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Newark Star-Ledger – Managers of New Jersey’s embattled pension fund, criticized by lawmakers for bailing out a struggling BlackRock hedge fund in October, secretly gave two other hedge funds the same deal, records from the state investment council show.
The Canyon Special Opportunities Fund and GoldenTree Credit Opportunities Fund were each awarded $49.5 million in state funds on the same day the controversial $49.5 million bailout of a BlackRock Inc. fund took place, according to a memo released by the investment council this week.
The cash infusions were a shade below the $50 million threshold that triggers public scrutiny. The BlackRock deal riled prominent Statehouse lawmakers. So does the new revelation that there was not just one such deal, but three.
Bloomberg – Satellite Asset Management LP, founded by former employees of billionaire George Soros, stopped client withdrawals from its three largest hedge funds and eliminated more than 30 jobs after losses reduced the firm’s assets to about $4 billion this year.
Satellite Overseas Fund Ltd., Satellite Fund II LP and Satellite Credit Opportunities Ltd. have declined as much as 35 percent in 2008, said a person with knowledge of the funds’ performance. Simon Rayler, Satellite’s general counsel, declined to comment and wouldn’t disclose how many people remain at the firm’s New York headquarters or London offices. Satellite oversaw about $7 billion for clients at the end of last year.
More than 75 hedge funds have liquidated or restricted investor redemptions since the start of the year as they cope with fallout from the global financial crisis. Investors pulled $40 billion from hedge funds last month, while market losses cut industry assets by $115 billion to $1.56 trillion, according to data compiled by Hedge Fund Research Inc. in Chicago.
West Palm Beach (HedgeCo.net) – Lee Hetfield has joined ARE Asset Management LLC, a distressed credit and distressed real estate asset management company in Florida, as Portfolio Manager.
Hetfield reports that as of May 30, 2008, ARE Asset Management launched ARE Opportunity Fund, Ltd. (British Virgin Islands). The fund works in purchasing mortgage loans, the strategy is generating returns using both loan modifications negotiated with borrowers to create loan re-performance, as well as loss mitigation techniques. Re-performing loans are held for income or sold to securitizers or other investors for a gain.
Loans that cannot re-perform, resulting in “REO” or real estate owned property, are resolved via a property sale or entered into a rental income program. The fund also opportunistically invests in senior commercial loans backed by improved real estate at low LTV’s (50-65% of 90 day liquidated value, 35%-45% of BPO), through high-yielding originations made by an affiliated commercial loan originator, SeaBreeze Financial.
The investment manager currently has $110 million under management under the strategy as that of the fund, and the results since launch have been encouraging: For the month of June the BVI fund was up 1.59%, net of expenses, and July looks to be up ~1.5% (early est.). Prior to the BVI fund launch The Manager has historically managed funds for offshore investors in fixed-term, LLC structures (in the same distressed/credit opportunities strategy).
The team is spearheaded by Jeffrey Kirsch with over 30 years of experience in commercial and residential real estate. He has managed the ARE group of companies, based in Miami, FL, since their founding in 1996. At ARE, Mr. Kirsch has overseen more than $1 billion in performing and non-performing mortgage transactions and has long-standing relationships with private and public-sector sellers.
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New York, July 8, 2008 — The Absolute Return New Funds Survey, published in the July/August issue of Absolute Return magazine, shows that new hedge fund launches this year in the Americas totaled $19.5 billion, with the top five funds amassing $13.7 billion, for more than 70% of the total. The number of fund launches is down 50% from last year, highlighting the growing barriers to entry for start-up managers and indicating that large capital flows are continuing to go to established, brand-name firms.
According to Absolute Return, 35 new funds began trading with a total of $19.5 billion between January 1 and June 30, 2008. That’s significantly more capital than in the same period in 2007, when 72 new funds launched with $14 billion. This year, five funds were formed with more than $1 billion each, in contrast to three funds that managed to surpass the billion-dollar mark in last year’s first half. Long/short equity funds dominated, followed by funds that invest in mortgaged-backed securities and those pursuing distressed strategies.
The survey also reported that Goldman Sachs Asset Management amassed $8.1 billion of the $19.5 billion total with $7 billion in its Goldman Sachs Investment Partners, an equity long/short fund, and $1.1 billion in Goldman Mortgage Credit Opportunities. The second-largest launch was Conatus Capital Management’s Conatus Capital Partners fund, which had $2.3 billion. Other sizeable launches included Lone Pine Capital’s $1.8 billion emerging markets fund, Lone Dragon Pine Fund, and Highliner Investment Group’s Alyeska Fund, a market-neutral fund that ended the first half with $1.5 billion.
Total assets under management in the hedge fund industry are $2.65 trillion, according to HedgeFund Intelligence.
About Absolute Return
Absolute Return is the leading source of U.S. hedge fund news and information featuring proprietary data and analysis on more than 3,000 single-manager hedge funds in the Americas. Absolute Return, a monthly magazine, and the Absolute Return Directory and Database, are divisions of HedgeFund Intelligence, a global provider of hedge fund news and data. For more information, please visit www.hedgefundintelligence.com/ar/
