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.
Bloomberg – Edward Filippi, previously with Lehman Brothers Holdings Inc., raised $35 million for a hedge fund investing in energy, metals and agricultural derivatives.
The Ground Zero Strategic Commodities Fund may begin trading in the first quarter of next year, according to Filippi, who spent a year selling commodity investment products for Lehman. The fund wants to hire a portfolio manager and an operations officer.
Reuters – Harvard Management Co, which invests the Ivy League school’s multibillion dollar endowment, hired two investment managers away from two prominent hedge funds, the university said on Wednesday.
Emil Dabora, a senior managing director at Caxton Associates, will join as an equity portfolio manager while Michele Toscani, now at Fortress Investment Group, will join the international fixed income portfolio management team.
HedgeCo.net (West Palm Beach) – Rosemawr Management LLC, two months ago launched the Rosemawr Municipal Partner Fund LP,. The fund has seen returns of 0.82% in May and 0.86% in June, since inception on May 1st 2009.
With former Managing Director at Lehman Brothers, Greg Shlionsky, as portfolio manager, the new fund’s investment approach is fundamentals-driven. The investment team believes it possesses a unique understanding of municipal investments’ fundamentals. The investment strategy is based on thorough analysis of securities’ structure and credit, rather than on short-term momentum or technicals.
The fund limits its capital allocation (before leverage) to any one investment to 15% of the Fund (with exceptions made for short-term very liquid securities). Leverage is only applied to securities that the Investment Team considers liquid.
Rosemawr Management LLC, the Fund Manager, is an SEC-registered Investment Adviser focused exclusively on the U.S. Municipal market. The Fund’s Investment Team is comprised of professionals who draw on decades of senior-level experience overseeing municipal portfolios and major trading desks to manage credit, interest rate and event risk. Average Principal’s tenure in the municipal market is 20 years.
In addition to the fund, Rosemawr oversees value-added municipal strategies for family offices (including those of Forbes 100 and Forbes 400 families), ultra high net-worth individuals, and select institutional clients.
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West Palm Beach (HedgeCo.net) – Bull Path Capital Management recently announced the conversion of one of its long-short hedge funds into a long-short equity mutual fund the ‘Bull Path Long Short Fund’ (BPFCX).
The newly launched mutual fund ranks #1 of 811 funds on total annualized returns in the Lipper Mid-Cap Universe for the 5 years ending March 31, 2009, may be a “perfect consideration as a core investment for many investors.” He believes the long-short category will increasingly capture investors’ attention because of its typically lower risk levels than long-only funds. BPFCX has also received a top Lipper Leader rating of 5 for capital preservation against all equity mutual funds (9,360 funds).
“Investors have been traumatized by the events of the past 18 months, including the sobering performance of many long-only, ‘buy and hold’ strategies, and wondering how and when they can reenter the market,” said Rob Kaimowitz, portfolio manager of the Fund and founder of Bull Path Capital Management. “We believe investors will be attracted to the performance characteristics of long-short funds which aim to capture the market’s upside while mitigating risk in a market sell-off.”
“Until recently, there have been few mutual funds focused on long-short, and we are one of the few tested strategies in the market today,” noted Kaimowitz. “We believe this strategy makes sense for both individual and institutional investors with a medium- to long-term view of the market.”
In addition, Kaimowitz says investors who may have previously considered long-short hedge funds should consider investing in this strategy through a mutual fund structure owing to such benefits as lower minimum investments, lower fees, full transparency and the assets being held in a trust bank.
“There has been increasing pressure on hedge funds to provide lower fees, greater liquidity and increased portfolio transparency,” noted Kaimowitz. “A mutual fund structure addresses these issues quite well.”
The Bull Path Long Short Fund adopts a strategy developed and run by Bull Path Capital Management since 2002. “One of the hallmarks of our strategy is our ability to reinvest our knowledge through our rigorous, concentrated fundamental analysis in establishing both long and short positions,” said Kaimowitz. “This ability serves us well as we seek to provide investors with consistent returns and high levels of alpha.”
The Bull Path Long Short Fund is available in A and C Class shares with a $1,000 minimum investment or a $500 minimum with participation in the automatic investment plan. The I share requires a minimum of $100,000 or a $50,000 minimum with participation in the automatic investment plan.
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Reuters – Fund managers need to stress-test worst-case scenarios more rigorously before investing in hedge funds, industry participants at a hedge fund conference said on Thursday.
Many existing stress tests, used to gauge how funds will perform in extreme market conditions, failed to identify potential problems during the financial crisis, leaving investors exposed to steep losses.
"Many allocators used models that failed to take into consideration certain risk factors, simply because they had never been seen as risks before," Mark Schindler, portfolio manager of alternative assets at Clariden Leu, told Reuters on the sidelines of the GAIM annual industry conference.
West Palm Beach (HedgeCo.net) – British Virgin Islands based hedge fund manager Tranen Capital took the lead in the Fixed Income – Asset-Backed Lending category for March 2009 with a return of 2.49%.
In addition to the March performance, the fund, ‘Tranen Capital Alternative Investment Fund Ltd.’ posted a YTD (through April) change in NAV of 11.5%.
“Investors are keenly aware of the dismal and unstable returns from the major financial markets. They are demanding alternatives and absolute returns. The Barclay ranking certainly highlights the strategy’s excellent returns but more importantly, it demonstrates that the funds’ performance is non-correlated to financial markets. The Fund’s NAV has increased 27% since July 2008, which has been independently determined by our actuaries, Data Life, and confirmed by our Administrator Commonwealth Fund Services. Additionally, we have also recently delivered our first independent audit to investors," says Kenneth Landgaard, Portfolio Manager.
Tranen Capital’s strategy is to trade life insurance policies in the Life Markets Space, more commonly referred to as the Life Settlements Market. The Life Markets Space enables seniors to sell their life insurance contracts for more than the cash surrender value than they would otherwise receive from the Insurance Company. The credit crisis has helped create more supply as Seniors (65 or older) are looking for other ways to generate cash. In fact, the life settlements market is expected to grow to over $160 billion over the next several years, according to a Sanford Bernstein report.
Arthur Bowen, Director and in-house counsel explained, “The growth in the life settlement market confirms the validity of this asset class and we continue to see great interest from institutional investors. These sophisticated investors understand the strategy and they appreciate that Tranen has gone to great lengths to provide an institutional quality product with a great level of transparency.”
Tranen Capital offers qualified offshore investors access to the Tranen Capital Alternative Investment Fund Ltd. with a 1% acquisition fee and a 20% incentive fee. The minimum investment is $100k.
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24/7 Wall St. – According to a civil suit filed today by the Securities Exchange Commission in the Southern District Court of New York, John-Paul Rorech, a bond salesman at Deutsche Bank Securities, and Reanto Negrin, a former portfolio manager at hedge fund investment advisor Millennium Partners L.P., were charged with insider trading in credit default swaps of VNU N.V. VNU, now Nielsen Company, is a Dutch media conglomerate that owns Nielsen Media and other media businesses.
According to Scott W. Friestad, Deputy Director of the SEC’s Division of Enforcement, “This is the first insider trading enforcement action involving credit default swaps.”
West Palm Beach (HedgeCo.net) – Hedge fund Tremblant Capital reported that it now owns 1.1 million shares of Chipotle Mexican Grill, bringing its total shares in the Denver-based fast food restaurant to 5.7%.
"Chipotle shares have fallen recently, and the hedge fund obviously saw opportunity there," news resource SeekingAlpha says, "keep in mind that this hedge fund typically doesn’t take larger than 5% stakes in companies (which requires a 13G filing), so it definitely likes this name, as this is the first major filing from them in quite some time."
With $4.1 billion in assets under management, hedge fund Tremblant is based in New York and run by Bret Barakett, who is a former portfolio manager at Moore Capital Management.
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Dow Jones Deutschland – While hedge funds suffer from redemptions and closures amid volatile markets, some firms are taking advantage of falling valuations and market dislocations to launch new funds.
Mark Fuchs, chief executive of Singapore-based Fuchs Capital Partners, said in an interview with Dow Jones Newswires that he is launching a hedge fund focused on trading blue-chip, large-capitalized Southeast Asian stocks in the region in two months.
Fuchs, the former head of Credit Suisse Group’s (CS) Southeast Asia equities division, has teamed up with two other Southeast Asian veterans: Winston Loke, who was previously Credit Suisse’s Chief Operating Officer for Asia-Pacific ex-Japan, Australia equities and Mark Maroongroge, most recently a portfolio manager with London-based hedge fund HBK Capital Management. He declined to elaborate on the size of the fund, however, other than to say it will start off "modest" in size but would eventually be "significant."
Reuters – NewSmith Capital Partners, one of the hedge fund firms to appear before last month’s Treasury Select Committee into the banking crisis, told Reuters on Thursday partner Jeremy Silewicz had left the firm.
Silewicz, who joined NewSmith in March 2007 as a portfolio manager on its European fund before moving to a role in marketing, left at the end of last year, a spokesman said.
He added that Andrew Irving, a member of NewSmith’s operations team, had also left the firm, but declined to comment on the reasons for their departures.
Reuters UK – JPMorgan Europe Dynamic fund favours defensive drugmakers and non-life insurers and has no plans to move into cyclicals until company newsflow, employment and money supply improve.
John Baker, portfolio manager of the 260 million euro (233.52 million pounds) fund, told Reuters his portfolio was invested in stocks with good newsflow and was mainly defensively positioned.
Baker favours GlaxoSmithKline which has taken a lot of cost out of its business and whose operating margins are improving, surprising the analyst community positively, he said.
The Washington Times – Year after year, the hedge fund industry dazzled Wall Street by delivering "absolute returns" – outsized profits whether markets rose or fell. Using sophisticated trading models, the pools of managed capital made wealthy people wealthier with eyepopping returns that carried seemingly moderate risk.
Not these days. Blindsided by a colossal market collapse and the widening Bernard Madoff scandal, hedge funds suffered their worst showing on record last year. And they’re bracing for more pain in 2009. The industry’s fall proves that even the quantitative brilliance and market wizardry of elite hedge funds are no magic bullet for investors during brutal times.
"Hedge fund managers have always said, ‘Look, we know how to make money even in difficult times,’ and that turns out to be a fallacy," said Timothy Brog, portfolio manager of New York-based hedge fund Locksmith Capital Management.
