York pro to lead rebranded KVO Capital (HFMWeek) The marketing chief of Jamie Dinan’s York Capital Management has left the hedge fund giant to become CEO and president of KVO Capital Management, with the latter renaming itself Oakum Bay Capital in the process, it was revealed Tuesday. Brooke Parish, who will become a partner and shareholder of Oakum Bay, was a partner at York Capital, which has about $15bn in assets under management. He most recently led the client advisory group that was responsible for marketing and client services.
Hedge funds struggle with European politics (Reuters) Euro zone turmoil has turned Europe's hedge fund managers into shadows of their former selves: haunted by ghosts of failed bets and as deeply divided on the fate of the indebted union as the leaders responsible for keeping it afloat. The community of financiers, the so-called 'masters of the universe' considered able to make fortunes in all economic conditions, are no longer dictating markets but are nervously eyeing trades which could win or lose on a politician's whim.
Hedge fund manager says that Greece must leave euro or it will fail (Telegraph) Pierre Lagrange, whose $2bn (£1.3bn) Long Short Fund bets on rising and falling stock prices, wrote to investors saying it was “futile” and damaging to keep Greece in the euro. Instead, bailout money earmarked for Greece should be used to “help them outside the euro”. Mr Legrange said bail-outs and writing off debt was a “moral hazard” and that eurobonds were not a plausible solution for the excessive debts racked up by Mediterranean countries.
Stock Picks: Basic fundamentals of hedge funds (Montrealgazette) Hedge funds have become a popular investment alternative over the last two decades. But, what is a hedge fund? From an academic perspective, “hedge” means to minimize the risk of an investment by making an offsetting investment. The primary objective of most hedge funds is to reduce volatility and risk while preserving capital and delivering positive returns under all market conditions, known as absolute returns. In this week’s column, we will explain the basic fundamentals of hedge funds. Hedge funds are most often compared to mutual funds, which can hold stocks, bonds, derivatives and other assets. Mandates can be even more specific to include sectors, geographies or other specialized strategies.
Hedge Funds Hurt in May Commodity Rout (Businessweek) For the third straight year, May proved a disaster for hedge funds that specialize in commodities as raw materials from copper to oil fell into bear markets. Funds tracked by the Newedge Commodity Trading Index lost an average 3 percent last month, the most since September. Taylor Woods Master Fund Ltd., managing more than $1 billion, retreated 4.2 percent, according to a monthly report obtained by Bloomberg News. Galena Asset Management Ltd.’s metals fund dropped 2.6 percent in May, according to the company, and Brevan Howard Commodities Strategies Master Fund Ltd. fell 2 percent, according to a monthly report to investors obtained by Bloomberg.
Jury convicts ex-Silicon Valley hedge fund manager of fraud (MercuryNews) A former Silicon Valley hedge fund manager was convicted Wednesday of defrauding local investors out of millions of dollars by luring them with bogus promises of backing from prominent law firms and auditors. After a few hours of deliberation, a San Jose federal jury convicted Albert Ke-Jung Hu of seven counts of wire fraud for his role in what prosecutors called a brazen scam during closing arguments earlier in the day. Federal prosecutors alleged during the two-week trial that Hu's scheme was "a facade he fabricated to lure victim-investors to invest in his funds."
Institutionalisation makes hedge fund managers grow up (HedgeWeek) Institutionalisation of the hedge fund industry was the key talking point in a panel discussion chaired by Dan Shapiro (pictured), partner of Schulte Roth & Zabel International. The panel included Jane Buchan, CEO of FoHF firm PAAMCO, Peter Schoenfeld, chairman and CEO of PSAM, Bernard Oppetit, chairman of Centaurus Capital, and Nicholas Botta, CFO of activist fund Pershing Square Capital Management. Currently, about 60 per cent of the industry’s USD2trillion AUM is now institutional money, with Shapiro noting that in a recent discussion he was told that 90 per cent of new money allocating to hedge funds is institutional in nature.
SAC Capital's Cohen recently deposed in SEC investigation-report (Reuters) Hedge fund manager Steven Cohen was recently deposed by U.S. Securities and Exchange Commission investigators over whether he made certain illegal trades based on inside information, Bloomberg reported, citing people familiar with the matter. Federal prosecutors and regulators have been investigating allegations of improper trading at SAC Capital, Cohen's hedge fund firm, since at least 2007, and U.S. authorities have implicated or charged four people with engaging in insider trading while working at SAC Capital in the last two years.
BlueMountain Helps Unwind JPMorgan's Whale (Businessweek) A hedge fund run by a former JPMorgan Chase & Co. (JPM) (JPM) executive who helped create the credit- derivatives market is aiding the lender as it unwinds trades in an index at the heart of a loss of more than $2 billion. BlueMountain Capital Management LLC, co-founded by Andrew Feldstein, has been compiling trades in Series 9 of the Markit CDX North America Investment Grade Index in recent weeks, then selling the positions to the New York-based bank, according to three people outside the firms who are familiar with the strategy.
Morningstar MSCI Composite Hedge Fund Index was down 0.5% (est.) in May, but still up 2.7% YTD (Opalesque) Morningstar, Inc., a leading provider of independent investment research, today reported preliminary hedge fund performance for May 2012 as well as estimated asset flows through April 2012. The Morningstar MSCI Composite Hedge Fund Index, an asset-weighted composite of nearly 1,000 hedge funds in the Morningstar Hedge Fund database, was down 0.5% in May, but still up 2.7% for the first five months of the year.
Here's What This Hedge Fund Is Doing With $30 Billion (Dailyfinance) Every quarter, many money managers have to disclose what they've bought and sold via 13F filings. Their latest moves can shine a bright light on smart stock picks. Today let's look at Citadel, founded and run by Kenneth Griffin. It's one of the biggest hedge fund companies around, with a reportable stock portfolio totaling $30 billion in value as of March 31, 2012.
Middle office outsourcing and the changing landscape of the hedge fund ecosystem (Hedgeweek) A year or two on from the financial crisis Hedge Fund firms were still reeling from the impact of the market on the absolute return model of the industry. Confronted with fears around risk and exposures founded by well publicized counterparty collapses, firms sought to regain investor confidence while shoring up best practices around risk management. Core to the new paradigm was a multi-counterparty model designed to take advantage of the lower custodial trading fees and to reduce counterparty risk while expanding product offerings (SMA, UCITS) to bolster a somewhat eroding bottom line.
Morgan Stanley, FBR pros to launch maiden hedge fund (HFMWeek) Tony D’Andraia, most recently with Morgan Stanley and Justin Meadlin, previously with FBR Capital Management, have teamed up to launch their maiden hedge fund, HFMWeek has learned. The duo formed New York-based Hyaline Capital Management in April, which next month will roll out its flagship Hyaline Capital Opportunity Fund, a top-down macro-driven long/short equity strategy.
UCITS Hedge Fund Index Flat In June (Hedgeco) The UCITS hedge fund alternative Index Blue Chip is flat this week with a performance of 0.0%. So far this month the UAI Blue Chip is down -0.01%, while it is up 2.05% on year to date. Macro (up 0.55%), Fixed Income (up 0.16%) and Emerging Markets (up 0.15%) are the best performing strategies for the week. The strategies posting the lowest returns are Commodities (-1.14%), CTA (-0.89%) and Volatility (-0.44%). However, due to their small weight in the Index, their combined contribution to performance is only -9bp.
Peltz Turned Down Seat at Ingersoll-Rand (NYTimes) Nelson Peltz‘s Trian Group disclosed on Wednesday that it turned down a board seat at Ingersoll-Rand, after the company sought to impose further restrictions on the hedge fund. The move frees Trian to publicly agitate for change at Ingersoll, the industrial conglomerate that makes products as diverse as Kryptonite locks and Club Car golf carts. Last month, the hedge fund disclosed a 7.05 percent stake in the company.
Cern lab seeking big bang for its bucks (FT) The Cern particle physics research laboratory is set to become a major hedge fund investor, as it seeks bigger returns for its $4bn pension scheme. Geneva-based Cern, best-known for its groundbreaking experiments in pursuit of the elusive subatomic Higgs Boson particle, will allocate over $500m to hedge fund managers in the coming months.
Sciens appoints Tim Wilkinson as President of Sciens Fund of Funds Management Holdings (HedgeWeek) Sciens Fund of Funds Management Holdings, part of the Sciens Capital Management Group and provider of single- and multi-strategy funds of hedge funds and managed account services, has appointed Tim Wilkinson as President of Sciens Fund of Funds Management Holdings. In this capacity Wilkinson will report into Sciens Fund of Funds CEO, Stavros Siokos and will be active across the range of Sciens’ products and services; encompassing private equity and real assets alongside the firm’s liquid asset capabilities (absolute return strategies and managed account platform services). Wilkinson will have particular responsibility for the firm’s global business development and distribution, incorporating all client-facing, marketing and brand development activities.
New structured product provider launches (MoneyMarketing) Structured product provider Structured Investment Group has launched offering a number of structured investments to the intermediary market. The group has an investment committee made up of four individuals with experience in hedge fund and structured product market. They will be focused on both investment and credit risk analysis and identifying investment strategies for the wealth manager and advisory market.
Julian Robertson Says He's Betting Against the Euro: Tom Keene (SFGate) Julian Robertson, founder of hedge fund Tiger Management LLC, said he's betting against the euro as the region struggles to resolve its sovereign debt crisis. "I continue to be short the euro against various currencies," Robertson, who once ran one of the biggest and best-performing hedge funds in the world, said today in an interview with Tom Keene on Bloomberg Surveillance. While a lot of investors are betting the euro will fall further, there's no reason to take a contrarian view until policy makers have taken steps to solve the crisis, he said.
Future Capital Partners strengthens business development team (HedgeWeek) Future Capital Partners (FCP), the GBP6 billion alternative investment boutique, has appointed Anthony Rogers as Business Development Manager. Rogers will be responsible for raising awareness of and presenting FCP’s range of innovative investment products to financial advisers, accountants and tax planners in the South East region.
GB Merchant Plans $500 Million Debt Fund (HFAlert) GB Merchant Partners is in the market with its second debt vehicle. The investment arm of Boston advisory firm Gordon Brothers began pitching the vehicle to investors in recent weeks. It wants to raise $500 million for the entity, dubbed 1903 Debt Fund 2. Hitting the target would nearly double the firm’s asset size. GB Merchant collected $175 million for its debut debt fund, which stopped taking capital in 2006. That vehicle is a hedge fund that invests in loans made to mid-size companies in a variety of industries. The firm manages another $485 million via 1903 Equity Fund, which takes majority and minority stakes in mid-size retail and consumer-products companies. The vehicles take their name from the year Gordon Brothers was founded.
Innovative session tests manager presentations (HedgeWeek) One of the unique features at Gaim 2012 was the opportunity for a variety of fund managers to deliver rapid-fire presentations to a panel of judges comprised of seasoned investors. The runner-up this year was Ozarslan Tangun (pictured) of AccessTurkey Opportunities Fund, LLC, whose 90-second presentation caught the attention of the audience and the judges alike, winning him a bottle of champagne. For the benefit of wannabe hedge fund presenters everywhere, here’s Ozarslan’s rapid-fire effort, summarising a number of themes into a concise presentation.
Putin’s next big challenge for Russia is to win back investors (Gulf-Times) President Vladimir Putin will court investors this week at Russia’s answer to Davos, but one who will not be attending is Steven Dashevsky, a fund manager who is looking at diversifying away from the country. Once optimistic about Russia, Dashevsky, who manages a $100mn hedge fund, has little hope for a new round of investor-friendly economic reforms. He has been disappointed by the lack of progress in the past few years and is not expecting any change after Putin’s inauguration for a new six-year presidential term in May.
Heavier regulations and 'gatekeeper solution’ may stem from AIJ scandal (Opalesque) The AIJ scandal that allegedly defrauded small- and mid-cap Japanese pensions of close to $2bn in a Ponzi scheme structure, is a good reason to justify the imposition of heavier regulations on the alternative investment managers or the industry as a whole, declared Akihito Miyake, from the law firm of Bingham McCutchen, Sakai Mimura Aizawa, one of the sponsors of the latest Opalesque Japan Roundtable with Eurex that took place in May at Bingham's Tokyo office. Miyake commented, "In my personal opinion, I regard the AIJ scandal just as a fraud to the mid- to small-sized pension funds, which did not have deep experience, particularly in alternative investments. The issue here is that it was just a fraud that happened by accident, it wasn't due to a lack of regulation or supervision by the government authorities."
NRI pushes into the US, global markets as a bridge to Asia (Opalesque) The Asian markets have been steadily picking up steam as the new hot spot for investors, funds and service providers seeking new, less volatile markets and returns. However, not all of that activity is coming from the outside - Japan based, Nomura Research Institute (NRI) is finding new opportunities in the US. The company, which was originally Japanese in focus has grown to provide financial IT solutions, research, middle and back-office outsourcing services and management consulting to clients throughout the world. In addition to increasing its physical US presence and client roster, the company also leverages its experience serving unique financial markets like those in Japan, to provide support for US firms that operate in Asia. In Japan, NRI has a long history of working with Japanese financial market participants as well as regulators. This history is now helping them build relationships worldwide with firms seeking knowledge of the inner workings of the Asian markets which can be challenging for outside investors.
The Monsoon Asia-Pacific Systematic program posts strong +5.9% returns in May despite market worries (Opalesque) Bethesda, Maryland-based Monsoon Capital defied the volatile markets in May as its Monsoon Asia-Pacific Systematic (MAPS) program closed the month up +5.9% net of fees (-5.4% YTD), compared to the MSCI Asia-Pacific Index which fell by -9.8% during the same month (-0.07% YTD). "Generally speaking, we do well when Asian markets trend up or down, typically by more than 5% and for more than one week," Gautam A. Prakash, founder and senior managing director of Monsoon Capital in an exclusive interview with Opalesque. "Conversely, we do poorly in range-bound and choppy markets, say when markets go back-and-forth in a 3-5% range multiple times a month. Fortunately, we have seen more of the former than the latter since we launched 19 months ago and therefore the strategy is faring well."
SEC Chief Accountant James Kroeker to Leave the Commission (SEC) The Securities and Exchange Commission today announced that Chief Accountant James L. Kroeker will leave the SEC in July to enter the private sector. Mr. Kroeker came to the SEC in 2007 as Deputy Chief Accountant and has been the agency’s Chief Accountant since January 2009. In that role, he has guided the operations of the SEC’s Office of the Chief Accountant and counseled the Commission on a wide range of accounting and auditing issues.
SEC Adopts Rule Requiring Listing Standards for Compensation Committees and Compensation Advisers (SEC) The Securities and Exchange Commission has approved a rule that directs national securities exchanges to adopt listing standards for public company boards of directors and compensation advisers... Once an exchange’s new listing standards are in effect, a listed company must meet the standards in order for its shares to continue trading on that exchange.
Investor flows turn positive in May but industry assets fall (HFMWeek) Investor flows turned positive in May, adding a net $9.5bn into hedge funds, but it couldn’t stop total industry assets falling to $2.5trn, new data has revealed. According to the eVestment|HFN May 2012 Hedge Fund Assets and Investor Flow Analysis, negative industry performance led to an overall decline of $28.3bn to $2.529trn industry-wide.
Plainfield exonerated following SEC investigation (HFMWeek) More than two years after disgruntled borrowers launched a smear campaign against Plainfield Asset Management and a whistleblower complaint was anonymously filed with the Securities and Exchange Commission (SEC), the firm has been vindicated. In a June 6 letter to Plainfield’s attorney the SEC said it had completed its investigation of the firm and that it did not intend to recommend any enforcement action, HFMWeek has learned.
Former BlackRock/MLIM duo reunite to launch new fund (HFMWeek) BlackRock veterans Robert Hodgson and Michael Oberdorf have teamed up to launch a new healthcare fund, HFMWeek has learned. After forming Princeton, New Jersey-based Lenus Capital Partners, the pair’s flagship Lenus Healthcare Fund, a long/short equity healthcare strategy, is expected to debut at the end of this month or early next month with internal capital along with commitments from a number of US high-net-worth individuals. “There are a couple of things that drive interest in healthcare,” said Hodgson, founding partner. “The level of innovation taking place in the healthcare and life sciences sector is driving huge opportunities for investment. Also, the dispersion of returns is very wide so it offers the opportunity for a long/short fund to capitalize on.”
Lonely Hedge Fund Bullish On Greece Tries To Woo Investors (Bloomberg) As the founder of a hedge fund that plans to buy nothing but Greek stocks, George Elliott is used to being treated as a curiosity. In March, Elliott met with the investment chief of a family office in London who said within seconds of sitting down that the firm had no interest in giving money to a hedge fund wagering on Greece. The executive merely wanted to hear his story, Elliott, the founder of Naftilia Asset Management Ltd., said in a telephone interview from his office in Athens.
Baseball Hall of Famer Eddie Murray May Be On Deck in Insider Trading Crackdown (Observer) If there’s been an overriding message to the government’s ongoing crackdown on insider trading, it may be that anyone can profit illegally on privileged information, and that no potential defendant is too big…or too random for prosecutors to take on. Last week, former McKinsey & Co. CEO Rajat Gupta was convicted on four counts of insider trading. Now it appears that former Baltimore Orioles first baseman Eddie Murray may be a target, as Reuters reports that the erstwhile slugger is among professional athletes under investigation for trading on nonpublic info on the buyout of a medical device company.
American investment guru Jim Rogers sues dentist (StraitsTimes) An American billionaire, a permanent resident here, is suing his dentist over a treatment that has left little for either party to smile about. Investment guru Jim Rogers, 69, wants a reimbursement of the $48,150 he spent on ceramic enhancements to his teeth recommended by Dr Ernest Rex Tan of Smile Inc Dental - and compensation on top of that.
Warren Buffett makes another big bet on newspapers, buying 63 from Media General (InlandPress) Just three years ago, billionaire Warren Buffett told stockholders at his Berkshire Hathaway Inc. annual meeting that newspapers were doomed to be money-losing propositions. “For most newspapers in the United States, we would not buy them at any price,” he said at the time. But last November he paid $200 million to buy his hometown daily, the Omaha World-Herald. And on May 17, he announced he was buying 63 dailies and weeklies from Media General Inc. for $142 million in cash. The deal includes such notable titles as the Richmond Times-Dispatch and the Winston-Salem Journal, but not its biggest property, the Tampa Tribune. Media General said it was in discussions with other perspective buyers for the Tribune.