WEST PALM BEACH, FL (HEDGECO.NET) – Recently some large Wall Street financial companies have acquired hedge fund firms in a bid to get a piece of the growing hedge fund management business. J.P.Morgan agreed to purchase Highbridge Capital Management for $1.3 billion, while Lehman Brothers began preliminary negotiations for the purchase of GLG Partners, a London based hedge fund company.
Now there are new reports that Man Group, the largest publicly traded hedge fund in the world, may be a target for Wall Street firms interested in getting a piece of the hedge fund pie. This rumor and speculation has helped the company�s stock to gain 5% in value in Tuesday�s market trading action.
Such interest by Wall Street in hedge funds indicates a widespread acceptance of hedge funds and their trading strategies. A few years back, hedge funds were known as �highly dangerous investments;� today such notion has all but disappeared.
Some analysts think the widespread acceptance of hedge funds has resulted from not only their superior performance in the markets, but also their increased level of transparency offered to investors. Today, hedge fund investment strategies have become appealing to institutional investors; particularly pension fund groups, and insurance establishments that continue to devote increasing levels of their assets to hedge fund managers.
Harry Davis, a partner with Schulte Roth & Zabel, a legal adviser to many large hedge funds, said, “I don’t know whether this is a trend or just happens to be a confluence of factors, but I think we are likely to see more banks and brokerage firms either buying or building this capacity,” adding, �Their high-net-worth clients are looking for this product.”
Other analysts however, believe that profitable hedge funds do not have reasons to sell. According to such views, this may be an exit strategy for hedge fund managers who think the future for hedge funds may not be as rosy as it is painted. The lousy returns posted so far this year by hedge funds, is the evidence supporting such views.
Paul Oranika
Editor-in-Chief
HedgeCo.Net
Email: [email protected]
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