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.
West Palm Beach (HedgeCo.net) – Euromoney Institutional Investor is planning to launch a new magazine and online offering covering US and international hedge funds in September.
The company’s hedge fund publishing assets include Institutional Investor’s Alpha magazine and Absolute Return magazine, which is published by HedgeFund Intelligence, the world’s leading information source on hedge funds. The new publication will be titled "AR".
"The new publication will include everything that Alpha and Absolute Return contained, but it will be a new magazine which will contain a lot of editorial that neither magazine does, including new surveys, rankings and high-powered web functionality," says Euromoney Institutional Investor chairman and Editor-in-chief Padraic Fallon.
"With the hedge fund sector under intense scrutiny from Washington, regulators and investors, this is an excellent time to launch a hedge fund publication," he says. "Building on the strengths of both Institutional Investor and HedgeFund Intelligence, we have the opportunity to produce the world’s leading hedge fund title which will keep investors, managers, regulators and the whole hedge fund community informed on developments in the sector."
"Hedge fund performance has recovered strongly in 2009, after the sector’s worst ever performance in 2008, and there are now significant opportunities," says Michelle Celarier, editor of Absolute Return. "The new magazine is an exciting development because it joins two prestigious monthly magazines that cover hedge funds to create a single authoritative voice. Our mission is to create the most insightful, entertaining and definitive content about the hedge fund industry, in both the printed magazine and online. We will offer readers information they cannot find elsewhere, including news and performance data on thousands of funds, along with in-depth analysis, research and profiles of the biggest hedge funds."
Advertising will be sold by Christine Cavolina, publisher of Institutional Investor, and the Institutional Investor sales team, led by Joy Desanto.
"AR will provide an unparalleled editorial environment for advertisers interested in the hedge fund industry," says Cavolina. "It presents the ideal opportunity for companies serving this audience to influence decision-makers and generate new business."
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West Palm Beach (HedgeCo.net) – Morgan Stanley is offering enhanced asset protection to its prime brokerage clients, announcing an expansion of its prime brokerage offering with the launch of new custodial services for long securities held by Prime Brokerage clients.
The custodial services will be provided directly by Morgan Stanley Trust National Association (MSTNA), a U.S national chartered trust company. MSTNA gives clients the option to hold their long securities with a Morgan Stanley subsidiary that is independent from Morgan Stanley’s U.S. and U.K. broker dealers.
"Recent market events have increased the demand for solutions that mitigate counter-party risk for hedge funds," said Rich Portogallo, Head of Institutional Clients and Services at Morgan Stanley. "The launch of new custodial services from MSTNA underscores Morgan Stanley’s commitment to providing hedge fund managers and investors with alternative asset protection solutions in addition to our best in class financing services and technology."
"We are excited to offer this new asset-protection platform to our clients," said Joe Davis, Managing Director in Morgan Stanley Prime Brokerage and President of the custody business of MSTNA. "We have created a platform that provides a seamless client experience across Prime Brokerage’s and MSTNA’s systems, and offers fully automated transfers, aggregated reporting and a single client service point of contact."
Alex Akesson
Editor for HedgeCo.Net Email: alex@hedgeco.net
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West Palm Beach (HedgeCo.net) – The Alternative Investment Management Association (AIMA), announced plans to mobilise the world’s hedge fund industry on the European Commission’s draft directive for Alternative Investment Fund Managers.
“There are provisions in this directive with potentially serious consequences for managers, investors, service providers and advisers internationally." Andrew Baker, AIMA CEO, said, "As the global trade body for the industry it is right therefore that AIMA takes the lead in mobilising resources in order to secure the best possible outcome for the industry on the directive."
"The feedback we’re getting from our members, who manage more than 75% of hedge fund industry assets globally, is that the draft directive has created enormous confusion. Because of the lack of proper consultation the directive presumes a structure for the industry which bears little relationship to reality. Implementation in its current form could prove to be unworkable. It also appears to be in conflict with much of existing EC financial services legislation." Baker said.
"We will therefore call for urgent effort to be devoted to re-drafting this directive." Baker continued, "To achieve this, AIMA will be announcing a series of initiatives to mobilise the industry. We will not oppose everything in the directive; some of the provisions, such as manager authorisation and registration, are already supported by us and measures which increase transparency to assist the authorities in the understanding of systemic risk issues are to be welcomed."
"We want to work with the Commission, EU governments and the European Parliament on this. We are not opposed to the directive per se, we just want the final directive to be practical and realistic.” Baker concluded.
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President Obama’s harsh attack on hedge funds he blamed for forcing Chrysler into bankruptcy yesterday sparked cries of protest from the secretive financial firms that hold about $1 billion of the automaker’s debt.
Hedge funds and investment managers were irate at Obama’s description of them as "speculators" who were "refusing to sacrifice like everyone else" and who wanted "to hold out for the prospect of an unjustified taxpayer-funded bailout."
"Some of the characterizations that were used today to refer to us as speculators or to say we’re looking for a bailout is really unfair," said one executive who spoke on condition of anonymity because of the sensitivity of the matter. "What we’re looking for is a reasonable payout on the value of the debt . . . more in line with what unions and Fiat were getting."
Professional Pensions – European schemes are increasing their allocation to non-traditional asset classes in a bid to manage their risks more effectively, Mercer says.
The consultant’s European Asset Allocation Survey – which polled around 1000 schemes from 11 countries – found 35% of UK schemes and 60% of European schemes (excluding the UK) expected to introduce new investment classes into their portfolio to help manage future investment risk.
Mercer investment consulting European head Tom Geraghty said: "Despite being innately diverse in history, culture and regulatory requirements, European pension funds have all felt the effect of the last year’s market turmoil.
West Palm Beach (HedgeCo.net) - London hedge fund manager ACP Partners, which is soon to merge with TriAlpha Investment Advisors, said that their long/short eguity strategy fund, ACP Financial Opportunities, has beaten its benchmark by over 65% in its first six months.
Since the fund launch on 1 September 2008 through 28 February 2009, the new fund, which invests across a group of portfolio managers focused on the financial sector, returned 4.9%. Its benchmark, the S&P 1200 Global Financials, returned -60.7% over the same period, and the HFRI Equity Hedge Index -22.2%.
"Financials account for around 20% of global equity market capitalisation and, despite benefiting from significant diversification, the financial sector as a whole exhibits a high degree of complexity and is under-covered by specialist investors." Stephen Greene, partner and CIO of the ACP’s Multi Manager business, said, "Having undergone an unprecedented shock, resulting in severe price dislocations, such conditions are ideal for sector specialist hedge fund managers to add value."
"The key to achieving positive returns has been portfolio construction. The portfolio was specifically structured to benefit from the expected market volatility as we placed significant emphasis on sourcing managers with trading orientated approaches, ‘macro-aware’ processes and short term catalysts for value realisation. Unusually, our fund was one of only a very few fund of funds to be market neutral over this period of turmoil." Greene concluded.
As examples, the portfolio currently shorts banks that lack balance sheet integrity and takes a long position on banks that have been through the exercise of write-downs and capital raises. The underlying managers also hold long positions in property and casualty insurers and reinsurers, who have strong balances sheets and will benefit from a firming of insurance premiums and decreased competition. Conversely, they have taken short positions in life insurance companies whose shorter term liabilities now far outweigh their available liquid assets. Several of the managers have been shorting consumer sensitive sectors, such as credit cards and consumer finance.
The fund has a minimim investment of $1,000,000 (or equivalent) with quarterly redemptions, and a managment fee of 1% and performance fee of 10%.
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West Palm Beach (HedgeCo.net) – “We welcome the publication of the Turner Review, which is an impressive and comprehensive piece of work." Andrew Baker, Chief Executive of The Alternative Investment Management Association (AIMA), said, "It is about the banking system’s role in the current financial crisis and as such its principal focus is the banks, not the hedge fund industry. We are grateful to Lord Turner for his even-handed and measured approach and for not making hedge funds the scapegoat for this crisis."
"The Review says that regulators and central banks need to gather better macro-prudential information on hedge fund activities and we completely support this – in fact we called, in our new policy platform of the 24th February, for the disclosure of systemically significant information by hedge fund managers to their national regulators (not all assets are managed in a collective fund structure). We also called for a global manager authorisation and supervision template on the FSA model. AIMA took the lead on behalf of the hedge fund industry globally in these respects.
We are glad that the Review points out that hedge fund leverage “is typically well below that of banks – about two to three on average” compared with levels of up to 50 times with some of the banks; and that “hedge funds in general are not today bank-like in their activities”.
Given those qualifications, we do appreciate why in the interests of financial stability the Review says that regulators need the power to apply appropriate prudential regulation to hedge funds if they judge that their activities have become bank-like in importance.
We note that any such regulation is hypothetical at present (the Review talks of “if it ever did become appropriate” to do this) and we are glad that Lord Turner has stressed that any regulation in this respect should focus on economic substance not legal form.”
AIMA has more than 1,200 corporate members worldwide, based in 43 countries.
Members include leading hedge fund managers, fund of hedge funds managers, prime brokers, legal and accounting firms and fund administrators. They all benefit from AIMA’s active influence in policy development, its leadership in industry initiatives, including education and sound practice manuals and its excellent reputation with regulators worldwide.
New York (HedgeCo.Net) - After handing AIG another $30 billion in taxpayer-funded, government bailout funds, U.S. Federal Reserve Chairman Ben Bernanke defended the decision, with the worn-out argument that the insurer’s failure may trigger an economic domino effect.
“We know that failure of major financial firms in a financial crisis can be disastrous for the economy,” Bernanke said in a testimony to the senate Budget Committee on Tuesday. “We really had no choice.”
So far, the government has come to AIG’s rescue four different times, pumping over $160 billion into the insurance giant. In an attempt to appease furious lawmakers who disagree with the latest handout, Bernanke said, "If there’s a single episode in this entire 18 months that has made me more angry, I can’t think of one (other than) AIG."
AIG reported an industry wide record $61.7 billion quarterly loss this week, attributing that to losses on their credit default swaps; worthless pieces of paper that “guarantee” mortgage-backed securities. AIG sold these credit default swaps, which supposedly insured about $440 billion in bonds. In reality, AIG did not have the funds to cover these investments. When the securities inevitably plummeted in value, AIG couldn’t cover what they promised. Unfortunately, credit default swaps, which were invented in the late 90’s by several employees at J.P. Morgan Chase as a means to make quick cash, are not regulated by the U.S. government.
Many feel AIG has acted irresponsible, and that no amount of government funds will turn the poorly run business around. AIG even “cleverly attached a hedge fund to their insurance company, taking advantage of a gap in federal and state oversight,” Bernanke added.
In exchange for the funds, the government will receive $26 billion in preferred stock in two AIG subsidiaries – American Life Insurance Co. and American International Assurance Co. AIG will not have to pay interest on the outstanding loan.
Julie Scuderi Senior Editor for HedgeCo.Net Email: julie@hedgeco.net
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New York (HedgeCo.Net) – Spanish bank Santander is seeking to freeze redemptions after stating on Monday that they currently lack the liquidity to meet the rising demands for withdrawals. Investors in the bank’s flagsihip real-estate fund, the Santander Banif Inmobiliario FII, moved to withdraw 80 percent, or $3.3 billion, of the fund’s capital at the end of January according to a regulatory filing yesterday.
Santander stated that investors would receive 10 percent up front of their redemption claims, to be followed by 10 percent increments whenever they could meet those demands. If they are still short on cash, they would inject capital themselves, they added.
The bank is hoping to put a halt on full capital withdrawals for the next two years so they may start an “orderly program of disposals.” They added that if they could not fulfill requests at the end of that period, they would wind down the fund.
The fund suffered losses last year after dropping 15 percent at the start of the fourth quarter after market conditions in residential real estate rentals took a turn for the worse. 67 percent of the fund’s assets were invested in real estate.
Some experts worry that the influx of demands at Santander may spark a domino effect with other Spanish funds invested in real estate, which considering their illiquidity, could pose a major a problem.
Santander has had their share of obstacles recently, including a massive 2.33 billion euro exposure to Bernard Madoff through their Optimal Investment Fund. Shares closed down 4 percent yesterday to 5.49 euros.
Julie Scuderi Senior Editor for HedgeCo.Net Email: julie@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! Be sure to check out our sister sites. www.hedgefundlounge.com, www.hedgefundtools.com, and www.hedgefundemployment.com
New York (HedgeCo.Net) – While some top banking execs choose to blow millions on lavish area rugs or fancy, non functional commodes, Leonard Abess Jr. of Miami-based City National Bank had a better idea; give back to the people who made him his fortune.
According to an exclusive published in the Miami Herald, Abess took $60 million of his personal fortune and distributed it to over 400 current and former employees of the bank.
For some employees who had given their life to the bank, that amounted to tens of thousands of dollars. All employees were recognized and compensated, from janitors, to clerks, to tellers.
”Those people who joined me and stayed with me at the bank with no promise of equity — I always thought someday I’m going to surprise them,” Abess told the Miami Herald. “I sure as heck don’t need [the money].”
Last November, Abess sold a majority stake in the bank to Caja Madrid for $927 million. He held onto his CEO position while maintaining a minority share. While most people would assume his father who founded City National, merely handed down a cash cow, it wasn’t the case at all.
Abess Jr. took a bankrupt establishment worth only $21 million at one point and convinced about 200 investors to put their faith into it. He was then able to grow the bank from $400 million in assets to over $2.75 billion while more than doubling the offices.
Abess never seemed to let his status give him an ego. He told the paper, “”I saw that if the president doesn’t come to work, it’s not a big deal. But if the tellers don’t show up, it’s a serious problem.’
Let’s hope other billionaire banking execs are as modest and as appreciative.
Julie Scuderi Senior Editor for HedgeCo.Net Email: julie@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! Be sure to check out our sister sites. www.hedgefundlounge.com, www.hedgefundtools.com, and www.hedgefundemployment.com
New York (HedgeCo.Net) – Halliburton and KBR, Inc. have settled with the Securities and Exchange Commission after allegations that KBR subsidiary Kellogg Brown & Root illegally obtained construction contracts in Nigeria by bribing government officials.
KBR and Halliburton will pay $177 to settle the charges brought on by the SEC. In addition, Kellogg Brown & Root has pled guilty to criminal charges brought forth by the U.S. Department of Justice. Those charges include one count of conspiring to violate the Foreign Corrupt Practices Act and four counts of violating the anti-bribery provisions of the FCPA. Kellogg Brown & Root has agreed to pay $402 million to settle these charges in addition to succumbing to stricter oversight.
"Today’s guilty plea by KBR ends one chapter in the Department’s long-running investigation of corruption in the award of $6 billion in construction contracts in Nigeria,” said Assistant Attorney General Rita M. Glavin of the Department of Justice. “This bribery scheme involved both senior foreign government officials and KBR corporate executives who took actions to insulate themselves from the reach of U.S. law enforcement.”
The complaint alleged that Halliburton, who was the parent company of KBR at the time, failed to detect or prevent the bribes. The KBR companies reportedly set up fake contracts with agents in the United Kingdom and Japan to launder the money to the Nigerian officials, after deciding it was necessary to use bribery in 1994. The payoffs took place for the next 10 years. Halliburton failed to perform adequate due diligence on the false agents, and as a result, their records contained false information about the payments.
Total bribes to Nigerian officials totaled $180 million. Albert “Jack” Stanley, one-time KBR CEO under former Halliburton head Dick Cheney, pleaded guilty to bribery charges in September after it was discovered he met with high-ranking Nigerian officials at least four times to make payments in exchange for the construction contracts. Stanley faces seven years in prison and fines totaling almost $11 million.
Julie Scuderi Senior Editor for HedgeCo.Net Email: julie@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! Be sure to check out our sister sites. www.hedgefundlounge.com, www.hedgefundtools.com, and www.hedgefundemployment.com
New York (HedgeCo.Net) – William Ackman, who runs hedge fund Pershing Square Capital Management, is letting clients withdraw as much of their investment as they please. A vast change from the dozens of hedge funds who rushed to halt redemptions, Ackman is personally stepping up to the plate, apologizing profusely for one of his fund’s performance and allowing investors to reclaim their cash.
Pershing Square IV, the fund started by Ackman two years ago, was supposed to reap returns by betting that the stock of Target Corporation would rise sharply. Instead, share prices at the discount retailer have done just the opposite, causing the fund to plunge 90 percent this year.
Ackman sent a letter to investors, describing his fund as “one of the greatest disappointments of my career to date.” He also personally threw in $25 million to help pay back frustrated investors. For those who wish to withdrawal what is left of their investment, they will be paid in March. For clients who invest in his other hedge funds, Ackman has declared that he will not charge a performance fee until the current losses are recouped.
While Ackman’s actions are no doubt admirable, many hedge funds are choosing to go the other route; forcing investors to stay locked in until unfavorable market conditions pass. Hedge funds like RAB Capital, Citadel and Fortress have all imposed restrictions on withdrawals following losses. Some are hoping that Ackman’s moves will start a new trend; one where investors can rightfully take what’s there’s, in addition to taking the fall for disappointing investments by forgoing their standard fees.
Julie Scuderi Senior Editor for HedgeCo.Net Email: julie@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! Be sure to check out our sister sites. www.hedgefundlounge.com, www.hedgefundtools.com, and www.hedgefundemployment.com
