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Minneapolis Star Tribune - Like most market watchers, last year’s participants in the Star Tribune Investor Roundtable failed to predict that 2008 would be a year of stomach-churning stock market declines, failed financial institutions, multibillion-dollar bailouts and credit markets as frozen as a Minnesota lake in January.
"I think everybody in the room knew there was more leverage, more speculation, more betting on the economy, but it amazes me that it got to this level," said Phil Dow, director of equity strategy at RBC Wealth Management.
But what the group of Twin Cities investment professionals did foresee a year ago was a period of unprecedented stock market volatility. The VIX index, a gauge of market swings, reached a record high this fall.
Reuters UK - Credit Suisse clients may have lost up to 1 billion Swiss francs (627.3 million pounds) ($195.18 mln) on investments connected to accused swindler Bernard Madoff, newspaper Sonntag reported on Sunday.
Without giving details of its sources, Sonntag reported that internal forecasts at Credit Suisse showed that customers of Switzerland’s second-largest bank could have lost 0.9-1.0 billion francs in the Madoff case.
Credit Suisse spokesman Jan Vonder Muehll said: "Credit Suisse did not actively recommend or sell products invested with Bernard Madoff.
"Furthermore, none of the funds of hedge funds offered by Credit Suisse contained holdings in Madoff funds."
Voiceof San Diego - San Diego County’s pension fund is slashing its $1 billion hedge-fund portfolio and acknowledging that the investments it once championed have become too risky and no longer make sense.
The board of the San Diego County Employees Retirement Association voted unanimously Thursday to reduce the size of its hedge-fund portfolio by more than half. That will free up $600 million, half of which will be held as cash. The rest will be reinvested in the portfolio.
The pension board also agreed to curb the aggressive strategy the $7.5 billion fund used to finance its hedge fund investments. Under the "alpha engine" strategy, the county bought financial derivatives known as swaps that were essentially bets on the market. Much like bets on a Chargers game, the swaps cost nothing initially, which freed up cash for hedge fund investments. When the market rose, the swaps made money, but in recent months, they cost the pension fund millions of dollars. Last month, the board voted to free up $100 million in cash to protect against further declines.
The pension board also agreed to curb the aggressive strategy the $7.5 billion fund used to finance its hedge fund investments. Under the "alpha engine" strategy, the county bought financial derivatives known as swaps that were essentially bets on the market. Much like bets on a Chargers game, the swaps cost nothing initially, which freed up cash for hedge fund investments. When the market rose, the swaps made money, but in recent months, they cost the pension fund millions of dollars. Last month, the board voted to free up $100 million in cash to protect against further declines.
New York (HedgeCo.Net) - Hedge funds may not be having their best year, but whoever said they lost their glamour obviously didn’t attend the HedgeCo Holiday Networking Event.
About 650 guests piled into Nikki Beach on Manhattan’s east side last Wednesday evening, drinking dirty martinis and partying into the early hours of the morning. For some, the event presented a sort of rare opportunity in the current times; a chance to network within the industry without the imminent reminder that nothing is guaranteed.
“For months, all you hear about is lagging numbers, layoffs and huge bailouts. Just for a night, I wanted everyone to forget all that. I think everyone was long overdue for a good time!” says Evan Rapoport, Co-Founder of HedgeCo Networks and organizer of the event.
"After a few hours of mingling, the tables that run down the middle of the place were transformed into a catwalk-type dance floor," said Cathy Eidorowicz, who also helped organize the event. "Everyone just kind of let loose and partied the night away, there was surprisingly a really good vibe in the air."
While some were there strictly to party, others used the event as a glorified job fair. With so many in the industry under one large white tent, it didn’t hurt to flash a resume while moods were merry. Especially when Wall Street job losses are expected to hit 48,000 by the end of next year
While hedge funds were once thought to manage around $3 trillion in assets, new estimates put that number closer to $1 trillion. Rapoport believes that although hedge funds have taken a hit, a stronger and more resilient industry is around the corner.
“The build-up is going to be much stronger," he said. Once we weed out the negative effects of over-leveraging, we are going to see a more stable, albeit smaller industry emerge.”
Julie Scuderi Senior Editor for HedgeCo.Net Email: julie@hedgeco.net
Forbes - Financial assets have become so cheap because of the credit crisis that now is a good time to scoop up bargains, the head of one of the world’s biggest hedge funds, Avenue Capital, said on Wednesday.
‘Now is a phenomenal time to buy, assuming you think we’re not in a depression,’ Marc Lasry, chairman and CEO of the company, said at the 2008 Clinton Global Initiative meeting in Hong Kong.
‘We’re looking at valuations we think are extremely low. Unless the unthinkable happens, you’ll be fine,’ he said, referring to the investment environment.
New York (HedgeCo.Net) - Victory Park Capital, a Chicago-based hedge fund, has received a vote of confidence from FRM Capital Advisors in the form of a major investment. Victory Park Capital plans on expanding their asset-based lending fund in hopes of taking advantage of the favorable market conditions associated with this kind of strategy.
“We are delighted to have the opportunity to partner with such an experienced team,” says FRM Chief Executive Clive Peggram. “We believe it is a very good time in the credit cycle to pursue an asset-based lending strategy.”
Victory Park Capital Advisors was founded last year and provides asset-backed loans to companies who are in need of financing and can’t always turn to the bank. Asset based lending is a popular strategy in today’s current market turmoil with the large amount of high rises and other developments being constructed. High interest rates are usually tacked on the loans, while the building is put up as collateral.
“We’re very pleased to form a relationship with Victory Park Capital,” says Blaine Tomlinson, FRM’s founder and group chairman. “As an established and experienced team, they are in an excellent position to capitalize on the attractive financing opportunities available to those who have capital to deploy.”
FRM Capital Advisors is active in the hedge fund seeding industry, seeking out potential opportunity among new funds. Hedge fund seeding is a great way for new funds to get the capital needed to get off the ground. Companies who provide the financing will work out some sort of the deal with the fund, perhaps sharing in the profits once the fund starts posting returns.
“We are incredibly excited about our relationship with FRM Capital Advisors and we are gratified that it has concluded that our team and strategy warrant such a significant investment,” said Victory Park Managing Principle Richard Levy.
FRM is a global fund of hedge funds group with over $15 billion of assets under management.
Julie Scuderi Senior Editor for HedgeCo.Net Email: julie@hedgeco.net
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