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.
CNBC – Cramer sees both of these as good companies in a great growth industry, but using a trick out of his old hedge fund playbook, he suggests the strategy of a paired trade: buying the best stock in the business while at the same time betting against a second stock in the same industry. By betting against another company in the industry, Cramer says, you’re hedging out the risk that home entertainment will turn out to be a flop, and because you’re buying the best company in the industry, the two trades shouldn’t cancel each other out.
Reuters UK – HSBC Halbis fund manager Jim Dunsford is favouring trades exploiting price discrepancies, rather than big bets on market movements, because he believes markets are still in unknown territory.
Dunsford manages the 100 million euro (85 million pound) Halbis Global Macro fund, which uses hedge fund-style techniques to try and make money in all environments.
"We prefer non-directional, relative value bets. We’re living in a very unusual environment and directional bets are risky," Dunsford told Reuters.
Bloomberg – Frederic Eechaute, a former senior analyst at DKR Oasis Management Co. LP, will start a Japan- focused equity hedge fund that trades stocks using its own analyst database.
Eechaute, who will split his time between Tokyo and Sydney, along with Stephen Good, who formerly worked in the Japanese equity sales department at Mizuho Securities Co., set up Instinct Capital in June to run the new fund that may open as early as September. The fund will employ a so-called long-short strategy, betting on rising and falling stocks, and have a maximum capacity of 30 billion yen ($319 million).
Bloomberg – John Meriwether, who roiled global markets when Long-Term Capital Management LP collapsed in 1998, plans to shut his current hedge fund, according to a person familiar with the matter.
JWM Partners LLC is closing its main Relative Value Opportunity II fund after losing 44 percent from September 2007 to February 2009. Meriwether, credited with generating billions of dollars of revenue at the former Salomon Brothers in the 1980s through so-called relative value trades, returned an average of 1.46 percent a year with his new fund since opening in 1999, compared with 2.4 percent for the Credit Suisse/Tremont Hedge Fixed-Income Arbitrage Index.
Reuters – Large dealers in the $26 trillion credit default swap market are blocking CME Group’s CME.N efforts to clear trades, in a bid to retain their "oligopoly" over the market, hedge fund BlueMountain Capital Management said on Monday.
Central clearing of CDS trades is viewed as imperative to removing risks associated with the potential failure of a large counterparty. Fears of margin losses helped spur a run on Bear Stearns Cos and Lehman Brothers and sparked government calls for mandatory clearing of standardized CDSs.
Bloomberg – Hedge funds and other investors who short-sell shares in Britain’s financial companies must continue to disclose their trades, the U.K.’s financial regulator said.
A reporting requirement put in place by the Financial Services Authority in January will continue until new short- selling rules come into place, the agency said in a statement today. The requirement had been due to lapse on June 30. The new set of rules is expected to come into force in 2010.
“Keeping the disclosure requirements will continue to enhance transparency and limit the potential for market abuse, while details of a long-term regime for short-selling are being drawn up,” said Sally Dewar, the FSA’s managing director of wholesale and markets.
Bloomberg – Hedge fund investors’ growing demands for separate accounts may be an overreaction to increasing redemptions and fraud, participants said at an industry conference in Hong Kong this week.
Investors are demanding accounts that allow them to tailor investments, see trades and get out when they want, instead of the traditional way of pooling their money in a fund, as managers try to curb redemptions and after U.S. financier Bernard Madoff’s conviction for running a Ponzi scheme.
A record $155 billion was pulled from hedge funds last year, according to Chicago-based Hedge Fund Research Inc., while capital outflow may accelerate to $168 billion this year, a Deutsche Bank AG survey in March showed.
Bloomberg – Octagon Capital Management Pte, run by former managers of the Government of Singapore Investment Corp.’s quantitative-investment group, plans to start a fund that seeks to profit from broad economic trends.
Octagon, which uses computer models to pick trades, will raise money “in the near future” for a quantitative macro fund that wagers on currencies, equities, interest rates and commodities in Asia, said Lam Poh Min, 39, co-founder of the Singapore-based hedge-fund firm, in an interview. The firm is looking for a “more opportune time” to start the fund, Lam said yesterday.
Times Online – Accountants and lawyers who are trying to sort out the European collapse of Lehman Brothers, the American investment bank, have charged more than £100million in fees in six months.
The bonanza shows no sign of abating. PricewaterhouseCoopers (PwC), the administrator, says that costs will accrue at a similar rate over the coming months as a team of nearly 1,500 people unwinds the complex financial web behind the world’s biggest bankruptcy.
PwC paid a further £114.8 million to 800 employees of the bankrupt bank who stayed on to help to unwind millions of trades between Lehman and other banks and hedge funds.
Interactive Investor – Japan’s Meiji Yasuda Life Insurance Co said on Monday it planned to cut its unhedged foreign bond holdings while increasing its hedged foreign bond holdings this business year to offset currency risks.
The nation’s third-largest life insurer by assets also said it has been experimenting with trades in yen swap rates since March to seek higher yields, and said it would boost its yen bond holdings mostly in super-long Japanese government bonds.
Meiji Yasuda said it planned to reduce its unhedged foreign bond holdings by about 100 billion yen ($997 million), and raise its currency-hedged foreign bond holdings by 200 billion yen in the year to March 2010.
Street.Com – In a fact sheet about the fund, which engages in several arbitrage strategies, AQR outlined plans to take advantage of a lack of liquidity in the "thinly traded" SPAC market.
A spokesman for AQR says the firm is not concerned that it missed the height of the market last fall, since it expects attractive risk-adjusted returns for some trades.
Independent – Lansdowne Partners, the hedge fund, has made almost £13m from a short position in Aviva – and stands to make more if the beleaguered insurer announces a rights issue.
The London-based investor has had a net short position on 0.27 per cent of Aviva shares since 13 February. The stock has since tumbled to less than half its value and on Friday a trade could have netted the fund £12.7m.
Hedge funds which made a killing last year short-selling banks ahead of rights issues are turning their attention to the insurance sector.
Lansdowne last month made a possible profit of almost £2.7m from short positions in Old Mutual and Legal & General, and has continued with trades in Aviva and Prudential. Lansdowne is not alone. Rivals including Odey Asset Management, Diamondback Capital and Gilder Gagnon Howe have also been playing the game.
