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.
Explore the most informative hedge fund articles and take the news with you, using HedgeCo RSS.
Still want more? Browse the hedge fund blogs, authored by hedge fund industry experts.
Globe and Mail - Hedge fund manager Eric Sprott heaps praise on his "defensive team" for helping him survive this bear market.
While some of his peers have cratered amid this year’s stock market crash, his short positions have kept him well ahead of his benchmark index.
For the first 11 months of this year, the returns of Sprott Bull/Bear RSP and Sprott Hedge LP I and II range from an 8.5-per-cent gain to a 4.5-per-cent loss compared with the S&P/TSX composite’s sharp 33-per-cent slide.
"The reason we started our first Canadian hedge fund in 2000 was because we foresaw this very, very difficult market," recalls Mr. Sprott, also chief executive officer of Toronto-based Sprott Inc.
Globe and Mail - Amaranth Advisors LLC and two of its former traders have reached a settlement with U.S. regulatory staff over the alleged manipulation of natural gas futures prices.
The deal, which was submitted to the U.S. Federal Energy Regulatory Commission, could end the long case against hedge fund traders Brian Hunter and Matthew Donohue.
A spokesman for Mr. Hunter, a Calgarian who made more than $100-million trading natural gas for Amaranth before the hedge fund collapsed, declined to comment.
The commission accused the traders last year of manipulating prices on the New York Mercantile Exchange, and proposed a $291-million (U.S.) fine.
A spokesman for Mr. Hunter, a Calgarian who made more than $100-million trading natural gas for Amaranth before the hedge fund collapsed, declined to comment.
The commission accused the traders last year of manipulating prices on the New York Mercantile Exchange, and proposed a $291-million (U.S.) fine.
Globe and Mail - The Caisse de dépôt et placement du Québec, hammered by losses on international holdings, has been forced in recent weeks to sell billions of dollars of stocks into a falling market.
A fund that began the year with $155.4-billion of assets has sold $10-billion of stocks in the past two months, sources said.
Canada’s biggest pension fund needed cash to shore up or shut down money-losing positions in areas such as currency hedging and derivatives, along with international real estate and private equity. Part of the problem, sources said, is that the fund’s hedging strategy was sideswiped by the recent fall in the Canadian dollar.
Globe and Mail - This is how bad things are for hedge funds right now. On the CanadianHedgeWatch.com website, a hub for the hedge business, the lead article one recent day was headlined "The hedge fund collapse."
The article, which originally appeared on the Portfolio.com website, tells us that as many as half the 10,000 hedge funds that existed earlier this year could fail or be wound up in the next 12 months. Outsmarted by the financial crisis of 2008, some prominent hedge fund managers lost 20 to 65 per cent of their assets even before October came. "The hedge fund mystique died with the crash of 2008," the article says.
The mystique is dead for sure, but hedge funds are not. The Horizons Global Contrarian Fund proves it.
What we have in Horizons Global Contrarian is a hedge fund of the old school. Rather than acting as a supercharged equity fund willing to push all risk boundaries, it tries in a measured and conservative way to make money no matter what the stock markets are doing.
The article, which originally appeared on the Portfolio.com website, tells us that as many as half the 10,000 hedge funds that existed earlier this year could fail or be wound up in the next 12 months. Outsmarted by the financial crisis of 2008, some prominent hedge fund managers lost 20 to 65 per cent of their assets even before October came. "The hedge fund mystique died with the crash of 2008," the article says.
The mystique is dead for sure, but hedge funds are not. The Horizons Global Contrarian Fund proves it.
What we have in Horizons Global Contrarian is a hedge fund of the old school. Rather than acting as a supercharged equity fund willing to push all risk boundaries, it tries in a measured and conservative way to make money no matter what the stock markets are doing.
Globe and Mail - People often think that the price of crude oil is the only factor affecting the retail price of finished petroleum products, but this is not true, said Cathy Hay, an analyst at Calgary gasoline consultancy MJ Ervin & Associates.
Other fundamentals also affect prices, and these can differ between gasoline and diesel, she said.
Currently, relatively high diesel prices are a result of an imbalance between supply and demand. Worldwide diesel supplies are extremely tight at the moment, particularly in Europe, where there has been a major shift away from gasoline-powered cars.
Other fundamentals also affect prices, and these can differ between gasoline and diesel, she said.
Currently, relatively high diesel prices are a result of an imbalance between supply and demand. Worldwide diesel supplies are extremely tight at the moment, particularly in Europe, where there has been a major shift away from gasoline-powered cars.
Globe and Mail - Math whiz Ravi Sood has ridden the highs and lows of the wild world of hedge funds.
The president of Lawrence Asset Management Inc. made a name for himself running the firm’s flagship hedge fund with stellar returns such as his 75-per-cent gain in 2007.
But the stock market crash has dealt a blow to Lawrence Partners Fund, which suspended redemptions this week after plunging 65 per cent for the first 10 months of this year.
The investment firm “believes it is in the best interests of all shareholders to suspend redemptions for 60 days,” the 32-year-old manager told investors in letter on Monday.
Globe and Mail - Since many hedge fund managers like to drive Porsche roadsters, it’s somehow appropriate that the German auto maker just ran them down.
The European hedge fund community took a pounding Monday covering short positions in Volkswagen. Shares in the auto company doubled Monday on a short squeeze that came after Porsche announced it had used derivatives to build a 74 per cent stake in VW. That move brought a long-running takeover near the finish line, and also meant portfolio managers betting on a drop in Volkswagen shares had to cover positions.
In their rush to cover shorts, often at massive losses, hedge funds pushed up the value of Volkswagen by 123 per cent on Monday, briefly making the auto maker the largest company on earth. Shares subsequently slipped, but ended the day up 25 per cent.
Globe and Mail - Epic Capital Management Inc. is closing its flagship hedge fund in what could be the precursor to a number of shutdowns in the troubled industry.
The Toronto firm’s assets tumbled from $300-million to $200-million as markets crashed and investors asked for their money, leading the managers to decide that giving remaining investors in Epic Limited Partnership their cash back was the prudent move, said founder and chief executive officer David Fawcett.
Epic focused on finding underpriced mid-sized Canadian companies, but that strategy couldn’t protect the firm from the market meltdown. Epic’s main fund has fallen about 43 per cent so far this year.
"We wanted to do it while we could and didn’t have a gun to our head," said Mr. Fawcett, who added that he expects a "pretty orderly unwind."
Epic focused on finding underpriced mid-sized Canadian companies, but that strategy couldn’t protect the firm from the market meltdown. Epic’s main fund has fallen about 43 per cent so far this year.
"We wanted to do it while we could and didn’t have a gun to our head," said Mr. Fawcett, who added that he expects a "pretty orderly unwind."
Globe and Mail - Hedge fund manager Ravi Sood is having a rough time navigating through the tsunami that has hit stock markets around the world.
The stellar record of his Lawrence Partners Fund suffered a 48-per-cent hair cut in September, sending its year-to-date loss to 53 per cent for the first nine months of 2008.
Mr. Sood would not comment about his fund, but told investors in a letter that he was forced to "reduce the size of core positions at inopportune levels in midmonth. …
"We cannot restore all of this year’s loss to date in the next few months or quarters, but we are confident we will get there," said the president of Toronto’s Lawrence Asset Management Inc.
Mr. Sood would not comment about his fund, but told investors in a letter that he was forced to "reduce the size of core positions at inopportune levels in midmonth. …
"We cannot restore all of this year’s loss to date in the next few months or quarters, but we are confident we will get there," said the president of Toronto’s Lawrence Asset Management Inc.
Globe and Mail - Desjardins Group is winding down hedge fund-linked products, as Canada’s largest financial co-operative joins life insurers in dealing with problems in guaranteed investments that have been pounded by the downturn.
Montreal-based Desjardins is shutting down lines of what are known as "principal-protected notes," or PPNs, an extremely popular product with individual investors. The move comes as Manulife Financial and Sun Life Financial take reserves against possible losses on annuities and other funds that promise customers’ capital will always be returned.
The products that Desjardins killed bought hedge funds to offer the co-op’s 5.8 million customers the upside of markets, along with a guarantee they would get back 100 cents on the dollar. Desjardins is closing PPNs called the Perspectives Plus Guaranteed Investment and Alternative Guaranteed Investment, both of which come due over the next five years.
Montreal-based Desjardins is shutting down lines of what are known as "principal-protected notes," or PPNs, an extremely popular product with individual investors. The move comes as Manulife Financial and Sun Life Financial take reserves against possible losses on annuities and other funds that promise customers’ capital will always be returned.
The products that Desjardins killed bought hedge funds to offer the co-op’s 5.8 million customers the upside of markets, along with a guarantee they would get back 100 cents on the dollar. Desjardins is closing PPNs called the Perspectives Plus Guaranteed Investment and Alternative Guaranteed Investment, both of which come due over the next five years.
Globe and Mail - Canadian hedge funds posted a brutal 11.2 per cent decline in September, losses that are likely to leave many investors questioning this expensive alternative asset strategy.
The latest installment of the Scotia Capital Canadian Hedge Fund Performance shows these funds outperformed the S&P/TSX composite index last month – it was down 14.7 per cent. But mounting losses on funds sold to investors as market neutral, or absolute return, are going to translate into redemptions.
“September was an extremely challenging month for Canadian hedge fund managers who were largely unable to successfully navigate erratic price movements in stocks and falling energy prices,” said Scotia Capital’s note on the sector’s performance.
“Panic selloffs in an environment driven by fear and uncertainty left major equity markets significantly down at the end of September,” said the investment bank. Obviously, the market swings have become even more violent in October.
Globe and Mail - Daniel Gross, writing on Slate, makes an interesting point about the latest version of the U.S. government’s bailout plan: The plan, officially known as the Emergency Economic Stabilization Act of 2008, looks a lot like the prospectus for a hedge fund.
“In the past, hedge funds – secretive pools of capital – were open only to qualified (read: rich) investors,” he said. “But with the stroke of a pen, President Bush will soon make all American citizens investors in the world’s biggest fund – and a democratic one at that.”
Hedge funds often use leverage, or borrowed money, to amplify their returns and often use the money to buy beaten up assets. Similarly, the bailout plan, which Mr. Gross dubs the Universal Hedge Fund, will use $750-billion (U.S.) of borrowed money to buy distressed assets. But the similarities don’t end there. The manager of the Universal Hedge Fund can hold bonds to maturity or flip them for a profit. The manager can also bring in outside expertise, making the fund look like a fund of funds.
“Like many of today’s sharpest hedge funds, the Universal Fund will also have the ability to drive a harder bargain by demanding equity stakes, or new debt securities, from the institutions it is helping,” Mr. Gross said.