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.
Seeking Alpha – Very in-depth and analytical commentary out of Elliott Management in their recent second quarter 2009 letter to investors. The hedge fund has penned a 24 page letter covering topics of risk management, the automotive industry, regulation, distressed assets, arbitrage opportunities and much, much more. We highly recommend taking the time to peruse through this lengthy and informative hedge fund investor letter.
Elliott Management was founded by Paul Singer back in 1977 and managers over $12 billion today.
Reuters – Bayswater Asset Management, a computer-driven hedge fund shut down last year after big losses during the credit crisis, has relaunched after revamping its risk management controls, its new backers said on Wednesday.
San Francisco-based Bayswater had initially been backed at its launch in 2004 with $25 million (15 million pounds) from Man Global Strategies, part of hedge fund giant Man Group.
However, its strategy of trying to exploit inefficiencies in global markets lost 12 percent in the six months to September 2007 and it returned money to investors after being caught out by a vicious circle of deleveraging in July and August that hit many computer-driven funds.
Reuters – Hedge fund managers, administrators and investors have gathered in Monaco for the annual GAIM industry conference following a tough year marked by poor performance and client outflows.
Below are selected quotes from the first day of the conference:
JONATHAN FEENEY, INVESTCORP INVESTMENT ADVISORS:
"In the last five years or so … everything was flying and no one cared about risk management. It’s only when problems arise that it suddenly becomes a focus, and then it’s too late.
"With a new manager, it’s horrible to say this, but it’s got to the stage now where you want to check the office exists. It’s the paranoia now post-Madoff."
Reuters – Many of Switzerland’s smaller fund of hedge funds providers could be forced to consolidate in order to cover increasingly onerous expenses if they are unable to attract significant assets, a Swiss academic said on Monday.
The small average size of Swiss funds of funds produced low income from management fees, making it more difficult for funds to achieve economies of scale, Peter Meier, head of the centre for alternative investments and risk management at the Zurich University of Applied Science, said in a presentation in Zurich. "I’m sure there are many funds around which no longer have the asset base to cover their costs. Some will need to attract more assets to survive," Meier told Reuters after the presentation on Swiss fund of hedge funds.
Howard Marks of Oaktree Capital, whatever his merits as a hedge-fund manager, is a spectacularly good memo-writer. And his latest makes a particularly germane point:
Once you decide to lever a fund, “risk management” becomes more important than “portfolio management.” Many more people know how to pick securities than know how to restrict a levered fund’s risk to the amount that can be withstood. And the ability to pick securities for an unlevered fund isn’t nearly as critical as the ability to manage risk in a levered fund.
West Palm Beach (HedgeCo.net) – In an effort to makes major changes to the EU financial regulation services, the European Commission (EC) has launched ‘Driving European Recovery’, a consultation on major structural changes to European financial services and markets regulation.
The EC are looking for investors such as hedge funds and other interested parties to interview and submit comments before April 10th, when the EC intends to publish its proposals on the future of the EU supervisory architecture.
The Commission endorses the key principles set out in the recent de Larosière report and calls for a supervisory system combining stronger oversight at EU level with maintaining a key role for national supervisors.
The Commission will propose an ambitious new reform programme, designed to deliver “responsible and reliable financial markets for the future”.
The reform program will present a supervisory framework that detects potential risks early, deals with them effectively before they have an impact, and meets the challenge of complex international financial markets.
The Commission will present a European financial supervision package before the end of May 2009, according to a statement, fill gaps where European or national regulation is insufficient or incomplete, based on a ‘safety first’ approach and improve risk management in financial firms and align pay incentives with sustainable performance.
Among other proposals to be revealed in May, the EC will, "Ensure more effective sanctions against market wrongdoing."
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The Independent – Three major European and US hedge fund groups yesterday pledged to work towards worldwide best practice standards after G20 ministers outlined plans to regulate the freewheeling sector.
The London-based Alternative Investment Management Association and US counterparts the President’s Working Group and the Managed Funds Association have written to the Financial Stability Forum to draw together different industry standards, of which the first draft is expected by the end of next month, said Andrew Baker, head of AIMA.
The organisations are discussing a global standard on issues such as disclosure, risk management, dealing with conflicts of interest within an organisation and statements about operational and business controls.
Reuters – Artradis Fund Management, Singapore’s largest hedge fund manager, said on Monday it has hired David Dredge from Royal Bank of Scotland as managing director for portfolio management.
Dredge was deputy global head of local markets at RBS as well as its head of local markets trading and risk management in Asia. He is also deputy chairman of the Singapore Foreign Exchange Market Committee.
Artradis said in a statement it saw opportunities in foreign exchange and interest rates, and has re-opened two of its funds to take in fresh money from investors.
HedgeCo.net – Artradis Fund Management, Singapore’s largest hedge fund manager, said on Monday it has hired David Dredge from Royal Bank of Scotland as managing director for portfolio management.
Dredge was deputy global head of local markets at RBS as well as its head of local markets trading and risk management in Asia. He is also deputy chairman of the Singapore Foreign Exchange Market Committee.
Artradis said in a statement it saw opportunities in foreign exchange and interest rates, and has re-opened two of its funds to take in fresh money from investors.
