Caxton to Cut Its Fees (WSJ) Caxton Associates LP plans to lower the fees it charges clients of its $7.5 billion hedge fund, a sign that even veteran money managers are bowing to investor pressure amid lackluster returns and low interest rates. Caxton will trim its management fee on money invested in the fund to 2.6% from 3%, while cutting its performance fee—what it pockets if the firm's investment gains exceed a certain level—to 27.5% from 30%, according to people familiar with the firm. ...Founded in 1983 by Bruce Kovner and Peter D'Angelo, Caxton is part of an old guard of macro hedge funds that also includes Tudor, Moore Capital Management and Soros Fund Management.
HSBC Said to End Administration Ties With Some Hedge Funds (SFGate) HSBC Holdings Plc, the administrator of $150 billion in assets for hedge funds, is terminating agreements with some smaller Asian clients to focus on more profitable ones, said three people with knowledge of the matter. One of the termination notices, reviewed by Bloomberg News, outlined when the bank will stop providing its services. The letter didn’t give a reason for HSBC’s decision. HSBC recently reviewed its fund-administration clients, something it does from time to time to gauge whether the relationships are mutually beneficial and whether to maintain them, said another person. The people asked not to be identified because the information is private. Tim Nicholls, a Hong Kong- based spokesman for HSBC, declined to comment on individual client relationships.
China’s Sovereign Fund Favors Big Hedge Fund Managers, Fan Says (BusinessWeek) China Investment Corp., the nation’s sovereign wealth fund, favors larger hedge funds when selecting external managers for investing its capital, said Hua Fan, head of fixed-income investment at CIC. CIC, which helps China manage the world’s largest foreign- currency reserves, will avoid “over-diversification” by investing in too many funds, Fan said at an annual conference of the Chinese Finance Association in New York yesterday.
Argentine Lobby Mystifies 'Members' (WSJ) When a New York hedge fund detained an Argentine naval training ship in Ghana earlier this month, it called international attention to a lobbying group at the center of a high-stakes financial tug of war. How Larry Matlack, a Kansas farmer, became affiliated with the group is a mystery to him. Mr. Matlack is president of American Agriculture Movement, a farmers' advocacy group that was listed among about 40 members of American Task Force Argentina, whose stated mission is to help investors recoup money from Argentina's 2001 bond default and subsequent restructuring.
Hedge fund replication strategies offer cheaper investing alternative (PIOnline) The next big thing in hedge fund investment won't be a hedge fund: It will be a replica. A growing number of institutional investors are considering a move into sophisticated, rules-based trading strategies that meet or beat hedge fund index returns — at a much lower cost. Sources predict that interest in hedge fund replication — still nascent in the global institutional investor universe — is likely to account for 5% to 25% of total institutional investment in hedge funds over the next 10 years. If the predication proves to be true, that would put between $13 billion at the low end and $63 billion at the high end up for grabs by hedge fund replicators in the U.S. alone (in current dollars).
GLG Trio Sit on $220 Million Man Loss (CNBC) Three principals of hedge fund GLG Partners are sitting on a $220m paper loss two years on from their firm’s acquisition by Man Group in the industry’s biggest merger. Monday will mark the first time that Pierre Lagrange, Emmanuel Roman and Noam Gottesman, who swapped their stakes in GLG for shares in Man on October 14 2010, will be able to dispose of their holdings, if they choose. Shares in Man have dropped from 264p when the merger closed two years ago to 90p on Friday, having traded as low as 60p over the summer.
Tax take from highly paid expats rises 23% (FT) The tax take from investigations into highly paid expatriates working in Britain has risen 23 per cent over the past two years to £117.2m, in a sign that the financial affairs of international bankers and hedge fund managers are coming under growing scrutiny. The compliance yield generated by the expat team of HM Revenue & Customs rose from £94.9m in 2009-10, according to data from a freedom of information request from Pinsent Masons, international law firm. It increased 6 per cent from £110.8m in 2010-11.
Albourne gives ultimatum to hedge fund managers (PIOnline) Albourne Partners Ltd. has drawn a wide line in the sand for hedge fund managers: Comply with global risk reporting standards or your fund will be dropped from the consultant's approved list. That list currently totals more than 2,000 hedge funds that manage a combined $300 billion on behalf of the hedge fund consultant's institutional client base. London-based Albourne Partners was a primary force in launching The Open Protocol Enabling Risk Aggregation standards last year. They provide hedge fund firms with a template for collecting, collating and communicating market risks within their portfolios.
Shortlist for 11th European Fund of Hedge Funds Awards 2012 announced (HedgeFundsReview) The judges have decided the shortlist for the European Fund of Hedge Funds Awards 2012. Winners will be named on November 21 in London. Two awards honour outstanding contributions to the FoHF industry. The shortlist for the 11th European Fund of Hedge Funds Awards has been published. The accolades recognise the best-performing European FoHFs as well as honouring qualitative attributes of the funds. The awards are the only event held exclusively for the European FoHF sector and attract the top names from the industry.
Dodd-Frank? Not Such a Drag After All (BusinessWeek) From the perspective of hedge fund managers, the Dodd-Frank Act is, in so many ways, a huge drag. The law requires them to register with the Securities and Exchange Commission. To supply reams of sensitive data on trading positions. To screen potential investors more carefully. To hire compliance officer after compliance officer. How could all of this not eat into profits and hamstring competitiveness? Now there are some early data to weigh these fears against. Wulf Haal, a law professor at the University of St. Thomas in Minneapolis, has released what he says is the first survey of fund advisers to be conducted after the SEC’s March 30 registration deadline. His findings: Despite their grumbling, funds are taking the new regulatory burdens in stride.
China private equity firm SAIF Partners foraying into hedge funds (CNBC) SAIF Partners plans to launch a Greater China hedge fund, according to marketing material obtained by Reuters, becoming the first major Chinese private equity firm to branch out into the hedge world. SAIF, one of China's biggest homegrown private equity firms with about $4 billion under management, is currently speaking to investors about the plan, which is at an early stage. The SAIF Partners Greater China Fund will employ the long/short equity strategy, the most popular hedge fund strategy in Asia. Going long refers to buying and holding a security to sell at a higher price. Taking a short position means borrowing a security that one does not own and selling it, in the hope of repurchasing it at a lower price and profiting from the price differential.
Bullish Wagers Drop to Eight-Week Low Before Rally: Commodities (Bloomberg) Hedge funds cut bullish commodity wagers to the lowest since the middle of August before signs the U.S. economy is improving and declining grain stockpiles drove prices to a three-week high. Speculators reduced net-long positions across 18 U.S. futures and options by 0.4 percent to 1.24 million contracts in the week ended Oct. 9, the lowest since Aug. 14, U.S. Commodity Futures Trading Commission data show. Corn bets dropped to the lowest since July before the U.S. government cut its stockpile forecast on Oct. 11. Soybean-oil wagers tumbled 64 percent, and those on crude oil contracted for a third week.
Gupta’s Admirers Urge Mercy as Insider Sentence Nears (Bloomberg) Microsoft Corporation (NASDAQ:MSFT) Chairman Bill Gates and former United Nations Secretary-General Kofi Annan were among supporters of ex-Goldman Sachs Group, Inc. (NYSE:GS) director Rajat Gupta who urged mercy at his sentencing next week for his part in the biggest hedge fund insider trading scheme in U.S. history. Gupta is to be sentenced Oct. 24 for leaking stock tips to Galleon Group LLC co-founder Raj Rajaratnam, who masterminded the conspiracy. In letters to U.S. District Judge Jed Rakoff in Manhattan, Gates, Annan and at least 200 others wrote on behalf of Gupta, who faces as many as 20 years in prison on the most serious of the four counts of which he was convicted.
Virginia hedge fund manager indicted on 26 counts of fraud (Opalesque) Jeffrey A. Martinovich, a Newport News, Virginia-based hedge fund manager has been indicted by a grand jury on 26 counts of fraud including mail fraud, wire fraud, unlawful monetary transactions, and bankruptcy fraud. He faces a maximum penalty of 20 years in prison for each count, if convicted. Martinovich was the CEO of MICG Investment, LLC, an investment firm based in Newport News, Virginia. In 2007, Martinovich started three hedge funds through MICG and began seeking investments. According to the indictment, in both 2007 and 2008, rather than seek this independent valuation, Martinovich fraudulently inflated the value of the private solar company he was investing in to falsely indicate an increase in the overall value of the hedge fund. Martinovich then allegedly used this fraudulent, unsupported, and inflated value of the solar company to convince new investors to invest in Venture Strategies, as well as to pay himself greater fees.
Australia's Sundance optimistic on talks with Hanlong (Reuters) Australian iron ore miner Sundance Resources is optimistic it will be able to conclude a sale of the company to China's Hanlong Group in a $1.4 billion deal that has dragged on for a year, Sundance's chairman said on Monday. Hanlong, which cut its offer by a fifth in August, was due to have given Sundance a letter from China Development Bank confirming funding for the deal by Oct. 1, but holidays in China and a failure to reach an agreement on conditions for the financing have delayed the process. "We are working on it positively and we expect a positive outcome," Sundance Chairman George Jones told Reuters.
Check Out The Star-Studded Event That Had Hedge Funders Rocking Out For Charity This Week (BusinessInsider) Hedge fund managers and hedge fund industry professional rocked out Thursday night at the Hedge Fund Rocktoberfest, an annual fundraiser benefiting children’s charity A Leg To Stand On (ALTSO). ALTSO, which provides prosthetic limbs and corrective surgeries to children with limb disabilities in developing countries, was co-founded by hedge fund manager C. Mead Welles, the CEO of Octagon Asset Management, back in 2002. The Rocktoberfest event began in 2004 and we were told by several people that in recent years it has really grown into a must-attend Wall Street event.
Investors in real assets find supply in hedge funds (Opalesque) Gamma Finance, an independent specialist provider of advisory services to the alternative investment sector, has been awarded advisory mandates of $500 million by clients seeking to optimise exits from a diverse range of lower-liquidity assets, including real estate and private equity positions. Placement agents and research companies are reporting that real asset and private equity investors are currently looking to raise additional capital and may deploy up to $200bn prior to the end of 2013. According to Gamma Finance, some of the beneficiaries of this increased activity may indirectly be the investors in hedge funds that have experienced low liquidity in the post-crisis years.
Pleasant Hill and Altegris to be sold (Opalesque) Troubled U.S. insurance company Genworth Financial Inc said it is selling two of its businesses, including its wealth management arm, to raise capital, media reports said. According to a Reuters report, Genworth is currently in talks with Goldman Sachs to sell its California-based wealth asset arm Pleasant Hill and its San Francisco-based alternative investments provider Altegris. The two businesses are expected to fetch an estimated $400m in fresh funds for Genworth. Pleasant Hill currently has an estimated assets of more than $20bn while Altegris, which Genworth bought in 2010 for $35m, has $3.36bn in client assets.
Dutch Hedge Fund Community Raises €100K For Children’s Charities (Finalternatives) On October third over 160 professionals from the Dutch financial alternatives community came together to show their support for the fund raising initiative of the Alternatives 4 Children foundation. As a result of the gala, the foundation raised more than €100,000 to support the causes which the charity is supporting. The money raised enables the organization to fulfill its prime objective: providing support for children in need. Organizations that will benefit include the Edelweiss school in Bangalore, India; the Scarab school in Mali; Tiny Miracles in India; Day For Change in The Netherlands; and Kamitei in Tanzania.
Ferrell drops hedge funds of funds for a new strategy (PIOnline) Ferrell Capital Management Inc. is still in business, just not the same business it started 24 years ago. Gone is a hedge funds-of-funds business in which many large banks invested to manage their portfolios' market risk. In its place and scheduled to launch by the end of the year is a new target volatility strategy that will be offered in a separate account format and likely a commingled ETF fund, said William G. Ferrell, president and chief investment officer.
Co-ops can be part of solution (TheStarPhoenix) Nouriel Roubini, the economist from New York University's Stern School of Business who earned the nickname Dr. Doom when his predictions of an economic meltdown came true in the 2008 recession, sees co-operatives as part of the solution. Speaking at the International Summit of Cooperatives in Quebec City's convention centre last week, Roubini said he has known about co-operatives, "since I was a child." Growing up in Italy, co-operatives were involved in agriculture, financial services and retail, he said. Later, working on a kibbutz in Israel, he learned about "sharing with other people and common goals."