Hedge fund manager: patient and confident enough to do nothing (CSMonitor) My post yesterday contrasting Seth Klarman with many of his more well-known hedge fund peers has generated a ton of feedback, which is cool. The one thing I did not do in the post was explain why Klarman was so influential and inspirational for me. So I'll do so here... I am not a value investor myself although I respect the discipline and we incorporate lots of what value investing emphasizes into our metrics. And so while other value investors may find themselves enamored with Klarman's ability as a stockpicker or an analyst, I find myself way more impressed with the manner in which he runs his practice.
Hedge Fund Performance for June, Asset Flows Through May (HedgeCo) The Morningstar MSCI Composite Hedge Fund Index fell 0.9% in June, while the MSCI World Stock Index soared 5.1%. “Hedge fund strategies came up short in June despite strong overall equity market performance,” Mallory Horejs, alternative investment analyst for Morningstar said,”Trend-following funds were hit especially hard due to several mid-month price-trend reversals across asset classes.”The Morningstar MSCI Systematic Trading Hedge Fund Index sank 3.0% in June, its largest decline in eight months.
We need a 'bloodhound' hedge fund to sniff out financial skulduggery (Guardian) The recent spate of banking scandals has shown how small cracks in seemingly impenetrable corporate behemoths can turn into gaping chasms that engulf whole management teams. Unfortunately, the recently announced banking inquiry is likely to be little more than a symbolic gesture. When push comes to shove, regulators are muzzled by political pressure to prioritise City competitiveness over public interest. I therefore propose a new "market-based" approach to combat financial skulduggery, tapping directly into financial market dynamics. Barclays' share price plummeted over 15% on the news of the scandal. If someone had shorted (bet against) Barclays shares, they would have done very well.
Asia Hedge Funds Put Returns Ahead Of Cash As Demand Scarce (Bloomberg) Ueli Wick, a former Credit Suisse Group AG banker who in June began running his own Singapore hedge fund, says he isn’t bothering to court investors right away. Instead, he wants to focus on performance. “It’s not that easy to go out with a good story and just raise money like that,” said Wick, 41, who founded Baruna Asset Management Pte with $15 million of his own money and some from family and friends. “People just want to see more proof and tangible numbers because they’ve just been too disappointed with hedge funds and are extremely skeptical. To get big money, I need to deliver first.”
"Black box" fund may not be enough to revive Man (Reuters) A recent uptick in the performance of its flagship AHL fund may not be enough of a cure for hedge fund manager Man Group after a sharp fall in assets, analysts said. The firm, whose shares have lost more than three quarters of their value since the start of last year as clients withdraw funds, is set to report interim results for the six months to the end of June on Tuesday.
John Paulson Said to See 50% Odds Euro to Fail (BusinessWeek) Billionaire hedge-fund manager John Paulson told clients he sees a 50 percent chance the euro will unravel, said an investor who listened to the comments. An event causing a breakup may happen in three months to two years, Paulson said on a conference call today reviewing second-quarter performance, according to the investor, who asked not to be named because the call was private. Paulson, who runs Paulson & Co., said he expects sovereign yield spreads to widen.
Moelis & Co. Parts Ways With Hedge Fund Advisor Derek Francis (WSJ) Sydney-based Moelis & Co. Australian equities Executive Director Derek Francis has left the boutique investment bank, people familiar with the matter said Tuesday. Mr. Francis specialized in advising clients about event-driven risk arbitrage as part of a two-man hedge fund advisory team, alongside Managing Director John Garrett. Prior to joining Moelis & Co., Mr. Francis was a hedge fund advisory director at UBS.
Q&A: Ader Investment Focuses On (Re-)Emerging Hedge Fund Managers (Finalternatives) Jason Ader, whose career has included stints as an analyst at Bear Stearns, Smith Barney, and Baron Capital, is both CEO and CIO of Ader Investment Management, the alternative investment firm he founded in 2003. Experienced in most areas of the alternative investing world, AIM today focuses on seeding (or re-accelerating) hedge funds less than three years old and with under $300 million in assets under management. Ader says he focuses on these managers because they tend to outperform their larger rivals.
Telus counters ‘misleading allegations’ from Globalive, dissident shareholder (FinancialPost) Telus Corp. has rebuffed claims it’s offside with Canada’s foreign-ownership laws, filing documents with regulators on Monday denying what the wireless carrier calls “misleading allegations” made by competitor Wind Mobile and a dissident shareholder. As of June 29, 32.59% of the company’s voting shares were held by foreigners, Telus said, a percentage that narrowly keeps the telecom giant within bounds of sector laws that forbid a major phone or wireless firm from being more than 33.3% owned by “non-Canadians.”
TPG Waits Patiently for Billabong (NYTimes) Patience can sometimes pay off in private equity. TPG Capital has again approached Billabong International with a deal — but this time, the buyout shop is offering less for the Australian surfwear maker. TPG is bidding $715 million for Billabong, compared with $824 million in February. Other buyout firms have successfully taken over companies after bidding less the second time around. Talbots, the women’s clothing retailer, agreed to sell itself to Sycamore Partners for $369 million after rejecting a higher bid from the investment firm as inadequate.
Man Group Had $2.4 Billion Outflows in Half; Cuts More Costs (SFGate) Man Group Plc, the world’s biggest publicly traded hedge-fund manager, said clients pulled a net $2.4 billion in the first half of 2012, adding pressure on the company to revamp its computer-driven trading strategies. Customers redeemed $9.6 billion from Man Group’s investment funds, compared with $7.2 billion of sales, the London-based company said in a statement today. Assets under management fell to $52.7 billion from $59 billion at the end of March.
Fairfield, Conn., hires hedge fund of funds (PIOnline) Fairfield (Conn.) Joint Retirement Investment Board hired Diversified Global Asset Management to run $15 million in a hedge fund of funds, according to recently released minutes of the board's July 17 meeting. Blackstone Alternative Asset Management and Lighthouse Investment Partners were also finalists. Investment consultant Callan Associates assisted.
Gottex looks to expand LUMA hedge platform through US partnership (InvestmentEurope) Hedge investor the Gottex group has sealed a partnership with America's Southport Harbor Advisors for developing the US activities of its LUMA hedge fund platform, in a westward expansion that complements nicely the group's enlargement eastwards, in Asia. The US agreement, which is non-exclusive, will see Southport Harbor Associates in Connecticut assist with distribution in the US for those managers on the $1.85bn platform, and forge contact with appropriate new managers for it.
This Recession-Proof Fund Could Double Your Money (iStockAnalyst) Doubling your money on a single investment is a great accomplishment by any standard. But doubling your money in less than a month are the trades that legends are made of. Although that might sound like something best left to hedge-fund wizards like Jim Rogers and Paul Tudor Jones, there is a unique investment opportunity setting up right now that could easily double in the next 30 days. I'm talking about the ProShares Ultra VIX Short-Term ETF (Nasdaq: UVXY), an exchange-traded fund (ETF) that seeks to replicate, net of expenses, twice the return of the S&P 500 VIX Short-Term Futuresindex for a single day. Shares of this ETF jumped from $12.57 to $24.22 from May 1 to May 18, almost doubling in price on just an 8% decline in the S&P 500 from 1,405 to 1,278. Take a look at the near 100% gain in less than three weeks in the chart below.
Martin Lipton’s Checklist for Dealing With Activists (WSJ) Martin Lipton, legendary deal maker and a founding partner of law firm Wachtell, Lipton, Rosen & Katz, has readied many a corporate chieftain for battle against unsolicited – and unwelcomed – demands, be they in the form of a takeover bid or an angry letter from a shareholder. On Monday, he offered those clients and would-be clients alike a handy, four-page “how-to” memo for “dealing with activist hedge funds.” “Hedge fund activism requires attention and warrants similar preparation as to that we recommend for responding to a hostile takeover bid,” Mr. Lipton wrote.
Hedge funds deliver positive performance over long term says Eurekahedge study (HedgeFundsReview) Hedge funds have achieved positive returns over the past five and 12 years, reports Eurekahedge. In its account of industry developments post-2008, it looks at performance, fees and market share. Hedge funds have delivered positive performance long term despite market turmoil in 2011 and uncertainty around the European debt situation hitting shorter-term returns, according to Eurekahedge.
Sprouting hedges grow profits (TheAustralian) AFTER yet another year of low to negative returns from Australian equities, it's no wonder that more daring investors are considering more exotic strategies that promise big upside. Start-up and early stage hedge funds - from one to three years old - can indeed produce spectacular returns, though they are viewed by the experts as highly risky. ..."If you understand what you're doing (investing in new hedge funds), it can be very rewarding," says Australian Fund Monitors chief executive Chris Gosselin.
Receiver sues hedge firm over €1.9m office rent (Independent) AN investment company is in dispute with a receiver over around €1.9m it allegedly owes in arrears for rent of two floors of a building at St Stephen's Green in Dublin, the Commercial Court heard. In February 2008, Shelbourne Development (Europe) Ltd (in receivership) rented the first and second floors of number 75 Stephen's Green to international hedge fund company, Hedgeserv Ltd. James Kelly, a founder of Hedgeserve, acted as guarantor on the 25-year lease.
Bank of America Promotes Hammond to Head US Capital Introductions (WSJ) Bank of America Merrill Lynch (BAC) has promoted Elizabeth Hammond to lead its U.S. capital-introduction effort within its prime-brokerage business, with immediate effect, according to the bank's internal memo. Ms. Hammond is replacing Justin Fredericks, who will be leaving in the next couple of weeks. ...Ms. Hammond, who joined Bank of America in 2009, has been a senior member of the bank's capital-introductions team for the past three years. In her new role as head of the U.S. capital strategy group, she will seek to deepen the bank's relationships with existing hedge-fund clients through customized products to address their capital needs like financing and stock loans, expand its U.S. prime-brokerage business overall, and oversee the U.S. capital strategy team.
Wet Seal Fires CEO as Financial Picture Weakens (WSJ) Wet Seal Inc. fired Chief Executive Susan McGalla after just 11 months on the job full time amid weak sales and pressure from a hedge fund that owns more than 4% of the teen retailer's stock. The company, whose stock has dropped nearly 49% in the past 12 months, also lowered its profit forecast Monday after sales declined sharply in July. In an interview with The Wall Street Journal shortly after taking the CEO spot full time, Ms. McGalla said the company had been running too many sales and had failed to distinguish itself in the ...
Biggs remembered as Wall Street 'dean' (PIOnline) Barton M. Biggs, managing partner of the $1.2 billion hedge fund manager Traxis Partners LP and former chief global strategist and chairman of Morgan Stanley (MS) Investment Management Inc., was considered “one of the deans of Wall Street,” whose views on the market and the investment management industry were eagerly sought by institutional investors. Mr. Biggs, age 79, died July 14 from a bacterial infection after falling ill a few weeks ago, according to Amer Bisat, who shared managing partner duties at Traxis Partners, Greenwich, Conn. Mr. Biggs founded the global macro hedge fund in 2003 after a career of almost four decades at Morgan Stanley, New York.
Gold Expert with Advice for Hedge Funds (HedgeFund) If anyone can attest to the old saying, “It’s as good as gold,” it would be Juan Carlos Artigas. Artigas is the global head of investment research for the World Gold Council, a United-Kingdom-based association that deals with gold demand as well as provides leadership in the industry, with its 23 members coming from the world’s top gold mining companies.
Argentina: We can’t pay Elliott (NYPost) On second thought, crying for Argentina might be OK. A lawyer for the country told a Manhattan federal appeals panel yesterday that it could be forced to pay a New York hedge fund and other disgruntled creditors up to $20 billion if a lower court ruling on its debt restructuring isn’t overturned. And the South America nation of 41 million people doesn’t have that kind of cash, the panel was told. “Argentina cannot take 15 to 20 percent of its reserves to pay holdouts,” said Jonathan Blackman, of the law firm Cleary Gottlieb Steen & Hamilton.
Kinetic goes 'zombie' hunting (PIOnline) Kinetic Partners US LLP is getting into the money management business, albeit in a very limited way. Specifically, Kinetic just entered the business of dismantling illiquid “zombie” private equity and hedge funds, said Geoff Varga, partner and global head of the New York-based firm's corporate recovery and restructuring practice.
Man FUM declines (StockMarketWire) Hedge fund manager Man Group said funds under management (FUM) at end-June were $52.7bn, reflecting sales of $7.2bn and redemptions of $9.6bn. The group saw investment movement of -$0.3bn, FX translation effects of -$0.5bn and other movements, principally guaranteed product degears, of -$2.5bn. Adjusted profit before tax (PBT) for the half-year to end-June was $121m, comprising adjusted net management fee PBT of $108m and net performance fee PBT of $13m.
Australian Hedge Fund Firm Regal Bets Against the Country’s Mining Boom (InstitutionalInvestor) AUSTRALIAN HEDGE FUNDS HAVE LIVED LARGE FOR a decade. Thanks to Chinese demand for minerals, their country’s No. 1 export, they’ve gladly ridden the commodity boom. But a recent slowdown in China and elsewhere has stopped them cold. Some Aussie hedge fund managers see an upside in today’s choppy markets, however. Philip King, CIO of Regal Funds Management, is now avoiding Australian mining stocks except to short them selectively. “We actually think there will be more opportunities for a long-short manager such as Regal in a mining down cycle than in a mining boom,” says King, whose Sydney-based firm manages six funds with combined assets of $1.2 billion.
Dillon Read Chiefs Out At Firm They Co-Founded (Finalternatives) The two top executives at UBS' disastrous hedge fund foray Dillon Read Capital Management have left the investment boutique they launched after Dillon Read's collapse. John Costas, who led Dillon Read, and Michael Hutchins, the hedge fund's chief investment officer, have left PrinceRidge, the fixed-income shop they co-founded in 2009. The head of the firm that bought a majority stake in the firm has taken the helm.
Hollande Transaction Tax Drives Investor Quest For Loopholes (Bloomberg) French President Francois Hollande’s transaction tax is set to take effect Aug. 1. Not all investors will be paying it. To escape the tax, many institutional investors will turn to so-called contracts for difference, or CFDs, offered by prime brokers that let them bet on a stock’s gain or loss without owning the shares. Traders have used it successfully to skirt the U.K.’s stamp duty. “We’ve never purchased U.K. stocks without using a CFD,” said Fabrice Seiman, co-chief executive officer of Lutetia Capital, a merger-arbitrage fund in Paris that oversees $100 million. “Now we’ll do the same for French stocks. It is individual investors who are going to pay.”
Man Group cuts $100 mln of costs as assets tumble (Reuters) Beleaguered hedge fund manager Man Group is staging a fresh assault on its costs in the first moves under new finance director Jonathan Sorrell to stem sliding sales and margins and an exodus by clients. The fund firm, whose share price has slumped by more than three-quarters since the start of 2011 on the back of outflows, said on Tuesday it would make $100 million of annual savings over the next 18 months, after calls from some analysts to cut deeper or faster.
Nikkei languishes at 6-week low on Spain concerns (Reuters) Japan's Nikkei share average held at a six-week low on Tuesday, although improved China data helped pare early losses triggered by fears that Spain may need a financial bailout. Exporters were again badly hit, pushing the subindex of the country's battered electronics sector to a three-year low as the yen strengthened against the dollar and the euro as investors clipped their exposure to risk.
Apparently, Anthony Scaramucci Wants To Debate Simon Lack And Lack's Not Into It (BusinessInsider) Anthony Scaramucci is the founder of fund of funds, SkyBridge Capital. Simon Lack, an investment advisor, is the founder of SL Advisors. Recently, these men have realized that they disagree very passionately about something. That 'something' is whether or not it is profitable to invest in a diverse portfolio of hedge funds. The argument has been unfolding on our site (thrilling for us). Lack says hedge fund diversification this is a stupid idea. Scaramucci, conversely, thinks that Lack's view is "cherry picking at its worst."
Altin's portfolio reveals defensive use of diversification to beat economic turmoil (Opalesque) ALTIN AG, the Swiss alternative investment company listed on the London and Swiss stock exchanges, today disclosed its entire hedge fund portfolio holdings as part of its policy of full transparency to investors. The diversified portfolio, featuring more than 30 underlying hedge funds and representing over 10 investment strategies, has a NAV performance of +162.85% since its inception in December 1996.
Morgan Creek Capital Adds Industry Vet To Investment Committee (Finalternatives) Morgan Creek Capital Management has added Daniel Kingston to the firm’s investment committee. In his new role, Kingston will work alongside the chief investment officer, Mark Yusko, and the investment team to evaluate investments and asset managers across all asset classes. Kingston has direct experience in public equity, private equity, venture capital, real assets, alternative investments and fixed-income which he has acquired working for some of the top institutional investors in the United States over the past 25 years.
Taking a Risk, and Hoping That Lightning Strikes Twice (NYTimes) Sean Parker, the 32-year-old billionaire and former president of Facebook — played by Justin Timberlake in “The Social Network” — was sitting on the top floor of his town house in the West Village of Manhattan last month, lamenting that too few entrepreneurs continue taking big risks after their first great success. “Every good entrepreneur I know ends up in the wasteland of being a venture capitalist. It’s really frustrating,” he said.
Libor scandal: Anthony Salz to lead Barclays review (Telegraph) Anthony Salz, a lawyer turned investment banker, is to lead a far-reaching review into the culture at Barclays in the wake of the Libor rigging scandal that has rocked the bank. Barclays announced plans to launch an independent review into its business practices after it was fined £290m by British and American regulators for trying to manipulate Libor, the interbank lending rate that affects mortgages and loans.
Colby College Protesters Don’t Want (Any More) Of Bob Diamond’s Dirty Money (DealBreaker) Protesters at Colby College on Saturday afternoon called on the administration to “restore Colby’s moral compass” and demand the resignation of Robert E. Diamond Jr., chairman of the college’s board of trustees…Among the roughly dozen demonstratoers, Josh Lawrence, of Farmingdale, said college officials should acknowledge that millions in donations to Colby came from alleged illegal profits to Barclays and, in turn, Diamond. “They should make a public statement and not take money from him again and remove him as the chairman,” Therrien said. A Colby spokesman said earlier this month that the college is “mindful” of Diamond’s situation.
Murdoch’s former editors charged over phone hacking (FT) In another blow to Rupert Murdoch’s newspaper empire, it was announced today that two of his most prominent former editors have been charged with phone hacking. The eight people have been charged with a six-year conspiracy to access the voicemail of over 600 high-profile people. Neville Thurlbeck, who was the News of the World’s chief reporter, and James Weatherup, an ex-assistant news editor, have also been charged on suspicion of conspiracy to intercept the voicemails of Angelina Jolie and Brad Pitt. This is not great news for News Corp of course. But the bigger issue is whether the company could face a full-blown inquiry in the US for criminal misconduct. Senator Jay Rockefeller of West Virginia is on the case and Tuesday’s charges clearly won’t help Murdoch.
Are Google and Apple Out of Ideas? (CNBC) Fortune recently hosted a great debate between Peter Thiel, the technology investor and entrepreneur, and Eric Schmidt, the chairman of Google. Thiel argued that the huge amount of cash of Google’s [GOOG 615.51] balance sheet is evidence that the company is out of innovative ideas. PETER THIEL: But, then the intellectually honest thing to do would be to say that Google is no longer a technology company, that it’s basically it’s a search engine. The search technology was developed a decade ago.