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.
AFP – The European Central Bank has warned that European Union plans to regulate hedge funds and private equity groups could tilt the playing field against EU companies.
The ECB’s position could influence the rewriting of proposed rules drafted by the European Commission.
“The ECB supports the intention to provide a harmonised regulatory and supervisory framework for the activities of alternative investment fund managers (AIFMs) in the European Union,” it said in an opinion requested by the Council of the European Union.
Reuters – Hedge funds and private equity could face more than 3 billion euros in costs and investors could see fund choice shrink by up to 40 percent due to proposed new EU rules, a Financial Services Authority report said.
The analysis of the impact of the Alternative Investment Fund Managers (AIFM) directive conducted by Charles River Associates and commissioned by the FSA found that it could load one-off costs of up to 3.2 billion euros on the affected parts of the funds industry.
New York (HedgeCo.net) – Hedge fund manager Thane Ritchie announced that he has been wrongly blocked from meeting with The Chicago Newspaper Guild and developing a coalition offer to buy the Sun-Times Media Group. A Chicago Newspaper Guild representative stated that until today, the union had no idea of Ritchie’s interest, much less its desire to work with the Guild in devising a Private Equity/Union coalition bid.
“The American newspaper is not just another recession driven victim industry like autos or housing,” Ritchie said, “its ink is the lifeblood of our political system and democracy, as our Founding Fathers emphasized by enshrining only this commercial endeavor by name in our Constitution.”
Despite requests to set up such a meeting, Ritchie was told that it was against Federal labor laws for a potential bidder to have a conversation with the Guild, which represents many of those employed at Chicago’s #2 daily and associated sister publications, according to Steve Denari of Third Millennium Group strategic consultants, Ritchie’s point man looking at the investment.
When Ritchie heard of this blockage, he became personally involved and retained labor experts to review it. “This is a travesty — why shouldn’t forward looking private equity sources be able to form a coalition offer with a union, which represents the largest set of stakeholders here? The only bidder reportedly has made it clear that not only do they refuse to negotiate with the Guild, but that they would actually like to withdraw their bid unless the Guild gives in on everything.”
Seeking Alpha - “You don’t want to be average; it’s not worth it, does nothing. In fact, it’s less that the market. The question is, ‘How do you get to be first quartile?’ If you can’t, it doesn’t matter what the optimizer says about asset allocation.” – Dr. Allan Bufferd, CIO of the MIT endowment in Foundation and Endowment Investing.
While Dr. Bufferd was talking about investing in private equity, the same applies to hedge funds as well. (We have two extensive chapters on the topic in my book.) I wanted to chat a bit about hedge funds, and then more specifically hedge fund clones. I have written a bunch of articles on hedge fund indexing and replication in the past, and there has been a lot of chatter recently about hedge fund clones.
Bloomberg – Lloyd’s of London insurers pulled as much as half a billion pounds ($825 million) from hedge funds and private equity after investment returns at the world’s oldest insurance market fell by more than half.
Catlin Group Ltd.,Brit Insurance Holdings Plc, Chaucer Holdings Plc and Beazley Plc withdrew or have redemption requests on as much as 434 million pounds of investments including in hedge funds, according to regulatory filings.
“The premise we and the rest of the world looked at in terms of hedge funds was that they would provide an uncorrelated return to things like the equity markets,” Catlin’s Chief Operating Officer Paul Jardine said in a telephone interview. “That didn’t happen.”
Reuters – The Carlyle Group is raising a new Asia buyout fund with a target size of up to $3 billion (1.8 billion pounds) as the U.S. private equity giant aims to tap more deals in Asia, two fund industry sources told Reuters on Friday.
It would be Carlyle’s third Asia-dedicated buyout fund and its biggest such fund in the region.
Its last Asia buyout fund launched in July 2006 raised $1.8 billion, which has been invested in various projects across the region, including a landmark deal with China Pacific Insurance (Group) Co Ltd, China’s No. 3 life insurer.
The Washingtom Post – Cerberus Capital Management LP on Tuesday dismissed market speculation that some of its hedge funds, which have suffered losses and heavy redemptions, are in danger of default.
Traders in London and Frankfurt were buzzing with talk that a major hedge fund was headed for default. Much of the talk was directed at Cerberus, a private equity and hedge fund firm hit hard by losses on investments in Chrysler and GMAC.
Times Online – Investors in Cerberus are seeking the return of more than $5.5 billion (£3.3 billion) from the fund, which has made a series of poor investments, including the acquisition of GMAC, General Motors’ finance division, and of Chrysler, the bankrupt carmaker.
The collapse in confidence caps a remarkable fall from grace for Cerberus. The American investment fund, which has several hedge funds and a private equity unit that invests in distressed businesses, was once the darling of Wall Street, but it lost its way with bets on the US automotive industry.
Gotham Gazette – The turbulent financial market events of recent days demonstrably signal the end of Wall Street as we know it. More uncertainty lies ahead, on Wall Street but also for the national economy. How is this affecting New York and what will it take to get the economy moving again?
Six months ago, a "disastrous foray into financial wizardry" by banks and lenders led us to the sight of the Federal Reserve giving J.P. Morgan Chase $28 billion to take over Bear Stearns. It was thought that this unprecedented action might calm the panic triggered by the sub-prime lending fiasco.
The bursting of the housing bubble destroyed billions of dollars of equity people held in their homes and started to jeopardize millions of mortgages across the country, prime as well as sub-prime. This mortgage meltdown led the U.S. Treasury Department earlier this month to take over the two quasi-public mortgage giants- Fannie Mae and Freddie Mac, which together hold nearly half of the $12 trillion in outstanding mortgage debt in the U.S.
