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.
DST International – One group of hedge funds has had its performance boosted in comparison to its peers as a result of the Bernard Madoff scandal, according to a number of industry insiders.
Due to the failures of three large funds or fund groups – Fairfield Sentry, Kingate and Rye Select – which were components in the Credit Suisse/Tremont equity market neutral index, the listing has been distorted.
As such, the surviving funds are able to claim they have outperformed the index’s benchmark, Reuters notes.
Reuters – The Madoff scandal could be a boon for mutual funds as investors shift into regulated asset management vehicles in Luxembourg or Ireland away from hedge funds in the Caymans, a German mutual funds executive said.
"There’ll be a drive clearly toward more transparency and stricter supervision. That could be good for mutual funds," Stephan Kunze, head of Europe at Deutsche Bank’s mutual funds arm DWS, told Reuters in an interview.
"A lot of strategies that have been set up in the Caymans will migrate to Luxembourg or Ireland-domiciled replicas (with) hedge fund strategies migrating onto mutual fund platforms," he said, speaking on the sidelines of DWS’s annual news conference.
New York Post – The founders of a New York hedge fund at the center of the Bernard Madoff scandal have begun selling assets as their firm faces massive losses and a slew of lawsuits, sources told The Post.
Walter Noel and Jeffrey Tucker, co-founders of Fairfield Greenwich Group, a New York hedge fund that lost a whopping $7.5 billion to Madoff’s alleged Ponzi scheme, have been forced to curb their lavish lifestyles amid mounting doubts that the firm can survive the firestorm.
The pair recently dumped a shared interest in a Cessna 560XL private jet, according to a person close to the firm.
Absolute Return – Assets for new hedge-fund launches fell "significantly" in the U.S. last year as hedge funds had their worst-ever year of performance, according to hedge-fund magazine Absolute Return.
"With these results, it’s no surprise that 2008 is being dubbed hedge funds’ worst year," deputy editor Carolyn Sargent said. "Turbulent markets, big losses, fund closures and the Madoff scandal have put investor loyalty to the test. Most investors are staying on the sideline, but those who are allocating capital can demand more favorable investment terms."
The financial crisis spurred investors to convert holdings to cash, and some funds faced unexpected disruptions to their trading strategies, including temporary bans on selling stock short.
Reuters – Investment firm SW1 Capital said on Friday it has bought into hedge fund platform PCE Investors and plans to build a controlling stake, cutting private equity firm Ubequity Capital Partners’ own holding.
PCE runs $1.6 billion (1.1 billion pounds) in assets and by next month will have 21 funds, run by 15 teams, in its stable. SW1 is hoping to exploit greater demand for robust and transparent hedge fund operations, thrown into the spotlight by the financial crisis and Madoff scandal.
The deal initially sees two-thirds owner Ubequity temporarily increase its holding as it and SW1 buy out minority shareholder Schneider Trading Associates.
The Washington Times – Year after year, the hedge fund industry dazzled Wall Street by delivering "absolute returns" – outsized profits whether markets rose or fell. Using sophisticated trading models, the pools of managed capital made wealthy people wealthier with eyepopping returns that carried seemingly moderate risk.
Not these days. Blindsided by a colossal market collapse and the widening Bernard Madoff scandal, hedge funds suffered their worst showing on record last year. And they’re bracing for more pain in 2009. The industry’s fall proves that even the quantitative brilliance and market wizardry of elite hedge funds are no magic bullet for investors during brutal times.
"Hedge fund managers have always said, ‘Look, we know how to make money even in difficult times,’ and that turns out to be a fallacy," said Timothy Brog, portfolio manager of New York-based hedge fund Locksmith Capital Management.
Daily Herald – Year after year, the hedge fund industry dazzled Wall Street by delivering "absolute returns" – outsized profits whether markets rose or fell. Using sophisticated trading models, the pools of managed capital made wealthy people wealthier with eye-popping returns that carried seemingly moderate risk.
Not these days. Blind-sided by a colossal market collapse and the widening Bernard Madoff scandal, hedge funds suffered their worst showing on record last year. And they’re bracing for more pain in 2009. The industry’s fall proves that even the quantitative brilliance and market wizardry of elite hedge funds are no magic bullet for investors during brutal times.
CNBC – Shares in Man Group, the world’s biggest listed hedge fund firm, slid on Wednesday after it said funds under management fell 21 percent and that it would sue over its exposure to the Madoff scandal.
Man said its assets totalled $53.3 billion at the end of last year, below Citi analysts’ expectations and down from $67.6 billion at the end of September. Part of the drop was due to net redemptions, which reached $3.2 billion in the three months to December.
Man Group’s shares were down 5 percent at 214 pence at 1014 GMT, up from a trough of 200 pence earlier. The blue chip FTSE 100 Index was 1.6 percent lower
Al-Bawaba – Never before in its short history was the hedge funds community confronted with the challenges nor the pressures it is facing today, following a six-year boom,with Madoff’s scandal coming as the icing on the cake following the US financial crisis.
With investors already becoming more demanding with regards to fees, transparency and regulation, these and other industry standards are expected to become topics of contention within this once powerful industry globally and in the region. Investors, regulators and hedge fund managers are expected to have compelling debates on all these issues at the 10th Hedge Funds World Middle East Conference taking place this year from 10 to 12 March 2009 at Madinat Jumeirah in Dubai.
Tacoma News Tribune – Year after year, the hedge fund industry dazzled Wall Street by delivering “absolute returns” – outsized profits whether markets rose or fell. Using sophisticated trading models, the pools of managed capital made wealthy people wealthier with eye-popping returns that carried seemingly moderate risk.
Not these days. Blind-sided by a colossal market collapse and the widening Bernard Madoff scandal, hedge funds suffered their worst showing on record last year. And they’re bracing for more pain in 2009. The industry’s fall proves that even the quantitative brilliance and market wizardry of elite hedge funds are no magic bullet for investors during brutal times.
“Hedge fund managers have always said, ‘Look, we know how to make money even in difficult times,’ and that turns out to be a fallacy,” said Timothy Brog, portfolio manager of New York-based hedge fund Locksmith Capital Management.
Munster Times – Investigators may get a clue Wednesday into how much money might be available for victims in the Bernard Madoff scandal.
The fallen investment guru is scheduled to submit a list of his personal assets to the Securities and Exchange Commission by the end of the year, including property that could be tapped to make restitution to victims of what authorities say was a $50 billion Ponzi scheme.
In a previous court hearing, Madoff also agreed to provide the names and locations of entities, bank accounts, brokerage accounts, investments or assets held by his business, Bernard L. Madoff Investment Securities LLC.
UnionLeader.com – For sheer toe-curling embarrassment, it may be a while before Wall Street does better than the Bernard Madoff scandal. Here was a rogue who practically telegraphed his unreliability by hiring a tiny, no-name audit firm, by reporting monthly investment results that never fluctuated and by claiming a trading strategy that could not possibly have been implemented given the billions of dollars he managed.
And yet, despite these warnings, the rich, the famous and the supposedly sophisticated entrusted their money to Madoff, who defrauded them with the most laughably crude of methods — an old-fashioned Ponzi scam.
