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Miami Herald – The deflating commodities bubble is claiming its first casualties as large investment funds absorb staggering losses from bad bets that prices for oil, precious metals and grains would keep going up.
Hedge fund operator Ospraie Management LLC notified investors Tuesday that it’s closing its flagship fund after it suffered losses in August on positions in energy, mining and other natural resource-related stocks that left the fund down nearly 40 percent year-to-date. It’s believed to be the first hedge fund to go bust in this latest commodities boom as prices come crashing down after a historic bull-run earlier this year.
And the bloodletting may have only begun. Wall Street analysts say similar trouble looms for other funds that got caught up in the exuberance of the boom but were too late in getting out.
Myrtle Beach Online – The deflating commodities bubble is claiming its first casualties as large investment funds absorb staggering losses from bad bets that prices for oil, precious metals and grains would keep going up.
Hedge fund operator Ospraie Management LLC notified investors Tuesday that it’s closing its flagship fund after it suffered losses in August on positions in energy, mining and other natural resource-related stocks that left the fund down nearly 40 percent year-to-date. It’s believed to be the first hedge fund to go bust in this latest commodities boom as prices come crashing down after a historic bull-run earlier this year.
And the bloodletting may have only begun. Wall Street analysts say similar trouble looms for other funds that got caught up in the exuberance of the boom but were too late in getting out.
They say Ospraie’s misfortunes illustrate one of the hard lessons emerging from the commodities bubble: Many money managers have never been through a commodities boom and so were ill-prepared for the hyper-volatility associated with hard assets.
"You’re always going to have victims when a market comes down this fast. People stayed at the party for too long," said Phil Flynn, energy analyst at Alaron Trading Corp. in Chicago.
Zawya – The Lionhart Group, an alternative investment management group that specialises in global multistrategy arbitrage, aims to attract $2 billion (Dh7.4bn) of investment from the Gulf in the next few years through its new branch at the Dubai International Financial Centre.
The regional office has two main roles. The first is to pull in cash from the Middle East and North Africa (Mena) for its investment and hedge funds, and the second is to expand the group’s investments in regional markets.
"We have had relations with GCC investors for a long time," Jim Quinn, Chief Operating Officer of Lionhart Middle East, told Emirates Business. "Around 10 per cent of our assets under management are from the region and these relations started 10 years ago.
"We are planning to build on these relations to attract around $2bn of GCC investments into our funds during the next two to three years. "We are opportunistic and the Mena region is witnessing major economic developments. We have two flagship investment funds with total assets under management of $500m.
ITNews- Recent second quarter figures from the Cayman Islands Monetary Authority (CIMA), have confirmed the achievement of a key milestone by the Cayman Islands financial services industry, with more than 10,000 investment funds currently registered in the jurisdiction.
At the end of June 2008 there were 10,037 funds on CIMA’s register, compared with 9,681 at the end of the previous quarter and 8,972 at the mid point of 2007. The current annual growth rate of 12% in net new hedge funds, which takes cancellations into account, is particularly striking in the context of the deterioration in global markets following the sub-prime meltdown and associated credit crunch.
"This is yet another round of impressive statistics from CIMA," said Mark Lewis, senior investment funds partner at Walkers. "The 10,000 barrier has been breached as hedge funds continue to be formed in the Cayman Islands, which remains the clear jurisdiction of choice for investment managers and their advisers around the world.
West Palm Beach (HedgeCo.Net)- The SEC has clarified its position on the "Cash Solicitation Rule" saying that a registered investment adviser may compensate a person for soliciting investors for, or referring investors to his or her investment fund.
Usually, under the rule, it is illegal for an investment adviser to pay a cash fee, directly or indirectly, as the "Cash Solicitation Rule" only applies to solicitations of “clients.”
But the SEC has taken the position that solicitations of investors for investment funds should not fall ito that category. The determination of whether the cash payment is being made solely to compensate that person for soliciting or referring investors will depend on the facts and circumstances of each particular case.
The SEC also warned that "Despite the additional guidance provided by the interpretative letter, investment advisers will need to continue to be mindful of potential traps for the unwary when entering into solicitation agreements."
Cayman Net News- The Royal Cayman Islands Police Service (RCIPS) have arrested an unidentified 47-year-old man in connection with last month’s collapse of several Cayman-domiciled investment funds.
Detectives from the Financial Crimes Unit (FCU) arrested the man on suspicion of theft, false accounting and uttering false documents after their investigations into the collapse of four hedge funds listed under the umbrella name “Grand Island”.
In June the Cayman Islands Monetary Authority (CIMA) confirmed that the “Grand Island” funds were put into voluntary liquidation by the funds’ shareholders. Three of the four funds involved were registered with CIMA in 2006 and one other was an unregulated fund.
Police say that the funds were believed to have been worth millions of dollars, though it is still unclear how much money was lost and how many people are affected by its collapse.
However, it is widely speculated that the losses are up to $70 million dollars and the main commodity being traded was oil. Because of the nature of the three registered funds investors had to contribute at the very least US$100,000.
Reuters- Sovereign wealth funds, which control up to $3.7 trillion in assets and have been making headlines as they buy assets in the West, will ultimately have the biggest impact on private equity and hedge funds, analysts at JPMorgan Chase said in a report on Thursday.
State-run investment funds currently own up to 7.5 percent of so-called alternative assets, or about $340 billion, and this stake could grow to as high as 17 percent by the end of 2012, said David Fernandez and Bernhard Eschweiler, analysts at the bank. "The main beneficiaries of the increased allocation by SWFs to alternatives are set to be private equity firms and hedge funds. These managers offer skills, resources and expertise that would be difficult for most SWFs to develop on their own," they said in the report. Indeed, last year one of the highest profile deals among sovereign wealth funds was the China Investment Co Ltd’s purchase of a $3 billion stake in U.S. private equity firm The Blackstone Group.
