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Hedge Fund News: John Thaler, Steven Cohen, Nouriel Roubini

SAC CAPITAL ADVISORSHedge fund titans and art collectors (PIOnline)
Hedge fund managers represent 6% of the 200 most active art collectors in the world, according to ARTnews. Leading that group of hard-core collectors is Steven A. Cohen, founder of S.A.C. Capital Advisors LP, the only hedge fund manager to make it into the magazine’s top 10 ranking. His collection focuses on impressionist, modern and contemporary art, according to ARTnews.

Texas Permanent’s plan to change hedge fund portfolio hits a snag (PIOnline)
Texas Permanent School Fund’s slow journey toward direct investment in hedge funds hit a traffic jam, thanks to the state education agency’s decision that the permanent fund must reconsider a proposal to terminate three of its five hedge funds-of-funds managers. The Texas State Board of Education and its committee on finance/ Permanent School Fund, which oversee management of the $24.4 billion Austin-based educational endowment, have spent more than a year in heated debate over a recommendation to move to direct investment in hedge funds through strategic relationships with two existing hedge funds-of-funds managers. Implicit in the proposal was terminating three hedge funds of funds.

Hedge-Fund Chief’s Son Freed in Death at Yellowstone Club (BusinessWeek)
A New York teenager out for a late- night drive in an all-terrain vehicle was charged with negligent vehicular homicide under the influence of alcohol after a crash that killed his passenger and prep-school roommate at the luxury Yellowstone Club resort in Montana. James Sinclair Welch, 19, son of Welch Capital Partners LLC founder Leighton Welch of Bronxville, was arrested about 11:50 p.m. on Aug. 2 by the Montana Highway Patrol, according to state court documents. The victim, Parker Regan, 19, of Mendham, New Jersey, was a son of R. Christopher Regan, co-founder of the Chartis Group, a health-care consultancy.

HFRX Global Hedge Fund Index gains +0.54% in July (+1.77% YTD) (Opalesque)
Global financial market volatility continued in July as evidence of slowing economies in the US and China accompanied continued investor concern regarding the European sovereign debt and banking crisis, with recent focus on weakness in Spanish banks. Yields on US and German government bonds declined to record lows as the yield curve steepened on concerns about weak economic growth, additional Eurozone instability and expectations for additional stimulus measures by central banking institutions. Global equity markets generally posted gains for the month, with positive contributions from Energy, Oil Services and central European economies, which were partially offset by weakness in US small caps, Southern European and Asian equity markets. Commodities posted gains concentrated in Wheat and Corn on US drought conditions, while Oil and Natural Gas also posted gains. The US Dollar gained against the Euro and GBP, whil e declining against the JPY. Overa ll, Hedge Funds posted gains for July, with the HFRX Global Hedge Fund Index gaining +0.54%, while the HFRX Market Directional Index gained +1.78% for the month.

Statistical flaws found in hedge fund study (FT)
Readers of FTfm will be familiar with the debate about hedge funds created by Simon Lack’s polemic against the industry, The Hedge Fund Mirage . Many of us in the industry looked at the arguments in the book with initial interest, and then growing scepticism. Many of the most sensational claims appeared not to be backed up by any figures. Where there were figures, the methodology was slapdash or flawed, and further undermined by simple errors. We, in the Alternative Investment Management Association, began to wonder if The Hedge Fund Mirage was itself an illusion.

Fall-out from ‘hedge fund’ shooting (IOL)
The shock waves from the shooting and suicide involving two dodgy asset managers in Cape Town last week are reverberating widely, with indications that investors in a “hedge fund” could face losses of almost R2 billion. The high drama surrounding the Relative Value Arbitrage Fund (RVAF) started when the person who ran the fund, Herman Pretorius, was visited by inspectors from the Financial Services Board (FSB), whereupon he went to see his business associate, Julian Williams. During an altercation, Pretorius apparently shot Williams twice before turning the gun on himself.

Armajaro to launch financials fund (FT)
Armajaro Asset Management, the $1.5bn commodities hedge fund founded by commodities trader Anthony Ward – dubbed “Chocfinger” by some for his preeminence in cocoa markets – is to launch a fund to invest in financial stocks. The Armajaro financials fund, which will trade in banks, insurance firms, asset managers and other financial companies, is set to launch on October 1.

Consolidation of single hedge funds and fund of funds: hedge fund news, week 31 (Opalesque)
In the week-ending 03 Aug 2012, it was reported that Richard Gerson was reported to have raised $1.2bn to launch his own hedge fund firm, Falcon Edge Capital; Rob Chandra has scaled back his role at Bessemer Venture Partners to launch the $250m hedge fund Avid Park; KKR Asset Management registered before the SEC two new funds, the KKR Alternative High Yield Fund, a mutual fund and KKR Alternative Corporate Opportunities Fund; and former Tiger Global Management executive Amit Doshi is laying the groundwork for his own hedge fund. Investment fund manager, Invest AD, has launched two UCITS-compliant funds, which invest in Africa and the Arabian Gulf; Falcon Private Bank last week launched Falcon Gold Equity UCITS Fund; and the Abu Dhabi government-owned group Invest AD has launched two UCITS-compliant equity funds investing in Africa and the Middle East.

Some smaller hedge funds outshine their bigger rivals (BRecorder)
A number of hedge fund industry spin-outs are showing up their bigger and better-known brethren by delivering eye-popping returns in a year marked mainly by lacklustre performance. After a horrible 2011, this year is not shaping up to be much better in the $2 trillion hedge fund industry, with the average fund up only 2.10 percent through June. But a handful of new funds, run by managers who had worked at some of the most prominent names on Wall Street and in the hedge fund industry in recent years, is doing very well with double-digit returns. Mick McGuire is the founder of Marcato Capital Management in San Francisco, which specialises in selecting stocks. Only a short time after leaving William Ackman’s $10 billion Pershing Capital Square Management, McGuire is posting the kind of returns that would make any parent proud. Ackman has invested as has the Blackstone Group, one of the world’s most powerful hedge fund investors.

South Korean regulator steps up efforts to expand domestic hedge fund industry (Opalesque)
South Korea’s market regulator, the Financial Services Commission has introduced several moves that will further boost the nation’s domestic hedge fund industry, it has been reported. According to AsianInvestor.net, the FSC has lowered the entry barrier in the required assets under management of asset managers that are qualified to operate hedge funds to W1tln ($881m), or 10% of the previous W10tln requirement.

Ex-Citadel Credit Chief Boas Said To Plan New Hedge Fund (Bloomberg)
Chris Boas, who quit last year as global head of credit at Citadel LLC’s securities unit, is planning to start a hedge fund, according to two people with knowledge of the matter. Boas’s Longwood Credit Partners LLP will seek to profit from price differences between debt securities and is scheduled to start in the first quarter of next year, said the people, who asked not to be identified because the information is private. Boas declined to comment when contacted on his mobile phone.

Morgan Creek’s Yusko Talks Investment Trends, The Quest For Yield (Finalternatives)
As CEO of Morgan Creek Capital Management, Mark Yusko advises institutional investors of all stripes and invests in assets across all major classes. The $8 billion fund of hedge funds shop takes an “endowment-style approach” to investing and, in fact, advises some of the country’s largest college endowments (including those of Duke University, Stanford University, the University of North Carolina and the University of Notre Dame). To find out more about that approach and about current trends among institutional investors—particularly family offices—FINalternatives Senior Reporter Mary Campbell recently spoke to Chapel Hill, N.C.-based Yusko.

Ackman, Einhorn’s Hedge Funds Outperform in July (WSJ)
Two of the closely followed hedge fund managers–Bill Ackman and David Einhorn–outperformed the broad market in July. Activist investor Bill Ackman’s Pershing Square Capital Management LP posted a 1.5% gain in July for each of its two main funds, according to an investor letter, while David Einhorn’s Greenlight Capital funds rose 2.7%, a person familiar with the situation said. The Standard & Poor’s 500 index rose 1.26% for the month. For the first seven months of the year, Pershing Square’s $4.5 billion Pershing Square Capital Management fund rose 3.8%, and its offshore vehicle Pershing Square International Ltd. rose 3.5% during the period, the investor letter said.

FMG raises more debt to fund growth (NineMSN)
The figure is 50 per cent higher than the extra $1 billion Australia’s third-largest iron ore producer last month flagged it would need. Fortescue’s large gearing – including a large proportion of high-yielding US junk bonds – and sensitivity to iron prices have previously raised investor concerns.

Credit Suisse: Hedge Funds Up 1.02% in July (HedgeCo)
The Dow Jones Credit Suisse Core Hedge Fund Index closed up 1.02% in July as six of the seven index component strategies reported positive results for July. Following the market events of 2008, increased attention has been focused on liquid hedge fund structures, including managed accounts which tend to offer greater liquidity and increased transparency.

Moore Capital loses its sizzle (FT)
If the hedge fund industry were to have royalty, Louis Bacon, founder of Moore Capital Management, would be front and centre at court, jostling for the crown. The 55-year-old trading Svengali is not only one of the longest-standing hedge fund managers, he is also one of the most successful.

Thaler’s JAT Reduces This Year’s Loss With 4.7% July Gain (Bloomberg)
John A. Thaler’s JAT Capital Management LP rose 4.7 percent in July, paring this year’s loss from wrong-way bets on consumer stocks as the firm reduced holdings in those companies, according to a letter to clients. The gain cut the hedge fund’s 2012 decline to 17 percent, according to a person familiar with the matter, who asked not to be identified because the information is private.

TPG-Axon’s Singh Says China Slowing Ends Commodities Run (Bloomberg)
Dinakar Singh, founder of $4 billion hedge fund TPG-Axon Capital Management LP, said the commodities “super-cycle” is over because of falling Chinese productivity and profits. “It’s not where it was 10 years ago,” Singh said today in an interview on Bloomberg Television’s “Market Makers” program with Erik Schatzker and Stephanie Ruhle. “They are slowing down in their growth.”

Blackstone Alternative Asset Management (Baam) (HedgeFundsReview)
When you are number one, the tendency is to look only at the numbers. While Blackstone Alternative Asset Management (Baam) may be the world’s largest discretionary allocator to hedge funds, it emphasises what it does differently rather than the amount of cash it manages. Nevertheless, the significant amount of money Baam has gives it an edge over competitors as well as allowing it the freedom and scope to be more innovative and imaginative in how it approaches hedge fund investment.

EXCLUSIVE-Fired Barclays trader draws scrutiny in Libor probe (Reuters)
A 30-year-old former Barclays Plc (BARC.L) swaps trader in New York, who was fired from the bank in 2010, is among those drawing scrutiny from prosecutors in the deepening scandal over the manipulation of global benchmark interest rates. U.S. prosecutors in Washington, D.C. are looking at Ryan Reich’s activities while at Barclays between August 2006 and March 2010, said several people familiar with the situation, who declined to be identified because the bid-rigging investigation is ongoing.

Ignis launches new credit hedge fund (CreditFlux)
Ignis Asset Management has announced the launch of a new credit hedge fund, the Ignis Absolute Return Credit Fund. The fund will be managed by Ignis’ head of credit, Chris Bowie, and is described as a pure alpha, market neutral fund targeting low volatility as well as a low correlation to other asset classes. The fund will invest in both investment grade and high yield credit globally through the use of credit default swaps. London-based Ignis has around £73 billion ($114 billion) in assets under management, and invests across a broad spectrum of asset classes, including fixed income, equities, and real estate.

Where are Natan’s Women? (Forward)
To anyone conscious of the paucity of women in positions of visibility and influence in the Jewish world, the lineup for the 10th anniversary celebrations of the Natan fund struck a startling note. The Natan Fund, a relatively small but influential philanthropy organization, which was started by hedge fund managers in 2002, is having two panel discussions — one each in September and November — with a total of eight speakers and two moderators. All but one of the people on the dais, who include prominent investor/philanthropists Boaz Weinstein and Michael Steinhardt, will be male.

London Olympics an ‘Economic Failure’: Roubini (CNBC)
Famously bearish economist Nouriel Roubini has branded the Olympics an “economic failure”, saying Londoners have left the city and tourists have stayed away following “excess warnings”. The Games (click for more on the Olympic Games) were meant to boost tourism in the United Kingdom and in London in particular with an extra million visitors a day, but many shopkeepers have reported a drop in activity.

Agribusiness ETFs And The Drought Of 2012 (SeekingAlpha)
According to the U.S. Census Bureau and a variety of institutions that study human population growth, the world will need to feed roughly 70 million new mouths every year. That is the current ”net” projection when births are offset by deaths. Pundits from Marc Faber to Jim Rogers have talked about the demographic changes. Their solution? Invest in agriculture. Faber tends to talk more about investing directly in farmland as a hedge against social unrest.

Pimco Stock Push Stumbles As Gross Says Equity Cult Dead (Bloomberg)
When Bill Gross started Pimco’s most recent effort to expand into stocks three years ago, he vowed not to repeat the mistake he made in the 1980s, when his bond traders overwhelmed a handful of equity managers at strategy meetings, eventually prompting them to quit. Last week, the manager of the world’s largest bond fund at Pacific Investment Management Co. in Newport Beach, California, compared long-term returns from equities to a “Ponzi scheme” and said returns of 6.6 percent above inflation, known as the Siegel Constant, won’t be seen again. “The cult of equity is dead,” Gross, 68, said in an Aug. 2 interview with Betty Liu on Bloomberg Television.

Speculators Lift Wagers In Longest Streak On Record: Commodities (Bloomberg)
Speculators increased wagers on commodities for an eighth consecutive week, the longest streak on record, just before a report on U.S. job growth sparked the biggest price rally in a month. Hedge funds raised their net-long positions across 18 U.S. futures and options by 4.9 percent to 1.22 million contracts in the week to July 31, the highest since Sept. 6, U.S. Commodity Futures Trading Commission data show. Bets more than doubled since reaching this year’s low on June 5, capping the longest increase since the data began in June 2006. Gold holdings climbed by the most since November 2008, and cocoa wagers reached a one-year high.

Treasury Bears Submit To Fed As Bond Optimism At High (Bloomberg)
Jay Mueller, who manages $3 billion of bonds for Wells Capital Management in Milwaukee, resisted buying Treasuries for four months, anticipating the Federal Reserve would drop its pledge to keep interest rates at a record low through late 2014. No more. With the economy growing at a 1.5 percent annual pace, the odds of a recession have risen to 60 percent, making 1 percent yields on 10-year notes a possibility, he said. Wells Capital’s parent, Wells Fargo & Co., boosted its Treasury holdings 32 percent to $11.5 billion in May alone, according to the latest data compiled by Bloomberg.

Berkshire’s Cash Hoard Swells As Buffett Pares Consumer Stocks (Bloomberg)
Berkshire Hathaway Inc. (BRK/A)’s cash swelled in the second quarter to its highest level in a year as Chairman Warren Buffett pared bets on consumer-products stocks. Cash advanced 7.5 percent to $40.7 billion in the three months ended June 30, the Omaha, Nebraska-based company said in an Aug. 3 regulatory filing. Berkshire was a net seller of equities in the quarter as it cut its allocation to companies that make and distribute consumer goods while boosting holdings of financial firms and a group called “commercial, industrial and other.” Individual stocks weren’t listed in the filing.

Treasuries Rise As Monti Comments Boost Demand For Safer Assets (Bloomberg)
Treasuries rose, snapping a decline from last week, after Italian Prime Minister Mario Monti warned of a potential breakup of Europe without greater urgency in efforts to lower government borrowing costs. U.S. government securities were boosted along with German bunds as Monti’s comments added to speculation the region’s debt crisis will worsen and revived demand for safer assets. Treasuries returned 6.8 percent in the past 12 months, according to Bank of America Merrill Lynch indexes. A gauge of bonds around the world rose 6.5 percent. Treasuries fell last week as a U.S. job report damped speculation the Federal Reserve will increase debt purchases to spur growth.

Gold Gains In London On Speculation About More Monetary Easing (Bloomberg)
Gold gained for a second day in London on speculation the Federal Reserve will do more to support growth. Fed Chairman Ben S. Bernanke speaks on economic measurement in Cambridge, Massachusetts today. Labor Department data on Aug. 3 showed U.S. payrolls rose 163,000 in July, the most since February and exceeding the 100,000 gain estimated by economists surveyed by Bloomberg News. Still, the unemployment rate rose to 8.3 percent from 8.2 percent in June.

Hedge Funds Are Buying Spanish Real Estate After Slump, FTD Says (Bloomberg)
Hedge funds and private-equity firms are buying Spanish real estate after prices slumped, Financial Times Deutschland reported, citing Adolfo Ramirez-Escudero, the head of investment at CBRE Group Inc.’s Spanish business. Ramirez-Escudero advised on four property deals valued at more than 100 million euros ($124 million) that were completed in recent months, the newspaper said. His clients are in talks about another 1.8 billion euros of transactions, more than twice as much as a year ago, FTD said.

Apollo Seeks Capital For Asia Funds In Real Estate Push (Bloomberg)
Leon Black’s Apollo Global Management LLC (APO), the private-equity firm that is seeking to rebuild its real estate arm, is raising $750 million for a pair of funds that will focus on commercial properties in Asia. The AGRE Asia Pacific Real Estate Fund LP filed a private- placement notice last month with the U.S. Securities and Exchange Commission to seek as much as $600 million of capital. The New York-based management company is also teaming up with Bank of East Asia Ltd. to raise $150 million for a related fund that will focus on China, according to a separate July filing.

Chairman Schapiro Statement on Knight Capital Group Trading Issue (SEC)
Securities and Exchange Commission Chairman Mary Schapiro today made the following statement: The apparent trading error by Knight Capital Group on Wednesday reflects the type of event that can raise concerns for investors about our nation’s equity markets — markets that I believe are the most resilient, efficient, and robust in the world. Reliance on computers is a fact of life not only in markets everywhere, but in virtually every facet of business. That doesn’t mean we should not endeavor to reduce the likelihood of technology errors and limit their impact when they occur.

UCITS Hedge Fund Index – July 2012 Performance (HedgeCo)
The UCITS Alternative Index Global is up 0.84% in July bringing its year to date performance to 0.50%, while the UCITS Alternative Index Fund of Funds is up 0.83% bringing its yearly performance to -1.58%. In July, 9 out of 11 strategies indices return positive performances. The UAI CTA is the best performer, up 2.67%, while the UAI Commodities and UAI Macro are up respectively 2.18% and 1.06%. The only negative strategies this month are Event-Driven and Volatility, down respectively -0.29% and -0.20%. So far this year, the UAI Fixed Income and the UAI Multi-Strategy are the best performers, up respectively 2.67% and 1.49%. The other positive strategies since the beginning of the year are Volatility (up 1.12%), Emerging Markets (up 1.11%), Macro (up 0.91%), FX (up 0.76%) and CTA (up 0.60%).

‘Macro’ Funds Show Micro Returns (WSJ)
Global financial markets continue to be whipsawed by policy makers and economic news, leaving even fund managers who focus on profiting from sweeping macroeconomic trends in a difficult spot. The bad news for investors of all stripes: Few in the markets expect the cloudy outlook to become clearer anytime soon. Friday’s better-than-expected July employment report shelved worries about a near-term slide into recession and sparked a relief rally in U.S. stocks. But the report was nowhere near strong enough to change the picture of a stuck-in-the-mud job market.

Lindsay Fiduciary Services Opens Doors In Caymans (Finalternatives)
A Buckingham Fund Services alumnus has founded his own Caymans-based independent director and corporate services firm. Alric Lindsay, along with Brett Feinstein (director) and Udo Baumgartner (associate), have established the Cayman Islands-based Lindsay Fiduciary Services.

Millennium appoints legal chief to board (Absolutereturn-Alpha)
Simon Lorne, Millennium Management’s chairman and chief legal officer, is now on its board of directors, according to a letter sent to Millennium International fund investors in July. Lorne joins independent directors Ian Goodall, Martin Lang and Michael McDonald. Goodall and McDonald are employees of Cayman Islands based International Management Services, one of several go-to companies…

Feds probing Third Point’s Yahoo! stake (NYPost)
Federal Trade Commission lawyers are probing Dan Loeb’s Third Point hedge fund, according to All Things D. Loeb owns more than 6 percent of Yahoo! and is its largest shareholder, according to sources. Two Silicon Valley money men said they had been contacted by a lawyer at the FTC’s Bureau of Competition inquiring about the circumstances of their contact with Loeb — specifically around the time that he first began buying large chunks of Yahoo! last year as part of an activist shareholder action. Loeb is currently a director on the Yahoo! board.

AuM will grow while investors will display patience with long/short equity, according to Credit Suisse cap intro head (MyCOOConnect)
Hedge fund Assets under Management (AuM) will continue to grow while many investors are still exhibiting patience with long/short equity, the global head of capital intro at Credit Suisse has said. Pension funds have been a major driver behind the growth in hedge fund AuM, whose assets now stand at $2.1 trillion. “The flow from global pension funds will continue to be the main driver. With many plans currently being underfunded, they need to find uncorrelated sources of alpha which hedge funds have proven they can provide,” said Robert Leonard of Credit Suisse.

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