Hedge Fund News: Paulson in Bermuda, Legg Mason, Leverage, China Mobile

PAULSON & COBermuda Welcomes Significant New Reinsurer (Tax-News.com)

The Bermuda government has welcomed the news that a new reinsurance entity will set up shop in Bermuda from June 1, 2012, as part of a joint venture between Validus Group and hedge fund manager John Paulson. The joint venture between Validus and Paulson has a contributed capital of USD500m. Validus will underwrite business for the new entity, PaCRe Ltd, and receive commission in return. The entity has been approved as a new Bermuda Class 4 reinsurer, which will focus on underwriting top layer reinsurance programs with a long-term approach to asset management. The Bermuda government welcomed the commitment as a vote of confidence in Bermuda, and its offering as a very attractive jurisdiction for international business.

Is China Mobile A Good Stock To Buy? (InsiderMonkey)

The European economy has been weak after the sovereign debt crisis last year, while emerging markets such as Asia and Latin America remain strong. One of the fastest growing countries is China and an increasing number of investors are investing their money in this promising market. One way to do this is by investing in American Depository Receipts (ADRs).

Hedge Funds Cut ICE Brent Crude Net-Longs by 11,809 Lots (Bloomberg)

Hedge funds and other money managers cut bullish bets on Brent crude by 11,809 contracts in the week ended April 3, data from ICE Futures Europe showed. Speculative bets that prices will rise, in futures and options combined, outnumbered short positions by 139,074 lots, the London-based exchange said today in its weekly Commitment of Traders report. The figure marks a 7.8 percent decrease in speculators’ net-long positions from the previous week, according to ICE data.

Legg Mason’s Top 10 Positions Returned 20% So Far This Year (InsiderMonkey)

Bill Miller, Legg Mason Capital Management’s former Chairman and Chief Investment Officer, announced last November that he would turn over full management of the Value Trust to Sam Peters, who was the co-manager of Miller at the time of the announcement. Under Miller’s management, Legg Mason Capital Management Value Trust outperformed the market for 15 consecutive years from 1991 to 2005. Miller’s performance in recent years was less spectacular. Will his successor Peters generate the type of stunning returns Miller did early in his tenure at Legg Mason?

Hedge funds keep a lid on leverage (FT)

Since 2010s adoption of the so-called Volcker rule, Wall Street’s banks have moved fast to drop some of the most prominent vestiges of their past success: their proprietary trading operations. Banks once dominated bond and equity markets thanks to the operations of such desks – which acted, to all intents and purposes, like internal hedge funds, speculating with a bank’s own capital – but now their presence is barely felt. The exit began with Goldman Sachs, which starting in 2010 saw the departures of its three main prop traders and their teams: Pierre-Henri Flamand in Europe left to set up a hedge fund, Edoma Capital; Morgan Sze in Asia departed to establish his hedge fund, Azentus Capital; and Bob Howard in the US left to set up a hedge fund for private equity house KKR.

Billionaire Hedge Fund Index Up 17% YTD (InsiderMonkey)

Billionaire Hedge Fund Index is up 17% YTD. The index also gained 2.9% in March. Today we have been reading articles about the Hennessee Hedge Fund Index. According to  media reports, hedge funds gained 0.6% in March and 4.6% in the first quarter. These articles compare hedge fund returns to the S&P 500 index. This is comparing apples to bananas (not even oranges). These articles also state that the last time hedge funds outperformed the market was in 2008.

Hedge funds gain in first-quarter, but lag broader market-data (Reuters)

Hedge funds posted their strongest start to the year since 2006 but still trailed the stock market’s surge, largely because many managers began the new year with a more timidly positioned portfolio, data released on Monday show. The average hedge fund gained 4.94 percent during the first three months of 2011, according to Hedge Fund Research (HFR). The Hennessee Group reported that hedge funds gained 4.6 percent during the quarter when the Standard & Poor’s 500 index climbed 12 percent.


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