Hedge Fund Exit Requests Running At Seasonal Norms (Reuters)
More clients asked for their money back from hedge funds in December than in the rest of 2011, in line with the traditional year-end evaluation of funds’ performance after a year marked by high volatility and erratic returns, data shows. Hedge funds are closing a year in which they have largely failed to deliver impressive returns, with volatile markets making it difficult to time their bets or hold onto gains. The average hedge fund is down 4.45 percent in the year to Dec. 15, according to Hedge Fund Research.
GlobeOp: December Redemptions At Normal Levels (FINalternatives)
December redemption requests are actually a tick lower than last year, despite the fact that the average hedge fund rose more than 10% in 2010 and is down about 4% this year. According to the GlobeOp Forward Redemption Indicator, hedge fund investors sought to pull 4.58% of industry assets this month, compared to 4.59% a year ago. December’s total was up from 3.44% in November and is the highest of the year, but that is nothing new for the industry, which generally sees its highest number of redemptions at the end of the year.
Mudd, Facing Civil Charge, Steps Down At Fortress (WSJ)
Former Fannie Mae CEO Daniel Mudd is taking a leave of absence from the hedge fund he runs less than a week after being charged in connection with the 2008 financial crisis. Randal Nardone, principal and co-founder of Fortress Investment Group, will serve as interim CEO in Mudd’s absence. Mudd is one of six former executives at that firm and Freddie Mac facing civil fraud charges.
Activist Fund Starboard Takes AOL Stake (Reuters)
Activist hedge fund Starboard Value has taken a 4.5 percent stake in AOL Inc. and requested a meeting with the internet company’s Chief Executive and board. The fund said Wednesday that AOL is deeply undervalued and it blamed the company’s massive operating losses in its display business. It also expressed concern over further acquisitions and investments into money-losing growth initiatives like Patch.
Mortgage Bonds Miss Out On Rally As Europe Bank Sales Loom: Credit Markets (Bloomberg)
U.S. mortgage bonds that lack government backing are trading at about the lowest prices in more than a year, even as riskier assets from high-yield company bonds to stocks rally, with investors bracing for sales of home- loan debt by European banks. “The European banks are scrambling for capital and the traditional route” of selling shares isn’t available as investors shun their equity securities, said Reza Ali, who heads Prosiris Capital Management LLC, a New York-based hedge fund that’s gained 10.7 percent since starting in July. “There are big question marks that don’t exist to the same degree for corporate bonds” and structured debt in the U.S. including collateralized loan obligations, aircraft-backed notes and commercial-mortgage securities. Hedge funds Och-Ziff Capital Management Group and Marathon Asset Management LP have said they’re awaiting the opportunity to be buyers
Buying Loopnet Returns 206% With Deal Closing Year-End: Real M&A (Bloomberg)
LoopNet, which runs a website that allows brokers to post and search commercial real-estate listings, fell more than $1.50 below CoStar’s per-share offer this week for the first time since the agreement was announced in April. With the deal set to close by year-end pending regulatory approval, traders betting the sale will be completed on time stand to reap an annualized 206 percent gain, according to data compiled by Bloomberg. Steve Gerbel, a merger-arbitrage hedge fund manager at Chicago Capital Management, which sold out of LoopNet in June, says if the FTC decides the acquisition will lessen competition and challenges it, there is little chance a compromise could be reached that still allows the deal to be completed.
Billionaire Sam Zell Sues Shareholders Over Tribune Buyout He Engineered (Bloomberg)
Billionaire Sam Zell sued former shareholders of the bankrupt publisher Tribune Co., claiming he should be paid along with other creditors should a court rule the 2007 buyout he engineered was a fraud. Pre-buyout creditors including hedge fund Aurelius Capital Management LP claim the buyout was a so-called fraudulent conveyance because it put so much debt on Tribune the company couldn’t survive. Aurelius helped devise a strategy to file dozens of lawsuits against shareholders in state court.
Hedge Funds Earn Big By Betting Against China (HFM)
Hedge funds betting against China have earned outsized returns this year by shorting mainly property and auto stocks and positioning their portfolios to benefit from a feared hard-landing by the world’s second-biggest economy, writes Reuters. The winners include the $1.7 billion Dragon Billion China Fund, which returned 13.5% up to end-October, and the $60 million Ariose China Growth Fund, which gained 35%, according to sources familiar with the funds’ performance. Zeal China Fund, managed by former Value Partners fund manager Jacky Choi, is up 7.2%, according to data compiled by Reuters, while China bear Hugh Hendry’s ‘China short’ fund has gained more than 52% so far this year, according to a Financial Times report. That contrasts with a near 25% slump in Hong Kong-listed Chinese shares up to the end of November and a 12.5% drop in the Eurekahedge Greater China index which is heading for its second-worst year on record.
China Hedge Fund Bears Look Good In Shorts (Reuters)
Hedge funds betting against China have earned outsized returns this year by shorting mainly property and auto stocks and positioning their portfolios to benefit from a feared hard-landing by the world’s second-biggest economy. Zeal China Fund, managed by former Value Partners fund manager Jacky Choi, is up 7.2 percent, according to data compiled by Reuters, while China bear Hugh Hendry’s ‘China short’ fund has gained more than 52 per cent so far this year, according to a Financial Times report. That contrasts with a near 25 percent slump in Hong Kong-listed Chinese shares up to the end of November and a 12.5 percent drop in the Eurekahedge Greater China index which is heading for its second-worst year on record.
Dexia Accused Of Misleading Investors (Reuters)
A Belgian investment company has launched legal action against Dexia and its chief executive, arguing the Franco-Belgian financial group misled investors before its state bailout in October. Lynx Capital bought 5,350 Dexia shares on Sept 5 for prices varying from 1.358 to 1.478 euros, according to lawyer Robert Wtterwulghe. Dexia’s shares have subsequently fallen to 0.33 euros. But after the October bailout, Dehaene recalled arriving with Mariani to take charge of the group after a first rescue in 2008 to be told by Mariani that Dexia was ‘not a bank, but a hedge fund’.