Hedge Fund Redemption Falls, Top Stocks Picked By Investment Banks, Buffett Blames For Romney’s Tax Rate, Etc…

BERKSHIRE HATHAWAYHedge Fund Exit Requests At Record Low –Globeop (Reuters)

Redemption requests by hedge fund clients have fallen to the lowest monthly level on record as improving market sentiment combined with a typical seasonal lull in asset re-allocation, data shows. The GlobeOp Forward Redemption Indicator, a monthly snapshot of clients giving notice to withdraw their cash as a percentage of GlobeOp’s assets under administration, measured 1.85 percent in the January report, down from 4.58 percent in the December report, which shows requests to redeem funds in January, which is typically a period of heavy re-allocation.

Over Two Thirds Of All Hedge Funds Are Under Their High Water Mark (Zero Hedge)

For an update on the sad state of the hedge fund industry, we go to the FT which confirms what we had been reporting every week in 2011 courtesy of the periodic HSBC hedge fund industry report, namely that less than one third of all hedge funds in 2011 paid material bonuses to their employees (or if they did, they better have done it without the knowledge of their LPs), because “more than two-thirds of hedge funds are below their high water mark., the point at which they are able to charge investors performance fees.” And since performance fees, or the 20 in the “2 and 20 part”, is where the discretionary component of analyst, trader and PM compensation comes from, it is safe to say that the bulk of hedgies did not have a good year in 2011.

Buffett Blames Congress For Romney’s 15% Tax Rate (Bloomberg)

Warren Buffett, the billionaire calling for more taxes on the rich, said Mitt Romney’s U.S. rate of about 15 percent reflects poor laws rather than failings by the candidate for the Republican presidential nomination. “It’s the wrong policy to have,” Buffett told Bloomberg Television’s Betty Liu in an interview today. “He’s not going to pay more than the law requires, and I don’t fault him for that in the least. But I do fault a law that allows him and me earning enormous sums to pay overall federal taxes at a rate that’s about half what the average person in my office pays.”

U.S. Activists Eye Canadian Proxy Battles (Reuters)

More U.S. investors are targeting Canadian companies for proxy battles to boost the value of their stakes, encouraged by favorable laws and activist attacks on such blue chips as Canadian Pacific Railway (CP) and Research In Motion. Brad Allen, senior vice-president at Laurel Hill Advisory Group, said the attack on CP and shareholder restiveness at BlackBerry maker Research in Motion show that shareholders are more willing to take on larger Canadian companies.

Falcone-Backed Mining Company’s Merger Falls Through (HFN)

A Brazilian mining company backed by Philip Falcone’s firm Harbinger Capital has seen a rival Brazilian mining firm decline its merger offer. Ferrous Resources proposed a $2.3 billion acquisition of MMX Mineracao & Metalicos last month, but according to a Business Week report, MMX turned down the offer on Thursday.

Institutional hedge fund investors’ number one challenge is meeting performance expectations, finds latest SEI report (Hedge Week)

2011 was the second-worst year, performance-wise, for hedge funds: the average global fund was down 5%. Although the survey found that three of the four primary objectives for hedge fund investors related to risk management – non-correlated investment strategies (22.4%), diversification (21.4%) and decreased volatility (12.2%) – performance came out as the top challenge they faced (25.9%).

Hermes BPK Starts $275 Million Alpha Vault Managed Futures (Bloomberg)

Hermes BPK Partners LLP, an advisory and fund of hedge funds manager with $2.3 billion assets under management, said it launched a $275 million account. The Alpha Vault Managed Futures account uses five funds to invest in futures markets, the company, owned by the BT Pension Scheme, said in a statement today. Hermes BPK will start marketing the account, which will be run by Mark Barker and Gregory Knott, in the first quarter, Matteo Dante Perruccio, chief executive officer of Hermes BPK, said in a telephone interview from London today.

Crude Oil Advances After European Union Agrees On Sanctions Against Iran (Bloomberg)

Oil rose as the European Union announced a phased-in embargo of Iranian (OPCRIRAN) crude in an effort to contain the Islamic Republic’s nuclear program. Hedge funds reduced bullish bets on oil for the first time in four weeks after the EU delayed sanctions against Iran. Large speculators cut wagers on rising prices by 3.8 percent in the week ended Jan. 17, according to the Commodity Futures Trading Commission’s Commitments of Traders report on Jan. 20.

Hedge Funds Fall Short Of Incentive Fee Level (Financial Times)

More than two-thirds of hedge funds are below their high-water marks, the point at which they are able to charge investors performance fees, according to Credit Suisse. The main source of income for hedge fund managers is their share of investment profits, typically 20 per cent; but if a fund drops in value, the manager must recoup past profits before charging any more performance fees.

Simon Lack On Outlook For Hedge Fund Market (Bloomberg)

Simon Lack, founder of SL Advisors and author of “The Hedge Fund Mirage: Illusion of Big Money and Why It’s Too Good to Be True,” talks about the outlook for hedge funds and investment strategy. Lack speaks with Sara Eisen and Adam Johnson on Bloomberg Television’s “InsideTrack.”

Pound Declines After Report Shows Corporate Profit Warnings Have Increased (Bloomberg)

The pound fell after an industry survey showed company profit alerts surged last quarter, adding to signs the U.K. economy is losing momentum. “Recent data out of the U.K. is not encouraging, and the latest survey on profit warnings doesn’t help,” said Neil Jones, head of European hedge fund sales at Mizuho Corporate Bank Ltd. in London. “People in the market are betting that the Bank of England will soon expand its quantitative-easing program and that would mean more sterling supply for the market” and put pressure on the pound, he said.

ICE Brent Money Manager Long Positions At 142,246 Last Week (Bloomberg)

Speculative bets by hedge funds and other money managers that the price of Brent crude will rise totalled 142,246 lots, in futures only, in the week ended Jan. 17, the London-based ICE Futures Europe exchange said today in its weekly Commitment of Traders report.

Speculators Raise Wagers On Higher Metals By Most Since July: Commodities (Bloomberg)

Speculators raised bets on higher metal prices by the most since July, turning bullish on copper for the first time in four months on signs of growth in the U.S., increasing demand in China and more confidence in Europe. Copper futures that dropped to a 14-month low in October are up 10 percent this month, heading for the biggest January rally since 2003. Hedge funds and other money managers had a net-long position of 4,775 contracts last week, after betting on lower prices for 17 consecutive weeks, the longest bearish stretch since July 2009, CFTC data show.

Avoca Hires Concerto’s Black To Head Hedge Fund Capital Raising (Bloomberg)

Avoca Capital Holdings, the Dublin- based investment firm, hired Rachel Black from Concerto Asset Management as head of capital raising for its credit hedge fund business. Black is based in London and reports to Simon Thorp, chief investment officer of fixed income, according to a statement from Avoca, which oversees 6 billion euros ($7.8 billion).

`Very Few Safe Havens’ Seen For Investors (Bloomberg)

George Papamarkakis, chief investment officer at North Asset Management LLP, discusses the performance of the MaxQ hedge fund and his search for havens in which to invest. He speaks with Owen Thomas on Bloomberg Television’s “On the Move.”

Lehman Pays More Than $500 Million To Marsal Firm In 39½Months (Bloomberg)

Lehman Brothers Holdings Inc. (LEHMQ) has paid more than $500 million in fees to restructuring firm Alvarez & Marsal LLC in 39 1/2 months, according to a court filing. Lehman’s creditors range from Goldman Sachs Group Inc. (GS) and hedge funds to the New York Giants and Abu Dhabi Investment Authority, as well as individuals who hold Lehman bonds. Once the world’s fourth-biggest investment bank, Lehman filed for bankruptcy with assets of $639 billion.

Key Insider-Trading Witness Avoids Prison Time (Reuters)

A hedge fund trader who wore a recording device and gave the government extraordinary cooperation in its crackdown on insider trading avoided a prison term when he was sentenced on Friday following a 2009 guilty plea to securities fraud. The former trader, David Slaine, was ordered to serve three years’ probation and to serve 300 hours of community service. District Court Judge Richard Sullivan in New York also fined Slaine $500,000 and $532,287 in forfeiture.

Factbox: What’s Behind Romney’s 15-Percent Tax Comment (Reuters)

Does Mitt Romney pay a lower effective federal income tax rate than a lot of Americans who, unlike him, work for a paycheck? Romney – who made his fortune at private equity firm Bain Capital – may also benefit from the “carried interest” tax break. This lets private equity and hedge fund managers treat a large part of their annual earnings as capital gains, rather than ordinary wage income. Some Democrats calls this a loophole and want to eliminate it.

Avenue Capital Raises $2bn For Europe Fund (Financial Times)

Distressed debt investor Avenue Capital has raised $2bn for its second Europe-focused fund, joining a long list of rivals aiming to take advantage of the difficulties faced by the region’s governments and banks. Apollo Management, Centerbridge Partners and Oaktree have set up funds for investment in Europe, while Anchorage, a New York credit hedge fund with $10bn under management, is raising up to $1bn for a fund to be targeted largely at Europe.

Top Footwear And Apparel Stocks According To Credit Suisse (Insider Monkey)

Credit Suisse Research analysts Christian Buss and Bilun Boyner published a report titled “US Apparel / Footwear / Specialty Softlines: What Worked This Holiday Season?” on January 05, 2012. The report isn’t available online but we will discuss its findings. The analysts have gathered recent commentaries on key demand trends this Holiday season from various retailers, and have published the resulting analysis. According to the analysts, women’s accessories and handbags witnessed the strongest demand pattern. The demand for footwear stayed on the higher side, while warm winters hit the cold weather merchandise demand.

Best It Services Stocks Picked By Goldman Sachs (Insider Monkey)

Goldman Sachs published a report entitled “Americas: Technology: IT Services” on January 11, 2012. The report isn’t publicly available but we will discuss its main points. In their report, Julio C. Quinteros Jr., Vincent Lin, Roman Leal, and Geo John are defensive for the IT services sector in the year 2012. Goldman Sachs (GS) is concerned about the “current macro backdrop, with expectations for a slower global growth clouding visibility as we head onto 2012”. They have concentrated on stocks that are U.S. based mentioning a number of buy and sell rated stocks. We will discuss the stocks in two articles. This is the first of two articles, focusing on the buy rated stocks.

Best Specialty Pharma Stocks Picked By UBS (Insider Monkey)

UBS Investment Research published a report entitled “UBS Pharma- Large Cap and Specialty” on January 11, 2012. The report isn’t publicy available but we will summarize its main points. In their report, Marc Goodman, Ami Fadia, Matthew Harrison, and Derek Yuan discuss the expectations for the fourth quarter of 2011 for selected pharmaceutical companies. UBS Investment Research also believes that there are many opportunities in the special pharmaceutical sector, with continued synergies, significant deal glows, and robust core growth. In this article we will discuss those stocks in the Specialty Branded sector that UBS has given a buy rating from within its coverage universe.

7 Semiconductor Stocks Recommended By Goldman Sachs (Insider Monkey)

Goldman Sachs published a report entitled “Americas: Technology: Semiconductors” on January 2, 2012. The report isn’t publicly available but we will summarize its main points. In their report, James Covello, James Schneider, Mark Delaney, and Gabriela Borges suggest that the semiconductor sector is expected to perform better than the semi production equipment sector. Semiconductor shipments are currently below trend and fundamentals are likely to improve in the second quarter of 2012. Orders for semi production equipment, on the other hand, are likely to decline by mid-2012. In this article we will focus on Goldman Sachs’ favorite stocks in this industry

PREVIEW-The LA Dodgers’ Scramble Begins (Thomson Reuters)

It’s almost put-up or shut-up time for the high rollers and big talkers circling one of baseball’s most storied franchises. The Dodgers landed on the auction block after owner Frank McCourt was forced to place the team under bankruptcy protection last year, kicking off a courtship that has lured a host of suitors from among sports, media and financial elite. They include NBA legend Magic Johnson, billionaire hedge fund manager Steve Cohen, ex-Yankees and Dodgers manager Joe Torre, Internet entrepreneur and Dallas Mavericks-owner Mark Cuban, and former Dodger greats Orel Hershiser and Steve Garvey.

11th Hour Evidence Delays Financier Perelman Trial (Thomson Reuters)

An invoice for computer work at the center of a contract dispute pitting corporate financier Ron Perelman against his longtime business partner and best friend, Donald Drapkin, was introduced into evidence at the last minute, delaying the trial by a day. Drapkin, 63, who now runs a hedge fund, was the first to sue in February 2009 for $18.5 million in unpaid compensation under a separation agreement. Perelman, 69, counter-sued three months later.

A Sears Wager Stings At Goldman (WSJ)

Edward Lampert and shareholders of Sears Holdings Corp. aren’t the only ones hoping for a turnaround of the big retailer. Goldman Sachs Group Inc. and some of its clients are sweating it out, too. Clients of Goldman invested about $3.5 billion in Mr. Lampert’s hedge fund through a special deal more than four years ago. Goldman invested about $75 million of its own money as part of the arrangement.

John Paulson: Don’t Call It A Comeback (WSJ)

If John Paulson’s chief New Year’s resolution was to turn things around in 2012, early indicators are that he’s making some progress. One of Paulson & Co’s key funds, the Advantage Fund, gained roughly 4% through Jan. 17, according to a person familiar with the fund. The S&P 500 rose about 2.9% from the end of 2011 to Jan. 17.

One Of The Hedge Funds Involved In The Insider Trading Scandal That Broke Last Week Is Already Settling (Business Insider)

Hedge Fund Diamondback Capital agreed to settle insider trading charges with the SEC for $9 million today. Three million of that fee is a civil penalty, the rest is to make up for the money Diamondback made from illegal trades on Dell and tech company Nvidia.

FBI Agent Who ‘Flips’ Insider Trading Witnesses (WSJ)

WSJ’s Jenny Strasburg has details of FBI agent David Makol, known for convincing people to gather evidence against friends of theirs under FBI investigation.

Eton Park Partner Omar Saeed Leaves For Hutchin Hill (AR)

Neil Chriss’ $1.3 billion multistrategy firm Hutchin Hill Capital is set to hire derivatives trader Omar Saeed from $12 billion Eton Park Capital Management. “I am very pleased to announce that Omar Saeed will join Hutchin Hill later this year as a Principal and Portfolio Manager,” Chriss wrote in a letter to clients yesterday about the hire. “At Hutchin Hill, Omar will focus on macro and derivatives…

A Raucous Hazing At A Wall St. Fraternity (Deal Book)

The chandelier-filled ballroom was teeming with 200 men in tuxedos — and a smattering of women — whose daily decisions can collectively make or break the global financial markets. Most were picking over a lavish dinner that included rack of lamb and crème brûlée. Others were preparing to sing bawdy show tunes. Kappa Beta Phi, an exclusive Wall Street fraternity whose members include big-name bankers, hedge fund billionaires and private equity titans, met at the St. Regis Hotel in Manhattan on Thursday night for its 80th annual black-tie dinner and induction ceremony.

Study Shows Long/Short Equity Most Popular UCITS Strategy (FINalternatives)

Over one quarter of the 1,210 alternative UCITS funds tracked by PerTrac employ long/short strategies and the best performers between January 2002 and October 2011 were those invested in emerging markets. Those are some of the findings of a recent PerTrac study of the UCITS universe, titled “The Coming of Age of Alternative UCITS Funds.” The report also indicated that the second-most popular UCITS strategy was a tie between global macro, CTA/managed futures and multi-strategy, each of which accounted for over 11% of the funds.

Study: Hedgies Need To Make Strategies More Comprehensible (FINalternatives)

Institutional investors are more committed than ever to hedge funds but they want to know more about their value propositions, risk mitigation methodology and performance expectations.

Hedge Fund Movie ‘Arbitrage’ Debuts At Sundance (FINalternatives)

“Arbitrage,” a film in which Richard Gere is neither an officer nor a gentleman but a crooked hedge fund manager, will have its first screening on Saturday at the Sundance Film Festival in Park City, Utah.

QVT Vet Joins Falcon Edge Capital (FINalternatives)

Financial analyst Chris Yetter has left the New York-based hedge fund QVT Capital to join Rick Gerson and Navroz Udwadia’s Falcon Edge Capital. FINalternatives has learned that Yetter will be joining forces with Gerson (a former Blue Ridge Capital partner) and Udwadia (formerly of Eton Park Capital), who are expected to launch their first hedge fund this quarter. The global multi-asset fund could raise as much as $1 billion.

Portland Hedge Fund Fraud Probe Expands (FINalternatives)

A federal investigation into a pair of Portland, Ore., hedge funds continued to grow last week with a new round of investor interviews and a new subpoena.

Patriotic Hedge Fund In Europe Push (FINalternatives)

A Denver hedge fund is planting its rather red-white-and-blue flag in European soil with the launch of a UCITS III-compliant offering.

Canadian Hedge Funds Fall In 2011 (FINalternatives)

U.S. hedge funds had a tough 2011 and the year was no kinder to their counterparts in the Great White North.

Och-Ziff, York Say Not Involved In Greek Debt Talks (FINalternatives)

Och-Ziff Capital Management and York Capital Management say they do not have significant investments in Greek sovereign debt and have not be involved in negotiations to restructure the country’s debt.

Hedge Funder Who Left Wife For Male Fashion Designer Paid $12 Million For A Penthouse In Chelsea (Business Insider)

U.K. hedge funder Pierre Lagrange, who separated from his wife more than a year ago and then started a relationship with fashion male fashion designer Roubi L’Roubi, now has a home in Manhattan’s Chelsea neighborhood.

Stocks Gain 2% For The Week, Despite Slow Friday (CNN Money)

The 2012 rally has left some investors wondering whether it’s sustainable. “People have to be cognizant that the more expensive the market is, the harder it is to move the needle,” said Uri Landesman, president of the hedge fund Platinum Partners.

Castle Hall Opens New London Office (HFN)

Castle Hall Alternatives, a provider of operational due diligence for hedge funds, has opened a new office in London. The London office is the Canada-based firm’s first venture in Europe, according to a company statement.

HazelTree Hires New Managing Director (HFN)

HazelTree Fund Services, a New York-based provider of hedge fund treasury management services, has appointed a new managing director. In his new role, Paul Calderone will manage all aspects of HazelTree’s operations, according to a company statement.

SEC Investigates Two Oregon-Based Hedge Funds (HFN)

The Securities and Exchange Commission has expanded their investigation into two Oregon-based hedge funds that investors alleged have been violating state securities laws. The SEC has been interviewing investors of Sasquatch Capital and Grifphon Asset Management, who claimed they have not been able to withdraw money from the respective funds, according to a report in the newspaper, The Oregonian.

The Psychology Of The Financial Crisis And Its Prognosis: Robert Shiller (Value Walk)

At SKAGEN Funds’ New Year’s Conference 2012 held on Thursday 12 January in Copenhagen, some of the world’s leading financial commentators gave their views on the outlook for the world’s capital and financial markets. Speakers at the conference included Yale professor, Robert Shiller, who discussed the psychology of the financial crisis, and Chinese private equity director, Victor Gao, who spoke about his continued faith in the growth of the Chinese economy.

Top Hedge Fund: Scoggin Capital On Their Investment Strategy (Value Walk)

Craig Effron and Curtis Schenker, co-founders of Scoggin Capital Management LP, talk about their partnership and the hedge fund’s investment strategy. They speak with Adam Johnson on Bloomberg Television’s “Street Smart.” Scoggin, which now has $1.8b aum,  had ONE down year in the past 25 years (2008).

Exclusive: Sandler Plus Returns 8.8% In 2011 (Value Walk)

The Sandler Plus Offshore fund was up approximately 1.4% during Q4 and finished the year up ~8.8%. The average l/s hedge fund was up 2% for the year.

Rep Scott Rigell Takes Up Warren Buffett On Debt Match (Value Walk)

Representative Scott Rigell spoke to Betty Liu of Bloomberg TV About Warren Buffett’s Pledge to Match Rigell’s Contributions Toward the Debt.

Royce Flagship Fund Down 4.2% For 2011, Matches Benchmark (Value Walk)

Royce Pennsylvania Mutual Fund (PMF) seeks long-term growth of capital. The Fund uses a disciplined value approach to invest in the equity securities of small-cap and micro-cap companies, those with market capitalizations up to $2.5 billion. We believe that investors in the Fund should have a long-term investment horizon of at least three years. Chuck Royce manages the Fund, assisted by Jay Kaplan and Lauren Romeo.

Howard Marks Latest Memo: What Can We Do For You? (Value Walk)

“At the risk of oversimplifying, I see a long list of macro risks on one side of the scale, and low valuations and joyless investors on the other. Prices are neither so high that we must be hyper-cautious nor so low as to call for aggressiveness. Thus I think it’s time to balance defense and offense, and to move forward, albeit with caution. That’s what we plan on doing in the coming months, while attempting to execute on my list of the things a manager can do for you.”

Sprott Asset Management Jan 2012 “Financial System is a Farce (Value Walk)

2011 was a merry-go-round of more bailouts, more deferrals and more denial. Everyone is tired of the Eurozone. It’s not fixable. There’s too much debt. The politicians don’t know what’s going on. Nothing has structurally changed. We’re still on the wrong path. There’s more global debt than there was a year ago, and it’s the same old song: extend and pretend, extend and pretend… around and around we go… and it isn’t fun anymore.

Warren Buffett’s MidAmerican Energy Is Out-Dealing Its Boss (Value Walk)

Berkshire Hathaway unit MidAmerican Energy is outdoing its boss, Warren Buffett, in his home turf: deal making. Mostly, MidAmerican has been known as the energy company where former Buffett lieutenant David Sokol made his mark. That was before Sokol resigned from Berkshire Hathaway last year amid questions about his stock purchases in a company Berkshire later acquired.

Absolute Returns Score Key Priority Rating As Institutional Investors Seek More 2012 Allocations (HFM Week)

The ability of hedge funds to provide absolute returns has been named as a key objective by more than 38% of those polled in a joint SEI and Greenwich global industry survey, the results of which were published Monday. It also found that institutional investors are looking to increase their allocations in the next 12 months, and that while there remains an enduring, if slightly down on-year, appetite for hedge funds, investors nowadays expect more from managers in terms of articulating their value proposition, risk mitigation methodology, and performance expectations.

Absolute Returns And Less Opaque Strategies Key To Attracting Investment – SEI (COO Connect)

One third of respondents named absolute returns as the main reason why they invest in alternatives. The study revealed 38% of all respondents would increase their target allocations over the next 12 month although the report states there is still a need for managers to help clients understand their investment strategies, performance expectations and risk-reward trade-off. Allocations into hedge funds also represent a greater share of respondents overall portfolios – 18% of the total compared with 12% in 2008. “Three of the top four goals named by respondents – accessing non-correlated strategies, diversification, and lowering volatility – address investment risks. This suggests institutions today use hedge funds to help them lower portfolio risks in addition to boosting returns,” said Rodger Smith, managing director of Greenwich Associates.

Javelin Launches On Goldman Sachs Platform (HFM Week)

Javelin Capital, the UK-based emerging markets equity hedge fund firm backed by Majedie Investments, Monday launched a Ucits version of its fund via a SICAV platform established by Goldman Sachs – taking total assets in its strategy to around $50 million, according to a Goldman Sachs statement. The regulated, Luxembourg-domiciled Javelin Capital Emerging Markets Alpha Fund will mirror the $32 million market-neutral Javelin Capital Global Equity Strategies Fund, which is structured as an Irish-domiciled QIF, said the statement.

BNP Paribas Invests In Admin Offering (HFM Week)

BNP Paribas Securities Services is embarking on a “major investment programme” aimed at expanding its hedge fund and fund of hedge funds administration service. The custody bank, whose admin division services single-manager hedge fund assets worth $40bn, placing it 19th in HFMWeek’s most recent survey, made the announcement in a statement today.

Hedge Funds Do Not Escape Laws And Regulation (Financial Times)

Sir, In her analysis of the relationship between the offshore fund and the onshore authorised manager (“It may be time to see ‘offshore’ off”, FTfm, January 15), Pauline Skypala does nothing but perpetuate a longstanding misunderstanding.

One Of 2011′s Best Performing Hedge Funds Sees Gold At $2,500 Shortly (Zero Hedge)

While it is early to determine if the ongoing breakout is finally in anticipation of upcoming episodes of direct and indirect monetization by the Fed, ECB, or any of the many other pathological currency diluters in circulation, it is obvious that precious metals have found a new bid in recent days.

Joel Greenblatt Examines At Investing Behavior And Why You’re Not As Smart As You Think You Are (My Investing Notebook)

Gotham Asset Management managing partner and Columbia professor Joel Greenblatt explains why investors who ‘self-managed’ his Magic Formula using pre-approved stocks underperformed the professionally managed systematic accounts.

Is Anyone Any Good At Picking Hedge Fund Managers (The Big Picture)

Last week, I gave a very informal presentation to an audience of sophisticated HNW investors. Lots of family offices, none with less than $10m net worth; I’d ballpark the median > $50m. They get together regularly to discuss investing issues they are wrestling with. The presentation was very general, including my (non)outlook on the economy, markets, investing, etc. During the Q&A portion, issues of asset allocation, indexing, tactical adjustments, rebalancing, behavioral economics, and more were batted about. One of the questions that came up was fund manager under-performance. Starting with the usual data points — 80% of managers miss their benchmark, etc. — we then discussed why family offices, foundations and institutions were so willing to pay 2+20 for what is sub-par performance. Yes, 2011 was a rough year, but the problem seems to go much further than that.

Volatility And Uncertainty Will Continue To Pressure L/S Equity, Hedge Fund Research Warns (COO Connect)

Market volatility and uncertainty will continue to put pressure on equity long/short hedge funds going into 2012, warned Kenneth Heinz, president of the Chicago-based Hedge Fund Research (HFR). “It is difficult to say whether I am optimistic about long short/equity because the answer changes every 20 minutes with what is happening in the eurozone. The changes have been very dynamic. Earlier last week, Standard & Poor’s downgraded France and Austria from AAA to AA+ but simultaneously Italian and Spanish bond auctions went pretty well so it is hard to tell what will happen,” said Heinz.

Nouriel Roubini Talks Greek Creditor Debt Talks On Bloomberg TV (Reuters Hedge World)

Citadel Clears High-Water Mark, Kerrisdale Capital’s Big Year, $2,500 Gold, Managed Futures Losses And More (Reuters Hedge World)

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