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.
New York (HedgeCo.net) – Hedge fund investor, logi ENERGY LLC., has announced the formation of The Peak Oil Value Fund. Launched September 8, the new hedge fund is the first of its kind aimed at institutional and accredited investors.
“We believe that the effects of Peak Oil on the markets are a temporary Global Macro series of events” Larry Ortega CIO of the Peak Oil Value Fund said, “We only have a few years to take advantage of these opportunities.“
The fund’s investment strategy employs five approaches: 1) Publicly Traded Equities and Equity Options; 2) Investment in oil in storage; 3) Investment in Oil, Gasoline and Heating Oil spreads in the Futures Markets; 4) Private Investment in Public Equities of Oil and Gas Exploration Companies; and 5) Private Investment in Private Companies or Oil and Gas Fields.
“Our superb models developed by our deep, complex team of expert geophysicists, mathematicians, oil professionals and oil traders have been able to predict and identify the fluctuations of oil prices and indicate when we expect prices to move based on both fundamentals of oil production and demand as well as storage, refinery processing, price action and economic utilization.” Ortega said, “They are not perfect, but we’re extremely pleased with the results. We invest like Warren Buffett, which is we make our money when we purchase our positions at deep value, thus the effects of our errors are minimal. Our difference is that in most of our strategies we also hedge nearly every position we take.”
The fund’s goal is to purchase or make significant investments in oil and gas exploration firms for their reserve positions while supporting their production and exploration efforts with direct investment in their fields and then hedge position value, reserves and future production. The fund expects to invest based on fundamental valuation of each position they take.
Alex Akesson
Editor for HedgeCo.net alex@hedgeco.net HedgeCo.Net is a premier hedge fund database and community for qualified and accredited investors only. Membership on www.hedgeco.net is FREE and EASY. We also offer FREE LISTINGS for Hedge Funds!
HedgeCo.net (West Palm Beach) – A survey by RSM McGladrey, a financial services consultancy, found that hedge fund managers are surprisingly ready to work with SEC regulators to cooperate with authority, despite wide-spread wariness about over-excessive regulation from the Obama administration.
However, the Obama financial regulatory plan was a top concern with 75%, fearing that further regulation will go too far and stifle the market’s recovery.
The survey polled more than 100 hedge fund managers during the last month and focused on hedge fund industry sentiment toward the Obama administration regulation.
Fund managers are also optimistic about the industry’s prospects, according to the survey. 60% believe the current environment provides more investment opportunities than challenges. An overwhelming majority (69%) see the U.S. economy returning to positive growth by Q2 2010.
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Times Online – While many lose sleep over each twist and turn of today’s economy, New Jersey collector Ralph DeLuca has found a hedge against the recession in the musty memorabilia of Hollywood’s past.
A former private investment consultant, DeLuca hardly batted an eye when he bought a vintage poster from the 1932 cult movie "Freaks" at auction in March for more than $100,000. The poster had cost $10 in the early 1970s.A few minutes later he outbid competitors for a rare poster of the original "Dracula" from 1931, owned by actor Nicolas Cage, snapping it up for more than $300,000.
West Palm Beach (HedgeCo.net) – The Treasury Department said that they have recieved 100 applications from potential fund managers interested in participating in the Legacy Securities portion of the Public Private Investment Program (PPIP).
A variety of institutions applied, including traditional fixed income, real estate, and alternative asset managers, such as hedge funds.
Successful applicants must demonstrate a capacity to raise private capital and manage funds in a manner consistent with Treasury’s goals, they must have experience investing in eligible assets and headquartered in the United States.
Applicants can expect to be informed of their preliminary qualification around May 15, 2009, when they can begin raising a minimum of $500 million in private capital that will serve as the investment that, pending further approval, will be matched with taxpayer funds.
Since announcing the program details on March 23, the Treasury has encouraged small, veteran, minority and women owned private asset managers to partner with other private asset managers. On April 6, Treasury extended the deadline for fund manager applications to provide more time to facilitate these types of partnerships.
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Reuters – Bridgewater Associates Inc, one of the world’s biggest hedge-fund managers, said on Tuesday it might be interested in participating in the U.S. Treasury’s public-private investment program, calling it a "big transfer of money from the government to the banks and to the buyers."
Bridgewater manages roughly $80 billion in global investments for a wide array of institutional clients, including foreign governments and central banks.
In a letter to clients, Bridgewater said its interest in buying the distressed assets under the terms being offered would depend on the pricing and on "whether we can get over our fears of partnering with the government."
West Palm Beach (HedgeCo.net) – Todd Groome, Chairman of the Alternative Investment Management Association (AIMA) said in a statement regarding the Public-Private Investment Program announced by Tim Geithner, "It shows that there is recognition among policy makers at the highest level that the hedge fund industry is part of the solution."
The Treasury’s Public−Private Investment Program aims to unclog credit markets and promote credit extensions, according to the Northern Trust Economic Research Department. The program has chalked out two initiatives – Legacy Loans Program and Legacy Securities Program. The Legacy Loans Program combines FDIC guarantee with debt financing from the private sector and Treasury to purchase troubled loans from financial institutions.
"Hedge funds can and should play a crucial role in assisting the recovery by providing counter-cyclical risk capital at times of distress like this," Groome said.
"AIMA, as the global trade body for the world’s hedge fund industry, is committed to working with policy makers internationally to help solve the current market crisis and prevent future crises from taking place," he concluded.
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New York (HedgeCo.Net) – The Obama administration has unveiled its much anticipated program aimed at clearing toxic assets from the books of U.S. banks and finding a middle ground between inaction and nationalization. By financing the purchase of up to $1 trillion in illiquid real estate assets, the government is hoping that its Public-Private Investment Program will revive the lending process while helping to jumpstart the economy.
“This will allow banks to clean up their balance sheets,” Treasury Secretary Timothy Geithner said. “There is no doubt the government is taking risk. You cannot solve a financial crisis without the government assuming risk.”
The plan entails using up to $100 billion in the Troubled Asset Relief Program funds along with additional capital from private investors to “generate $500 billion in purchasing power to buy legacy assets with the potential to expand to $1 trillion over time,” according to a statement released by the Treasury.
Under the plan, the “Legacy Securities Program” would be instilled to protect private investors’ or hedge funds’ purchase of the assets by using money from half of the original funds. The Treasury would match any private capital that is raised for the purchases dollar for dollar.
The Federal Deposit Insurance Corporation would oversee a facet of the plan called the “Legacy Loans Program,” which is expected to garner interest among many private investors. With this program, the treasury would pony up half of the capital to purchase a bundle of loans while the rest of the cash would come from private investors or hedge funds. The FDIC would then guarantee financing of up to six times the original price, then auction off the loans.
In addition, private-sector purchasers would determine the value of these assets so as to quell any fears that the government might be overpaying for the loans.
Some critics are weary that the program’s success relies exclusively on the action of private investors to step up to the plate. The Fed’s new program to revive consumer credit, called the Term Asset-Backed Securities Loan Facility, or TALF, was a disappointment as far as popularity was concerned, with just 19 large hedge funds and other firms showing interest. Out of the $200 billion offered, only $4.7 billion in requests for loans came in.
Another reason cited for the lack of big-money interest in the programs is the mess that unfolded after AIG handed out $165 billion in employee bonuses. A near unanimous vote in the House to tax those bonuses 90 percent may have stifled public outcry, but it did little to put to rest investor’s uncertainty regarding the government’s conflicting actions.
Former President Bush declined to buy the toxic securities in November. No banks have agreed as of yet to sell their illiquid assets.
Julie Scuderi Senior Editor for HedgeCo.Net Email: julie@hedgeco.net
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Bloomberg – The Obama administration will announce details of a plan today to expand the $700 billion rescue of the financial system that will rely on enticing private investors to buy the troubled assets clogging banks’ balance sheets.
Treasury Secretary Timothy Geithner, who will unveil the Public Private Investment Program today, has crafted an approach using up to $100 billion of bailout money to spur investment funds to purchase — and banks to unload — the illiquid securities and loans that have caused credit to dry up. The Treasury, Federal Reserve and the Federal Deposit Insurance Corp. will all play a role alongside private investors in aiming to buy between $500 billion and $1 trillion of troubled assets.
“By providing a market for these assets that does not now exist, this program will help improve asset values, increase lending capacity by banks, and reduce uncertainty about the scale of losses on bank balance sheets,” Geithner said in an op-ed piece published in today’s Wall Street Journal. “The ability to sell assets to this fund will make it easier for banks to raise private capital.”
Reuters – Investment adviser MAG Capital and its owner settled U.S. regulators’ claims that it took warrants from three hedge funds it advised without compensating them, the U.S. Securities and Exchange Commission said on Tuesday.
The Los Angeles-based investment adviser and owner David Firestone, without admitting or denying the SEC’s allegations, will pay $100,000 and $50,000, respectively, to settle the SEC’s complaint.
On 44 separate occasions, between 2003 and 2006, MAG took warrants from its clients without compensating their funds for them, the SEC said.
According to the SEC, MAG’s hedge fund clients made investments in so-called private investment in public equity (PIPE) transactions.
The PIPE transactions included warrants and other securities. The hedge funds paid for the warrants as part of the bundle of securities sold by the issuers in the transaction.
However, MAG took a portion of the warrants in each transaction and did not compensate the hedge funds for the warrants it took, the SEC alleged.
Reuters - Two years ago, investors scrambled to snap up shares in elite hedge fund firms, eager for a piece of the lucrative action. What they got instead were big losses.
Starting in early 2007, when hedge fund and private equity firms were minting cash, four private investment firms cracked open the door to let in small investors. Fortress Investment Group LLC, Och-Ziff Capital Management Group, Blackstone Group LP and GLG Partners Inc led a new class of firms that let ordinary investors ride the wave of hedge fund riches.
