Loeb, Cooperman Stand Out in Horrid Year for Hedge Funds (CNBC)
Dan Loeb’s Third Point was the clear hedge fund standout in a horrible year for the industry as almost nine out of 10 managers underperformed the S&P 500. Omega Advisors’ Leon Cooperman also scored big. Loeb — once better known for his acerbic letters to CEOs — used an activist position in Yahoo and the contrarian buying of Greek bonds to drive the firm’s flagship fund to a 21 percent gain in 2012. The firm’s more-leveraged Ultra fund posted an even bigger 34 percent return. “Among his many talents, the one that I appreciate in Dan is his adaptability and ability to learn and evolve,” said SkyBridge Capital’s Anthony Scaramucci, who holds one of the largest gathering of hedge fund investors every year in Las Vegas. (Loeb is a speaker.) “This is the main reason in my mind why he has become one of the world’s greatest investors.”
Dow Jones Credit Suisse Core Hedge Fund Index up 0.99 per cent in December (HedgeWeek)
The Dow Jones Credit Suisse Core Hedge Fund Index closed up 0.99 per cent in December as each of the seven index component strategies reported positive results for the month. Event driven (2.14 per cent) and emerging markets (1.34 per cent) led the way, while the worst performers were managed futures (0.15 per cent) and convertible arbitrage (0.49 per cent).
The Chinese government continues to embrace the expansion of its local hedge fund industry. Hubert Tse, a partner at the Shanghai-based law firm Boss & Young, announced that the Shanghai Municipal Financial Service Office is expected to launch the qualified domestic limited partner (QDLP) pilot program in the next few months and issue its first license. This is good news for hedge fund managers as China’s regulators are soon to allow foreign hedge funds to set up shop in Shanghai, China’s second largest city.
Pundits predict brighter prospects for hedge funds in 2013 (Opalesque)
After a disappointing year in 2012, hedge fund managers are hoping for brighter prospects this year with many of them forecasting better returns for most strategies, reported Pensions & Investments. The report quoted Kenneth J. Heinz, president of the Chicago-based Hedge Fund Research Inc., “Because of all the uncertainty in the world right now, investor risk tolerance is very low, including hedge fund portfolio managers, but even if all the uncertainties aren’t resolved early this year, there will be more clarity about what is going to happen globally. That will encourage many hedge fund managers to be less risk averse than they have been.”
Odey Raising Chicken Coop Bets on Banks as Hedge Fund Yields 24% (SFGate)
Crispin Odey is fumbling around a storage room in a Georgian town house in London’s Mayfair district, home to Odey Asset Management LLP, his $7 billion hedge-fund firm. Clattering through old computers, boxes of books and forgotten oil paintings that lent a genteel air to his offices, he’s fishing for the book that shows he was one of the earliest investors to spot the financial crisis, Bloomberg Markets will report in its February issue. Odey emerges from the room brandishing “Crunch Time for Credit?,” a 250-page report he commissioned and had published in 2005 charting the emergence of a credit bubble and predicting a market collapse.
SEC staff preview top hedge fund enforcement trends for 2013 (HedgeWeek)
In a recent speech before the Regulatory Compliance Association, Bruce Karpati, chief of the Securities and Exchange Commission’s enforcement division’s asset management unit, suggested where the SEC may be heading regarding hedge fund oversight in the months to come. Karpati both highlighted the SEC’s past enforcement activity concerning hedge funds (including several cases where the SEC alleged funds fraudulently overvalued their holdings) and signalled that the SEC’s emphasis on such activity will continue.
Amid the Latest Criticism, Herbalifers Stay Resolute (WSJ)
When hedge-fund manager William Ackman unveiled his 334-slide presentation alleging that Herbalife Ltd. (NYSE:HLF) HLF +1.76% is a pyramid scheme, it did nothing to shake Joanne Clare. The 38-year-old Staten Island mother of three has been selling the company’s weight-loss products and supplements since 2004, when she says they helped her drop from 210 to 160 pounds in four months. She now sells as much as $3,500 a month of Herbalife products to her 30 clients and the two distributors in her “down line.”
Compuware bid becomes high-stakes chess match (CrainsDetroit)
Will Compuware Corporation (NASDAQ:CPWR)‘s measured approach to the takeover bid launched last month work against a hedge fund company used to playing hardball and getting its way? Compuware engaged two New York City investment banks and a New York law firm to advise its board of directors on how to react to the $2.3 billion offer by New York-based Elliott Management Corp. A formal response is unlikely before Jan. 22, when Compuware releases its next earnings report.
Don’t rule out hedge funds in portfolio (RecordNet)
Do hedge funds belong in your portfolio? I have long preached that investors buy no-load, low-cost index funds. So why write about hedge funds? For one thing, “hedge fund” is one of those terms one comes across constantly in the media. If you’ve never been sure what one is, this column should help. And if you’re somebody who has pondered adding a hedge fund to your portfolio – and there are a lot of people who have the appropriate net worth to do so – what follows might help you determine whether to do so.
Hedge-fund liquidator suing BNY Mellon firm (Independent)
The liquidator of a bust Cayman Islands hedge fund is suing an Irish firm owned by The Bank of New York Mellon Corporation (NYSE:BK) for millions. Dublin-based BNY Mellon Investment Servicing International is being sued by Grant Thornton in its capacity as liquidator of Weavering Capital, a €450m-valued hedge fund that collapsed in 2009. The Sunday Independent understands that the amount of damages being claimed by the liquidator on behalf of out-of-pocket Weavering investors is €200m at the low end but could be up to €500m if certain facts are proven.
Bad time to end ban on hedge fund ads (FT)
Investors twitching nervously last week over Washington’s tryst with fiscal havoc may have felt better after the last-minute deal to stave off tax rises and budget cuts, giving a frayed US economy more time to mend. They may be in no mood for a less dramatic but possibly ugly trauma looming ahead. Last week’s fix stopped politicians from weakening a frail recovery, but many market watchers still expect a hard path to strong investment returns in 2013, especially after a year in which big stock indices finally caught up to pre-2008 peaks. It could not be a worse time for US regulators to follow through on an April 2012 law that directs them to lift a longstanding ban on “general advertising” and “general solicitation” for traditional limited partnership hedge funds and other private placement vehicles.
Investors keep faith in hedge funds (FT)
Big investors are sticking to their hedge fund portfolio allocations, despite the lacklustre performance of some strategies in 2012. New data on hedge fund returns to be unveiled on Tuesday by Hedge Fund Research, a fund tracking group, suggest the average hedge fund manager eked out a 5.5 per cent return last year. This performance barely corrects the sector’s dismal performance in 2011, when the average hedge fund lost 5 per cent.
Weavering Founder Appears in Court Over Hedge Funds Collapse (BusinessWeek)
Weavering Capital (UK) Ltd. founding director Magnus Peterson appeared in a London court today facing six charges of fraud, forgery, fraudulent trading and false accounting over the collapse of the hedge fund in 2009. Judge Michael Snow ordered Peterson, 49, to appear at a higher criminal court in 12 weeks and surrender his passport. The defunct fund had about $640 million under management in late 2008 before discovering the counterparty for its biggest trading position was controlled by the fund’s manager.
Global hedge fund industry gained $75bn in 2012, hedge fund news, week 01 (Opalesque)
In the week-ending January 4, 2013, Gabelli & Partners launched the credit hedge fund Gabelli Intermediate Credit Fund on January 1; and former Citadel head of securities Patrik Edsparr received a license to start an asset management company in Hong Kong. The Nordic Hedge Fund index was up 0.26% in November (+3.46% YTD); the ‘Alternative Alternatives’ investment funds were up 0.42% in November (+2.75% in first 11 months of 2012); and the Credit Suisse Liquid Alternative Beta Index was up 1.13% in December (+3.22% YTD).
Doom scenario far-fetched but euro gloom to deepen (Reuters)
It would be fair to say that U.S. hedge-fund manager Kyle Bass does not expect the explosion in global debt in recent years to turn out well. “This ends through war,” Bass, the founder of Hayman Capital Management in Dallas, said. “I don’t know who’s going to fight who, but I’m fairly certain that in the next few years you will see wars erupt, and not just small ones,” he told a recent conference. But while many investors have, like Bass, bet heavily on chaotic sovereign default in countries such as Greece, three years of dogged diplomacy in Europe have so far wrong-footed the doomsayers.
Armstrong hedge fund eyes stocks rally, buys Apple (Reuters)
Hedge fund manager Patrick Armstrong is backing his confidence in the technology and luxury goods sectors by buying shares in Apple and holding his positions in the likes of LVMH and BMW. Armstrong, who co-manages $220 million as head of investment selection at Armstrong Investment Managers, believes that such companies will help to drive the S&P 500 and other stock markets to new highs in 2013, aided by central banks’ pro-growth policies and fast-growing emerging markets. “Some equity markets, including the S&P 500, will reach their all-time highs (in 2013),” the former co-head of Insight Investment’s $2 billion multi-asset group said in a statement.
New Kids on a Tough Block (WSJ)
Investors have shown little love for U.S.-stock mutual funds in the past few years. But that hasn’t stopped some companies from launching funds into this market for the first time. Overall, more money has been flowing out of these funds than into them for a record 20 consecutive months. Still, some U.S.-stock funds have net inflows, and there are companies that believe they can join that group.
What Looks Like a Hedge Fund but Isn’t? (WSJ)
Hedge funds have been a disappointment, says Ohio financial adviser Dan Gaugler, so he has been shifting clients to mutual funds that use hedge-fund-like strategies. Five to seven years ago, he was investing up to 10% of his wealthiest clients’ portfolios in hedge funds of funds, which promised stock-like returns with bond-like risk by spreading money among private, high-minimum funds that used a variety of strategies. “What they gave us was bond-like return,” partly because of their high costs, he says.
Dyal buys stake in MKP Capital (PIOnline)
MKP Capital Management sold a minority stake to Dyal Capital Partners, said Patrick McMahon, MKP’s founder, CEO and a managing member. MKP manages about $6 billion in global macro, credit and fixed-income hedge fund strategies. It will continue to operate under its own name from its New York office. Dyal Capital Partners is an institutionally oriented, $1.28 billion private equity fund managed by Neuberger Berman Group that takes 20% passive minority stakes in hedge fund managers.
New Year, New Face in Fund Administration (MarketWatch)
The New Year sees the launch of a new fund administration firm for alternative investment managers. Tower Fund Services is a newly established independent third-party administrator offering a compelling combination of fresh perspective and in-depth experience. The firm provides a full spectrum of tailored outsourced solutions for hedge funds, funds of funds, multi-manager platforms, private equity, venture capital and real estate funds. Its suite of services includes fund startup, accounting, valuation, reporting and tax services to alternative investment managers in all strategies and structures. Tower Fund Services was co-founded by the former managing director and director of operations for Apex Fund Services (US) Inc.
