Blackstone Readies Big-Bet Hedge Fund (Wall Street Journal)
The Blackstone Group L.P. (NYSE:BX) is quietly laying plans to start a hedge fund that will make big, bold bets, an effort it hopes will eventually rival some of the largest firms in the business, according to people familiar with the plans. The private-equity firm will fund several teams of traders with hundreds of millions of dollars to place a relatively small number of large, highly concentrated wagers, the people said. The strategy is notable now as many hedge funds are shying away from making such outsize bets. Blackstone is aiming to rival powerhouses such as Millennium Management LLC, which has $23 billion under management; Chicago-based Citadel LLC, which has $22 billion; and the $45 billion Och-Ziff Capital Management LLC in New York.
Harvard Endowment Loses Ciaschini as Departures Increase (Bloomberg)
Matt Ciaschini, who oversaw $700 million of natural resource investments at Harvard University’s endowment, has resigned, bringing departures at the money manager to at least four in the past two months. Ciaschini, a vice president at Harvard Management Co., left last month for personal reasons to join Newark, New Jersey-based Prudential Financial Inc (NYSE:PRU)’s agricultural investments group, he said today by phone. Harvard reassigned his responsibilities and doesn’t plan to replace him, said Christine Heenan, a spokeswoman for the university. Jane Mendillo, the endowment’s chief executive officer who took over amid unprecedented losses during the 2008 financial crisis, said last week she will leave at the end of this year, citing personal reasons.
SAC Capital shrinking its operations for the SEC (CNBC.com)
Steven A. Cohen‘s SAC Capital reached an agreement with U.S. securities regulators on Friday for the once-powerful hedge fund to no longer be an investment adviser, following the firm’s guilty plea to insider trading charges last year. The Securities and Exchange Commission’s order, stipulating that SAC will stop being an investment adviser on June 30, was widely expected after the government prohibited the firm from managing money for outside clients.
Chenavari Toro Up 13% (FINalternatives)
In its five-year history, Chenavari Investment Managers’ Toro Capital Fund has never failed to post double-digit returns, and the vehicle is well on its way to doing so again. Toro rose 2.26% last month—its 31st straight month in the black—and is now up 13.34% on the year, ValueWalk reports. That puts it among HSBC’s top performers this year, a distinction Toro won for its full-year performances in 2010, 2011 and 2012.
Hedge fund correlation risk alarms investors (Financial Times)
Hedge funds’ correlation with the equity market has risen back to pre-financial crisis highs, raising fears that the $2.7tn industry could again suffer sharp losses in the event of a market slide. The level of correlation may also raise questions about the high fees of hedge funds, given that investors can get equity market exposure, or “beta”, very cheaply via passive tracker funds. “Investors are getting screwed because they have beta elsewhere and now they are paying 2 and 20 [2 per cent of assets and a 20 per cent performance fee] for it,” said David Kabiller, founding principal of AQR, a $105bn hedge fund house.