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.
GrowthBusiness.co.uk – Its proposals would, if enacted, put an additional burden on both funds and the companies in which they invest. They have been greeted with dismay in the City, but what would they mean for the industry?
The central notion is that fund managers should be subject to ‘harmonised’ governance standards across the EU, with robust systems put in place to manage risk, liquidity and conflicts of interest. The rules would apply to private equity funds with more than €100 million (£90 million) invested, though this threshold would be increased to €500 million for funds which do not use leverage and lock in their investors for a minimum of five years.
Bloomberg – James Pallotta and Christopher Pia, hedge-fund managers who recently struck out on their own, are discovering just how much the global financial crisis is reducing investors’ appetite for risk.
Pallotta, who split from Tudor Investment Corp. last month, and Pia, who spent 13 years managing money for Moore Capital Management LLC, probably will raise about $500 million apiece this year, according to brokers who provide loans and administrative services to hedge funds. Michael Ryan, who left Credit Suisse Group AG to open Jai Capital Management, will top out at around the same amount, according to the brokers, who asked not to be identified because the funds are private.
Investors, who put more than $1 billion each into seven new hedge funds last year, are scaling back after the industry posted its worst year on record in 2008. Whether it’s a big-name manager like Boston-based Pallotta or a newcomer, that threshold will be harder to cross this year than in the boom of 2002 through 2007.
Globe and Mail – A U.S. hedge fund with a reputation as an activist investor has become the biggest shareholder in AbitibiBowater Inc., putting added pressure on management at the struggling paper giant to find a speedy solution to its financial woes.
Seattle-based Steelhead Partners LLC revealed in a regulatory filing made Friday that it now holds 14.8 per cent of Abitibi’s shares. The fund has tripled its stake in the debt-heavy newsprint king in recent weeks, jumping to the head of the pack among Montreal-based Abitibi’s shareholders.
Steelhead first said in July that it had acquired 5 per cent of Abitibi’s shares, surpassing the threshold that required it to disclose its holdings under securities laws. Its stake had grown to 10 per cent in early January and almost 15 per cent by the end of the month, according to its most recent filing made with the U.S. Securities and Exchange Commission.
Norwalk Advocate – Some hedge funds are reducing their management and incentive fees to keep investors for longer periods during turbulent times on Wall Street.
Typically, hedge fund managers require investors to lock their money into a hedge fund for a year while charging a 2 percent management fee and keeping 20 percent of hedge-fund profits as an incentive fee – if it reaches a pre-determined point.
Camels Capital LLC, a Greenwich-based hedge fund, and Ore Hill, a New York-based fund, among others, have restructured these terms to keep investors.
"Ourselves, Ore Hill and a few other funds have taken a step to do that in this period of liquidity to lock in investors," said Richard Brendan, chief executive officer for Camels Capital. "We’ve been able to lock in our investors for a period of time to participate in opportunities with them."
Brennan would not comment on the specifics of the agreement between the hedge fund and his investors.
Scott Baker, a principal with Greenwich-based hedge fund investment firm Cookpine Capital, said many hedge funds are coming up with innovative ways to secure investor capital for longer periods.
West Palm Beach (HedgeCo.Net)- Russia has held up very well over the month of June according to one of the most experienced Russian hedge fund managers, Pharos Financial Group. For the first half of 2008, the Pharos Russia Fund was up 3.8%, the Pharos Smll Cap Fund was up 6.8% and the Pharos Gas Investment Fund was up 3.3%. This compares very favorably with the MSCI Russia Index which was down 2.9% over the same period.
Trading activity throughout June was primarily driven by developments in global markets as domestic news flow was relatively light. However, Russia was very resilient through this very difficult month. The best performing stocks in June were fertilizers, metals and mining companies, which have also been the best performers over the first half of 2008.
Meanwhile, one of the most important developments in June was the final dissolution of utility holding company RAO UES. UES has been one of the most liquid stocks in Russia since it began trading in 1995, and for much of the following 10 years it was traded as the market proxy for Russia. The de-listing and final break up of UES on June 6 was the culmination of a very thorough restructuring of the entire utility sector which has seen $100B of assets split into a series of independent companies, and is one of the great underreported business stories of this decade.
"We expect financial markets to continue to be challenging throughout the summer as the credit crisis continues to wrack global markets." Pharos said, "Russia’s economy remains a beacon of stability in these turbulent times and the country is in excellent financial shape. However, global nervousness and uncertainty will cause short term volatility that will at times push fundamental valuation metrics aside. Our funds are positioned relatively defensively here, and we are focusing on investments that should outperform in this difficult environment."
Pharos Financial Group is specializing in the securities markets of Russia and the former Soviet Union. With a eleven year history through up and down markets, Pharos has a proven record of superior absolute returns with Russian Hedge Funds and Russia Hedge Fund Investing.
