBernstein of placing his money into a risky hedge fund in order to collect higher fees and commissions for the firm.
According to Felder, he had given the investment firm simple instructions as to what to do with his $750,000. Instead, the firm placed the money into the riskier fund out of sheer “greed and self-interest.”
“It’s like the owner of a restaurant who tells his waiters to push the chopped liver,” Felder said.
The New York City-based AllianceBernstein manages over $590 billion of capital and is a subsidiary of French insurance company AXA.
Julie Scuderi Senior Editor for HedgeCo.Net Email: julie@hedgeco.net
Reuters - An unprecedented cash crunch is choking the ability of banks to lend and creating an opportunity for hedge funds to launch, or ramp up corporate lending facilities.
Companies that have relied on bank borrowing to grow, or even maintain their business, are turning to hedge funds in a move that some say may signal a broad shift of lending from banks to asset managers.
"I have a very strong belief that the new investment banks will be the absolute return hedge funds and the managers of private equity," said Thomas Priore, Chief Executive at ICP Capital, an investment firm that manages $13 billion in fixed income assets, in New York.
Norwalk Advocate – Some hedge funds are reducing their management and incentive fees to keep investors for longer periods during turbulent times on Wall Street.
Typically, hedge fund managers require investors to lock their money into a hedge fund for a year while charging a 2 percent management fee and keeping 20 percent of hedge-fund profits as an incentive fee – if it reaches a pre-determined point.
Camels Capital LLC, a Greenwich-based hedge fund, and Ore Hill, a New York-based fund, among others, have restructured these terms to keep investors.
"Ourselves, Ore Hill and a few other funds have taken a step to do that in this period of liquidity to lock in investors," said Richard Brendan, chief executive officer for Camels Capital. "We’ve been able to lock in our investors for a period of time to participate in opportunities with them."
Brennan would not comment on the specifics of the agreement between the hedge fund and his investors.
Scott Baker, a principal with Greenwich-based hedge fund investment firm Cookpine Capital, said many hedge funds are coming up with innovative ways to secure investor capital for longer periods.
Daily Telegraph – Cerberus, the American hedge fund, has sold its stake in Merchant Equity Partners, the owner of the MFI furniture chain, to Hilco and Goldman Sachs.
The secretive investment firm was one of the original backers of MEP but is understood to have sold its stake in the furniture chain’s owner several months ago. It is believed that its stake was split between Goldman and Hilco, the turnaround specialist, both of which were existing MEP backers.
MEP was launched by Henry Jackson, a former investment banker, and has made two acquisitions in the furniture retail sector.
New York Post – Hedge fund executive Hunter Biden has had anything but a quiet introduction to his career in finance.
The 38-year-old son of Democratic vice presidential candidate Sen. Joe Biden is caught up in several lawsuits regarding the acquisition and operation of Paradigm Companies, an investment firm that operates a fund of funds – a hedge fund that invests in other hedge funds.
Biden also appears to be feuding with partner James Park, the son-in-law of the Rev. Sun Myoung Moon, Court papers show.
Biden, also a Washington lobbyist, took control of Paradigm in August 2006 and was, for a brief period, its president – getting paid $1.2 million a year despite no experience in the sector, according to charges in one of the suits.
Months later, Anthony Lotito, a consultant, sued Biden, James Biden, his uncle, and Paradigm for allegedly cheating Lotito out of fees related to the purchase. Biden has denied the charges and the suit is awaiting trial.
Hedge fund executive Hunter Biden has had anything but a quiet introduction to his career in finance.
The 38-year-old son of Democratic vice presidential candidate Sen. Joe Biden is caught up in several lawsuits regarding the acquisition and operation of Paradigm Companies, an investment firm that operates a fund of funds – a hedge fund that invests in other hedge funds.
Biden also appears to be feuding with partner James Park, the son-in-law of the Rev. Sun Myoung Moon, Court papers show.
Biden, also a Washington lobbyist, took control of Paradigm in August 2006 and was, for a brief period, its president – getting paid $1.2 million a year despite no experience in the sector, according to charges in one of the suits.
Months later, Anthony Lotito, a consultant, sued Biden, James Biden, his uncle, and Paradigm for allegedly cheating Lotito out of fees related to the purchase. Biden has denied the charges and the suit is awaiting trial.
West Palm Beach (HedgeCo.net) - California based Martin Asset Management (MAM) is replicating hedge-fund-like returns and risk factors through its ETF strategies without the heavy fees, lockups and non-transparent holdings, the boutique alternative investment firm said.
"Our approach allows investors to obtain the very same benefits as they would with a hedge fund without the limitations usually associated with hedge funds", says Francisco Martin, Senior Managing Director and Founder of Martin Asset Management.
"We use a similar investment philosophy as you would with ‘Global Tactical Asset Allocation’." Martin said, "It is an investment strategy that attempts to exploit short-term market inefficiencies by taking positions in various markets with a view to profiting from relative movements across those markets."
The approach focuses on general movements in the markets rather than on performance of individual securities within them Positions are generally taken with a relatively short-term time horizon (3 – 6 months) – hence the term Tactical Asset Allocation – and in markets across the globe – hence the term Global.
"Our philosophy is simple; we don’t charge any management fees but participate with a 10% performance fee and a High Water Mark. The transparency of a separate managed account and the elimination of all hedge fund imposed barriers make our approach much more attractive to the investor," says Martin.
MAM is expected to launch its new product by August of 2008.
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Washington Post – John W. Henry & Co., the investment firm run by the Boston Red Sox baseball team’s owner, is among hedge funds that in July suffered their worst drops in almost 18 months as oil and other commodities retreated from record prices.
John W. Henry lost 17 percent on its JWH GlobalAnalytics fund, the firm said on its Web site. Altis Partners’ $1 billion global futures program fell 18 percent, paring its gain for the year to 10 percent. London-based Man Group’s AHL Diversified Futures, the computer program that trades about $25 billion of investments, dropped 5.5 percent through July 28, or a loss of about $1.37 billion in the month.
Oil, natural gas, nickel and corn prices all tumbled in July, making it the worst month for the Reuters/Jefferies CRB Commodity Index in 28 years. The drops pushed commodities trading advisers to their biggest declines since March 2007, according to data compiled by fund tracker Barclay Hedge.
Bloomberg – John W. Henry & Co., the investment firm run by the Boston Red Sox baseball team’s owner, is among hedge funds that suffered their worst drops in almost 18 months in July as oil and other commodities retreated from records.
John W. Henry lost 17 percent on its JWH GlobalAnalytics fund, the firm said on its Web site. Altis Partners Ltd.’s $1 billion global futures program fell 18 percent, paring its gain for the year to 10 percent. London-based Man Group Plc’sAHL Diversified Futures Ltd., the computer program that trades about $25 billion of investments, dropped 5.5 percent through July 28, or a loss of about $1.37 billion in the month.
Oil, natural gas, nickel and corn prices all tumbled in July, making it the worst month for the Reuters/Jefferies CRB Commodity Index in 28 years. The drops pushed commodities trading advisers, which manage about $234 billion, to post their biggest declines since March 2007, according to data compiled by BarclayHedge, a Fairfield, Iowa-based fund-tracker. So-called CTA funds rose 8.3 percent in the first half, making them the best performing strategy in an industry that had its worst start to a year in nearly two decades.
Law.com – Smith, Gambrell & Russell and one of its former attorneys are caught up in the expensive brouhaha surrounding International Management Associates, a now-defunct investment firm which bilked pro football players, a former Scientific-Atlanta CEO and other well-heeled investors of some $150 million.
IMA’s bankruptcy trustee, William F. Perkins, told a federal court last month that the law firm and a former counsel from its Washington, D.C., office, C. Gladwyn Goins, represented IMA so poorly that they not only allowed the company’s founder, Kirk S. Wright, to embezzle from investors long after his wrongdoing could have been discovered but also "helped Wright to continue his criminal misconduct."
Those alleged legal missteps cost the company "tens of millions" of dollars, according to the complaint, which demands that the firm and its former counsel pay more than $80 million in damages, plus attorney fees and litigation costs.
New York Times Blogs – Jack Nash, a former chairman of Oppenheimer & Company who helped pioneer the modern hedge fund business, died July 30 in Manhattan. He was 79.
He died at Mount Sinai Medical Center after a long illness, according to his family.
Mr. Nash, who fled Nazi Germany with his family at the age of 12, joined Oppenheimer as a trainee in 1951 when it was still a small Wall Street investment firm. He left briefly to work for his father’s textile business, but returned to the firm in 1954.
Mr. Nash became the company’s president in 1974, and its chairman in 1979.
At Oppenheimer Mr. Nash met Leon Levy, his longtime business partner. They specialized in leveraged buyouts and transformed the company into one of the world’s largest mutual fund businesses.
BOSTON (Reuters) – Keeley Asset Management, which made its name by selecting small and forgotten companies, said on Wednesday that it took an 18 percent stake in beleaguered money manager Pzena Investment Management.
Keeley now owns 1.09 million Pzena shares, making it one of the company’s biggest owners, according to a regulatory filing.
"They have been through some pretty tough times in the last 12 months, but we still think they are a pretty good shop," said Mark Keeley, who oversees marketing for Chicago-based Keeley, a 26-year-old, family-owned investment firm.
