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) – Credit rating agency Moody’s said on Tuesday that it would probe deeper into why its staff incorrectly rated approximately $1 billion of complex debt securities.
While it was thought to be a computer error that caused the discrepancies in ratings, an external investigation by Sullivan & Cromwell revealed that some members of a key ratings committee violated certain codes of conduct while dealing with constant proportion debt obligations, or CPDOs. An expose produced by the Financial Times originally shed light on the errors.
“I am deeply disappointed by the conduct that occurred in this incident,” said Moody’s CEO and Chairman Raymond McDaniel. “The integrity of our rating process is core to Moody’s values and is essential to the market.”
CPDOs were awarded the highest "Triple A rating" when they first appeared in 2006. It then came to be known that they were actually associated with risky instruments. Moody’s insists that the error was not intentional. Some investors who snatched up CPDOs lost over half of their capital.
Following the subprime fallout last summer, Moody’s, Fitch and Standard & Poor’s have downgraded hundreds of billions worth of debt, creating substantial losses for investors and causing the implosion of several hedge funds.
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. For more information, visit www.hedgeconetworks.com
New York (HedgeCo.Net) – New York-based Avenue Capital, the hedge fund that manages roughly $20 billion, is back after a lagging first quarter. The company informed investors that the fund experienced gains in May for the second straight month.
The firm’s $1.5 billion Avenue International Ltd Fund was up over 1.5% in May, while the $1 billion Avenue Europe International Ltd Fund and the $574 million Avenue Investments LP Fund followed suit and also posted gains.
Hedge funds are optimistic after experiencing losses stemming from last years credit crunch and subprime fallout. Improved performance in credit markets as of late are making the future look bright for hedge funds.
The Avenue Capital Group was founded in 1995 and is headed by famed manager Marc Lasry. The funds specialize in a long/short strategy while focuses on distressed and undervalued debt and equity opportunities. The company recently raised $6.1 billion for “special situations” trading strategies.
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. For more information, visit www.hedgeconetworks.com
Independant- European Union Financial Services Commissioner Charlie McCreevy has defended hedge funds in relation to the fallout from the US subprime mortgage market collapse.
The move comes in tandem with a report commissioned by French President Nicolas Sarkozy which states that France should join a German initiative asking the European Union’s executive arm to propose measures boosting hedge fund transparency.
Berlin has been pushing for the creation of a code of conduct for hedge funds within the group of Eight club of industrialised nations, even though regulators show little appetite for imposing tougher rules on the industry. Mr McCreevy is considered a general critic of regulation in financial markets.
New York (HedgeCo.Net) – Drake Management will shut down its two remaining hedge funds one month after winding down the $2.5 billion Global Opportunities Fund. The $1.4 billion Absolute Return Fund and the $160 million Low Volatility Fund will follow suit, after experiencing similar losses originally fueled by the subprime fallout and credit crunch.
Drake had informed investors in March that they were considering shutting down the funds, citing “challenging market conditions.”
The Absolute Return Fund was down 14.36 percent in 2007, while the Low Volatility Fund was down 4 percent. Drake will be launching new funds, and investors that choose to stay with the firm will only pay performance fees once the original losses are recouped.
"We are committed to launching successor vehicles for the funds later this year, for those investors who have expressed a desire to remain invested in strategies substantially similar to those of the funds and to new investors who would like to invest," said the company.
Drake was formed in 2001 by former BlackRock manager Anthony Faillace and his partner Steve Luttrell.
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. For more information, visit www.hedgeconetworks.com
