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.
Reuters Dubai – The outlook for investments in the oil and gas industry remains healthy as demand growth from emerging economies is expected to recover, a co-manager of a shariah compliant oil and gas hedge fund said.
"There is constant demand for these finite resources from emerging economies like China and India, even though there is some downturn in the short term," said Russell J. Lucas of U.S.-based Lucas Capital Management, co-portfolio manager of Al Safi’s Lucas Energy Fund.
"You have to eat, you have to drive, you need heat to keep your family warm, I believe those are the things that should be the core of a portfolio, especially in uncertain times."
The Dubai oil and gas hedge fund could grow to $500 million (332.7 million pounds), from its initial investment of $50 million in the next 18 months, he said.
Bloomberg – Hedge-fund managers including George Soros and Philip Falcone, in an unprecedented appearance before Congress, defended their practices and profits while splitting over whether the U.S. should impose stricter regulations.
"This is not a case where management takes huge bonuses or stock options while the company is failing,” said Falcone, one of five billionaire investors who testified today before the House Committee on Oversight and Government Reform in Washington.
Falcone, senior managing director of New York-based Harbinger Capital Partners, urged Congress to require more disclosure by hedge funds, which oversee $1.7 trillion of investments. Soros, founder of Soros Fund Management LLC, cautioned against “ill-considered” rules because this industry is reeling from market losses and client defections.
Reuters – Hedge fund managers could play a key role in jump starting the ailing U.S. economy if Washington offers them appropriate tax breaks, a prominent hedge fund industry lawyer said on Tuesday.
Sitting on billions of dollars in cash, dozens of hedge funds are looking for investments at the same time cash- strapped small and mid-sized companies search for new money to help them stay in business.
Together these unlikely partners could find a way to escape a debilitating liquidity crisis that threatens to push the country further into its deepest financial crisis since the Great Depression, Perrie Weiner, a partner at law firm DLA Piper told Reuters in an interview.
"There is a way out, but the answer lies not with the current government rescue plan, but rather with hedge funds," Weiner, who advises dozens of hedge funds as international co-chair of DLA Piper’s Securities Litigation group said one day before speaking about the topic at an industry conference.
West Palm Beach (HedgeCo.net) – Because of investors’ demand Salus Alpha decided to make the Salus Alpha Directional Market accessible as a fund. This way Salus Alpha continues to launch tracker funds for all hedge fund indices launched by Alternative-Index Ltd.
The Directional Markets Index (DMX) convinced investors this year with outstanding +53% YTD performance and above-average performance in the last years, the DMX contrasts clearly with other Hedge Fund Indices.
Investors are able to achieve profits even in falling markets because of the widening of the product range Salus Alpha. It responds to investors’ needs in the current volatile market environment and offers a lager selection of funds with no correlation to bonds or equities.
The Salus Alpha Directional Markets employs directional trend following strategies in multiple time frames and markets. The funds objective is to achieve low to negative correlation to traditional longonly investments such as bonds or equities. The fund also tracks the Vienna Stock Exchange listed DMX.
Since inception of the calculation the DMX displays a performance of approximately 28.40% p.a. with a volatility of 17.88% p.a.
The subscription period for the Salus Alpha Directional Markets is from 5th November 2008 to 30th November 2008. During subscription period no sales fee will be charged.
CNBC – A Goldman Sachs hedge fund that launched in January with over $6 billion under management lost close to $1 billion by September, according to the Financial Times.
The fund, known as Goldman Sachs Investment Partners, has told investors it lost $989 million by September, the newspaper said on Monday.
Most of the fund’s losses stemmed from investments in commodities, basic materials, metals, mining, energy and agriculture, the FT said.
Losses from investments in convertible bonds — debt instruments that can convert into equity — also contributed to poor returns, the newspaper said.
He’s explaining how hedge fund investors — technically, limited partners — are only allowed to withdraw money on an quarterly or annual basis, which can result, when a fund is performing poorly, in a rush of redemptions that resembles a run on a bank.
To meet those redemption requests, a hedge fund leveraged 5 to 1 will have to sell at least $5 of investments to meet every $1 of redemptions. (And 5 to 1 is conservative; a hedge fund can, in theory, be almost infinitely leveraged.)
Reuters Shanghai – The investment banking arm of China Construction Bank plans to launch a 5 billion yuan ($731.3 million) fund to focus on investments in the country’s rapidly growing heathcare sector, state media reported on Tuesday.
Hong Kong-based CCB International is leading the fundraising but has not yet reached the initial target of 5 billion yuan, the online edition of the official Xinhua News Agency (www.xinhuanet.com) said.
Once launched, the fund would focus on investments in healthcare-related sectors including pharmacy, medical equipment manufacturing, medical institutions and services, Xinhua quoted CCB International’s chief executive, Hu Zhanghong, as saying.
Times of India – Often-touted as manipulative, hedge funds have been time and again blamed for indiscriminate selling and thereby pulling down the domestic stock prices even in India. But India-focused hedge funds have also been affected by the meltdown.
The big and secretive India-focused funds have booked losses to the tune of 46% in 2008 — in the process effectively wiping out the 50% returns clocked by the posted by them in 2007. Hedge funds have an aggressively managed portfolio of investments which use advanced investment strategies such as leverage, long, short and derivative positions in both domestic and international markets with the goal of generating high returns.
Reuters UK – Dozens of hedge funds have told investors they cannot get their money back right now as managers try to limit a wave of redemptions to safeguard all their clients’ investments — as well as their own futures.
Only a few months ago, hundreds of the world’s estimated 9,000 hedge fund managers made it tough for wealthy investors to put money into their funds by requiring high investment minimums of $1 million (617,500 pounds) or more and charging heavy fees.
Now managers are making it hard for investors to get out.
"Everyone is looking at their gate provisions (mechanisms that limit redemptions) and what rights they have to close their gates," said Timothy Mungovan, a partner who advises hedge funds at law firm Nixon Peabody LLP. "It is a phenomenon that has been occurring for some time and is picking up pace now."
Bloomberg – Some hedge fund managers provided inaccurate information to investors in newsletters and monthly fact sheets, Hong Kong’s Securities and Futures Commission said.
In one instance, the hedge fund manager excluded the fund’s largest stock holding from its top five investments because of “oversight,” the regulator said in a statement issued late yesterday to all licensed hedge fund companies in the city. In other cases, the managers misstated the funds’ debt ratios and net asset values “to a limited extent.”
The findings were results of a recent SFC inspection of eight small locally established hedge fund managers overseeing $5 million to $800 million and employing three to 30 people. The regulator didn’t identify the managers involved. Ernest Kong, a SFC spokesman, declined to provide further comments.
Regulators worldwide have been increasing oversight over the $1.7 trillion hedge fund industry amid a crisis that has laden the world’s largest banks and securities firms with more than $670 billion of losses and led to the failure of Lehman Brothers Holdings Inc. Hedge funds are bracing for the industry’s worst year in almost 20 years and trying to stem investor withdrawals.
Wall Street Journal – Some high-profile Bain Capital credit-investment funds are choking on losses of as much as 50%, said people familiar with the matter, the latest revelation in a day of shake-ups across the hedge-fund business.
The private-equity firm’s credit affiliate, Sankaty Advisors LLC, has lost between 40% and 50% across two funds that bought up highly secured corporate loans, these people said. The two vehicles had roughly $4 billion in assets just a few weeks ago, and used a relatively low amount of borrowed money to fund their investments.
Steep losses have also hit London hedge fund Centaurus Capital LP, which Wednesday offered its investors a chance to cut their fees. And, at Tudor Investment Corp., one of the oldest and best-regarded hedge funds, fund manager James Pallotta finalized a plan to run his own firm separate from longtime colleague Paul Tudor Jones.
Bloomberg - Man Group Plc, the largest publicly traded hedge-fund manager, rose in London trading after its biggest pool reported gains for a fourth consecutive week.
“It increases the probability that they will be earning performance fees on the fund,” said Gurjit Kambo, an analyst at Numis Securities, who rates the stock an “add.”
AHL Diversified Plc gained 1.9 percent in the week to Oct. 20, and is up 12 percent in the past 12 months, Man said in a statement yesterday. AHL, whose computer-trading program dictates about a third of Man’s investments, is now closer to its so-called high-water mark, the level above which the firm begins to collect performance fees.
London-based Man rose as much as 6.1 percent and was up 14.5 pence at 368.5 pence by 10:10 a.m. The stock has gained 16 percent so far this week, valuing Man at about 6.3 billion pounds ($10.3 billion).
