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.
Chicago Tribune – Strong returns are a mixed blessing this year for investment funds that specialize in trading futures contracts.
While the stock market plunged about 35 percent, managed futures funds posted annual returns of about 16 percent, according to the Credit Suisse Tremont Hedge Fund Index.
That makes them one of the few havens for investors at a time when pensions, retirement savings and even prominent local hedge funds such as Citadel Investment Group and Magnetar Capital LLC have recorded big losses.
But the success of managed futures has also left them vulnerable to client withdrawals. Because market turmoil froze the assets in many portfolios, some institutional and individual investors are pulling money from managed futures.
Bloomberg – Salida Capital Corp., a Toronto-based hedge-fund manager with assets of about C$900 million ($834 million), halted redemptions on three of its funds after the bankruptcy of Lehman Brothers Holdings Inc.
Lehman acted as prime broker for Salida’s C$157 million Global Opportunity Fund, the C$85 million Global Prospector Fund and the C$64 million Global Arbitrage Fund, Managing Director Courtenay Wolfe said in an interview.
Salida is one of dozens of investment managers worldwide whose Lehman prime-brokerage accounts were frozen when the New York-based company filed for protection from creditors on Sept. 15. Large securities firms such as Lehman typically offer prime brokerage services to hedge funds and professional investors that borrow stock and cash to invest.
“The Lehman issue is something we are navigating through,” Wolfe said today in a telephone interview from Toronto. “We are working very hard to get the securities back for our firm and our investors because we believe they are rightfully and legally ours.”
New York Times – For some hedge funds, Lehman Brothers has become the Roach Motel of Wall Street: They checked in, but they can’t check out.
Two weeks after Lehman spiraled into bankruptcy, hedge funds that did business with the Wall Street bank are still fighting to get their money out of the firm. For some, it has become a life-or-death struggle.
Big funds like GLG, Harbinger, Amber Capital and Elliott Associates have varying degrees of exposure to Lehman Brothers.
But even a $6.2 million fund run by students at the Darden School of Business at the University of Virginia has been caught up in the bankruptcy. The fund, like its larger counterparts, used Lehman as a prime broker, and no longer has access to its money.
Telegraph.co.uk – In the biggest-ever round of redemptions, funds around the world are braced to give back between 10pc and 50pc of their assets under management.
Hedge funds were faced with a slew of redemption notices at the start of the quarter, but investors were prepared not to withdraw their money if returns improved, according to one prime broker. He said many would now be forced to close.
None of the strategies used by hedge funds produced a positive return in September. According to the Dow Jones Hedge Fund Indexes , equity market-neutral funds, which often try to manage risk by shorting a stock in one sector and going long on one if its competitors, have fallen 1.85pc this month, while convertible arbitrage securities have dropped 7.96pc and distressed securities by 7.34pc. That compares with a 9pc decline by the FTSE 100. Hedge fund of funds, which are designed to spread risk, are expected to face the biggest redemptions.
TORONTO - Introduction Capital announced today that BMOCapital Markets and Sprott Asset Management have signed on as the executivesponsors for its third annual forum for sophisticated global investors whoare interested in the Canadian hedge fund market entitled "Canadian HedgeFund Managers Speak with Investors".
"We are very pleased to have such great support from the Canadian Hedge fundcommunity," said Karen Azlen, CEO, Introduction Capital Inc.
The forum will provide investors with direct access to 17 of Canada's mostprominent hedge fund managers who each will present an overview of theirfirm, fund strategy, risk management approach and market outlook to anaudience of fund of funds, family offices, institutions and high net worthindividuals from around the world. The forum will be held on September 25th,2008 at the St. Andrew's Club & Conference Centre in Toronto, Ontario,Canada.
About BMO Capital Markets:
BMO Capital Markets is a leading full-service North American financialservices provider, with over 2,400 employees operating in 14 North Americanoffices and 26 worldwide, offering corporate, institutional and governmentclients access to a complete range of investment and corporate bankingproducts and services. BMO Capital Markets is a member of BMO FinancialGroup (NYSE, TSX: BMO), one of the largest diversified financial servicesproviders in North America with more than US$377 billion total assets andmore than 37,000 employees as at April 30, 2008.
BMO Capital Markets is a recognized leader in Canadian Prime BrokerageServices. They were the first full service Prime Broker in Canada and havemaintained their leadership position since the early 1990s. They provide anextensive range of products and services to hedge funds in Canada and theUnited States, including Clearing & Custody, Securities Lending, Financing,Reporting, Research and Trade Execution.
BMO Capital Markets also provides a number of value-added solutions to hedgefunds and structured product managers. Equity derivative strategies areavailable to add leverage, facilitate alpha transport structures and improveefficiency of after-tax returns at the fund level and/or the end investorlevel. A full range of FX, interest rate and credit derivatives are offeredto add flexibility and hedging capabilities for portfolio managers. Theyprovide these solutions for North American and international funds andinvestors.
About Sprott Asset Management:
Founded in August 2000, Sprott Asset Management Inc. (SAM) a wholly ownedsubsidiary of Sprott Inc., is a fund company dedicated to achieving superiorreturns for its investors over time. SAM is registered with the InvestmentIndustry Regulatory Organization (IIROC) of Canada as an investment dealer,equities and managed accounts and is also a member of the Canadian InvestorProtection Fund (CIPF). SAM has a history of offering investment managementservices to corporations, institutions and high net worth individuals forover 27 years under the umbrella of Sprott Securities Inc., prior to itspermanent separation into an asset management company. Currently, SAMmanages various long/short equity strategies, mutual funds and managedaccounts.
With the input from its investment professionals, the decision makingprocess at SAM encompasses a rigorous set of standards. Its team ofportfolio managers, together with the support of its research team, considerthemselves "investment opportunists", committed to seeking out the "bestideas" for its investors. Taking a consistent, disciplined approach toinvesting, based on sound fundamental analysis and independent research, theinvestment team at SAM carefully explores, analyzes and selects what theyconsider to be a portfolio of the "best ideas" that equity markets have tooffer.
SAM Funds are guided by an investment discipline focused on balancing riskto achieve outstanding returns. Accordingly, they have a "defensive" stylewhere even though they have the ability to use leverage in its Funds, theytypically choose not to do so other than short sales in certain SAM Fundswithin specified limits. Its primary objective is to achieve long-termcapital appreciation by investing in equities with superior risk/rewardcharacteristics and by capitalizing on undervalued investment opportunities.SAM strives for exceptional performance and returns rather than attempt tomirror or follow the market indices.
About Introduction Capital:
Introduction Capital is a boutique firm that brokers strategic businessrelationships between sophisticated global investors and Canadian hedge fundmanagers. The firm tracks over 100 hedge funds in Canada and offers globalinvestors the perfect place to "start" their Canadian manager search.Introduction Capital encourages offshore investors to visit Canada bycreating full manager meeting itineraries on their behalf. Over $150 millionin investor capital has been introduced to Canadian hedge fund managersthrough Introduction Capital since it was founded in 2004 by Karen Azlen.Introduction Capital is a member of the Canadian Chapter of AIMA and isregistered with the Ontario Securities Commission as a Limited MarketDealer.
Attendance to the forum is by invitation only with limited seating. Forinquiries, information on attending or interview requests please contactKaren Azlen, CEO, Introduction Capital Inc. at 416-849-1927 ork.azlen@introcap.com. Please visit our website at www.introcap.com.
New York (HedgeCo.Net) – Service providers for hedge funds scored a victory yesterday when a New York judge threw out a suit filed against UBS by defrauded investors.
Judge Charles Ramos dismissed the complaint in a Manhattan court at the request of UBS, who served as prime broker and custodian to the now collapsed hedge fund Wood River Partners, LP.
The investors had accused UBS of improperly profiting from the trades of the fund, and claimed that UBS had made $100 million by selling borrowed shares of Endwave Corp., the fund’s main holding.
The plaintiffs also accused UBS of creating a short market for Endwave stock while borrowing from the hedge fund’s account to buy shares. This in turn decreased the fund’s portfolio by almost $20 million, according to their allegations.
"The facts alleged do not support the causes of action,” Ramos stated. "These plaintiffs lack standing."
Investors were duped into thinking their assets were being diversified when in reality they weren’t. The hedge fund exceeded the 10% cap on ownership of any one company, though it wasn’t clear whether or not UBS had knowledge of that situation.
Nevertheless, it was a victory for service providers seeing as how recent trends show more and more of disdained investors going after affiliated or hired help by defunct hedge funds.
Investors in Wood River lost approximately $100 million. The plaintiffs of the lawsuit were made up of a group that had funneled in $79 million. John Whittier, who headed the hedge fund, is now serving three years behind bars.
Julie Scuderi Senior Editor for HedgeCo.Net Email: julie@hedgeco.net
HedgeCo.Net is a premier hedge fund database and community for qualified and accredited investors only. Membership on www.hedgeco.net is FREE and EASY. We also offer FREE LISTINGS for Hedge Funds! Be sure to check out our sister sites. For more information, visit www.hedgeconetworks.com
New York (HedgeCo.Net) – Disdained investors of the former Bayou hedge fund, run by one-time fugitive Sam Israel, are going after Goldman Sachs for $20 million to try and recover some of their losses.
Goldman Sachs served as the prime broker while clearing trades and taking custody of the securities. They also provided reports on the hedge fund’s investments. Reports that some say should hold them partly accountable for the $450 million that was duped out of trusting investors.
The suit, which was filed as a private arbitration case in Federal Court, claims that Goldman Sachs Execution and Clearing provided monthly statements to Bayou highlighting its losses. The reports showed more than $88 million between August 1999 and August 2005. But while the reports may have been right on, creditors claim that Goldman knew that Bayou was turning around and reporting substantial gains to investors and did nothing about it.
“Through either gross negligence or a willful choice to ignore the signs of fraud, G.S.E.C. failed to diligently investigate the red flags it was made aware of it, to contact Bayou’s auditors to request additional information, or to alert the appropriate authorities of what it had learned,” the suit alleges.
In 2004, Bayou provided Goldman with reports that claimed it had earned returns of almost 18 percent since its inception, which the suit says was “completely inconsistent with the actual returns the Bayou Funds had been realizing in their trading accounts at G.S.E.C., in which they had done nothing but lose money.”
Goldman has declined to comment.
Julie Scuderi Senior Editor for HedgeCo.Net Email: julie@hedgeco.net
HedgeCo.Net is a premier hedge fund database and community for qualified and accredited investors only. Membership on www.hedgeco.net is FREE and EASY. We also offer FREE LISTINGS for Hedge Funds! Be sure to check out our sister sites. For more information, visit www.hedgeconetworks.com
International Herald Tribune- Samuel Israel 3rd bilked his investors out of $250 million, but they are hoping to recoup some of their money from one of Wall Street’s deepest pockets: Goldman Sachs.
Bayou’s creditors were taking aim at Goldman even before Israel, the former manager of the Bayou Group hedge fund firm, surrendered to the authorities on July 2. His faked suicide on a Hudson River bridge 40 miles north of Manhattan and subsequent disappearance on the day he was to start a prison term had set off an international manhunt.
Bayou’s unsecured creditors committee sued Goldman in late May, claiming the investment bank had failed to detect Israel’s fraud, one of the biggest ever in the hedge fund industry, and to investigate signs that something was amiss at Bayou.
For six years, Goldman acted as the so-called prime broker for Bayou, clearing trades, taking custody of securities and providing reports on the fund firm’s investments. The claim seeks $20 million.
New York (HedgeCo.Net) – Bear Stearns has triumphed in a case involving disgruntled investors seeking $141 million for the losses they incurred following the collapse of the Manhattan Investment Fund Ltd., a hedge fund where Bear served as the prime broker.
The fund, which filed for Bankruptcy in 2000, started experiencing losses almost immediately after its launch in 1995. After shorting technology stocks to no avail, fund manager Michael Berger issued false documentation showing profits and gains and ultimately collected $575 million from investors. Berger pleaded guilty in 2000 to securities fraud.
The suit against Bear Stearns was an attempt to hold hedge funds’ prime brokers responsible for investigating fraudulent clients. However, it was ruled that Bear Stearns had acted in good faith. The eight person jury in Manhattan concluded on June 27th that Bear was not liable for failing to see the discrepancies in the hedge fund’s books.
Julie Scuderi Senior Editor for HedgeCo.Net Email: julie@hedgeco.net
HedgeCo.Net is a premier hedge fund database and community for qualified and accredited investors only. Membership on www.hedgeco.net is FREE and EASY. We also offer FREE LISTINGS for Hedge Funds! Be sure to check out our sister sites. For more information, visit www.hedgeconetworks.com
West Palm Beach (HedgeCo.Net)- Athamas Capital, a Luxembourg domiciled alternative investment fund, has announced the launch of the Athamas Capital SICAV SIF Hedge Fund. (Specialised Investment Fund)
Launched on June 1st, the hedge fund´s strategy is to achieve an absolute return by investing in listed companies addressing the energy and environmental challenges, including; energy, alternative energy, agriculture, energy efficiency and environmental services.
With Goldman Sachas as prime broker, the Athamas Capital SICAV SIF Hedge Fund has EUR16.5 million ($25.5 million) in seed capital and is open to professional investors, high net worth individuals and institutional investors for a minimum investment of EUR250,000 (approximately $390,000). The target fund size for 2010 through 2012 is EUR50-100 million (approximately $77-154 million).
The hedge fund’s strategy stems from the conviction that the energy and environmental sectors will be key in the 21st century due to the depletion of the global energy supply, rising demand, global warming issues raising awareness, as well as regulations and business initiatives to adapt and mitigate it.
Structured as an umbrella fund with four sub-funds, (some of which are yet to be launched) Athamas Capital is an alternative investment fund in the energy and environmental sector, trading mainly along the lines of; long/short equities, long/short listed or OTC derivatives, and futures on indices or commodities.
Athamas means; ("rich harvest"), the king of Orchomenos in Greek mythology, was the son of Eole. He was married first to the goddess Nephele (goddess of Clouds) with whom he had the twins Phrixus (driving rain) and Helle (bright light).
Reuters- Acceleration Capital Group is the latest entry into the capital introduction space, and plans to offer services that give emerging hedge fund managers an edge for growing their businesses. Acceleration Capital was incorporated toward the end of March as a unit of Saratoga Prime Services, a multi-custody introducing broker-dealer platform that clears through Goldman Sachs, Bear Stearns and Interactive Brokers.
"Our view of the industry is that prime brokerage services are extremely necessary but somewhat commoditized, and the pricing and buying of stock is not much different from shop to shop," said Lance Baraker, one of the founders of Saratoga. "But hedge funds are also looking for branding, and it helps to have a global brand name as prime broker partner and on your documents.
