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.
Telegraph.co.uk – The hedge fund, which has $11bn (£6.7bn) of assets under management, will be the cornerstone investor in the new company called Lothian which will buy oil assets around the world and manage them. The plan is for Lothian to have a market value of as much as $500m.
GLG, which is listed on the New York Stock Exchange, is helping to put together a management team for Lothian that includes Tom Hickey, the former finance director of Tullow Oil, John Kennedy, chairman of Wellstream Holdings – the Newcastle-based manufacturer of pipes for the oil and gas industry – and Andrew Knott, a former analyst at Merrill Lynch who joined GLG last year. It is thought they are looking for one more high-profile director before the flotation.
Your Industry News – Falkland Oil and Gas Ltd (FOGL.L: Quote) said it conditionally raised about 7.6 million pounds ($11.8 million) to help fund capital expenditure on long-lead drilling equipment, and general and administrative costs through 2010 into 2011.
The AIM-listed oil and gas explorer said it issued about 10.4 million new shares to certain directors and institutional investors at 73 pence apiece, representing a 19 percent discount to the shares’ closing price of 90 cents on Tuesday.
Falkland Oil said it placed 1 million of the placing shares with one of its founding shareholders, RAB Special Situations (Master) Fund Ltd, managed by hedge fund manager RAB Capital Plc (RAB.L: Quote).
Investors Chronicle – 2008 witnessed a boom and bust of monumental proportions in the junior mining and oil and gas sectors. From being among the London market’s strongest performers, driven by record commodity prices, resources stocks plummeted out of favour even more rapidly to languish among the market’s laggards.
Although strong recovery is unlikely in the short term, the longer term outlook for resources remains bullish. The world will run on oil for many years to come, and analysts estimate a $70-80/barrel oil price is needed to drive sufficient exploration and supply to satisfy likely demand when economies recover. Growth-driven Asian demand for all commodities, though slowing, has in all probability built up an unstoppable momentum.
Supply-side constraints plus the possibility of a weakening dollar and further falls in equities will create upward price pressure on oil, gold and other commodities. Commodities may start to recover during the year, depending on the severity and duration of the recession. Even if they don’t, continued low prices will deter exploration and development, and cause supply shortages, which will simply store upward price momentum to be released when economies eventually do recover. What’s more, the depth of the current downturn suggests that post-recession demand could rapidly create supply pressures, an over-correction and renewed price shocks.
