SkyBridge Expands Into Asia (HedgeFund)
Funds of hedge funds firm SkyBridge Capital plans to delve into Asia’s growing hedge fund market. According to an AsianInvestor article, the firm plans to open a Singapore office by the first quarter of 2013, followed by the launch of an Asia-focused fund at the end of next year.
Icahn wins legal fight over Forest Labs books (ThomsonReuters)
Billionaire investor Carl Icahn scored a court victory in his proxy fight with drugmaker Forest Laboratories Inc on Friday when he was granted access to some of the company’s records. Icahn has accused the maker of antidepressant drug Lexapro of mismanagement and is seeking court documents to aid in his fight to elect four members to the company’s 10-member board at its Aug. 15 annual meeting. Master Abigail LeGrow of Delaware’s Court of Chancery ruled that Forest had to open its records relating to events such as the company’s lowering of its earnings forecast in June.
Hedge fund assets under threat as growth slows (eFinancialNews)
Overall growth from Europe’s 20 largest hedge funds was stagnant in the past year but there was a big dispersion between winners and losers as investors shifted their money to strong-performing managers and away from those who disappointed. The top 20 managers saw their combined assets rise by 2.2% to $265.2bn in the 12 months to June 30. Assets under management of the top 10 dipped 0.8% over the same period to $200.4bn. This was driven by a $12.3bn decline in hedge fund assets managed by Man Group, the world’s largest listed hedge fund manager, as a result of poor performance at its flagship computer-driven strategy AHL.
Church of England risks vicars’ pensions in hedge funds (Guardian)
The Church of England has poured £60m of vicars’ pension investments into hedge funds run by some of the world’s richest people. One of the funds is run by US billionaire Ray Dalio, while another is managed from a south London mews house by British multimillionaire David Harding. Disclosure that the church is risking vicar’s pensions in hedge funds prompted a call from within the CofE for the church’s pension board to scrutinise hedge fund remuneration policies.
KKR funds enter through the front gate (MarketWatch)
In the 1980s and 1990s, investors knew they’d arrived if they were able to put money with Kohlberg, Kravis & Roberts, the leveraged buyout firm that was a key player in the high-profile merger deals of the time. Henry Kravis and George Roberts were the “Barbarians at the Gate.” Along with partner Jerome Kohlberg, who left the firm in 1987, they were the masters of the universe and just the biggest deal around. While KKR & Co. (US:KKR) — as the company was renamed — has remained an enormous private-equity investor and a linchpin in countless big deals, the legendary firm has always been outside the reach of ordinary investors.
Effective data management – a growing challenge for hedge fund managers (HedgeWeek)
Providers of outsourced services not only can help hedge fund managers meet the new requirements of regulators and investors for more detailed and timely investment data, they can help managers better use the data they have to streamline their operations or refine their product offerings, says Pat Hayes, a senior managing director with State Street Alternative Investment Solutions in Ireland… Changes sweeping across the investment industry pose profound implications for hedge fund managers and how they manage data. As investors develop new approaches to asset allocation and risk management, their demand for enhanced information is accelerating. Compounding this challenge for hedge funds are the many regulatory directives now emerging that include additional reporting and record-keeping requirements.
Validus see’s mixed success with sidecars due to hedge fund investment strategies (ARTemis)
Bermuda based reinsurance group Validus Holdings which has a number of sidecar and ventures, has announced its second quarter results and revealed mixed success in their sidecar segment. Validus launched a Bermuda Class 4 reinsurer PaCRe, Ltd. in a joint-venture with John Paulson and his Paulson & Co. hedge fund in April and in June announced another edition of their AlphaCat vehicle, AlphaCat Re 2012 Ltd. Ed Noonan, CEO of Validus said in their earnings call; “Our AlphaCat business continues to demonstrate the economic and strategic value of outstanding research and analytical skills, size and market presence. AlphaCat successfully launch two new vehicles in the quarter, AlphaCat Re 2012 and PaCRe, and generated $58 million in catastrophe premiums.”
Elliott’s Global Trading Chief Miller To Leave Hedge Fund (Bloomberg)
Brian Miller, who runs global trading at hedge fund Elliott Management Corp., is leaving after 21 years at one of the industry’s top performers and may eventually start his own fund, according to a letter to clients. Miller, 46, will initially manage his own money by forming a family office, Elliott said yesterday in the letter, a copy of which was obtained by Bloomberg News. Jon Pollock, 48, who is co-chief investment officer, will become chief trading officer, said the firm, which oversees $20 billion. Peter Truell, a spokesman for New York-based Elliott, declined to comment.
The Little Book of Hedge Funds Demystified (MoneyLife)
The Little Book of Hedge Funds: Hedge funds were set up to protect capital, but very few have delivered Many of us are familiar with mutual funds. However, not all of us know what a hedge fund is, much less how it functions and operates. We only get to know about these mysterious beasts when the market turns volatile and the volatility is blamed on hedge funds’ trading operations. Hedge funds employ complex trading strategies while charging 2% as fees and 20% of profits.
S. Korea to ease entry barrier of hedge funds (YonhapNews)
South Korea said Sunday it will ease regulations on hedge funds to enable asset managers and brokerage houses to more easily set them up, with an aim to nurture the related sector. A hedge fund is privately pooled money used by investors who seek massive investment returns through risky bets using a wide range of investment techniques, including short selling and leveraged buyouts.
Looking For Trouble (Barrons)
Event-driven hedge-fund managers can’t complain about a lack of opportunities. Near-zero interest rates, a U.S. fiscal cliff, possible euro-zone sovereign defaults and banking collapses, Middle-Eastern uprisings, and sputtering global growth are just some of the general categories of disruption in the stock and bond markets. Sixty-seven year-old Peter Schoenfeld thinks they make for some of the most exciting markets of the post-war era. “The world is confusing, but we like it when it’s confusing,” says the head of Peter Schoenfeld Asset Management’s WorldArb Partners Fund. “There are still big issues out there and that’s reflected in the portfolio. We look for short-dated events, where we can capture inefficient pricing of risk around the globe. In our minds, there are a lot of inefficiencies where slight nervousness causes exaggerated responses in stocks and transactions.”
TCI rides on green missive to push for coal washing (Business-Standard)
Says new rules would impact two-thirds of Coal India production, improve pricing power and profitability of the miner The amendments proposed by the Ministry of Environment and Forests have come as a shot in the arm for UK-based hedge fund, The Children’s Investment fund (TCI), in its ongoing tussle with the coal ministry. TCI holds around one per cent in Coal India Ltd (CIL), the state-owned monopoly coal producer, and has been pushing for mandatory washing of coal produced by CIL to improve the pricing power and profitability of the miner.
Commensus Launches Hedge Fund Support Hub In London (CMVLive)
Leading UK outsourced IT provider delivers premier technology services to London-based hedge funds and investment firms Leading IT Support provider, Commensus today announced its expansion with the launch of its London Hedge Fund Operations Hub based from the firm’s offices in Westminster. Commensus is now able to provide a comprehensive 24/7 IT service to the UK hedge fund and alternative investment community, helping them to globalise their IT infrastructure using a technology known as the Hybrid Cloud.
Hedge Funds Crashing the Mutual Fund Party, Says Barron’s (MFWire)
Beverly Goodman of Barron’s had a column this weekend explaining why so many hedge funds are starting mutual funds. It’s simple: with their core businesses struggling, they want to attract assets. “If you sell more products that more people can invest in, you will likely attract assets,” she writes. “Genius.” Yet she notes that “the reasons aren’t all craven.” The funds business is changing, and investors are looking for alternative investments and balking at hedge funds’ lockup periods, which makes mutual funds more attractive.
Major banks under pressure to act tough with loss-making hedge fund clients (IndiaTimes)
Major banks face growing pressure to extract more money from, or even sever ties with, unprofitable hedge fund clients as they cut costs in the face of tough trading conditions and try to refocus on the biggest managers. Industry insiders say prime brokers – which provide services such as stock lending and financing for hedge funds – are sifting through their client lists, in some cases demanding higher fees on trading or a greater share of a fund’s business, and sometimes telling funds to look elsewhere.
Core drama at largest U.S. electric company lingers (IndependentMail)
The investigations into whether regulators and consumers were misled in the run-up to the merger of North Carolina’s two Fortune 500 energy companies could continue quietly for months after a deadline arrives next week. North Carolina utilities regulators and the state’s attorney general have demanded internal documents and other evidence by Aug. 7 involving Duke Energy Corp. and its surprise decision to change a key detail of its Progress Energy Inc. takeover even as regulators were considering approval.
Hedge Funds Add Wagers In Longest Streak Since 2009: Commodities (Bloomberg)
Hedge funds raised commodity bets in the longest bullish streak in three years as speculation that policy makers will increase economic stimulus drove prices toward the biggest monthly rally since October. Money managers raised their net-long positions across 18 U.S. futures and options by 3.4 percent to 1.17 million contracts in the week ended July 24, U.S. Commodity Futures Trading Commission data show. Wagers gained for seven weeks, the longest increase since June 2009. Corn bets climbed to the highest since September 2011, and traders are the most bullish on natural gas since October 2006.
Zames Rises From JPMorgan Battlefield To Dimon’s War Council (Bloomberg)
Twice in the past 100 days, JPMorgan Chase & Co. (JPM) Chief Executive Officer Jamie Dimon has turned to a 41-year-old former hedge-fund trader to tackle challenges facing the largest U.S. bank. Matt Zames, named chief investment officer in May to contain trading losses that have cost at least $5.8 billion, became the firm’s co-chief operating officer last week. Zames, who began the year as co-head of the bank’s fixed-income business, now oversees senior executives including Chief Financial Officer Douglas Braunstein, 51, and regulatory affairs head Barry Zubrow, 59.
John Eckstein, Pioneer Of Treasury Futures Trading, Dies At 74 (Bloomberg)
John F. Eckstein III, one of the first traders of Treasury bill futures contracts following their debut in 1976 and a pioneer of cash-futures arbitrage trading in the U.S. government bond market, has died. He was 74. Eckstein died on July 24 at a nursing home in New Rochelle, New York, having never fully recovered from a heart attack he suffered in 2005, his son, John F. Eckstein IV, said in a telephone interview.
Operational due diligence takes centre stage (Opalesque)
Post-Madoff, operational due diligence has become crucial, moving, according to Shane Brett, managing director of Global Perspectives, to centre stage within the alternatives industry. In his latest White Paper –The Rise & Rise of Operational Due Diligence, Brett recalls that the Madoff scandal exposed the alternative investment industry to widespread allegations of substantial neglect, in terms of its due diligence processes. Brett’s paper asks what should a hedge fund investor or fund of fund manager look for and do to ensure a potential investment is being correctly managed. In an interview with Opalesque, Brett explained that issues still abound, despite the raft of new regulation that has been drafted or implemented since the financial crises of the last few years.
Huge opportunities in German high-yielding corporate credit as ‘Mittelstand’ enterprises shift financing (Opalesque)
There are huge opportunities in German high-yielding corporate credit as the German Mittlestand companies, are forced a to move away from bilateral short term facilities towards multilateral and longer term instruments, said Mark Hoffmann, portfolio manager for Robus Capital, a credit opportunities strategy in the German speaking countries based out of London and Frankfurt, in the latest Opalesque London Roundtable sponsored by Eurex, Bingham and Taussig Capital.
Basel III, Solvency II to ‘create opportunities that we may never see again in our lifetime’ – London Roundtable (Opalesque)
The dislocations that are going to take place over the next ten years in banking and insurance are going to create opportunities that we may never see again in our lifetime, apparently. And some are coming into the arena, seeing those opportunities and seizing them. More hedge funds going into reinsurance Hedge funds have had a finger in the reinsurance business for a while. But as three big names have moved into it recently, this may herald a wider strategy trend.
‘Alternative Alternatives’ investment funds down 0.34% in June (+0.11% YTD) (Opalesque)
‘Alternatives Alternatives’ investment funds saw another negative month in June, according to a first estimation based on 712 single- and multi-manager funds currently listed in 25 categories in the Opalesque Solutions A SQUARE Fund Database (Source). The Opalesque A SQUARE Index lost* 0.34% in last month, and is now up 0.11% for the year 2012. Estimates for May and April were corrected to -1.32% and -0.42%, respectively. The A SQUARE Funds of Funds Index lost 0.51%, expanding its year-to-date loss to -0.40%.
SEC Freezes Assets of Insider Traders in Nexen Acquisition (SEC)
The Securities and Exchange Commission today obtained an emergency court order to freeze the assets of traders using trading accounts in Hong Kong and Singapore to reap more than $13 million in illegal profits by trading in advance of this week’s public announcement that China-based CNOOC Ltd. agreed to acquire Canada-based Nexen Inc. The SEC alleges that Hong Kong-based firm Well Advantage Limited and other unknown traders stockpiled shares of Nexen stock based on confidential information about the deal in the days leading up to the announcement. Well Advantage is controlled by prominent Hong Kong businessman Zhang Zhi Rong, who also controls another company that has a “strategic cooperation agreement” with CNOOC.
SEC Charges N.Y.-Based Fund Manager and Others With Securities Law Violations Related to Chinese Reverse Merger Company (SEC)
The Securities and Exchange Commission today charged New York-based investment manager Peter Siris and two of his firms with a host of securities law violations mostly related to his activities with a Chinese reverse merger company, China Yingxia International Inc. The SEC alleges that Siris, an active investor in Chinese companies and former newspaper money columnist, misled investors in his two hedge funds through which he invested $1.5 million in China Yingxia.
Hedge Fund Players with Their Art Collecting (HedgeFund)
The hedge fund industry and the art world have gone hand-in-hand in recent years as indicated in an article last week about top collectors. …They include three Johns (and none are named Jasper): John Andrew MacMahon, founding partner of credit-focused Bell Point Capital Management; John Phelan (with wife Amy), a cofounder and co-managing partner of Michael Dell’s hedge fund MSD Capital, and former Centaurus Advisors head John Arnold along with his wife Laura.
Connecticut-Based Firm Welcomes New Managing Director (HedgeFund)
Connecticut-based Alternative Investment Group has hired an industry veteran as managing director of the firm’s business development division. The $1.6 billion hedge fund firm announced Monday that Sanford Brown will be responsible for developing relationships with institutional consultants, wealth advisors and end advisors, including endowments and pension plans.
Will Indra Nooyi Leave Pepsi? (TheDailyBeast)
Whenever a big new job opens up just about anywhere in the world, Indra Nooyi’s name enters the frame. Last year, scuttlebutt in Mumbai had the PepsiCo chief executive returning to India to run the powerful Tata Group. Earlier this year, Nooyi was floated as a candidate to run the World Bank. Now her recent recruitment of a former White House and Treasury official to Pepsi’s ranks has some pegging her for a big job in Washington. …As a consequence, when Relational Investors—a hedge fund run by activist investor Ralph Whitworth—popped up with a $600 million position in Pepsi two months ago, Wall Street was atwitter with talk of a Pepsi breakup. So far, Whitworth has not said much about his aspirations. But he has pushed for breakups before, occasionally fighting to replace corporate directors with his own representatives to make that happen.
Two Worms Eating at Apple’s Core (Forbes)
As someone who joined the chorus of people who thought that Apple (AAPL) would never be the same after Steve Jobs left, it brings me little joy to point out that two worms are already eating away at its core: an Apple innovation drought and the rise of price-sensitive buyers. So don’t be surprised to see Apple’s stock begin a steady decline — interrupted by abrupt plunges when it misses earnings expectations or guides lower.
Texas Permanent goes long on commodities with 2 firms (PIOnline)
Texas Permanent School Fund, Austin, awarded $350 million each to Pacific Investment Management Co. and Credit Suisse to invest in long-only commodities. Commissioners of the Texas State Board of Education, which oversees management of the $24.4 billion educational endowment, approved the investment in PIMCO’s Commodity Real Return and Credit Suisse’s Enhanced Total Commodities strategies, according to a webcast of the board’s July 20 meeting.
Borough of Camden to double hedge fund allocation (PIOnline)
The £995 million ($1.56 billion) London Borough of Camden Pension Fund will double its hedge fund allocation to 10% of total assets, said Peter Taylor, pension fund accountant. Funding will likely come from reducing equities, which accounts for about 73% of the total portfolio. According to documents published on the fund’s website, the move is “to reduce the pension fund’s dependence on highly volatile equity markets through greater asset allocation.”
Grifphon, Sasquatch Lawsuit Grows (Finalternatives)
Things were even more rotten at two Oregon hedge funds than investors originally believed, according to an amended lawsuit. Clients of Grifphon Asset Management and Sasquatch Capital added to their allegations against the hedge funds, their managers and accountants. The new complaint alleges that Grifphon founder Yusaf Jawed used $200,000 of investor money to buy a Portland penthouse apartment that he later defaulted on and lost, that the founders of the two hedge funds had accused each other of misappropriating investor money—and that their accountants, Perkins & Co., knew about it—and that Perkins did not tell clients that it had stopped working for Grifphon and Sasquatch because neither could verify the existence of their assets.
Arizona Pension Invests $100M In Czech, Two Private Equity Funds (Finalternatives)
The Arizona Public Safety Personnel Retirement System has committed as much as $100 million to a trio of alternative investment firms. The bulk of the money went to former FrontPoint Partners‘ star manager Stephen Czech’s Czech Asset Management. The $6.6 billion public pension fund committed up to $70 million to the firm’s SJC Onshore Direct Lending Fund II, spun off from FrontPoint earlier this year.
Chicago Bridge & Iron to Buy Shaw Group for $3 Billion (NYTimes)
The engineering company Chicago Bridge & Iron agreed on Monday to buy s rival, the Shaw Group, for $3 billion. Under the terms of the acquisition, Chicago Bridge & Iron is offering $46 a share in cash and stock for Shaw, which specializes in power generation and government services sectors. The deal represents a 72 percent premium on Shaw’s closing price on Friday.
Roper Industries to Buy Sunquest Information Systems for $1.4 Billion (NYTimes)
Roper Industries, an industrial manufacturer, has agreed to purchase Sunquest Information Systems, a maker of diagnostic and laboratory software for $1.42 billion in cash. The acquisition comes amid increasing consolidation in the medical diagnostics industry. Sunquest, which specializes in patient management and diagnostics software, will complement Roper’s existing medical business. Sunquest’s products are used in more than 1,700 hospitals.
Shamed HSBC Takes $2 Billion Hit For U.S., U.K. Scandals (HedgeWorld)
Revelations of lax anti-money laundering controls at HSBC are “shameful and embarrassing” for Europe’s biggest bank, its boss said on Monday [July 30], and it may have to pay out well over $2 billion for the scandal and in compensation for U.K. mis-selling. HSBC set aside $700 million to cover fines and other costs after a U.S. Senate report criticized it this month for letting clients shift funds from dangerous and secretive countries, notably Mexico. Chief Executive Stuart Gulliver told reporters the ultimate cost could be “significantly higher.”
Jeff Ubben’s ValueAct Wants Gardner Denver Sold After CEO Quits (InstitutionalInvestor)
ValueAct Capital, managed by activist hedge fund manager Jeff Ubben, is calling for the sale of industrial equipment manufacturer Gardner Denver following the unexpected resignation of its CEO Barry Pennypacker. For ValueAct, which manages over $7.5 billion and has a tradition of nonbeligerent activism and board cooperation, this is the first time it has recommended a company be sold.
Investors eye wine, art funds for hedging (NYPost)
Don’t like how stocks and bonds are performing? Here’s an asset you can wrap your arms around — literally. Rising fears that traditional investing has become a lose-lose proposition have a growing number of wealthy folks seeing dollar signs in niche funds that invest in art, wine, musical instruments and even classic cars. They’re known as “collectible” funds or “treasure” funds, and while they come with plenty of skeptics and potential pitfalls, they’re also promising returns reminiscent of the days before the Great Recession. Sergio Esposito, founder of Union Square’s wine shop Italian Wine Merchants, said the wine fund he helped start in 2010, The Bottled Asset Fund, has been doing so well he hopes to launch another next year.
Romney praises Israel’s success, but his failure to mention occupation outrages Palestinians (WashingtonPost)
Mitt Romney told Jewish donors Monday that their culture is part of what has allowed them to be more economically successful than the Palestinians, outraging Palestinian leaders who called his comments racist and out of touch. “As you come here and you see the GDP per capita, for instance, in Israel which is about $21,000 dollars, and compare that with the GDP per capita just across the areas managed by the Palestinian Authority, which is more like $10,000 per capita, you notice such a dramatically stark difference in economic vitality,” the Republican presidential candidate told about 40 wealthy donors who breakfasted around a U-shaped table at the luxurious King David Hotel.