What Will Happen to Wall Street if Romney Wins in November? (Minyanville) During the first presidential debate, a Yahoo Finance poll found that 80% of voters (33,782) believed Mitt Romney gave a stronger performance than President Obama. Among the praise and critiques of both candidates, one important question has emerged: What will happen to Wall Street if Romney wins in November? "I think they have pretty much more or less settled on what the regulations are going to be," said Andrei Knight, hedge fund expert, founder, and Senior Currency Strategist at fxKnight.com. "If Obama is re-elected we're going to see more enforcement. Thus far they have kind of just passed the rules and tested the waters, but so far they have not been very aggressive about enforcing it. If Obama wins I think we will definitely see more enforcement of the rules because the election will kind of be the public's confirmation that yes, we are on the right track. That would embolden the regulators and we'd see more enforcement. [But] if Romney wins we would definitely see Dodd-Frank [revisited] and possibly repealing some of it."
New York Hedge Fund Awaits Decision From Ghanaian Court on Argentinean Naval Vessel (Observer) A lot of people will be watching Ghana’s Supreme Court tomorrow, which is not something that can be said everyday. Then again, it’s neither a common occurrence for a hedge fund to impound a sailing vessel used for training by a sovereign navy. That’s what happened last week when an affiliate of Paul Singer’s hedge fund Elliott Associates asked the Ghanaian government to prevent the ARA Libertad, a tall ship owned by Argentina,from leaving the port of Tema. The cause of that bizarre action? NML Capital, the Elliott affiliate, wants the South American nation to make good on bonds issued before its $95 billion default in 2001.It’s not the first time hedge fund creditors have gone after Argentinean assets, according to Merco Press: In 2007, the country cancelled a scheduled maintenance trip to U.S. soil by the presidential airplane, and in 2009, rumors swirled that bondholders might seize the country’s exhibit at the Frankfurt book fair.
Hedge Fund Launch: Aberdeen Introduces Three Philadelphia Multi-Asset Funds (HedgeCo) $286.5 billion hedge fund group Aberdeen Asset Management has launched the Aberdeen Dynamic Allocation Fund, the Aberdeen Diversified Income Fund and the Aberdeen Diversified Alternatives Fund. These funds were created on September 24, through the reorganization and renaming of Aberdeen’s previous range of “Optimal Allocation” target risk funds. These multi-asset funds will be managed in Philadelphia by the Aberdeen Solutions investment team, responsible for $37 billion of assets under management globally as of June 30th, 2012.
PerTrac study reveals large hedge funds perform better in down years but small funds outperform generally (Opalesque) Latest research from PerTrac, provider of analytics, reporting and communications software for investment professionals, analyses the performance trends for hedge funds of all shapes, sizes and age from 1996 to 2011. The sixth annual study, Impact of Size and Age on Hedge Fund Performance: 1996 - 2011, shows that the average large fund outperformed the average small fund in the negative performance years of 2008 and 2011. During the 41 months since 1996 in which hedge funds of all sizes posted negative performance results, the average large fund lost less than the average small fund in 61% of these monthly periods.
Fundhost licenses SS&C AdvisorWare (Finextra) Fundhost provides administration services to the Australian boutique investment manager sector and believes there is an opportunity to offer back office services to the growing hedge fund sector. They selected SS&C's AdvisorWare for its hedge fund industry leadership, ASP hosting model and local support. "We are delighted to partner with SS&C as we launch our Australian hedge fund administration business," commented Anne Ridgway & Mark Bennett, Joint-CEOs, Fundhost. "Our hedge fund clients can benefit from globally proven hedge fund technology together with Fundhost's back office administration experience, all available at a highly attractive pricing point."
IndexIQ Launches New Hedge Fund ETF (HedgeCo) Index-based alternative investment provider Index IQ has launched a new hedge fund replicator fund, the IQ Hedge Market Neutral Tracker ETF (QMN). The new ETF fund seeks to track, before fees and expenses, the performance of the IQ Hedge Market Neutral Index. “The Index IQ ETF continues the growth of the hedge fund-like investment industry.” Brett Langbert, President and COO at HedgeCo Networks, said of the launch. “This is a major trend to follow in alternative assets, as roughly $50 trillion in retail assets have little to no exposure to hedge funds. Platforms that provide hedge fund-like performance, such as ETFs and separately managed account platforms, give retail investors a way to mirror hedge fund performance in their own portfolios, and we believe this is a new wave of hedge fund investing and a trend all industry participants should keep their eyes on.”
Lyxor Hedge Fund Index up 0.2 per cent in September (HedgeWeek) The rise was led by the Lyxor Event Driven Special Situations Index (+2.2 per cent) and the Lyxor L/S Equity – Long Bias Index (+1.5 per cent). The sharp move in the markets occurred early in the month as the ECB’s plan for unlimited bond purchases came into focus. For the remainder of the month, markets were relatively calm and exhibited low correlations among individual securities. Volatility was low, as markets did not lurch erratically from euphoria to fear. Fundamentals generally overrode emotions, meaning that some risk assets rose in value (e.g. equities and corporate bonds) and some fell (e.g. agricultural commodities and crude oil). This environment benefited nearly all hedge funds strategies, with the exception of CTAs, which often act as the de-correlated portfolio diversifier.
Ex-Wall St execs launch hedge fund to bet on Asia M&A (BusinessTimes) Hong Kong-based Ardon Maroon Fund Management, run by former Wall Street bank executives, has launched an Asia-focused hedge fund with seed capital from a European family office, a company document showed, aiming to profit from events such as mergers and restructurings. The launch comes as Asian funds that focus on mergers and activities such as spin-offs or bankruptcies, also called event-driven funds, have outperformed so far in 2012, rising 5 per cent on average against the 3.7 per cent gain overall for Asian hedge funds, data from industry tracker Eurekahedge showed.
Expedition Advisors deploys Imagine risk management system (Finextra) Expedition, a Hong Kong-based hedge fund focused on a mix of volatility and dispersion strategies, now operates Imagine at the core of its business infrastructure. According to Craig James, Managing Partner at Expedition Advisors, "Based on our own technology backgrounds, we were well positioned to construct all of our necessary systems in-house and, for the most part, that is precisely what we did. However, it was neither practical nor cost effective to try replicating Imagine's unique combination of software, data, and services for risk and portfolio management. This comprehensive approach was quite compelling so, after evaluating several other systems, Imagine was clearly the optimal choice for Expedition as we prepared to launch."
Harding’s Winton Capital ups dividend on back of profit rise (CityAM) WINTON Capital Management, the firm founded by hedge fund star David Harding, saw profits jump 23 per cent last year after it added $11bn (£6.9bn) to assets under management in 12 months, accounts show. Harding, who last week publicly revealed his £34m tax bill, helped lead the firm to a £161.9m profit in 2011 compared to £131.5m in the previous year, propelled by an increase in the company’s assets under management from $17bn to $28bn.
Privity of Contract in the Caymans, Part I (AllAboutAlpha) Two recent decisions by the Grand Court of the Caymans concern the scope and enforceability of side letters. Although one has to be careful about sweeping conclusions (each decision was limited to its specific facts), the hedge fund management won both lawsuits, in each case at least in part on privity-of-contract grounds. The takeaway is that if you are invested in a Caymans domiciled fund, and you want to negotiate an enforceable side letter, you ought to be very careful about its drafting. It may someday be read and construed with a jaundiced eye. I’ll detail the first of these decisions below, and the second in a follow-up.
Regulation and Hedge Funds (HedgeFund) Financial and legal experts gathered at a conference last week to discuss the impact of Dodd-Frank Act and the JOBS Act upon the hedge fund industry. The law firm of Thompson Hine sponsored the event, held Thursday at Club 101 on Park Avenue in New York. The topics covered ranged from how hedge funds are preparing to cope with the loosening of advertising restrictions through the JOBS Act to how regulations are affecting mostly smaller fund managers. Speakers included Anthony Scaramucci, founder of fund of funds manager SkyBridge Capital and CNBC contributor, and representatives from Thompson Hine.
The Inner Child of Hedge Funds (Minyanville) I don’t really care all that much for hedge funds. While the world has gone gaga over them, they’ve only struck amusement in me. In fact, I don’t even see hedge funds as an asset class per se. To me, they're more of a fee structure than anything else. ...However, the way in which I was privileged to learn these views is noteworthy and bears telling, since it’s a bright spot in the reputation of an industry that could use a little burnishing. Once a year, the industry bands together in something called Trading Day for Kids, a one-day fundraising event that provides a vehicle for hedge fund and other institutional investors to improve the lives of at-risk children and youth in New York City. Specifically, on October 25, the hedge fund community will do all their trading, en masse, through one broker – this year, it will be Canaccord Genuity – that in turn will donate all of the commissions to Youth, I.N.C., which is a sort of uber charity that redistributes the funds to some really terrific non-profits throughout the city.
EU Crisis: Searching for the Bernanke Put (MoneyNews)
In preparation for a conference on the EU crisis to be held at the CATO Institute in Washington, D.C., Wednesday, I searched for information on the operation of the so-called Term Asset Lending Facility (TALF), one of the array of programs put in place by the Federal Reserve and the Treasury to support the financial markets. On March 23, 2009, Joe Weisenthal wrote for the Business Insider that under the program, “The banks get to dump ‘toxic’ assets, the hedge funds set a price and taxpayers get their money back if anyone makes a profit,” Tyler Durden posted on Zero Hedge a primer on how the program worked and how this program could be exploited if a hedge fund bought assets with a face value of $100 for $80 by putting up $2.40, with the Fed putting up the rest. A day later, the fund would discover that the asset was only worth $20, which was the market price, so the fund would lose $2.40, and the taxpayer $77.60. Supposedly the bank would then buy the asset for $20 and pay the fund a $5 million fee for the privilege.
French Firm Hires Top Execs (HedgeFund) Natixis Global Asset Management has boosted its employee count through the hire of two new executives. Investment Europe reported that James Beaumont joined the Paris-based asset manager as the new head of product consulting and solutions, while Catherine Morat heads the firm’s product marketing team.
London Brokerage Targets Hedge Fund With N.Y. Office (Finalternatives) Boutique brokerage and research shop United First Partners aims to expand it hedge fund client base with its first office in North America. UFP already has five staffers at its New York office, including co-founder Michael Hadjedj, and its first strategic partnership, with Goldman Sachs Execution and Clearing. "It's an exciting time for us," Hadjedj said. "The New York office and expanding sales team will provide United First Partners with the broader platform needed to build on its success to date in the European markets."
Spectrum Said to to Buy Stanley Home Business for $1.4 Billion (Bloomberg) Spectrum Brands Holdings, Inc. (NYSE:SPB), the consumer-products company controlled by Harbinger Group Inc (NYSE:HRG), has agreed to buy Stanley Black & Decker, Inc. (NYSE:SWK)’s home unit for $1.4 billion in cash, said two people with knowledge of the matter. Spectrum, the Madison, Wisconsin-based producer of consumer products such as Rayovac batteries and George Foreman grills, may announce the deal as soon as today, said the people, who asked not to be named because the details aren’t public. Spectrum will add Stanley’s residential hardware and home improvement unit to its appliance division, these people said. Spectrum is acquiring Kwikset door locks and Stanley builders hardware, among other brands.
Half of Wall Street Employees Expect Bigger Bonuses (Bloomberg) Almost half of Wall Street employees expect their year-end bonuses to be higher this year than they were a year ago, according to an eFinancialCareers.com survey. Of the 911 U.S. financial professionals who responded to the e-mailed survey, 48 percent anticipate a higher payout, up from 41 percent in a similar survey last year, the job-search website said today in a statement. Employees of hedge funds and other asset managers were more optimistic than those at banks and broker-dealers, according the statement. Of the respondents, 82 percent work for U.S.-based companies.
Bernanke, Subbarao to Meet in Mumbai (WSJ) Ben Bernanke will meet with Reserve Bank of India Governor Duvvuri Subbarao in Mumbai on Wednesday, marking the first time a serving Fed chairman has visited the Indian central bank. Economists say the two should have lots to talk about. For starters, Mr. Bernanke may give Mr. Subbarao some “lessons” on how monetary policy can help tackle a slowdown, says Ashima Goyal, who advises the Indian central bank on its monetary policy.