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.
Seeking Alpha – If someone was asked to name a fund in the global macro game, undoubtedly Tudor Investment Corp or Moore Capital Management would be among the most frequent responses. The global macro strategy has fared well in the world of hedge funds. Paul Tudor Jones’ Tudor Investment Corp has earned an annualized return of greater than 20% over the span of two decades.
Louis Bacon’s of Moore Capital Management shares the same accolade. And, while they are both down this year, they have fared much better relative to many of their peers and the market indexes in general. Tudor’s flagship fund finds itself -5% for the year, while Moore was -2.9% year-to-date through November as we noted in our November hedge fund performance update.
But, in a never-ending quest for outperformance, Tudor and Bacon want more. And, in order to accomplish that, they see it fit to return to their roots.
FT Alphaville – Centaurus Capital is running down its flagship hedge fund after investors with the London activist failed to back an emergency restructuring. Centaurus, founded by former BNP Paribas traders Bernard Oppetit and Randy Freeman, will now repay the bulk of investors in the $1.2bn Centaurus Alpha fund, with only a handful expected to remain.
The failure to persuade half the investors to lock up their money until June, in return for lower fees, is a surprise as others – including the flagship funds of RAB Capital and Henderson – have won investor backing for similar proposals.
West Palm Beach (HedgeCo.net) – One of the world’s largest hedge funds has temporarily halted redemptions according to reports. Tudor Investment Corp’s flagship portfolio, has been reported to have halted redemptions so they can segregate difficult-to-sell assets in the fund from those they can offload more easily.
Bloomberg reports that the move was made by the the fund to avoid having to raise cash in falling markets to pay out withdrawing investors. Tudor Investment Corp, the hedge fund manager established by Paul Tudor Jones, was also reported by Bloomberg as having temporarily suspended redemptions from the portfolio.
Tudor is reportedly allotting to the investors in Tudor BVI Global shares in Legacy, with a view to selling the assets in Legacy over time to hand money back to those clients.
Founded in 1980 by Paul Tudor Jones II, the firm currently manages $15.4 billion. The firm’s investment strategies include global macro trading, fundamental equity investing in the U.S. and Europe, emerging markets, venture capital, commodities, event driven strategies and technical trading systems.
Alex Akesson
Editor for 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!
Globe and Mail – Math whiz Ravi Sood has ridden the highs and lows of the wild world of hedge funds.
The president of Lawrence Asset Management Inc. made a name for himself running the firm’s flagship hedge fund with stellar returns such as his 75-per-cent gain in 2007.
But the stock market crash has dealt a blow to Lawrence Partners Fund, which suspended redemptions this week after plunging 65 per cent for the first 10 months of this year.
The investment firm “believes it is in the best interests of all shareholders to suspend redemptions for 60 days,” the 32-year-old manager told investors in letter on Monday.
Reuters – Hedge fund manager PMA said on Wednesday its flagship macro vehicle focusing on foreign exchange and interest rate markets returned 4.83 percent in October, even as the global financial crisis ravaged many of its peers.
The unit of SPARX Group Co Ltd, Japan’s largest listed hedge fund manager, said the PMA Harvester Fund managed by macro-strategy chief investment officer Shun Hong Liu had now returned 21.33 percent year-to-date.
"Given that we anticipate that market conditions will remain difficult in the near-term, our strategy will be to remain light and nimble in our positions," the CIO said in a statement.
Globe and Mail – Epic Capital Management Inc. is closing its flagship hedge fund in what could be the precursor to a number of shutdowns in the troubled industry.
The Toronto firm’s assets tumbled from $300-million to $200-million as markets crashed and investors asked for their money, leading the managers to decide that giving remaining investors in Epic Limited Partnership their cash back was the prudent move, said founder and chief executive officer David Fawcett.
Epic focused on finding underpriced mid-sized Canadian companies, but that strategy couldn’t protect the firm from the market meltdown. Epic’s main fund has fallen about 43 per cent so far this year.
"We wanted to do it while we could and didn’t have a gun to our head," said Mr. Fawcett, who added that he expects a "pretty orderly unwind."
New York (HedgeCo.Net) – One month after RAB was forced to revamp their flagship fund, the British hedge fund is halting redemptions on their Energy Fund. After losing more than 50% of its value this year, RAB has informed investors that they will not be able to make withdraws in the near future.
Investors who wish to stay in the fund will be offered the same deal as those locked up in the $1.4 billion Special Situations Fund. The deal entails paying smaller management fees in exchange for keeping their money in the fund for the next three years.
Investors have until this Friday to let RAB know whether or not they want to accept the offer. The alternative would be receiving “redemption shares,” which are basically an IOU promised by RAB to pay back the investors when they start posting profits.
The Special Situations Fund, one of the largest shareholders of Northern Rock, got burned with the British Government nationalized the faltering bank. Losing almost $55 million in the first half of the year, former RAB head Phillip Richards wrote it off as “very regrettable” while outlining some new strategies for the company that involved investing in under-developed regions throughout India and the Middle East. Richards stepped down shortly after as CEO to concentrate exclusively on the Special Situations Fund.
The RAB Energy Fund is run by Gavin Wilson and Mark Redway and once managed over $1.5 billion at its peak.
Julie Scuderi Senior Editor for HedgeCo.Net Email: julie@hedgeco.net
Reuters UK – Recent sharp moves in global currencies are the start of longer trends set to produce strong money-making opportunities for trend-following hedge strategies, according to Insch Capital Chief Executive Chris Cruden.
Cruden, whose Insch Interbank Currency Program is up 7.96 percent over the year to end-September before fees compared with a 27.6 percent fall in the MSCI World index, points to the rise of the Australian dollar versus the U.S. dollar between 2001 and 2008 as an example of previous long-term currency moves.
"I imagine the nature of the shakeout will produce sustained moves lasting many months if not years," said Cruden, a former director of Adam, Harding and Lueck Asset Management AHL.L, now the flagship hedge strategy of Man Group.
CNBC – Ongoing hedge fund losses and liquidations spooked markets Wednesday, and some of the biggest names in the mix now are Citadel Investments and Highland.
Hedge funds had their worst month ever in September, with average losses of 6.2 percent, according to an estimate by TrimTabs Investment Research.
All major categories of funds chalked up losses over the month, but emerging markets, long equity funds and distressed strategies had the worst results. The declines came as investors withdrew $43 billion from hedge funds—almost seven times the previous monthly record for redemptions, TrimTabs said.
Citadel confirmed to CNBC that its flagship Kensington and Wellington funds, which hold around $15 billion in assets, are down between 26 percent and 30 percent so far this year.
International Herald Tribune – Only 10 months ago, Remy Trafelet was so flush that he treated about 100 employees at his hedge fund to a getaway in Venice. He and his crew spent a long, luxurious weekend at the five-star Hotel Bauer, which has Murano glass chandeliers, private gondoliers and a splendid view of a 17th-century basilica.
But now, a bit like Venice, Trafelet’s hedge fund seems to be sinking. His flagship fund has fallen about 26 percent this year, and Trafelet is struggling to hold on to anxious employees, as well as some investors.
Perhaps the most remarkable thing about Trafelet is that he is not so remarkable at all. Thousands of hedge fund managers like him — mostly young, mostly male and virtually all unknown outside financial circles — confront a sober reality: for now, the days of easy money are over.
Times Online – Every week at least one British hedge fund is considering winding up its funds as catastrophic investment performance puts the sector under unprecedented pressure, an industry expert said yesterday.
Andrew Shrimpton, the former head of hedge fund regulation at the Financial Services Authority who now runs Kinetic, a consultancy, said: “The credit crisis is definitely kicking in for the hedge fund industry now. We are being approached by hedge funds considering voluntary fund liquidations on a weekly basis.”
His remarks came as CQS, one of London’s best-known hedge funds, wrote to its investors to say that its flagship $4.25billion CQS Fund had fallen 9.42 per cent for the year to date. Michael Hintze, its chief executive and senior investment officer, told investors that senior management at CQS were meeting as often as three times a day to monitor the fund and take action over its exposures where necessary. The fund, which specialises in convertible arbitrage – or small price differentials between bonds and underlying equities – is down more than 11 per cent for the year.
Times Online – Who would be in hedge funds right now? Man Group, which has long traded on its name as the world’s largest hedge fund manager, yesterday found the tag something of a liability.
The shares lost 35½p to 398p before a trading update next Monday, making a 46 per cent fall in six weeks, with analysts saying that it is heavily exposed to the whole hedge fund industry through its fund of funds portfolio. Barclays’ index of hedge fund performance shows a 5.6 per cent fall in the year so far to the end of August. Hedgies relied on high borrowing to generate high returns. Most are now being forced to sell positions to cut debt.
Meanwhile, there are growing question marks over Man’s flagship AHL managed futures fund, as its performance has slipped in the past quarter and the short-selling ban may have an impact on its strategy. Man itself is still available to be shorted.
Investec, which cut its target price from 650p to 460p, said: “The hedge fund industry looks set for further negative press, possibly impacting on short-term fund flows at Man, as well as its near-term share price performance.” Kaupthing cut its earnings forecast but held its 630p target pointing out that the AHL fund was still up 3 to 4 per cent in the year so far.
