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Hedge Fund News: Prudential, Jim Rogers, George Soros

Pru Adds Hedge Fund Credit Specialist (Finalternatives)
Prudential Financial has hired a hedge fund economist to boost its emerging markets credit capabilities. Prudential Fixed Income named Giancarlo Perasso lead economist for Europe, the Middle East and Africa. Perasso joins the insurer from London-based hedge fund Matrix/Redux Funds, and will remain based in the British capital. Prudential also hired Gerwin Bell, a former International Monetary Fund mission chief, as lead economist for Asia.

Prudential Financial Inc (NYSE:PRU)

Hedge Fund Fight Over Madoff Claims Shows Contract Woes (BusinessWeek)
Hedge funds Perry Capital LLC and Solus Alternative Asset Management LP are fighting over whether they had a contract when they agreed to trade $195 million of claims on Bernard Madoff’s bankrupt firm, amid rising prices on the claims. Solus sued Perry July 3 for $20 million after the trade fell apart, saying they had a legally enforceable deal, sealed by phone and “instant messages” on Bloomberg LP terminals. Perry denied there was a deal, “let alone one that can be enforced in court.”

Former Galleon hedge fund employee Roomy Khan leaves Federal Court in New York (IBNLive)
A top Federal Reserve official said on Tuesday the Federal Reserve should launch another bond-buying program of whatever size and duration is necessary to get the economy back on its feet, signaling support from some U.S. policymakers for aggressive steps to boost the flagging recovery. Boston Fed Bank President Eric Rosengren said in interviews with the New York Times and CNBC that the Fed should start buying Treasury and mortgage-backed securities and continue doing so until the economy was back to full strength.

Hedge Funds Gained 1.1% in July, Still Lag Broad Market (WSJ)
Hedge funds posted their largest monthly gain since February with a 1.1% increase in July, according to Chicago-basd Hedge Fund Research, but performance still lagged that of the broad market. The Standard & Poor’s 500-stock index rose 1.4% last month, including dividends. Hedge funds’ underperformance was more marked in the first seven months of the year. Their returns averaged 2.9%, when the S&P 500 index surged 11%. Global stock markets started out on a tear but have turned choppy since March, when concerns over European nations’ heavy indebtedness and sputtering global economies again came to the fore.

Sometimes Hedge Fund Associates Would Rather Bake Muffins (Observer)
Ben Gifford graduated from Dartmouth in 2010. He sought work teaching in Asia, but those kinds of jobs don’t exactly grow on trees, so he went to work for Bridgewater Associates. But life at the $125 billion hedge fund didn’t exactly agree with him, and after a year-and-a-half at the firm, he decided to pursue other dreams. Such as? As a high schooler in Newton, Mass., Mr. Gifford and childhood friend Sean Pears had an epiphany. A bakery could sell muffins, and give customers the chance to flip a coin. Heads, they get a second muffin, free. Tails, just one muffin. Double or Muffin!

Hearing set in hedge fund case (CTPost)
With a sentencing date in hand, a federal prosecutor is pressing forward with a bond revocation hearing for Francisco Illarramendi, the wealthy owner of a group of Stamford-based hedge fund involved in a Bernard Madoff-like Ponzi scheme that may have cost investors hundreds of millions of dollars. U.S. District Judge Stefan R. Underhill set Oct. 29 for sentencing Illarramendi, 43, of New Canaan, who owned the Michael Kenwood Capital Management Group in Stamford. Illarramendi pleaded guilty March 7, 2011, to wire, securities and investment adviser fraud as well as a conspiracy charge. Those charges carry up to 70 years in prison and more than $5 million in fines.

S&P 500 bests hedge funds for second consecutive month-HFR (Reuters)
Hedge funds on average gained 1.05 percent in July, trailing the benchmark S&P 500 Index for the second straight month, according to data from research firm Hedge Fund Research Inc. Hedge funds in the $2.1 trillion industry were up 2.88 percent this year on average, HFR said. By comparison, the S&P 500 was up 7.41 percent through July. Last month the index rose 1.26 percent.

Food Supply Shock – $10 Corn Coming: Top Hedge Fund Manager (CNBC)
Few people know more about commodities than top hedge fund manager Renee Haugerud. And what she sees happening in ‘the softs’ has her very worried. Of greatest concern to her is the price of corn [CCV1 796.75 -3.75 (-0.47%) ], which has surged in recent months due to sizzling hot temperatures scorching most of the growing region. And although temperatures are starting to ebb lower, Haugerud says it’s too late. “The corn crop for this year is gone,” she says. “We can’t improve it.”

AdvisorShares Set to Launch the QAM Equity Hedge ETF (MarketWatch)
AdvisorShares, a leading sponsor of actively managed Exchange Traded Funds (ETFs), announced today that the QAM Equity Hedge ETF QEH 0.00% will open for trading tomorrow, Wednesday, August 8, 2012. QEH is sub-advised by Commerce Asset Management (“CAM”), a Memphis, Tenn.-based investment advisor and subsidiary of Commerce Holdings, LLC who advise on approximately $700 million in assets. QEH employs an actively managed long/short strategy that seeks to exceed the risk-adjusted performance of approximately 50% the long/short equity hedge fund universe as defined by the constituents of the HFRI Equity Hedge (Total) Index, aiming to provide investors with better risk adjusted returns versus the S&P 500 Index over time while reducing the time required and expertise needed to select individual hedge funds.

The curious case of Children’s Investment Fund vs Coal India (NDTV)
UK-based hedge fund Children Investment Management Fund (TCI) has dragged Coal India Ltd (CIL) to court over illegal interference of the government in the functioning of the public-owned company. TCI is a minority stakeholder in CIL owning little over 1 per cent in the public sector unit (PSU), while the government owns 90 per cent. The basic premise of TCI’s argument is that the Centre has “illegally” interfered with CIL’s functioning. As TCI says in a press statement, “Ministry does not have legal authority to interfere with the discretion with CIL as it has been doing on a regular basis.”

Believe It Or Not, In This Movie The Hedge Fund Manager Is The Hero (Forbes)
Actor and filmmaker Derek Ting is a risk-taker off-screen as well as on-screen. In Supercapitalist Derek portrays Conner Lee, an ambitious American-born stock trader transplanted to Hong Kong, where he discovers the true meaning of success. In real life, Derek is a Hong Kong-based American expatriate who succeeded not only in getting his movie made, but also in landing a valuable distribution deal, despite formidable obstacles.

Hutchin Hill Exits JPM Trade, to Open UK Office, Launches Credit Fund (ValueWalk)
Hutchin Hill, another hedge fund that profited from the JPMorgan Chase & Co. (NYSE:JPM) London Whale fiasco, marked its fourth anniversary in the month of July this year. The Hutchin Hill Capital Master Hedge Fund’s Q2 reports a rise of 1.73 percent in returns on all fees, while the year to date returns for the first six months of fiscal 2012 was up 0.8 percent. HH gained 9.5 percent on the S&P index for the first half of the year. For the four years, 2008-2012, the fund gained a total of 35.21 percent on all returns, compared to a raise of 21.15 percent on S&P 500. The master fund now has $1.1 billion in assets under management (AUM). The fund exited the whale trade at the end of June. The fund is short one global bank, but does not disclose if it is JPMorgan Chase & Co. (NYSE:JPM).

Bank of America Merrill Lynch reports hedge fund performance flat (Opalesque)
Bank of America Merrill Lynch research reveals that hedge funds were flat last week with long/short equity up the most with performance of 0.52% and the CTAs performing the worst, down 0.71%. The whole investable hedge fund composite index was up 0.06% as of August 1st. Mary Ann Bartels, head of technical analysis, reports that the bank’s models indicate that Market Neutral funds market exposure fell to -2% from 5% net long while Equity Long/Short decreased market exposure to 24% from 26% net Long, remaining well below the 35-40% benchmark level. Bartels reports that Macros have gone long small cap and move flat commodities. “They remain short S&P 500, NASDAQ 100, 10-year Treasuries and EAFE. EM exposure is increased sharply and USD remains long” she writes.

Healthcare hedge fund Trevi Opportunities Fund up +6.4% YTD (Opalesque)
New York-based Trevi Health Capital posted positive year-to-date returns for its Trevi Opportunities Fund (TOF) a long-short healthcare hedge fund, according to sources familiar with the firm. Trevi Health has been involved in healthcare related investments since 2005, primarily as a private equity firm, but launched this fund at the end of 2010. The fund is up +6.4% year-to-date after rebounding from a down month in May. Since inception, the fund is up +10.2% annualized. TOF is a long-short equity and special situ…

TEXT-S&P summary: Man Group PLC (Reuters)
With assets under management (AUM) of $52.7 billion at June 30, 2012, Man ranks as one of the largest publicly listed hedge fund managers globally. Man has now integrated GLG Partners Inc. (GLG), which it acquired in 2010, and we continue to view GLG’s acquisition as broadly positive for Man’s business profile. In particular, GLG has broadened Man’s product offering and reduced its reliance on in-house investment manager AHL. We note, however, that AHL still comprises over a third of management fee revenue and that continued market volatility and macroeconomic uncertainty have hindered its investment performance. Man reported that AHL was 11% below peak on a weighted-average basis as at July 20, 2012. Some GLG products, such as the GLG European Long Short Fund, GLG Global Convertible Fund, and GLG Market Neutral Fund, reported a competitive one- and three-year performance as at end-June 2012, and 34% of GLG performance eligible funds were at peak at June 30, 2012. However, we note that their performance remains weak in other areas, such as emerging markets.

What Does the Next GM Bankruptcy Looks Like (TownHall)
It’s not too early to start thinking about how the next great crisis in the auto industry will shake up the world. With the general economic slow down worldwide, declining auto sales and uncertainty surrounding the future direction of the automotive market, another automaker meltdown isn’t out of the question. And because the high profile federally-financed bailout for GM has generally gotten poor reviews from politicians, voters and Wall Street, General Motors is a good place to start to look at what the next automotive bankruptcy could entail.

GoldenTree Hires Ex-Goldman Employee (HedgeFund)
New York-based hedge fund firm GoldenTree Asset Management has brought on a former Goldman Sachs trader. American Banker reported that Deeb Salem started his first day at the firm on Monday. The article said that Salem worked at Goldman Sachs for about 11 years until he left in May. He was among those at Goldman who handled the bank’s bets against subprime mortgages during the 2007 subprime mortgage crisis.

Business in brief (CompassCayman)
Atlanta accounting and advisory firm Gifford, Hillegass & Ingwersen LLP said it has opened an office in the Cayman Islands to serve hedge fund and alternative investment fund clients. GH&I said its new office will also assist captive insurance companies and other offshore entities. “The establishment of a GH&I office in the Cayman Islands is an important strategic move to efficiently serve our alternative investment clients and established niche practice,” said Andrew Siegel, GH&I tax partner and leader of the firm’s alternative investment group. “We have a strong domestic practice and have been studying the idea of opening an office in the Cayman Islands for some time. The Cayman Islands continue to be one of the preferred domiciles for hedge funds and thus, an attractive environment for financial and professional service providers.”

Ezekwesili, others to chart new economic path for Africa (NGRGuardianNews)
BUILDING on her work in the last five years as World Bank Vice President for Africa, former Nigerian Solid Minerals and Education Minister, Oby Ezekwesili, is teaming up with billionaire George Soros to chart a new economic course for Africa. The move will help advanced economies on the continent to finally reach and positively touch the lives of the poor African majority, and set up a world-class graduate school of public policy in Abuja.

Robust foreign demand supports JGBs (FT)
Takeshi Fujimaki has been wrong for a decade and counting. Since the former star JPMorgan trader was fired by George Soros in 2000 for shorting Japanese government bonds, he has earned a living advising pensioners to cut their yen holdings, in anticipation of an imminent fiscal collapse. As the yen has strengthened and bond yields fallen, the celebrity lecturer and media pundit has stuck to his guns, arguing that the only way of addressing Japan’s “terrible” state finances is through hyperinflation, soaring interest rates and a plunge in the Japanese currency to “Y300 or Y400” against the US dollar, from about Y78 at present.

Jim Rogers Issues Dramatic Warning (FT)
In a riveting interview on CNBC, legendary investor Jim Rogers warned Americans to prepare for “Financial Armageddon,” saying he fully expects the economy to implode after the U.S. election. Rogers, who for years has been an outspoken critic of the Feds policies of “Quantitative Easing,” says the world is “drowning in too much debt.” He put the blame squarely on U.S. and European governments for abusing their “license to print money.” In the U.S. alone, the national debt has surged to nearly $16 trillion, that’s more than $50,000 for every American man, woman and child.

A Hundred Horses Are Ford’s Pride After Flipping Tainted Banks (Bloomberg)
Gerald J. Ford has something he wants to show off. He jumps into a golf cart and races toward one of the 11 barns on his lush, 1,000-acre Kentucky thoroughbred farm. He speeds past tall sycamore trees, painted lawn jockeys and manicured fields of grass glistening from the May morning dew. Ford stables more than 100 horses here, including broodmares he breeds with his prized Pleasantly Perfect, winner of the $6 million Dubai World Cup in 2004, Bloomberg Markets reports in its September issue.

E-Tailor Startups Challenge Amazon In $200 Billion Market (Bloomberg)
Venture firms such as New Enterprise Associates and Accel Partners are stepping up investment in e- commerce as shoppers increasingly turn to niche websites for custom-made clothes at prices that undercut department stores. The two firms, along with Lightspeed Venture Partners and Battery Ventures, helped online retail funding more than double last year to $328.7 million, according to the National Venture Capital Association.

London Lots Soar As Cash-Rich Funds Fill Bank Void: Mortgages (Bloomberg)
Great Portland Estates Plc (GPOR) didn’t have to build a thing to boost the value of its development site in London’s Mayfair district. The 1.3-acre plot appreciated by 10 percent in the second quarter, almost twice the return that income-producing office buildings there will generate this year. Development in the U.K. capital is gaining appeal as a lack of bank financing for construction contributes to a scarcity of new properties and bolsters land values in areas like the West End, where a concentration of hedge funds has helped lift rents to the second-highest in the world after Hong Kong. The value of Great Portland’s Hanover Square has climbed about 50 percent since April 2011, a month before the real estate investment trust won permission to build there.

Rival Citadel Bid for Knight (WSJ)
Citadel LLC made a rival $500 million loan offer to its competitor Knight Capital Group Inc. on Sunday, hours before Knight finalized a $400 million recapitalization by a group of investors, people familiar with the discussions said. The offer, which was considered and discussed by Knight’s board, was for a $500 million loan to Knight in exchange for a controlling stake in Knight’s currencies trading platform Hotspot FX, plus a minority stake in the company of less than 20%, these people said. It followed an earlier offer on Friday, which Knight also reviewed, they said.

SEC Charges Pfizer with FCPA Violations (SEC)
The Securities and Exchange Commission today charged Pfizer Inc. with violating the Foreign Corrupt Practices Act (FCPA) when its subsidiaries bribed doctors and other health care professionals employed by foreign governments in order to win business. The SEC alleges that employees and agents of Pfizer’s subsidiaries in Bulgaria, China, Croatia, Czech Republic, Italy, Kazakhstan, Russia, and Serbia made improper payments to foreign officials to obtain regulatory and formulary approvals, sales, and increased prescriptions for the company’s pharmaceutical products. They tried to conceal the bribery by improperly recording the transactions in accounting records as legitimate expenses for promotional activities, marketing, training, travel and entertainment, clinical trials, freight, conferences, and advertising.

Other Voices: Asia Pacific and the BRIC countries key areas for sustained growth of asset management, says report (Opalesque)
A new report published online today urges asset managers to regain investor confidence by facing up to the moral challenges posed by recent global events. Based on a survey‚ of asset managers, „Success of the Fittest: A Swift Survey of Shifts in Asset Management‰, assesses the fitness of the asset management sector in the present financial climate. It looks at five key areas impacting the current and future state of the asset management sector, including the macro-economic and industry environments, and the moral issues‚ confronting those who work in it. The report also states that Asia Pacific and the BRIC countries will remain the key areas for sustained growth of asset management, though most of that growth has to come as much from within the region as reliance on growth and inward investment from the Western Hemisphere. Financial centres in those regions should benefit from growing wealth in the APAC region.

Singularity managed futures program up 17.02% YTD (Opalesque)
Swiss-based managed futures fund, Singularity closed a turbulent July posting positive returns of +2.51%, raising year-to-date returns to +17.02% according to sources familiar with the fund. Singularity is a multi-strategy CTA using a systemic, trend following approach. The fund seeks to maintain a low correlation to broad market indices and invests in futures in equities, commodities, FX and fixed income. Since the inception date of the fund in September 2011, the fund shows a net return of +18.15%. The fund is available as an offshore (BVI) fund for qualified investors in Germany and Austria, people familiar with the fund structure. Current assets under management in the strategy are approximately EUR 8m.

Strapped City Seeks Hedge Fund Help (Finalternatives)
A struggling Pennsylvania city may turn to a hedge fund to keep itself afloat. Scranton, a former major coal-mining center in northeastern Pennsylvania, has been trying to fill a budget gap for months. Now, it’s following the state capital’s lead in seeking the money from a hedge fund.

MKP Funds Post July Gains (Finalternatives)
Hedge funds generally did well in July and MKP Capital Management’s were no exception. The investment manager’s global macro fund, the MKP Opportunity Fund, was up 1.34% on the month, bringing its YTD gains to 4.66%. The $2.3 billion vehicle is managed by MKP founder and CEO Patrick McMahon.

Pergovacz, Ex-Naissance Sales, To JPMorgan Asset Management (Finalternatives)
Former Naissance Capital salesman Peter Pergovacz is moving up at JPMorgan Chase. Pergovacz has joined JPMorgan Asset Management’s global liquidity sales team for Europe, the Middle East and Africa. He moves over from JPMorgan Worldwide Securities Services, where he was an institutional relationship manager.

Carlyle Swings to a Loss in 2nd Quarter (NYTimes)
The Carlyle Group swung to a loss in its second quarter, the firm said on Wednesday, as it struggled to show growth in its core private equity investments. The firm’s loss of $57 million was reported as economic net income, a metric preferred by other publicly traded private equity firms like the Blackstone Group and Kohlberg Kravis Roberts. The figure includes unrealized gains for investments.

LIPPER-ETF tiddlers for the chop? (Reuters)
The exchange-traded fund (ETF) market has shown strong growth since its inception in Europe. Many fund promoters have sought to capitalise on this, seeking to differentiate themselves from rivals and match client needs by injecting some innovation into their product offerings. This has led to a broad variety of ETFs competing for assets, both in terms of asset classes and replication techniques. Looking at assets under management, however, the European ETF market is still highly concentrated. The five top promoters account for more than 75 percent of the entire industry. On a fund-by-fund basis the concentration is even greater.

Mervyn King urges patience as Bank of England cuts growth forecasts (Telegraph)
Sir Mervyn King has urged “patience” on economic recovery as the Bank of England cut its growth forecasts and warned the crisis has a long way to go yet. The Bank revealed in its August Inflation Report that it is now expecting zero growth this year after forecasting a 0.7pc rise in GDP just three months ago. It also cut its 2013 forecast to 1.7pc growth from 2.1pc.

Casey Foundation CIO retires (Fortune)
Sometimes it’s actually best to ask a question when you don’t know the entire answer. …Through the end of 2011, Casey Foundation assets included around $600 million in both public equity and hedge fund investments, plus another $419 million in private equity investments. The public equities piece does not include around $416 million in UPS (UPS) common stock. Annie Casey was the mother of UPS founder UPS founder James Casey, who set up the foundation alongside his siblings.

Caution Hurts Hedge Funds In July; Time To Short Government Debt? (Barrons)
More insight today on hedge funds, which have been trailing the market of late. Hennessee Group, an adviser to hedge fund investors, said that Hennessee Hedge Fund Index increased 0.47% in July (2.78% year-to-date), while the S&P 500 gained 1.26% (9.68% YTD). According to the firm, ongoing volatility has hurt hedge funds, especially those that tried to position themselves more conservatively in light of the continuing Eurozone crisis.

Housing Doubters Must Now Contend With Data (TheReformedBroker)
No one in their right mind would refer to the current trend in housing as a rip-snorting bull market – but to dismiss the amelioration out of misplaced loyalty to a long-held pessimistic outlook would be a mistake. …There are buyers for foreclosed homes – Wall Street is raising billions of dollars in new vehicles to scoop them up. Hedge funds are buying them up as well. This will intensify as it’s a trade with homerun potential over the next decade and Big Money needs a homerun right about now.

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