Marc Faber: If I Were Bernanke, I Would Resign (CNBC) Central bankers are “counterfeit money printers” and Federal Reserve Chairman Ben Bernanke should resign for messing up the U.S. economy so badly, Marc Faber, author of the Gloom, Doom and Boom, told CNBC on Friday. He said Bernanke was one of the main proponents of an ultra-expansionist economic monetary policy that was to blame for the latest financial crisis. “If I had messed up as badly as Bernanke I would for sure resign. The mandate of the Fed to boost asset prices and thereby create wealth is ludicrous — it doesn’t work that way. It’s a temporary boost followed by a crash,” Faber said.
FX Concepts’ Taylor turns bearish on US dollar (HedgeFundsReview) The head of $3 billion hedge fund FX Concepts says the Federal Reserve’s open ended quantitative easing programme will drive the US dollar lower in coming months. FX Concepts chairman John Taylor expects the dollar to weaken further after the Federal Reserve announced a fresh round of monetary easing to stimulate economic growth and job creation in the US. The Federal Open Market Committee (FOMC) said on September 13 it would purchase $40 billion of agency mortgage securities a month until the US labour market shows signs of improvement.
Are Investors Growing Weary of Hedge Funds? (InstitutionalInvestor) Investors appear to be fed up with hedge funds, at least for the time being. For example, HFR Thursday reported that the number of launches of new hedge funds is on the decline. It counted 245 launches in the second quarter, down from 304 in the prior quarter. The June period marks the lowest quarterly launch total since the fourth quarter of 2010. This news comes on the heels of our recent report that hedge fund investors redeemed an estimated $11.8 billion in July alone, making it the fourth month in a period of five that investors yanked out more money from hedge funds than they invested in them.
Grandmaster Capital hedge fund founder sees strength in US equities (HedgeFundsReview) The reports of the death of US equities have been greatly exaggerated, says Patrick Wolff, founder and chief investment officer of Grandmaster Capital, a long/short equity hedge fund that ranks among the top performers year to date. Contrary to the perspective of many investors, including bond king Bill Gross who proclaimed the death of "the cult of equity" in a article published in August, Wolff contends US equities "are one of the best options for investors with a medium to long-term horizon."
BlueCrest AllBlue FoF performance is weak, says analyst (InvestmentEurope) BlueCrest AllBlue, the London-listed fund of hedge fund, has performed 4% in NAV terms over the past 12 months. Oriel Securities, which has initiated coverage of the fund, described the performance as ‘disappointing’ and posted a Negative recommendation. Oriel noted that a number of investment trusts are reconsidering their exposure to listed hedge funds, possibly leading to a contraction of the listed hedge fund sector.
Hedge Fund Association asks SEC for clear rules on verifying investor accreditation (HedgeWeek) The Hedge Fund Association (HFA) has asked the Securities and Exchange Commission in a comment letter to specifically tell private fund managers what they will need to do to safely verify whether investors are accredited, should they want to advertise after the rules in the Jump Start Our Business Start-ups Act (JOBS Act) are finalised. The HFA also praised the entire proposed rule to lift the hedge fund advertising ban as a significant step to modernise securities laws that maintains the investor protections available under the current system. At the same time, it encouraged the regulator to coordinate with the Commodity Futures Trading Commission to harmonise any new rules with the Commodity Exchange Act (CEA).
Credit hedge fund manager Oak Hill announces marketing hires (CreditFlux) Oak Hill Advisors has confirmed that, as reported by Creditflux earlier this week, it has hired former GSO and Seix Investments marketing specialist Eric Storch. New York-based Oak Hill has also taken on Dalia Cohen as its new head of investor relations, according to the announcement. She previously carried out similar roles for private equity firm JLL Partners and credit hedge fund Trimaran. Both Cohen and Storch join Oak Hill, which manages credit hedge funds and CLOs, as managing directors.
Quintillion Offers StatPro Revolution for Cloud Analytics (WatersTechnology) Hedge fund administrator Quintillion has announced that it will offer StatPro's Revolution package as a cloud-enabled analytics service to its clients. Revolution provides attribution and risk measurement for investment portfolios, delivered through cloud-based architecture. Dublin-based Quintillion offers fund administration and middle-office support, along with investor services to its clients. JPMorgan holds a 25 percent stake in the company.
Soros Fund seeks buyers for asset-based lender Crystal Financial (Financial-News) US hedge fund sponsor Soros Fund Management LLC has mandated Deutsche Bank AG (FRA:DBK) to help it find potential buyers for asset-based lending specialist Crystal Financial LLC, Bloomberg reported, quoting two people in the know. The insiders would not be identified as the procedure is not public, Bloomberg said. Spokesmen for Soros and Deutsche Bank did not wish to comment on the matter when contacted by the agency.
South Africa: Hedge Fund Proposed Framework Released for Public Comment (allAfrica) On Thursday, National Treasury and the Financial Services Board (FSB) released the proposed framework for the relatively new and small in size South African hedge funds that are estimated at R31 billion, compared to US$ 2 trillion for the global hedge fund industry. Pension funds, long-term insurers, qualified investors and funds of hedge funds (these are funds that invest in hedge funds rather than investing directly in the underlying shares, bonds, or other securities) are entities that invest in hedge funds.
New Jersey Pension’s Secondary Market Approach to Hedge Fund Allocation (InstitutionalInvestor) Although it is not unusual these days for a pension fund to dump its fund-of-funds managers and invest directly in hedge funds, it’s less common for another pension fund to scoop up those same assets for its own portfolio. But that’s exactly what is happening at the $49 billion Massachusetts Pension Reserves Investment Management Board, which is cashing out of four of the five fund-of-funds managers it now invests with to go directly into hedge funds. And the $69.4 billion New Jersey Division of Investment, which oversees investments for the state’s public workers, is picking up some of those investments. It’s a novel move for a pension fund and is somewhat reminiscent of what happens in hedge fund secondary market trading, when investors trade investments in hedge funds directly with each other rather than redeeming from the manager. In these instances, investors sometimes sell their holdings at a discount or premium to what they originally paid.
Richard Gere is compelling as a hedge-fund billionaire trying to escape a scandal in 'Arbitrage' (FreeP) Greed is good, until it isn't anymore, is among the lessons viewers can take from "Arbitrage," a guilty-pleasure thriller for these tough economic times. In directing his first feature, writer and documentarian Nicholas Jarecki shows great command of tone as he balances sex, danger and manipulation with some insiderish business talk and a healthy sprinkling of dark humor. His film is well-cast and strongly acted.
Aima’s HK chairman to build regional voice (AsianInvestor) Philip Tye, the newly appointed chairman of the Hong Kong chapter of the Alternative Investment Management Association (Aima; day job: managing director of DragonBack Capital), says the hedge fund industry it represents needs to coordinate at a regional level. One of the objectives of Aima Hong Kong will be to coordinate with its brethren in Singapore, Sydney and Tokyo. He is working on cross-border communication along with two other Aima council members, Chris Pearce, COO of Marshall Wace in Hong Kong, and Mark O’Sullivan, a partner at Ernst & Young in Sydney.
Abrams raises $2.8b hedge fund (BostonGlobe) Abrams Capital Management, one of Boston’s largest hedge fund firms, has raised $2.9 billion for its new fund, according to a filing with federal securities regulators. There are 457 investors in the fund, Abrams Capital Partners II, which posts a minimum investment of $5 million. Abrams picks stocks and fixed-income securities it believes are undervalued. Its founder, David Abrams, started the firm in 1999 after leaving the Baupost Group, Boston’s largest hedge fund firm.
HFR: Hedge fund launches fall to six-quarter low (PIOnline) Hedge fund launches in the second quarter declined 19% to 245, the lowest level of quarterly fund creation since the fourth quarter of 2010, according to new data released Thursday by Hedge Fund Research, an index creator and industry researcher. The rate of hedge fund liquidation eased to 192 funds in the second quarter, down 17% from the previous quarter, according to HFR's report. However, the total of 424 fund liquidations in the first half of 2012 exceeded the rate in the first six months last year by 14%.
The JOBs Act will Have Minimal Impact on Hedge Funds (ValueWalk) Private Investment Funds now face a more relaxed environment in their fund raising campaigns, as the Securities Exchange Commission (“SEC”) looks set to implement a rule that will allow the firms to attract more accredited investors by collecting some critical information about them. However, it is quite perplexing as to what change this rule brings to an environment that already allows hedge funds to advertise, and allows accredited investors to acquire stakes in the firms. According to a report published on Harvard Law School’s Forum for Corporate Governance and Financial Regulation by Alan Klein, who is a partner in the Corporate Department at Simpson Thacher & Bartlett LLP, this is one of the capital reforms, run under the flagship of the Jumpstart Our Business Startups Act, alias (“JOBS Act”), enacted by the U.S Congress back in April, and proposed in late August.
Hedge Fund Legend Cliff Asness Shares His Required Reading For Wall Streeters (BusinessInsider) Cliff Asness spoke at The Bloomberg Markets 50 conference this morning, and he had everyone paying on the edge of their seats with his self-described "geeky wit." To check out what he said, head to our live blog of the event here. Business Insider did catch up with Asness after his talk, and while he was surrounded by adoring fans we managed to get one important question in: What is your required Wall Street read?
BioFuel Energy Shares Surge 40% on Hedge Fund Buying Momentum (Nasdaq) Shares of BioFuel Energy continu to burn higher Thursday, rising 40% to $5.82 but off a day high $6.09 after two hedge funds disclosed increased stakes in the ethanol-maker earlier this week. David Einhorn's Greenlight Capital bought 69,000 shares, boosting its overall stake to 36.2% of the company. Daniel Loeb's Third Point LLC reportedly bought 34,000 shares, raising its investment to 19%.
Louis Bacon Recruits Brother To Have Tough Conversations With Employees Re: The Fact That They No Longer Work At The Firm (DealBreaker) One thing you may or may not know about hedge fund manager Louis Bacon is that he likes to keep his human interactions to a minimum. It’s not a personal thing, just people in general thing. He doesn’t like ‘em and he doesn’t want to talk to or look at ‘em. ...So it probably did not come as much of a surprise when LB hired his brother, the improbably named Zack Hampton Bacon III, to speak with a dozen or so members of the staff re: security waiting to escort them out of the building.
The World's Most Powerful Hedge Fund Manager Tells Investors How They Should Set Up Their Portfolios (BusinessInsider) Hedge fund god Ray Dalio, who runs Bridgewater Associates, is widely considered to be the most successful hedge fund manager in the world. He recently sat down with CNBC's Maria Bartiromo to discuss a variety of topics at the Council on Foreign Relations and he had some advice for the average investor. During the hour-long discussion, Bartiromo asked Dalio about portfolio allocation in terms of gold versus equity versus real estate and other asset classes.
Hedge Funds Ask SEC to Limit Liability in Solicitation Rule (ComplianceWeek) The Hedge Fund Association—which represents investors, hedge funds and service providers— has asked the Securities and Exchange Commission to specifically tell private fund managers what they will need to do to safely verify whether investors are accredited once a new rule allowing solicitation and advertising of private funds is finalized. Last month, the SEC approved a proposed rule to eliminate the current prohibition against general solicitation and advertising for private securities offerings. The proposed exemptions, mandated by the JOBS Act, focus on offerings conducted under Rule 506 of Regulation D. The elimination of the prohibition, as well as a similar one contained in Rule 144A of the Securities Act, permits general solicitation as long as issuers “take reasonable steps to verify” that all of the purchasers are accredited investors.
Jim Rogers’ “Astonishing” New Investing Idea (Yahoo) Jim Rogers is a walking, talking, book-writing one-man encyclopedia of global investing wisdom. He was a co-founder of the groundbreaking international hedge fund, Quantum funds, has ridden through 116 countries in a record-breaking trek, and has written five books on his global journeys including "Investment Biker" in 2003 and "A Bull In China" in 2008. In the attached clip Rogers shares his latest insights on China and reveals his surprisingly positive view towards Russia.
Adoboli Loss Could’ve Topped $12 Billion, Prosecutor Says (Bloomberg) Kweku Adoboli, the former UBS AG (UBSN) trader, could have lost the bank as much as $12 billion through unauthorized, “unhedged investments,” prosecutor Sasha Wass said. “The scale of Mr. Adoboli’s gambling was so large and so unchecked he could have quite easily approached and even exceeded the limits of the bank’s resources,” Wass told the 12- person jury at the beginning of a London criminal trial today.
Hedge funds buoyed by stock markets in August (Reuters) Hedge funds racked up further gains in August, helped by rising stock markets, low volatility and the relative absence of major political shocks in the euro zone, whose debt crisis has proved so hard to handle for managers in recent years. The SS&C GlobeOp Hedge Fund Performance Index, which tracks the performance of the majority of hedge fund services provider GlobeOp's $187 billion in assets administered, rose 0.83 percent in August, taking returns so far this year to 6.76 percent, the firm said in a statement.
Romney trying to shift back to economy (WSJ) Republican Mitt Romney is trying to shift the focus of the presidential campaign away from anti-American violence overseas and back to the economy, accusing President Barack Obama of ignoring Chinese trade violations and pointing to a new Federal Reserve effort to bolster the economy as evidence of Obama's weak policies. Obama, campaigning in the aftermath of the death of four Americans at a consulate in Libya, is playing up his role as commander in chief, vowing that "no act of terror will go unpunished."
Trades After 2008 Meeting Probed (WSJ) U.S. securities regulators are investigating possible insider trading by Wall Street executives who attended a private meeting with then Treasury Secretary Henry Paulson in 2008, according to people familiar with the probe. The Securities and Exchange Commission recently sent subpoenas to hedge funds and other firms that were represented at the July 2008 meeting, the people said. SEC investigators are seeking information on whether Mr. Paulson suggested in the meeting that the government was willing to rescue the struggling mortgage-finance companies Fannie Mae and Freddie Mac, the people said.
Pimco's Gross Reaps Benefits from Bets on Fed MBS Program (WSJ) Bill Gross, the manager of the world's biggest bond fund, stands out as one of the fixed-income investors best positioned to benefit from the Federal Reserve's latest monetary stimulus. Half of the $272.5 billion Total Return Fund that Mr. Gross manages at Pacific Investment Management Co. is dedicated to mortgage-backed securities after an extensive portfolio shuffle in recent months that saw him simultaneously offload longer-dated Treasury bonds. After the Fed announced it would buy more MBS as part of its new stimulus program Thursday afternoon, these securities enjoyed a strong rally while the longest maturing Treasurys sold off.
SEC Charges Connecticut-Based Broker with Stealing Investor Funds to Pay Mortgage and Shopping Bills (SEC) The Securities and Exchange Commission today charged a broker and his company based in Danbury, Conn., with stealing at least $600,000 from customers who he persuaded to withdraw money from their brokerage accounts he managed at other firms and instead invest with him directly. The SEC alleges that Stephen B. Blankenship lured about a dozen customers – including some retirees and others he met at church – into his scheme by assuring them they could obtain a greater rate of return on their money by transferring it to his firm, Deer Hill Financial Group.
The Alpha Cooperative and EAB Investment Group Bring Enhanced Risk Management Techniques to Hedge Fund Industry (HedgeCo) The Alpha Cooperative, LLC (“TAC”), a provider of turn-key institutional infrastructure for asset management firms, today announces a strategic alliance with EAB Investment Group (“EAB”). The complexities in managing risk across the full structure of a firm, including governance, operational and investment risk can significantly increase the cost of running a hedge fund; however an effective risk management program is increasingly important to investors. Through the alliance of TAC and EAB, clients gain access to a fully supported governance structure as well as bottom up risk management. By providing operational infrastructure and hedged portfolio strategies, TAC and EAB promote the essential items for emerging managers, lessening the chance of operational failure and large drawdowns.
John Henry denies Red Sox sale (Absolutereturn-Alpha) John Henry has firmly denied rumors that his Fenway Sports Group is quietly working to sell the Boston Red Sox. The founder of hedge fund firm John W. Henry & Co. was said to be "quietly shopping the team to potential buyers" in a FOX Business report today that cited unnamed sources. The article alleged that losses at the hedge fund are "likely weighing on the consideration to sell the team." "A sale of any kind is so far from our thinking it hasn’t even come up apart from technical planning issues involving death or disability. This report is completely without foundation,” Henry told the Boston Globe.
KStone Partners Adds Managing Director (Finalternatives) New York-based hedge fund of funds manager KStone Partners has hired Maria C. Ricci as senior managing director, with a focus on business development. Ricci has spent over a decade working with high-net-worth individuals, wealth advisors and leading institutions. She has held positions in institutional research sales at Bloomberg and was a director of institutional research sales at Instinet. Ricci was also an assistant vice president at AllianceBernstein. She began her career as a financial advisor on Wall Street.
David Cranston Rejoins Investcorp (Finalternatives) David Cranston has returned to Investcorp to oversee the firm's $1.6 billion hedge fund seeding platform. In a role similar to the one he held with the alternative asset manager from 2005 to 2010, Cranston will be charged with growing the Single Manager Platform, which currently includes six managers.
Morgan Creek Capital’s Yusko Headlines Annual Hedge Fund Summit (Finalternatives) What does it take for a hedge fund manager to raise capital from endowments? Mark Yusko, CEO and CIO of Morgan Creek Capital Management, will answer this question and more during his keynote address at the FINforums Annual Hedge Fund Summit. The event, which takes place on September 20 at New York’s Sentry Centers, is organized by FINalternatives, a leading independent news source for the alternative investment industry.