Hedge Fund ETF Weapons Turn Dangerous for Solo Investors (Businessweek)
If you are convinced, really convinced, the price of crude oil will rise today and U.S. stocks will fall, Factor Advisors LLC has an exchange-traded fund for you. The FactorShares 2X: Oil Bull/S&P500 Bear (FOL) (FOL) offered by the New York-based firm makes a two-times long wager on crude oil futures and a short bet on Standard & Poor’s 500 Index futures, in effect delivering twice the daily change in the spread between the two positions. The product’s birth followed “a lot of feedback” from institutional investors, including hedge funds, Stuart Rosenthal, chief executive officer of Factor Advisors, said in a telephone interview.
Hedge fund boss found guilty in $600 million fraud (Reuters)
Magnus Peterson, the boss of collapsed hedge fund business Weavering, has been found guilty of defrauding investors and ordered to pay hundreds of millions of dollars in damages. London’s High Court ruled that Peterson, manager of the Weavering Macro Fixed Income fund, deceived clients and breached his duty of care to investors with a strategy that could not cope with the vagaries of markets at the height of the global credit crisis.
Arpad Busson’s unfolding hedge-fund drama (TheAustralian)
ARPAD “Arki” Busson mingles with Hollywood’s brightest stars. But the charismatic financier’s fund of hedge funds EIM is no A-list performer. Mr Busson, who was once engaged to Australian supermodel Elle MacPherson, is looking to merge EIM with another group, after seeing its assets more than halve in just four years. But there may be more twists in the tale.
One In Nine Fund Managers Has Regulatory Black Mark, New Forms Show (Forbes)
The hedge-fund industry thrives on secrecy. Clients sign non-disclosure forms to keep investment results secret, hedge funds and private-equity firms compare their performance to themselves instead of the broader stock indexes, and nobody knows how much that performance is skewed upward by “survivor bias” because hedge funds have a habit of shutting down after a bad year instead of continuing on to drag the averages down. Now a report compiled from new data required by the Securities and Exchange Commission shows another secret the industry would prefer its clients didn’t know about. One in nine advisors to private funds have a “significant adverse regulatory event” ranging from a regulatory violation to a felony conviction in the past 10 years.
TDR Capital Said To Seek More Than $2 Billion For Fund (Bloomberg)
TDR Capital LLP, a London-based private-equity firm started with backing from hedge-fund manager Paul Tudor Jones, may seek 1.75 billion euros ($2.2 billion) for its third European fund, according to two people with knowledge of its plans. The firm expects to start marketing TDR Capital III in the second half, said the people, who asked not to be named because the information is private. Blair Thompson, a partner at the firm, declined to comment.
Fortress Unveils Asia Volatility Hedge Fund (Finalternatives)
Fortress Investment Group has launched an Asia-focused volatility hedge fund helmed by a pair of former Artradis Fund Management hands. The Fortress Convex Asia Fund debuted on May 1 with US$55 million in initial assets. The new fund invests in stock, interest rate and currency options, as well as Asian volatility instruments, Fortress said in a document obtained by Dow Jones Newswires. It will seek “to deliver non-correlated returns in normal markets and out-sized returns in stressed or dislocated markets, providing ‘Tail Risk’ protection,” Fortress said.
Citigroup Selling Fund For Japan’s Local Banks To Hedge JGB Risk (Bloomberg)
Citigroup Inc. (C) started selling a fund for Japanese regional banks to hedge against the risk of a decline in the value of their government bond holdings as the world’s biggest public debt swells. The U.S. bank is targeting Japan’s 106 local lenders and plans to raise as much as 200 billion yen ($2.5 billion), Manabu Miyamae, the head of regional sales at Citigroup Global Markets Japan Inc., said in an interview in Tokyo. The fund is the first of its kind to hedge such risk through yen interest-rate swaps, according to Citigroup, the only distributor of the product.
Ex-Credit Suisse Trader’s Asia Macro Hedge Fund Returns 20% (Bloomberg)
Splendid Asia Macro Fund, run by a former Credit Suisse Group AG (CSGN) trader, returned 20 percent this year through April as it bought Asian currencies, fixed income and equities, and sold the yen amid the European crisis. The fund, whose trades focus on Asia, now has $60 million in assets from $40 million when it started in July, said Charlie Chan, the founder of Singapore-based Charlie Chan Capital Partners Pte. Splendid Asia has returned about 14 percent since inception through April, he said.
InterContinental Surges After Peltz’s Trian Buy: London Mover (Bloomberg)
InterContinental Hotels Group Plc (IHG), the world’s largest hotel operator by rooms, rose the most in more than eight months after activist investor Nelson Peltz’s Trian Fund Management LP bought a stake in the company. InterContinental advanced as much as 6 percent after the Denham, England-based company said in a statement that Peltz’s funds own 4.27 percent of its shares. InterContinental had the biggest gain today among stocks on the FTSE 100 Index (UKX) of the most valuable companies on the London Stock Exchange.
Dimon $2 Billion Blunder Shows Capital Safer Than Swaps (Bloomberg)
JPMorgan Chase & Co. (JPM) Chief Executive Officer Jamie Dimon railed against higher capital requirements last year at the same time his bank was using derivatives to hedge more than $1 trillion of loans and bonds. Those bets, which led to $2 billion of losses, wouldn’t have been necessary if JPMorgan did what banks once did: rely on bigger capital buffers rather than credit-default swaps to hedge against souring loans. One hundred years ago the equity of U.S. lenders was about 20 percent of total assets, compared with 9 percent now, according to data compiled by the Federal Reserve. For JPMorgan, it was 7 percent last quarter.
Institutional infrastructure and regulatory compliance are biggest headaches for hedge funds (Opalesque)
The need for an institutional infrastructure and regulatory compliance are two of the biggest headaches for a lot of hedge funds across the globe at the moment, declared Mark Wightman, the global head of alternatives strategy for SunGard, speaking at the latest Opalesque Australia Roundtable held in Melbourne. SunGard is a Fortune 500 company which provides a range of software solutions to over 400 hedge funds globally. The Australian Roundtable was sponsored by Eurex, SunGard and Australian Fund Monitors.
Distressed credit and US recovery forefront of investor minds, says DB survey (HFMweek)
European investors are educating themselves about the continent’s distressed space in anticipation of an opportune time to deploy capital, while Asian allocators believe the US will see a sustained recovery, according to Deutsche Bank’s latest monthly hedge fund report. The bank’s Global Prime Finance May 2012 Monthly Hedge Fund Trends publication also noted that allocators in the Asia region are continuing to show an interest in high-profile start-ups.
Einhorn Says Apple Isn’t A Below-Average Company, But It’s Priced Like One (Forbes)
Hedge fund manager David Einhorn has made no secret of his confidence in Apple, a significant holding for his firm Greenlight Capital. The billionaire extolled the virtues of the company during a recent presentation at the Ira Sohn Investment Conference in New York, echoing themes from his first-quarter investor letter. The stock market’s rally during the first quarter helped many stocks recover some ground from the fourth quarter, boosting price-to-earnings multiples. Greenlight returned 6.8% in the quarter, net of fees, and in the May 29 letter, published by zerohedge, Einhorn notes that holdings including General Motors and Microsoft enjoyed rebounding multiples as well, but without the “fanfare” of Apple.
JT Capital Founders To Quit Hedge Fund (Finalternatives)
Having failed to attract the capital they sought, the co-founders of China-focused hedge fund JT Capital Management are calling it quits. Larry Zhang and Kurt Baker will step down as managers of their Greater China Long-Short Fund, Asian Investor reports. The fund will go on, turned over to Harvest Alternative Investments, whose parent company seeded the vehicle.
Hedge giant weds (NYPost)
Hedge-fund mogul Larry Robbins, founder of Glenview Capital Management, is getting married to former dancer Sarahmay Wesemael in the south of France on June 9. We’re told Robbins, 42, has lined up a Boeing 767 to fly some 100 of his Wall Street pals out of Newark, ahead of the wedding bash, for four days of partying on the Riviera. Robbins is divorced from Amy Robbins, who helped him start his company, and with whom he has four sons. Willowy blonde Wesemael, 33, is from New Jersey but is believed to have family links in Nice, France. Robbins, described by Business Insider as “one of the most optimistic hedge-fund managers around” and who manages about $5.2 billion, is known for flamboyant behavior.