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Bloomberg – K+S AG, Europe’s largest maker of potash for fertilizers, and competitor Israel Chemicals Ltd. fell in local trading after a Russian rival’s contract in India prompted speculation that prices will come under pressure.
The drop mirrors declines at North American producers Potash Corp. of Saskatchewan Inc. and Mosaic Co. on July 10 after RBC Capital Markets reported that Russian producer OAO Silvinit may have sold the crop nutrient for less than analysts expected. K+S lost as much as 5.4 percent and the Israeli company dropped 3 percent.
Soros Fund Management LLC, billionaire investor George Soros’s hedge fund firm, owns about 1.9 percent of Potash Corp after reducing the stake to 5.6 million shares at the end of the first quarter from 5.9 million at the beginning of the year.
Bloomberg – Camulos Capital LP, a hedge-fund firm founded by former Soros Fund Management LLC trader Richard Brennan, is in talks to have Mariner Investment Group run its business operations.
Mariner, an $11 billion firm managed by Bill Michaelcheck, may handle compliance, accounting and administration for Stamford, Connecticut-based Camulos, according to a June 30 investor letter obtained by Bloomberg News.
Wealth Bulletin – Satellite Asset Management, a $2.8bn (€2.1bn) hedge fund established by former employees of billionaire George Soros, is winding down due to investor redemptions, Bloomberg said on its website late Friday, according to a Reuters report.
The New York-based firm, which had nearly $7bn in client assets at the end of 2007, was launched in 1999 by Lief Rosenblatt, Gabe Nechamkin and Mark Sonnino, who worked together at Soros Fund Management.
Bloomberg – Billionaire investor George Soros’s Soros Fund Management LLC was fined 489 million forint ($2.2 million) for attempting to manipulate the share price of OTP Bank Nyrt., Hungary’s largest bank, the country’s financial regulator said.
The Soros fund attempted on Oct. 9 to “send out false or misleading signals about a security’s supply and demand or its share price” and short sold OTP shares, the regulator, known as PSZAF, said in a statement late yesterday. The short selling caused the shares to drop 14 percent in the final 30 minutes of trade, the regulator said.
Short-sellers sell borrowed securities, hoping to profit by repurchasing them later at a lower price and then returning them to the owner. Budapest-based OTP is Hungary’s largest lender.
Bloomberg – Billionaire investor George Soros’s hedge-fund firm bought more shares of Petroleo Brasileiro SA and Potash Corp. of Saskatchewan Inc. in the fourth quarter, almost doubling its holdings.
Soros Fund Management LLC bought 16 million shares of the Petrobras’ U.S. traded shares, bringing its stake to 1.45 percent, according to a filing yesterday with the U.S. Securities and Exchange Commission. The New York-based firm increased its holdings in Potash by 2.6 million shares to 2 percent in the fourth quarter. Petrobras and Potash are now the firm’s two biggest reported U.S. stocks.
West Palm Beach (HedgeCo.net) - In the monthly report from Dow Jones Indexes on the performance of Hedge Fund Strategy Benchmarks, only one of four strategies, merger arbitrage, posted net-of-fee gains in November.
After hedge funds experienced two of the most volatile months in market history, merger arbitrage emerged with a small positive net-of-fee gain in November, returning 0.15%. The small gain held YTD performance for merger arbitrage at approximately the same level as last month, down about -9%.
Convertible arbitrage was hit the hardest with a loss of -4.80%, followed by event driven and distressed securities, which were down -6.35% and -7.47%, respectively, for November.
The equity market neutral and equity long/short benchmarks were suspended at the start of the month as a result of the temporary risk mitigation measures taken by the investment manager of the managed account platform that supports the Dow Jones Hedge Fund Strategy Benchmarks. It has not been determined when calculation of these benchmarks will resume.
On a float-adjusted basis, the Dow Jones Wilshire 5000, the only broad measure of the domestic equity market, lost -8% (-8.15% on a full-cap basis) in November decreasing its YTD return to -38.30% (-38.37% on a full-cap basis).
The fixed income asset class, as measured by the Dow Jones Corporate Bond Index was up 4.88% this month and its cumulative return is down -5.99% for the year. Finally, the Dow Jones Wilshire Global Index, the broadest measure of global equity market, lost -6.73% for the month decreasing its YTD return to -44.68% for 2008.
November 2008 figures for the Dow Jones Hedge Fund Strategy Benchmarks are based on daily estimates net of fees.
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CNNMoney.com – Dow Jones & Co. has suspended the publication of two hedge-fund benchmarks and the Dow Jones Hedge Fund Balanced Portfolio Index that incorporates them, saying that the underlying hedge funds have been deleveraging in an effort to reduce the risk to their investors.
Suspended are the Dow Jones Hedge Fund Equity Long/Short and Equity Market Neutral Strategy benchmarks. The 5-year-old benchmarks, and four others like them, measure individual hedge-fund strategies. Combined, the six make up the Dow Jones Hedge Fund Balanced Portfolio Index.
The request for the hedge funds to deleverage was made by Lyra Capital LLC. Lyra Capital is an investment manager and unit of Credit Agricole Structured Asset Management S.A. Lyra "provides the methodology programs used" in the Dow Jones Hedge Fund Strategy Benchmarks, the company’s Web site says.
West Palm Beach (HedgeCo.net) – Hedge funds measured by both the Greenwich Global Hedge Fund Index ("GGHFI") and the Greenwich Composite Investable Index ("GI2") significantly outperformed equity indices despite posting their greatest losses since August 1998 during September.
"It was a perfect storm for both credit/equity markets and hedge funds in September," said Thomas Whelan, Greenwich CEO, "The already deflated values of financial firms provided the perfect trap for value investors while government intervention limited the ability of hedge funds to effectively mitigate their risk. Simultaneously, the continued freezing of credit markets combined with investor redemptions forced fixed-income funds to liquidate or otherwise mark down assets at depressed prices. The results of the market turmoil and unpredictable regulatory environment are evident in their returns this month."
Long/Short Equity managers fared better than both US and foreign equity markets during the month, but still were subject to unpredictable market movements, losing -6.69%. Both Growth and Value funds struggled to find profitable trades, returning -8.16% and -7.05%, respectively. Short Selling managers by contrast enjoyed their most profitable month this year, advancing +9.27% on average. Year-to-date, Short Selling funds have gained 17% and remain the best performing subsector of hedge fund strategies.
Market Neutral funds were not immune to market forces during September, as they felt the effects of dysfunctional credit markets, declining -4.49%.
Despite the marked weakness in hedge funds in September, not all hedge fund strategy groups moved lower for the month. Directional Trading funds advanced by +0.51% on average, led by Futures managers who capitalized on declining commodity values. Macro managers did not fare as well, losing -3.62% on the month.
Specialty Strategy managers were the weakest performing strategy group for the month of September, with funds losing -7.33% on average. Emerging Markets funds were once again the main reason behind the losses as these managers shed nearly 10% during the month.
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