Stocks Favored By Hedge Funds Fell More Than The S&P 500 (Bloomberg)
Stocks favored by hedge funds fell more than the S&P 500 during the first three days of the week. A Goldman Sachs index of companies that appear most often in funds’ top 10 holdings lost 4.5 percent in the first three days of the week, a period in which the S&P 500 fell 3.5 percent. The index rose 0.4 percent today. Hedge funds selling assets because of client redemptions may have exacerbated declines for equities and reinforced market volatility, according to Eric Green, a Philadelphia-based fund manager at Penn Capital Management. His firm oversees about $6 billion. “The hedge fund exposure continues to go down — it’s year end, they’re squaring positions off, they’re preparing for redemptions,” Green said in a telephone interview. “The volatility is pretty extreme, the market is getting whipped around on nothing and most of them want to shut things down. They probably have to sell more things than buy because they have net redemptions.”
Gold Reverses Gains As Fund Selling Resumes (Reuters)
Spot gold turned lower in New York on Thursday, giving up earlier gains and hitting a 2-1/2-month low, on the back of fund selling even as the dollar remained under pressure. “You have forced selling of gold as investors were getting margin calls and I heard discussions of hedge funds closing. The selling pressure is being put on one asset that’s up in value for the year in a notable amount,” said Mark Luschini, chief investment strategist of broker-dealer Janney Montgomery Scott with about $54 billion in assets under management. At that time, there was talk hedge fund manager John Paulson might have liquidated his holdings to meet end-of-year client redemptions. Regulatory filings in November showed Paulson & Co had cut its gold holding by a third in the third quarter.
Reeling Sursum Loses Staff (AR)
Paul Orwicz’s Sursum Capital Management, the much-ballyhooed long/short equity firm he launched with other émigrés of SAC Capital Advisors last year, has suffered a sharp reversal of fortune as speedy as its initial success. With assets dropping significantly following double-digit losses, Sursum’s problems have turned into a boon for others, with several key staffers departing to fast-growing firms. <p></P><p> Sursum recently lost senior analyst Paul Kim—one of Orwicz’s core, three person team at SAC—to $5 billion Indus Capital Partners’ expanding European fund. Kim was an analyst covering technology, media and telecommunications stocks at Omega Advisors before joining SAC in 2007 to work with Orwicz.
Traders Confounded As Volatility Extends Run (Bloomberg)
Duke Buchan III’s $1 billion hedge fund beat U.S. stocks by 46 percent in the decade through March, a period that included the steepest equity-market losses since the 1930s. “Markets seem to be driven more by the latest news out of Europe than by a company’s earnings prospects,” Buchan, 48, said in a Dec. 8 investor letter. “We have not weathered the ensuing volatility well.” Traders who used to profit from price swings are struggling as record stock market volatility shows no signs of abating. Hedge funds are on track to post their second-worst year on record.
AMR Debt Value Set at 23.5 Cents on Dollar in Credit-Default Swaps Auction (Bloomberg)
Credit derivatives traders settling contracts that protected against a default by AMR Corp. (AMR) set a value of 23.5 cents on the dollar for the debt of the American Airlines parent. Banks, hedge funds and other institutional investors had bought or sold a net $337.6 million of protection against an AMR default as of Dec. 9, down from $366.6 million through Nov. 25, according to the Depository Trust & Clearing Corp., which runs a central repository for the credit swaps market.
Highbridge Manager Return Client Money From Hedge Fund (Bloomberg)
Henry Swieca plans to return money to outside investors in his $500 million hedge fund Talpion Fund Management LP that he started two years ago, according to two people with knowledge of the matter. Swieca, 54, a co-founder of Highbridge Capital Management LLC, is returning about $100 million to outside clients and will continue to manage about $400 million of his own and family money, said the people, who asked not to be identified because all investors haven’t been notified.
Canadian Hedge Funds Could Double Aum In Next Five Years, Says AIMA Canada (COO Connect)
The Canadian hedge fund industry could double its assets under management (AuM) over the next five years, according to the chair of AIMA (Alternative Investment Management Association) Canada. AuM in Canadian hedge funds is modest and currently stands at approximately $30 billion. This is a fraction of the estimated $2 trillion global AuM. Nevertheless, the region has doubled its AuM since 2008.