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.
Commodity Online – Agoracom market analyst Peter Grandich, who isn’t among those who expect the world at large to emerge from “this absolutely horrific downturn” by year-end, instead sees good opportunities on the horizon for investors who want to “buy things on the cheap” because prices will fall in the equity markets.
He also sees bright prospects for gold—particularly gold ETFs and mining companies that are in or near production and have potential for developing additional deposits. At the same time, Peter tells The Gold Report that the “severely wounded” U.S. economy should anticipate rougher and tougher times.
Bloomberg – Ronnie Wu, chief investment officer of the $400 million hedge fund of funds house Penjing Asset Management Ltd., will start a pool of money dedicated to providing early investments to new hedge funds next month.
It aims to make five to six investments with the flagship Penjing Asia Fund by year-end, he said in an interview yesterday. The new pool will begin with about $25 million from Wu’s family and friends and then raise capital from investors after the initial money has been deployed.
West Palm Beach (HedgeCo.net) – "Alpha" released the results of the 2009 Hedge Fund 100, the magazine’s eighth annual ranking of the world’s biggest single-manager hedge fund firms. Although most hedge fund managers in 2008 couldn’t escape the carnage from what many have called the worst financial crisis since the Great Depression, their industry overall lost less money than did other investors. For their part, the firms in the Hedge Fund 100 managed a combined $1.03 trillion in assets at the beginning of this year, down from the record $1.35 trillion that the world’s 100 largest firms managed at the end of 2007.
Bridgewater Associates leads the Hedge Fund 100 with $38.6 billion in assets under management. The Westport, Connecticut-based firm, which was founded by Raymond Dalio more than 30 years ago, grew by more than $2 billion in assets last year, based on the strength of its Pure Alpha Strategy hedge fund, which was up 8.7 percent in 2008. New York-based JPMorgan — the world’s biggest hedge fund firm a year ago — saw its assets fall 26.4 percent, to $32.9 billion, in large part because of redemptions and poor investment performance at its Highbridge Capital Management group.
Redemptions have been a challenge for most hedge fund firms, even those that managed to deliver positive returns in 2008, as investors have looked to raise cash where they can. In the fourth quarter of last year, hedge funds saw a net outflow of $152 billion, with most of the assets coming out of bigger firms. In recognition of this new reality, "Alpha" changed the methodology for the Hedge Fund 100, using firm and fund asset totals as of January 1, 2009 (in the past the magazine collected December 31 data). To qualify for "Alpha’s" 2009 Hedge Fund 100, a firm needed at least $4 billion in assets under management, compared with the $6.25 billion minimum a year ago.
The ten biggest hedge funds managed a combined $264 billion at the start of 2009, down nearly 12 percent from year-end 2007.
"Alpha’s" Hedge Fund 100 Top 10
Rank Firm Total Capital ($ millions) 1 Bridgewater Associates 38,600 2 JPMorgan Asset Management 32,893 3 Paulson & Co. 29,000 4 D.E. Shaw & Co. 28,600 5 Brevan Howard Asset Management 26,840 6 Man Investments 24,400 7 Och-Ziff Capital Management Group 22,100 8 Soros Fund Management 21,000 9 Goldman Sachs Asset Management 20,585 10 Farallon Capital Management 20,000 10 Renaissance Technologies Corp. 20,000 To view the complete rankings for the Hedge Fund 100, visit www.alphamagazine.com
English Eastday – Investors continued to withdraw capital from hedge funds in the first quarter of 2009, redeeming nearly 103 billion U.S. dollars, according to data released on Tuesday.
The redemption figure, about 7.3 percent of overall hedge fund assets, was down from the record quarterly withdrawals in the fourth quarter of 2008 of over 152 billion dollars, said Chicago-based Hedge Fund Research (HFR).
Total hedge fund industry capital declined to 1.33 trillion dollars as of the end of the first quarter of 2009, 600 billion dollars below the its peak at the end of the second quarter of 2008 and 75 billion dollars less than the total asset at the year-end 2008.
New York Times – While his counterparts at other big hedge funds are trying to figure out whether they can stay in business, the fund manager John Paulson continues to rack up enormous profits. DealBook has obtained Mr. Paulson’s confidential year-end letter to his undoubtedly gleeful investors.
The 20-page report details how Mr. Paulson’s firm, Paulson & Company, which manages nearly $29 billion in assets, avoided the huge losses plaguing other funds, and it gives his firm’s outlook for this year.
Paulson Advantage Plus, the firm’s largest fund with roughly $7 billion in assets, returned a whopping 37.6 percent net of fees for 2008. Another version of the fund, which does not use borrowed money to amplify its return, recorded gains of about 24 percent, according to the letter.
Bloomberg – Looking for a new definition of a hedge fund? How about an organization that takes 20 percent of the profits on your money in the good times, then refuses to let you have it back when the weather turns rough?
We all know the hedge-fund industry had a terrible 2008. With a few honorable exceptions, its promises of being able to deliver steady, positive returns in either a rising or falling market turned out to be empty.
Yet, in many cases, the industry has taken a bad situation and made it worse. Many funds have placed limits on withdrawals that investors can make. In effect, people are locked into a falling asset.
That is a big mistake. In any investment business, the return of capital is far more important than the return on capital. By forcing investors to keep their money tied up during a bad year, the hedge funds are damaging their own reputation, and it may well never recover.
There are numerous examples of funds limiting withdrawals.
Citadel Investment Group LLC said last month it was stopping year-end withdrawals from its two biggest funds after investors sought to take out $1.2 billion, or 12 percent of assets.
Magnetar Capital LLC took similar action after its largest fund lost 30 percent of its value in the year through November.
Cerberus Capital Management LP last month limited redemptions from a hedge fund that lost 16 percent of its value.
