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.
Telegraph.co.uk – The chatter was that Harbinger, a powerful US hedge fund run by Philip Falcone, has built a small stake in African Minerals and has been talking to London brokers in recent days about picking up more stock. Harbinger declined to comment.
If Harbinger has built a stake in the company, it is not clear what the hedge fund’s intentions are for African Minerals. The group runs a variety of strategies. Sometimes the investment fund acts as a passive, long-only investor. However, Harbinger also has a reputation for being activist and occasionally bids for companies. Last year, for example, Harbinger made a takeover approach for blue-chip satellite services group Inmarsat, which slipped 6.3 to 495.2p.
Mr Falcone is well known in City circles. The trader hit the headlines when it emerged that Harbinger was one of the main hedge funds to have shorted HBOS before the Government orchestrated the bank’s emergency merger with Lloyds, now Lloyds Banking Group.
Stuff – Hedge funds are living up to their high-flying reputation again with strong returns in the last three months, but many investors burned by last year’s losses are clamoring for reforms before committing new money.
Final June quarter data will not be released until next week, but Merrill Lynch analysts who track returns in the $1.3 trillion industry wrote on Monday that hedge funds will likely post their best quarterly performance since early 2000.
Reuters India – Hedge funds are living up to their high-flying reputation again with strong returns in the last three months, but many investors burned by last year’s losses are clamoring for reforms before committing new money.
Final June quarter data will not be released until next week, but Merrill Lynch analysts who track returns in the $1.3 trillion industry wrote on Monday that hedge funds will likely post their best quarterly performance since early 2000.
Reuters – Hedge fund industry icon Arthur Samberg’s startling decision to shut Pequot Capital shows how a firm’s reputation matters as much as its returns.
For decades Samberg, who founded Pequot more than two decades ago, delivered strong performance no matter how markets behaved, enticing investors to funnel in so much cash that the firm managed $15 billion in its heyday in 2001. When the U.S. government last year reopened a probe into allegations of insider trading in Microsoft Corp, skittish investors left quickly.
Post Chronicle – U.S. securities regulators charged a prominent hedge fund industry executive on Wednesday with failing to properly review collapsed hedge fund Bayou Group before recommending that their clients invest.
Hennessee Group and its principal Charles Gradante, who runs the New York-based group with his wife, failed to research the hedge fund group as vigorously as promised, the Securities and Exchange Commission charged.
The news is a big blow to Gradante and the Hennessee Group, which established their reputation in the $1.3 trillion hedge fund industry by tracking funds’ returns, industry flows and creating portfolios for clients.
Reuters – Pension funds will likely funnel more money into hedge funds and become a powerful engine of growth for the industry in the coming months, a hedge fund industry veteran said on Wednesday.
"We are finding that corporate pension funds are looking at hedge funds for allocations for their equity exposures, said Carrie McCabe, chief executive of Lasair Capital LLC, a firm that creates portfolios of hedge funds for clients.
McCabe, who cemented her reputation in the hedge fund industry while running Blackstone Alternative Asset Management and FRM Americas, described a real urgency to pension funds’ desire to beef up their returns with hedge funds in a hurry.
Globe and Mail – A U.S. hedge fund with a reputation as an activist investor has become the biggest shareholder in AbitibiBowater Inc., putting added pressure on management at the struggling paper giant to find a speedy solution to its financial woes.
Seattle-based Steelhead Partners LLC revealed in a regulatory filing made Friday that it now holds 14.8 per cent of Abitibi’s shares. The fund has tripled its stake in the debt-heavy newsprint king in recent weeks, jumping to the head of the pack among Montreal-based Abitibi’s shareholders.
Steelhead first said in July that it had acquired 5 per cent of Abitibi’s shares, surpassing the threshold that required it to disclose its holdings under securities laws. Its stake had grown to 10 per cent in early January and almost 15 per cent by the end of the month, according to its most recent filing made with the U.S. Securities and Exchange Commission.
New York Daily News - Jacob Ezra Merkin was once revered as a wizard of Wall Street, an angel of charity and a lion of Judaic studies.
Now he has earned infamy as a destroyer of wealth, a menace to philanthropy, a pariah in some synagogues and a target of a probe by the state attorney general’s office.
A single unforgivable deed capsized his fortune, reputation and social standing overnight: He embraced a false prophet of profit named Bernard Madoff.
Bloomberg – Looking for a new definition of a hedge fund? How about an organization that takes 20 percent of the profits on your money in the good times, then refuses to let you have it back when the weather turns rough?
We all know the hedge-fund industry had a terrible 2008. With a few honorable exceptions, its promises of being able to deliver steady, positive returns in either a rising or falling market turned out to be empty.
Yet, in many cases, the industry has taken a bad situation and made it worse. Many funds have placed limits on withdrawals that investors can make. In effect, people are locked into a falling asset.
That is a big mistake. In any investment business, the return of capital is far more important than the return on capital. By forcing investors to keep their money tied up during a bad year, the hedge funds are damaging their own reputation, and it may well never recover.
There are numerous examples of funds limiting withdrawals.
Citadel Investment Group LLC said last month it was stopping year-end withdrawals from its two biggest funds after investors sought to take out $1.2 billion, or 12 percent of assets.
Magnetar Capital LLC took similar action after its largest fund lost 30 percent of its value in the year through November.
Cerberus Capital Management LP last month limited redemptions from a hedge fund that lost 16 percent of its value.
West Palm Beach (HedgeCo.Net)- Sidley Austin has further expanded its hedge fund practice in London by hiring a new counsel in the Investment Funds, Advisers and Derivatives practice.
Barry Breen has joined the firm’s London office and will focus his practice on hedge funds and further expand Sidley’s fund capabilities in London. "Barry is a talented and experienced hedge fund lawyer and we are pleased to have him join us to enhance our growing fund capabilities in Europe," said Bruce Gardner, head of the hedge fund practice in London.
Breen will advise clients on the organization of offshore and onshore hedge funds, including master/feeder,fund of funds and side by side investment structures, commodity pools, registered fund of funds and mutual funds, ETFs, and the registration, regulation and governance of registered management investment companies.
"I am thrilled to join a firm with such a respected and renowned global investment funds practice," said Breen. "I look forward to working with Bruce, David and the other partners in the practice to continue to build and strengthen the funds team in London, Europe and globally."
Breen previously was with Tannenbaum Helpern Syracuse & Hirschtritt LLP in the Financial Services, Hedge Funds and Capital Markets practice operating out of their New York and London offices.
Sidley has a international practice in structuring and advising investment funds and advisers. In 2006 and 2007, the Alpha Awards(TM) for hedge fund service providers ranked Sidley as the number one onshore hedge fund law firm. Additionally, in 2008, the firm was named "Investment Funds Team of the Year for the U.S." by Chambers and Partners. In 2007, Sidley also was named Investment Funds Law Firm of the Year by Asian Legal Business. The Investment Funds, Advisers and Derivatives practice group consists of more than 100 lawyers in Chicago, Hong Kong, London, Los Angeles, New York, San Francisco, Singapore and Tokyo.
