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.
New York (HedgeCo.Net) – New York City-based Ramius Capital will close four of its hedge funds that manage about $550 million in capital, the Wall Street Journal reports citing people familiar with the matter.
The closing hedge funds are concentrated in convertible bonds, distressed credit and securities of merging companies.
Some of the money in these funds could be transferred to Ramius’ largest, $2.1 billion multi strategy fund. However, as the company deals with a wave of redemption requests, the multi strategy fund could be in danger of losing about $500 million of its value.
“Going forward, these strategies will continue to be important allocations in our multi-strategy fund and will continue to be managed by the same portfolio teams,” Ramius told the Wall Street Journal.
Ramius currently manages about $10 billion in capital. It recently offered its main hedge fund clients lower management fees to keep their loyalty with the firm.
Julie Scuderi Senior Editor for HedgeCo.Net Email: julie@hedgeco.net
FT Alphaville – Centaurus Capital is running down its flagship hedge fund after investors with the London activist failed to back an emergency restructuring. Centaurus, founded by former BNP Paribas traders Bernard Oppetit and Randy Freeman, will now repay the bulk of investors in the $1.2bn Centaurus Alpha fund, with only a handful expected to remain.
The failure to persuade half the investors to lock up their money until June, in return for lower fees, is a surprise as others – including the flagship funds of RAB Capital and Henderson – have won investor backing for similar proposals.
Computerworld Australia - The collapse of Wall Street may help make computer science and other IT careers attractive to students who abandoned those fields in droves after the dot-com bust of 2001.
William Dally, chairman of the computer science department at Stanford University, says that for the past several years, he has watched some students interested in technology go into banking and finance because those fields could be more lucrative.
"Many thought they could make more money in hedge funds," Dally says. He notes that students are returning to computer science because they like the field and not because it will necessarily make them rich.
Barron – In the 1980s, Carl Icahn loomed large as a corporate raider, in the mold of the Gordon Gekko character in the movie Wall Street. Icahn made a lot of money but was vilified for what some considered a slash-and-burn approach to taking over companies.
Twenty years later, Icahn has morphed into a shareholder activist and rails against what he considers to be incompetence among senior executives and on boards. "They call me raider. They call me an activist," says Icahn, who, at 72, shows no sign of slowing down. "I don’t know what those labels mean. All I know is that something should be done to improve corporate governance and management. If we don’t, managements will remain unaccountable and our economy will suffer."
Time – Here’s one upside to a down market: a number of historically prominent mutual funds that long ago shut their doors to new investors are reopening.
It’s been years since anyone without an existing account could put money into some of the best-known names in the business, like Sequoia Fund, Dodge & Cox Stock, Longleaf Partners, Fidelity Magellan, Artisan Mid Cap Value, Oakmark Equityand Income, Vanguard International Explorer and Third Avenue Small-Cap Value.
Bloomberg – Parkcentral Capital Management LP, an investment firm that manages money for the family of former U.S. presidential candidate H. Ross Perot, is liquidating a fixed-income hedge fund because it’s “no longer viable.”
Parkcentral Global Hub Ltd.’s assets fell as much as 40 percent to $1.5 billion this year through October. The fund is selling remaining holdings to pay creditors, Eddie Reeves, a spokesman for the Plano, Texas-based firm, said in an e-mailed statement today. Perot, 78, who ran unsuccessfully for U.S. president in 1992, and members of his family are the fund’s biggest investors.
Washington Post – New Jersey’s pension fund is under fire over a series of hedge-fund investments, the Wall Street Journal said.
New Jersey made the investments last month, to funds run by BlackRock Inc <BLK.N>, Canyon Capital Advisors LLC and GoldenTree Asset Management LP, as they were "facing the equivalent of margin calls," William Clark, director of the New Jersey Division of Investment, told the paper in an interview.
In effect, the funds, which had borrowed money for investments, either faced or anticipated facing demands from lenders for cash as the value of those investments fell, the paper said.
State legislators, upon learning of the investments, are questioning both the wisdom of the decisions as well as the process, according to the paper.
Money Morning – Hedge funds looking to slash their use of borrowed money may have to unload another $200 billion in assets to reach their objectives, a new study found, though a Money Morning expert believes the exit door could get pretty narrow should the holiday shopping season get off to a rocky start later this week.
Investors yanked $40 billion from the $1.5 trillion hedge fund industry in October, a month in which market losses slashed industry assets by an additional $115 billion, Hedge Fund Research Inc., reported. A new survey of hedge fund managers conducted by Sanford C. Bernstein & Co. LLC found that 63% said the sale of assets to cut leverage was at least half completed. Another 23% said the process was three-quarters complete.
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.
Wall Street Journal – In 2006, Lawrence Summers resigned as president of Harvard University and took a position as a part-time managing director with D.E. Shaw Group, a New York hedge fund with a reputation as one of the most secretive trading outfits in the world.
D.E. Shaw is known for using sophisticated computer-based quantitative strategies to make money on fleeting movements in the stock and bond markets. The fund has been a top performer, returning 15% to 20% a year over the long term, and in two decades has grown into a global powerhouse. But like many funds, it has taken hits in the credit crisis.
USA Today – It is last call for investors to ask for their money back from poorly performing hedge funds. Whether that is a bullish or bearish sign for battered stocks is anyone’s guess.
Wall Street hopes the passing of the Nov. 15 deadline — the last day for many investors to make a request to redeem hedge fund shares payable at year’s end — could mark the beginning of the end of "forced selling" by funds to raise cash. If the selling recedes, it could help lift some of the downside pressure on stocks. Forced selling has been blamed for sharp stock price swings and plunging asset values in the financial crisis.
Investors have redeemed an estimated $85 billion from hedge funds through the end of the third quarter, says Charles Gradante, co-founder of hedge fund adviser Hennessee Group.
Reuters – As many hedge funds suffer big losses and anxious investors yank out their money, the town synonymous with the riches of their recent glory is now hurting.
In Greenwich, Connecticut, the luxury car dealers are quiet, the prices of mansions are declining and the retailers who have made a good living serving its wealthy residents are complaining about a sudden drop in business.
"Everything is down. We started to see it in the summer, but October is when the bottom caved in," said James McArdle, whose family has run McArdle’s Florist and Garden Center in Greenwich for 98 years. "Housing sales are down and so that always cuts into our market. Fewer buyers, fewer makeovers."
