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 – A long-running legal dispute between Fairfax Financial Holdings Ltd. and a group of hedge funds has produced a sideshow involving the chief executive officer of one of Canada’s biggest mutual fund companies.
Fairfax, a Toronto-based insurance conglomerate, wants Bill Holland, the chief of CI Financial Corp., to testify in connection with its bitter lawsuit, which alleges hedge funds conspired to drive down its stock price.
Neither CI nor Mr. Holland is named in that lawsuit, and no wrongdoing is suggested. And while CI says it will co-operate, Mr. Holland yesterday called the situation absurd.
Lexington Herald-Leader – When does "absolute" imply something that in reality is far less than certain?
When it comes to "absolute return funds." That’s the label mutual fund companies have put on hedge fund-style products that they’ve been rolling out the past three years. The funds seek to smooth out the bumpy, downward ride the markets have taken lately.
But you can still lose money, even if you manage to fare better than most investors in a downturn. Absolute return funds lost an average 11.7 percent over the 12-month period ended Wednesday, according to Morningstar Inc.
Forbes – When does "absolute" imply something that in reality is far less than certain?
When it comes to absolute return funds. That’s the label mutual fund companies have put on hedge fund-style products that they’ve been rolling out with increasing frequency the past three years. The funds seek to smooth out the bumpy, downward ride the markets have taken lately.
Seattle Times – With their investment records in tatters, some mutual-fund companies are pinning their hopes on products with an old-fashioned ambition: delivering steady returns.
Many of these funds are doing just that, while others are falling short of the mark.
Putnam Investments recently introduced four "absolute return" funds that use such strategies as buying foreign securities or bonds to smooth out their performance and aim to earn investors 1 to 7 percent a year above inflation.
Post Chronicle – The SEC’s inability to uncover the scandal until Madoff’s sons went to authorities last week comes at a particularly bad time for the SEC and its Chairman, Christopher Cox. They have already been accused by some lawmakers and market experts of being asleep at the wheel while the credit crisis exploded on Wall Street.
The agency’s future existence as a separate agency is already under threat as Washington looks at overhauling the regulation of the financial services industry.
"This will be profoundly embarrassing for the SEC," said Columbia University law school professor John Coffee, who has been critical of the agency for failing to properly regulate the failed investments banks. "Congress will predictably give them little mercy."
International Herald Tribune- Samuel Israel 3rd bilked his investors out of $250 million, but they are hoping to recoup some of their money from one of Wall Street’s deepest pockets: Goldman Sachs.
Bayou’s creditors were taking aim at Goldman even before Israel, the former manager of the Bayou Group hedge fund firm, surrendered to the authorities on July 2. His faked suicide on a Hudson River bridge 40 miles north of Manhattan and subsequent disappearance on the day he was to start a prison term had set off an international manhunt.
Bayou’s unsecured creditors committee sued Goldman in late May, claiming the investment bank had failed to detect Israel’s fraud, one of the biggest ever in the hedge fund industry, and to investigate signs that something was amiss at Bayou.
For six years, Goldman acted as the so-called prime broker for Bayou, clearing trades, taking custody of securities and providing reports on the fund firm’s investments. The claim seeks $20 million.
Business24-7- When oil prices were as low as $10-20 a barrel two decades ago, the UAE seriously considered borrowing from the local market to finance its swelling budget deficit. But the plan was shelved in favour of painful spending cuts.
Such reductions, however, could not be maintained for a long time because of the rising domestic development needs and a seven per cent growth in the population. As a result, the deficit in the country sharply widened.
Yet authorities still never considered borrowing or introducing income taxes for two reasons: the country’s petrodollar income was swelling and a gigantic overseas investment empire was taking shape.
Financial Times- The 10-day-long search for missing hedge fund manager Samuel Israel is entering a critical phase with law enforcement agencies sparing no expense to ensure they "get the body back" before the trail goes cold.
Authorities are now working on the assumption that the body in question will eventually be found alive and in all likelihood in a country with no extradition treaty with the US, meaning Mr Israel could be anywhere from Bahrain to Burundi, Senegal to Syria.
The hunt for Mr Israel began last week when the 48-year-old failed to report to a prison in Massachusetts to begin a 20-year sentence for defrauding investors in the hedge fund Bayou Management out of more than $400m.
HONG KONG (Reuters)- As risk appetite for equities and property wanes, investors are willing to endure negative real returns for bonds from China, Singapore and Hong Kong because their economies are seen better equipped to tackle inflation.
Conventionally, bond yields have to be sufficient to compensate investors for their holdings as inflation erodes value over time, but those seeking safe haven destinations are choosing to brave lower returns in some markets.
Bond investors are proving less patient with India, Thailand and the Philippines, markets where yields will continue to rise on worries about fiscal imbalances and authorities’ limited effectiveness in overcoming inflation.
