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 Post – Despite headlines about hedge funds that got decimated after making complicated bets on mortgages or energy, the most basic investment strategy of picking which stocks will rise and which will fall – known as long-short equity strategy – is turning out to be one that’s giving hedge-fund managers fits.
Indeed, hedge funds are finding that today’s choppy markets are proving to be tougher to navigate than the terrible years following the dot-com bubble burst in 2000. And it helps to explain why so many hedge funds have called it quits and instead are moving into cash.
The hedge-fund industry is seeing its worst results in recent memory, down an average of 4.09 percent year-to-date, according to the Hennessee Hedge Fund Index. Long-short equity funds, rarely expected to be losers, are nevertheless down 3.2 percent for the year.
Reuters – Some of the world’s biggest hedge funds suffered a dramatic drop in assets in the first half of 2008 as financial markets tumbled and many investors asked for their money back, according to a survey released on Monday.
Renaissance Technologies, which runs one of the world’s most successful hedge funds that also charges some of the world’s highest fees, saw assets under management shrink by 14.71 percent during the first six months of the year. The firm, run by former mathematics professor Jim Simons, managed $29 billion at the end of June, according to a survey conducted by magazine Absolute Return.
While total assets may have shrunk, its $8 billion Medallion fund soared 48 percent at the end of July, net of fees, the New York Post reported, citing people familiar with the returns.
Farallon Capital Management’s assets declined 8.3 percent to $33 billion, and Goldman Sachs Asset Management saw assets fall 7.9 percent to $26.9 billion.
New York Post – Former Goldman Sachs exec Steve Mandis has left the $12 billion hedge fund Halcyon Asset Management – one of the oldest hedge funds on Wall Street, according to an investor letter.
Mandis was vice chairman and chief investment officer at Halcyon Structured Asset Management LP, a lending subsidiary of Halcyon that he helped co-found about four years ago with about $1 billion in capital.
According to an investor letter issued Tuesday and obtained by The Post, Mandis’ departure is "effective immediately," and the firm expects to announce a succession plan "as soon as possible."
Although the official reason for Mandis’ departure could not be learned, people familiar with the matter said his lending subsidiary had been performing poorly and was drawing the ire of some of the firm’s biggest institutional investors.
New York Post – The heat is getting turned up under Alan and Philip Milton, the brother team that runs Greenwich-based Windmill Management and its embattled SageCrest hedge funds.
A lawyer for an investor in the SageCrest II hedge fund is threatening to fight the Miltons’ Chapter 11 filing for the $500 million fund – claiming the duo made the court filing last Sunday night, in part, to head off the possible appointment of a forensic accountant to probe the fund’s books.
WoodCreek Capital, was due in court Aug. 18, the day after the Miltons filed to liquidate their funds, to seek a pre-emptive lien on some of SageCrest assets and access to inspect their books.
WoodCreek had filed a $5.8 million lawsuit against the Miltons’ fund claiming the duo had reneged on a promise to honor their withdrawal from the fund.
Reuters – The commodity half of oil tycoon T. Boone Pickens’s BP Capital hedge fund lost 35 percent of its value in July, the New York Post said, citing sources.
The fund is believed to be down about 10 percent for the year, the paper said.
A Pickens spokeswoman told the paper that commodity-fund investors were informed that the steep decline in natural gas and oil prices has had an adverse impact on its performance.
"We continue to analyze the market and adjust accordingly," the spokeswoman was quoted as saying.
New York Post – Corporate raider turned activist investor Carl Icahn is having a tough year.
The Far Rockaway, Queens native’s hedge funds are suffering their first losses since the 72-year-old opened them in 2004. The losing streak, which started midway through 2007, is expected to continue when Icahn Enterprises, the publicly-traded holding company for his hedge funds and other investments, reports earnings on Tuesday.
Shares of Icahn Enterprises, which include the hedge funds and other businesses, have plummeted nearly 50 percent this year as investors have backed away from their initial enthusiasm for the activist investor. His funds were up about 2 percent last month, but are down roughly 6 percent for the year, according to investors.
New York Post – Jim Simons, a man known for running one of the world’s most secretive, expensive and successful hedge funds, is on track to wow investors with another year of double-digit returns.
Simons’ $8 billion Medallion fund, the oldest of the three Renaissance Technologies funds, was up 48 percent at the end of July, net of fees, according to people familiar with the funds’ returns.
Medallion, which is funded mostly by Renaissance insiders, charges a whopping 49 percent in fees, including a 5 percent management fee and 44 percent incentive fee.
That’s high even by the standards of an already costly industry – the industry average is a 2 percent management fee and a 20 percent incentive fee – but with such eye-popping returns, no one’s likely to complain.
New York Post – After months of falling financial stocks and rising oil prices, July’s sudden turnaround was a welcome relief to average investors.
Not so for hedge funds – including subprime-mortgage superstar Phil Falcone.
That’s because a number of smart-money investors, including Falcone’s Harbinger Capital Partners, got slammed when oil took an unexpected dive, and Wall Street stocks suddenly popped in mid-July.
It was the exact reversal of otherwise long-winning bets that energy prices would continue to climb and financial firms would keep getting pummeled.
"July will be bad in aggregate for the hedge fund industry," said Veryan Allen, who advises large investors on hedge funds. "The short squeeze in financial stocks and the oil selloff has hurt quite a few," he said.
New York (HedgeCo.Net) – New York’s top 100 hedge funds are in trouble and can’t seem to get out of the red, according to performance reports obtained by the New York Post.
Prominent hedge funds are still trying to recover from the credit crunch and unless they see a turnaround soon, 2008 could be the first year that hedge funds as a whole lose money since 2000.
Big time fund Appaloosa, who manages about $4 billion, is down almost 18 percent this year, compared to returns of 8 percent and almost 25 percent in ‘07 and ‘06 respectively.
Cantillion Capital Management, another monster fund that has $2 billion tied up, is closing in on 20 percent when it comes to losses this year. And the $10 billion Tontine Associates isn’t faring so well either. The fund is down 17 percent after an amazing 2007 where it posted returns of 40 percent. QVT Financial was another fund that saw 40 percent returns in ’07, only to be down over 6 percent this year.
It’s not all bad news, however. Some fund managers are just destined for success. John Paulson’s fund, Paulson Advantage is up over 18 percent this year after a record breaking 2007. Phillip Falcone of Harbinger Capital is riding high with returns of over 40 percent so far.
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) – In a press call with HedgeCo, a global forum for the alternative asset community, Joe Christinat of Thomson Reuters clarified the story of HedgeWorld’s abrupt closing.
Christinat said that HedgeWorld will retain the format that it is in currently. They will continue to offer TASS database, and have the service provider/jobs/conference section as well as publish several newsletters including the alternative advantage newsletter.
Although unable to comment on the rumors of staff changes, Christinat said that they are continuing to follow the Thomson Reuters strategy since the purchase of Reuters by Thomson.
Launched in 1999, HedgeWorld became one of hedge fund industry’s premier information provider for individual and institutional accredited investors and their professional advisers, fund managers and service providers in the global hedge fund industry.
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!
New York Post- If the Securities and Exchange Commission expands its clampdown on short-selling, it is widely expected to slam hedge funds like Stephen Cohen’s SAC Capital and James Simon’s Renaissance Technologies, which profit from fast-and-furious trading, experts predicted.
That’s because under the long-accepted rules of the short-selling game, these hedge funds, which often trade through sophisticated computer programs, have been able to skip the process of borrowing the shares needed to cap off their short positions.
But that luxury is now being challenged by the SEC’s mandate requiring investors who short 19 financial stocks, including Fannie Mae and Freddie Mac, to borrow the shares they short before they bet against the stock whose price they predict will fall.
New York (HedgeCo.Net) – Alan Schwartz, former Bear Stearns CEO, has decided to leave JPMorgan and pursue other ventures.
“With most of the work on the merger integration behind us, Alan will be moving on from the firm at the end of August to pursue other interests,” said JPMorgan CEO Jamie Dimon in a memo distributed internally.
Schwartz, 58, is expected to finish out the month of August at JPMorgan. The New York Post reported last month that Schwartz was presented several offers including one from private equity firm Kohlberg Kravis Roberts & Co. and others from hedge funds.
“Despite the extremely difficult circumstances that brought our firms together, Alan has been a terrific and constructive partner through the process,” Dimon added in the memo.
Schwartz took the leading role at Bear Stearns, replacing James Cayne. He was in office only three months before the shocking Federal Reserve-backed buyout that put 14,000 of his employees out of a job. Some suspected he was reluctant to align himself with JPMorgan after such a large number of his staff was laid off. Schwartz defended his company’s implosion, blaming the event on false market rumors of a liquidity crunch.
"I am very proud to have been a part of Bear Stearns,” Schwartz stated in the memo. "It was a special place I know many of us will miss.”
While an insider did confirm Schwartz’s exit plan, there is no word yet on what his severance will entail.
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
