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.
Reuters – The current rebound in stock markets is a bear rally and could turn by September, according to hedge fund manager Hugh Hendry, who has recently cut exposure to agricultural stocks.
Hendry, who is partner and chief investment officer at Eclectica Asset Management, said that while stock markets have rallied in recent months on hopes for an economic upturn, developed economies are still heading for a 1930s-style depression.
"To date we are maintaining the profile of the economic contraction that we witnessed in the 1930s. Nothing as yet has changed that profile. It’s still a profile of concern to me," he told Reuters on the sidelines of the GAIM 2009 conference in Monaco.
Reuters – Fund managers need to stress-test worst-case scenarios more rigorously before investing in hedge funds, industry participants at a hedge fund conference said on Thursday.
Many existing stress tests, used to gauge how funds will perform in extreme market conditions, failed to identify potential problems during the financial crisis, leaving investors exposed to steep losses.
"Many allocators used models that failed to take into consideration certain risk factors, simply because they had never been seen as risks before," Mark Schindler, portfolio manager of alternative assets at Clariden Leu, told Reuters on the sidelines of the GAIM annual industry conference.
MONACO, June 17 (Reuters) – Investor flows out of the hedge fund industry have stabilised and the health of the industry has improved, GLG senior managing director Pierre Lagrange told Reuters on Wednesday.
‘Industry-wide they (flows) have stabilised,’ Lagrange said in an interview on the sidelines of the GAIM 2009 conference in Monaco. ‘You can see from performance that things are better.’
The hedge fund industry has suffered redemptions of around $250 billion between October and March as investors fretted over record poor performance last year.
Hedge funds have begun to raise leverage levels again in recent weeks as prime brokers and other lenders become bolder about extending credit in more stable markets, a lawyer specializing in the sector said on Tuesday.
Henry Bregstein, attorney at law at Katten Muchin Rosenman, said that some strategies, such as multi-strategy funds and funds of funds, had tentatively started to increase leverage to as much as 50 percent within the last six weeks.
"We’re starting to see some leverage come back into the hedge fund industry," he told Reuters on the sidelines of the GAIM hedge fund industry conference here.
"With the stronger funds, we’re beginning to see some working on new leverage transactions… Markets appear to have stabilised."
Straits Times – Hedge fund executives at the conference said Mr Obama’s deal undercut bankruptcy court rules that have long given priority to secured lenders. The White House move and its combative stance with hedge funds may keep some managers on the sidelines or chill investment in some companies.
Mr Gary Kaminsky, former managing director at Neuberger Berman, told conference members that government involvement began last March with the forced sale of Bear Stearns to JPMorgan Chase and has not let up since.
‘You have to assume the government will be involved. You have to assume the free market is not as free as it was in the past and won’t be for the next 20 years,’ Mr Kaminsky said.
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.
Hedge Funds Review Magazine – Troubled Swiss-based alternative asset management group Gottex Fund Management Holdings said assets under management (AUM) were down over $2 billion to $13.5 billion at September 30, 2008, compared with $15.6 billion at June 30, 2008. The fall represented a 13.6% decrease.
The fall was mainly caused by “negative performance in extremely challenging markets”, according to a company statement on third quarter trading. The poor performance was despite Gottex’s market neutral and directional products performing better than or in-line with the broader market indices and relevant hedge fund benchmarks.
AUM change across Gottex strategies during the quarter 2008 included declines in market neutral and directional strategies (-13.1%), asset based strategies (-15.8%), advisory mandates (-15.2%) and enhanced index strategies (-3.2%).
The Independent – Stanley Fink, the so-called godfather of UK hedge funds, has made a dramatic return to the industry after retiring from Man Group, the largest alternatives manager in the world, only two months ago.
Mr Fink confirmed yesterday that he had been appointed chief executive of International Standard Asset Management, an alternative asset manager with about £200m under management. The fund also announced the appointment of the former Labour Party fundraiser Lord Levy as chairman.
The London-based trading group said Mr Fink will assume responsibility for the operational management of the business to build a significant hedge fund presence, while both will use their extensive network of wealthy contacts to boost the fund’s assets under management.
International Standard Fund was set up by the former Merrill Lynch gold trader Roy Sher, a friend of Mr Fink, in 2003, and is mainly backed by private investors. Mr Sher said the big-name appointments should help the firm to win market mandates ahead of its hedge fund rivals.
Bloomberg- Asian hedge funds are increasing their use of multiple prime brokers after the U.S. subprime mortgage market collapse heightened the risk of relying on a single investment bank for brokerage services, an AsiaHedge survey found.
Hedge funds that are managed in Asia or invest primarily in the region awarded 326 shared mandates to prime brokers, 36 percent more than last year, according to Bloomberg calculations based on information in AsiaHedge’s 2007 and 2008 Asian prime brokerage surveys. The pace of growth exceeded the less than 20 percent increase in sole mandates to 778 in the past year.
Rising delinquencies in the subprime market that led to the near collapse of Bear Stearns Cos., once among the top three Wall Street prime brokers, have forced the world’s largest banks and securities firms to post more than $400 billion of asset writedowns and credit losses since the beginning of last year.
