TrimTabs and BarclayHedge report hedge funds redeem $4.9bn in June 2012 (Opalesque)
BarclayHedge and TrimTabs Investment Research reported today that the hedge fund industry redeemed $4.9 billion (0.3% of assets) in June, compared with inflows of $1.1 billion in May. Based on data from 3,012 funds, the TrimTabs/BarclayHedge Hedge Fund Flow Report estimated that industry assets were $1.71 trillion in June, down 1.3% from $1.73 trillion in May and down 29.5% from their peak of $2.4 trillion in June 2008. “The hedge fund industry can’t seem to get out of the doldrums,” said Sol Waksman, founder and president of BarclayHedge. “Industry performance continues to lag popular benchmarks such as the S&P 500, and asset growth has been flat for most of the past year.”
MARC FABER: If I Had To Vote For Obama Or Romney, I’d Shoot Myself (BusinessInsider)
Marc Faber, the famous investor and strategist, says that neither candidate in the upcoming U.S. Presidential election is worth voting for, at least if the goal is fixing the economy. In fact, says Faber, the Thailand-based author of the Gloom, Boom & Doom Report, if you put a gun to his head and told him to pick a candidate to vote for, he’d say, “shoot.” Why is Faber so negative on the two candidates?
Singer’s Elliott hedge fund struggled to make gains in quarter (Reuters)
Frustrating, annoying and unsatisfying are three words veteran hedge fund manager Paul Singer used to describe the second quarter of the year, when his hedge fund lost some ground as bets on gold and stocks hurt the portfolio. His flagship fund, Elliott Associates, lost 0.5 percent over the period, not enough to materially hurt its gains so far this year, which through June 30 were 4.6 percent, according to an investor letter reviewed by Reuters. Singer has consistently been one of the industry’s top performers, with annualized returns of 14 percent since the fund was launched in 1977.
Lyxor Hedge Fund Index up 1.08 per cent in July (HedgeWeek)
The Lyxor Hedge Fund Index gained 1.0 per cent in July (+1.5 per cent in 2012), with 12 out of 14 Lyxor Strategy Indices ending the month in positive territory, led by the Lyxor Long Term CTA Index (+3.2 per cent) and Lyxor L/S Equity Statistical Arbitrage Index (+2.1 per cent). Hedge funds gained traction as market choppiness diminished. Risk assets, especially equities, traded in a range as markets alternated between optimism and pessimism.
New York court denies Porsche SE end to hedge fund suit (Reuters)
A New York state court rejected a motion by Porsche Automobil Holding SE to dismiss a $1.4 billion-plus lawsuit brought by 26 hedge funds alleging fraud and unjust enrichment stemming from the company’s trading in Volkswagen voting shares in 2008, Porsche said late on Wednesday. Porsche SE said it continued to believe the damage claims were without factual and legal merit, adding it would appeal the decision.
Busson Talking Tie-Ups Shows Decline of Hedge-Fund Middlemen (SFGate)
On a Thursday night in May, Arpad Busson danced atop a white sofa, a cigarette in his hand, as the Pet Shop Boys performed their 1980s hit “West End Girls” at his annual hedge-fund charity gala in London. The party at Kensington Palace Gardens, where guests including celebrities Eva Herzigova were entertained by female trapezists, wasn’t quite as exclusive as in prior years when attendees included Prince William and his wife Catherine, the Duchess of Cambridge, and former U.S. President Bill Clinton. Organizers dropped the black-tie requirement at Busson’s Absolute Return for Kids dinner, which raised about 15 million pounds ($23 million), little more than half the record 27 million pounds five years ago.
Are Hedge Fund ETFs Worth The Trouble? (Nasdaq)
Another hedge fund ETF debuted today and with it may come valid questions regarding just how beneficial ETFs that replicate hedge fund strategies are to investors. The hedge funds tracked by Hedge Fund Research are up just 2.3 percent this year. Over the last five years the Hedge Fund Research Index has an annualized return of negative 0.6 percent, about in-line with the S&P, according to Breakout on Yahoo Finance.
N.J. officials charge Jersey City hedge fund, executives with fraud (NJ)
State officials have sued a Jersey City-based hedge fund and its executives over charges that they defrauded dozens of investors and sold about $12 million worth of unregistered securities. The charges were levied against Osiris Partners and an affiliated entity, Osiris Fund Limited Partnership, and 10 individuals who either worked for the firm or sold unregistered interests in the hedge fund, the state attorney general’s office said today in a statement. Among those charged were the firm’s chairman, Peter Zuck, 62, of Middletown, whom the state said also was a three-time convicted criminal.
Lebanon man pleads guilty in $3.5 million hedge-fund scheme (LehighvalleyLive)
A Hunterdon County man admitted Wednesday to his part in stealing more than $3.5 million in a hedge fund scheme that paid for extravagant bar tabs and vacations, according to authorities. Daniel Dragan, 41, of Lebanon, along with his co-defendant, Carmelo Provenzano, 29, of Garfield, N.J., pleaded guilty to fraud conspiracy in U.S. District Court of New Jersey in Camden. The two admitted to creating three fake hedge funds and enticing investors with foreign currency profits from 2009 to July 2011, according to court documents. Dragan and Provenzano told investors that they had a proprietary computer algorithm for trading foreign currencies that achieved returns of 170 percent in the prior two years, U.S. Attorney Paul Fishman announced today.
7 Outperforming Healthcare Stocks Being Sold By Hedge Fund Managers (SeekingAlpha)
Do you value the buying and selling trends of smart money institutional managers? We ran a screen with that idea in mind. We began by screening the healthcare sector for stocks that have outperformed the market over the last quarter, with over 20% quarterly return. We then screened for those with bearish sentiment from institutional investors, with significant net institutional sales over the last quarter representing at least 5% of share float. This indicates that institutional investors such as hedge fund managers and mutual fund managers expect these names to underperform in the future. For an interactive version of this chart, click on the image below. Analyst ratings sourced from Zacks Investment Research.
Why investors should avoid hedge funds (Reuters)
At the beginning of January, Simon Lack published The Hedge Fund Mirage: The Illusion of Big Money and Why It’s Too Good to Be True. It basically does for hedge funds what the Kauffman Foundation did for private equity, and shows that while fund managers can do extremely well for themselves, fund investors would be better off avoiding the asset class entirely. The book was well received (see reviews by Jonathan Ford and Jonathan Davis, in the FT, and James Pressley, for Bloomberg), and even Andrew Baker, the chief executive of the Alternative Investment Management Association, said that “much of the book is sensible advice for investors in hedge funds about the need to be well-educated about the industry”. Baker did quibble with the message of the book, saying that it revealed “more about investor behaviour than manager performance”.
Investor buys Lake Las Vegas acreage (LVRJ)
New York hedge fund manager John Paulson and Raintree Investment Corp. have purchased about 875 acres at Lake Las Vegas for $17.3 million, a source familiar with the deal told the Las Vegas Review-Journal. The land lies in a hilly area on the north shore called Rainbow Canyon. About 565 acres are developable. The city of Henderson in March approved a rezoning that would allow 3,500 homes on the land, which includes considerable shoreline. It’s unclear what the new owners plan to do with the site, however.
Singapore Revises Hedge Fund Rules (HedgeFund)
Singapore’s financial regulator has changed some of the qualifications for hedge funds to operate in the country. Hedge Funds Review reported that Monetary Authority of Singapore amended final rules for hedge fund firms that went into effect on Tuesday. The revisions pertain to business conduct, registration, and licensing.
Fund funds’ funk (NYPost)
Investors are sick and tired of paying fees for little in return, and in no place is that more evident than in the fund-of-funds industry. In June, investors pulled $8.7 billion from such firms, according to Trim Tabs Investment Research, which said that $50.4 billion came out of funds of funds over the prior 12 months, leading to a $32.1 billion drop in overall hedge-fund assets in that time. Funds of funds invest in a portfolio of hedge funds for both individual and institutional investors. While some firms are now lowering fees, they typically charge a 1 percent management fee and 10 percent performance fee — on top of the fees that go to the component funds.
Oct. sentencing set for Conn. hedge fund adviser (CBSNews)
An Oct. 30 sentencing date has been set for a former Connecticut hedge fund adviser who pleaded guilty in connection with an alleged pyramid scheme involving hundreds of millions of dollars from a pension fund for Venezuela’s state oil workers. Francisco Illarramendi, a Venezuelan-American who ran unregistered hedge funds out of offices in Stamford, pleaded guilty last year to several counts of fraud and conspiracy to obstruct justice in a scheme to conceal huge losses. The pension fund for Petroleos de Venezuela accounted for roughly 90 percent of the investment in the unregistered hedge funds.
Clive Said to Miss July Commodities Rally as Brevan Gains (SFGate)
Chris Levett’s Clive Capital LLP lost money in July as rivals profited from the biggest commodities rally in six months, two people with knowledge of the performance said. The $3.3 billion fund slid 3 percent in July, crimping its year-to-date gain to 3.8 percent, according to the people, who declined to be identified because the information is private. The Brevan Howard Commodities Strategies Master Fund Ltd. climbed 0.6 percent for a 4.4 percent gain this year through July, a third person with knowledge of the matter said. The Standard & Poor’s GSCI Spot Index of raw materials gained 6.1 percent last month, its biggest advance since February.
Contrarian Capital Fund Long Catalonia Short Spanish Sovereign Debt (ValueWalk)
Contrarian Capital Management is a value oriented hedge fund specializing in distressed debt. The firm currently has over $3 billion in AUM. The flagship hedge Fund was up 0.31 percent in the second quarter of 2012 and declined 2.75 percent on S&P 500. The year to date gain is 9.36 percent. Since inception in 1986, the fund has returned over 12% per annum. Contrarion increased their short exposure towards the beginning of second quarter (upto 25 percent), owing to high volatility. During the period, the fund profited from corporate bonds, sovereign bonds, and shorts in S&P 500. The management expects that the third quarter will be more stable, and therefore reduced short trades as Q2 ended.
3 Key Takeaways From The World’s Brightest Hedge Fund Managers (SeekingAlpha)
I recently finished reading The Alpha Masters, by Maneet Ahuja. If you haven’t read it yet, I highly recommend it. Rather than a book on investment strategy, it serves as a comprehensive, in-depth look into the psychology and work ethic of some of the world’s best investors. There are distinct reasons as for why these investors are able to achieve rates of return that exceed their benchmarks with such consistency.
Yikes! Hedge Funds Caught With Their Pants Down (CNBC)
“The big mutual fund and hedge fund managers have been caught with their pants down playing total defense,” Jim Cramer said Wednesday, noting that big cash positions in defensive plays such as Clorox [CLX 71.39 0.44 (+0.62%) ] and Kimberly-Clarke [KMB 83.25 0.53 (+0.64%) ] suddenly went away. The rotation out of defensive names, the “Mad Money” host said, came as Bureau of Labor Statistics reported Friday that the U.S. economy created more jobs than expected with 163,000 new positions added in July. Hopes that the European Central Bank will aid Spain and Italy — both its banks and bond markets alike — also seemed accelerate the rotation out of defensive stocks, Cramer added.
BNY Mellon named largest alternative UCITS administrator (Opalesque)
BNY Mellon, the global leader in investment management and investment services, has seen its Alternative Investment Services (AIS) business named as the largest global administrator of alternative UCITS funds in the second annual administration survey by Absolute UCITS publication. This is the second year that AIS, a leading hedge fund service provider, has claimed the top spot with $26.7 billion in alternative UCITS assets under administration across 29 funds (as of January 2012). AIS’s alternative UCITS assets surged 70%, or $11 billion, from January 2011, continuing the growing demand for solutions that the company has seen over the last few years. Since 2008, BNY Mellon’s AIS business has more than doubled total alternative assets under administration and custody to over $525 billion.
Prosecutors Seek $6M DiamondBack Forfeiture (HedgeFund)
U.S. prosecutors have taken legal action to recover $6 million that hedge fund firm Diamondback Capital Management forfeited in January to settle an insider trading case. Bloomberg reported that the U.S. government filed a civil forfeiture complaint in a Manhattan federal court on Tuesday.
Robertson’s Tiger Progeny Bet On Priceline Prior To Drop (Bloomberg)
Priceline.com Inc. (PCLN)’s 17 percent stock market swoon today may fall particularly hard on money managers who got their start with the help of billionaire Julian Robertson, the founder of Tiger Management LLC. These managers, known as Tiger “cubs” and “seeds,” held a combined 4.1 million Priceline shares as of March 31, according to the most recent data they’ve filed with the U.S. Securities and Exchange Commission. That equated to an 8.3 percent stake in Priceline.com, a Norwalk, Connecticut-based company that ranks as the largest U.S. online travel agency.
Why More Banking Crises Are on the Way (TheTakeAway)
Libor, HSBC, Standard Chartered: Banking scandals have been a mainstay of news headlines for the last few months, damaging the public’s perception of high finance. Politicians still eschew specific action against the banking culture that brought on the crisis, and Washington continues to deepen the national debt. Jim Rogers, an American investor and chairman of Rogers Holdings and Beeland Interest, saw this in 2002. And in 2008. And he says the cyclical pattern of economic downturns will almost definitely produce one in the next year or two.
Icahn’s slate for Forest has tough act to follow (Reuters)
In his proxy fight against Forest Laboratories Inc, Carl Icahn is fond of touting his past successes in the healthcare sector. He points to Amylin Pharmaceuticals Inc, Biogen Idec Inc, Genzyme Corp and ImClone Systems, whose shares soared after his nominees joined their boards. And he suggests his four proposed directors for the Forest board will be able to replicate those successes.
Treasuries Snap Decline Before Jobless Claims Report (Bloomberg)
Treasuries snapped a four-day decline before a U.S. report that economists said will show initial claims for unemployment insurance increased last week, adding to signs global economic growth is slowing. U.S. government securities and other investments are drawing demand from investors outside the country who are seeking safety in dollar-denominated assets, said Alexander Matturri, chief executive officer at S&P Dow Jones Indices, the world’s largest provider of financial market indexes. The Treasury is scheduled to sell $16 billion of 30-year bonds today, following a 10-year auction yesterday and a three-year sale on Aug. 7.
BNP Fund Freeze Shrinks Holdings Five Years After Crisis Ignited (Bloomberg)
When a Brookfield Investment Management Inc. analyst saw bonds of Accuride Corp., the wheel manufacturer in Evansville, Indiana, at 94 cents on the dollar in December, he decided it was time to buy. The problem was the price wasn’t real. The debt was only available at 104 cents. “When it actually came time to shake them loose from somebody’s hands, that’s where the disconnect came in,” said Richard Cryan, co-manager of high-yield corporate debt at the New York-based firm, which oversees $150 billion of assets. Unable to find a seller at the lower price, they gave up.
Global Food Reserves Falling As Drought Wilts Crops: Commodities (Bloomberg)
Stockpiles of the biggest crops will decline for a third year as drought parches fields across three continents, raising food-import costs already forecast by the United Nations to reach a near-record $1.24 trillion. …“People thought we were going to be swimming in corn by the end of the year,” said Kelly Wiesbrock, who helps manage $1.3 billion of assets for Harvest Capital Strategies, a San Francisco-based hedge fund. “Then the month of June hit and into July, and it’s just been a train wreck.”
Anglo CEO Doubles Down On New Mines Amid Falling Demand (Bloomberg)
Driving northeast from Santiago, the road corkscrews toward the shark’s-grin skyline of the Andes Mountains. In winter, Santiago’s smart set plies this route, heading for virgin-powder days and pisco-sour nights at La Parva ski resort. Most have no inkling that in a high mountain valley just over the ridgeline, excavators the size of houses have sculpted the mountainside into a steeply terraced pit 1,800 feet deep, Bloomberg Markets magazine reports in its September issue. This is Los Bronces, one of the world’s richest copper mines. Anglo American Plc (AAL), the London-based company that owns Los Bronces, spent $2.8 billion from 2007 to 2011 to double the size of the mine. And Los Bronces is just one of four megaprojects that Anglo Chief Executive Officer Cynthia Carroll has initiated or pushed through construction since she took over in 2007 — each representing a wager in excess of $1 billion on the continued rise of China, India and other emerging markets.
Citigroup Sells $158 Million Of Mortgages To Fund Venture (Bloomberg)
Citigroup Inc. (C), the third-biggest U.S. bank by assets, sold $158 million of mortgages to a joint venture of two investment funds as the lender disposes of unwanted home loans. The partnership of Oaktree Capital Group LLC (OAK) and Carrington Holding Co. bought the loans under a program to offer delinquent borrowers an opportunity to rent their homes as an alternative to foreclosure and eviction, the three companies said in a statement. Mark Rodgers, a spokesman for New York-based Citigroup, declined to comment on the purchase price.
The Daily Docket: Pinnacle Says Shareholders Jeopardized Restructuring (WSJ)
Pinnacle Airlines Corp. is accusing hedge fund and shareholder Meson Capital Partners LP of putting its reorganization at risk in order to squeeze value out of shares that are expected to be worthless. …A California bill that could have delayed some municipal bankruptcies has been halted, the Los Angeles Times reports. Deal Journal looks at Japan Airlines Co.’s efforts to prepare for its initial public offering.
Bet on Platinum’s Fall Is Anti-Euro Wager (WSJ)
Some hedge funds have found a new venue to wager on a worsening outlook for Europe: the platinum market. In recent months, a number of money managers have ratcheted up their bets on a decline in platinum prices to the highest level ever in the futures market. The rationale is simple: Platinum’s main use is to scrub pollutants from the tailpipe emissions of diesel-fueled cars, and Europe is by far the world’s largest market for those cars.
The Bonds, They Are A-Changin’ (WSJ)
Bob Dylan’s music was the soundtrack for the counterculture of 1960s America. Now it has become a selling point for an unusual bond offering being marketed to institutional investors and wealthy individuals. A privately held Nashville, Tenn., company is preparing a $300 million bond backed by the cut it receives as a middleman between music companies and songwriters and the outlets that broadcast their music.
SEC to Host Market Technology Roundtable (SEC)
The Securities and Exchange Commission today announced that it will host a technology roundtable next month to discuss ways to promote stability in markets that rely on highly automated systems. The roundtable entitled “Technology and Trading: Promoting Stability in Today’s Markets” will take place on September 14 and convene experts on designing, operating, and controlling the systems that form the core of our market’s infrastructure.
Three Arrows Capital to launch Asia Arbitrage Fund (Opalesque)
Three Arrows Capital LLC is launching a new Asian Arbitrage Fund in September. The fund will focus on Asia market neutral liquidity constrained arbitrage. Kyle Davies will serve as Chairman and Chief Risk Officer and Su Zhu will serve as Chief Executive Officer. Davies worked at Credit Suisse in Equity Exotic Derivatives, Corporate Derivatives, and Convertible Bond Trading Groups. Zhu worked at Credit Suisse in Equity Exotic Derivatives, Flow Traders in ETF, and Deutsche Bank in Absolute Strategy Groups. Davies and Zhu have an organic growth story over a decade of knowing each other. They met in high school at Phillips Academy, studied together at Columbia University, and then worked with each other in Hong Kong in various derivatives trading roles.
Eurekahedge Hedge Fund Index up 1.15% in July (Opalesque)
Hedge funds posted positive returns for July, making it the first month since February to witness healthy returns. In July, the Eurekahedge Hedge Fund Index was up 1.15%, as managers capitalized on trends across several asset classes. Comparatively the MSCI World Index was up 1.05%. Key highlights for July 2012: Hedge funds were back in the black with positive performance numbers in July after four months of negative returns.
Gottex announces completion of Penjing acquisition and approval of share buyback (Opalesque)
Gottex Fund Management Holdings Limited an independent global alternative asset management group, has confirmed that at its extraordinary general meeting (EGM) held on 8 August 2012 its proposed share buyback was approved by shareholders. Gottex also announced that it has received all relevant regulatory approvals in connection with its proposed acquisition of Penjing Asset Management (Penjing) and, with all conditions now satisfied, the acquisition completes today.
Two new managers join FX Gateway (Opalesque)
Morgan Stanley today announced that Hong Kong-based currency manager Ortus Capital Management and Swiss-based currency manager Quaesta Capital have joined FX Gateway, a multi-manager platform aimed at providing institutional investors access to select currency managers. Morgan Stanley acts as the FX Prime Broker and distributor for FX Gateway. With the addition of Ortus Capital Management and Quaesta Capital, the number of managers available on the platform totals twelve, less than one year after FX Gateway’s launch in September 2011. Ortus Capital Management, a systematic manager led by Dr. Joe Zhou in Hong Kong, currently has in excess of $3bn assets under management. Going live on FX Gateway will give the company access to investors who want to invest their assets on an unfunded basis, in smaller allocation sizes or at customized volatility levels. The Ortus program features weekly liquidity.
LMR Partners Opens HK Office (HedgeFund)
London-based hedge fund LMR Partners is expanding its presence to Asia. Financial News reported that LMR has registered with Hong Kong’s Securities and Future Commission, which would allow the firm to do business in the region.
Rob Romero: Why I shorted Facebook and Zynga early (Absolutereturn-Alpha)
Most long/short technology and energy hedge funds invest in Silicon Valley from offices on the East Coast, far away from the hub of activity around the San Francisco Bay Area. That distance can lead to safer, long-biased bets, and unremarkable returns. Investing from afar is not for Rob Romero. His Connective Capital Management makes a point of shorting tech and energy stocks from its home in Palo Alto, and using the team’s experience working for such companies as AMD, Broadcom and HP to inform its bets.
Institutional investors approve of Treasury’s new floating-rate notes (PIOnline)
Money managers and consultants are encouraged by the possibility that the U.S. Treasury Department will implement a floating-rate note program, the first new U.S. government debt security since TIPS were introduced in 1997. The securities will “probably offer some value,” said Bret Barker, managing director, U.S. fixed income, at TCW Group, Los Angeles. But he’s waiting for more information on the structure of the notes before knowing how much value the securities will offer.
National Oilwell Varco to Buy Robbins & Myers for $2.5 Billion (NYTimes)
National Oilwell Varco agreed on Thursday to buy Robbins & Myers, a maker of oil well drilling equipment, for about $2.5 billion, as deal-making in the energy sector continues unabated. Under the terms of the deal, National Oilwell will pay $60 a share in cash, a 28 percent premium to Robbins & Myers’ closing price on Wednesday.
Hewlett-Packard’s Deal-Making Missteps (NYTimes)
Hewlett-Packard has no problem spending money on deals. But making money on them? That’s the rub. On Wednesday, the technology giant disclosed that it would have to take an $8 billion charge related to the acquisition of Electronic Data Systems, a $13.9 billion purchase it made four years ago. It’s the latest setback for the struggling computer maker, where a string of acquisitions have fallen flat.
Kindler, Former Pfizer Chief, Joins Lux Capital (NYTimes)
Jeffrey B. Kindler, who retired as Pfizer‘s chairman and chief executive at the end of 2011, has joined Lux Capital as a venture partner, the firm announced on Wednesday. The hiring marks Mr. Kindler’s most prominent business appointment since his contentious departure from Pfizer. He became the pharmaceutical giant’s chief in 2006, having joined four years before from McDonald’s as general counsel.
Accountant who stole £70,000 to fund girlfriend’s lavish lifestyle set himself on fire after friend threatened to expose him (DailyMail)
An accountant turned himself into a human fireball after learning he was about to be exposed for stealing £70,000 to fund a luxury lifestyle for his girlfriend. Anthony Roden, 56, died in a car blaze after his illegal immigrant lover Regina Stan ‘bled him dry’. The morning of his death Mr Roden had been given an ultimatum by his long-term friend and client Timothy Boscher to return the stolen £70,000.
Romney’s tax plan makes no sense (WashingtonPost)
There seems to be a Democratic mole inside Mitt Romney’s campaign. Could it be Romney himself? Well, of course not. But considering the campaign’s behavior, it might just as well be. President Obama and his allies have cast Romney as a wealthy fat cat who’s out of touch with everyday Americans and who would use his presidency to enrich the already rich. To counter this damning image, the last thing you’d expect Romney to do is embrace a tax plan favoring the super-rich. Which is exactly what he has done. After examining Romney’s proposal, the nonpartisan Tax Policy Center concluded that households with incomes exceeding $200,000 would receive tax cuts; meanwhile, taxes would rise for the other 95 percent of the population.