Hedge Fund News: Stanley Fink, David Einhorn, Carlson Capital

KKR buys hedge fund provider Prisma Capital (Reuters)
Kohlberg Kravis Roberts (KKR.N), the private equity company, has bought hedge fund money manager Prisma Capital Partners LP, marking the latest move by the private equity sector to boost assets by bolting on smaller funds-of-funds shops. Founded by three former Goldman Sachs Group Inc (GS.N) partners, Girish Reddy, Thomas Healey and Gavyn Davies, Prisma uses a fund-of-fund strategy for an institutional client base of insurance companies, institutional investors, endowments, pension plans and family offices. More than 90 percent of its $7.8 billion in assets under management belong to institutional investors.


Global Hedge Funds Gain as AIJ Rattles Japan Pension Market (SFGate)
Global hedge funds are adding Japanese assets after local manager AIJ Investment Advisors Co. unnerved the retirement market by seeking to hide $1 billion in losses from its pension-fund clients. Neuberger Berman Group LLC is winning new mandates to the $4 billion it has gathered in Japan since 2004. Winton Capital Management Ltd., with about $3 billion from Japanese investors, is seeing steady inflows, while Financial Risk Management Ltd. is starting a new fund to meet growing interest.

First Global Macro Hedge Fund ETF (MCRO), Offering Low Volatility and Low Correlation Global Macro Investing for All Investors, Celebrates Three-Year Anniversary (MarketWatch)
The first Exchange-Traded Fund (ETF) designed to offer investors low cost, liquid and transparent access to the risk and return benefits of Global Macro hedge fund investment strategies marked its third anniversary on June 9, it was announced today by the fund’s sponsor, IndexIQ. Launched during a period of high market volatility, the IQ Hedge Macro Tracker ETF (MCRO) has exhibited strong returns since inception with low volatility as compared to the hedge fund industry benchmarks. “The last three years have been a roller coaster ride for the markets,” said Adam Patti, chief executive officer at IndexIQ. “While we could not have fully anticipated this when we launched MCRO, the fund was designed as a low volatility vehicle that would provide downside mitigation while allowing an investor to maintain exposure to the global equity markets. We have been pleased to see that it has performed as intended over this period.”

Einhorn’s overlooked bear call on US Steel pans out (Reuters)
Hedge fund manager David Einhorn, best known for his prescient short bet against Lehman Brothers and recently, Green Mountain Coffee Roasters, hasn’t received the same attention for another notable bearish call – United States Steel Corp. The Greenlight Capital manager unveiled his negative critique of U.S. Steel at the Ira Sohn charitable conference on May 16, where more attention was focused on Einhorn’s bearish views on industrial goods company Martin Marietta Materials and online retailer Amazon.com.

Most EDHEC hedge fund indices failed to escape market turmoil in May (Opalesque)
After a rather quiet month of April, markets in May experienced the first significant shock in the year 2012, and switched back to a stress regime reminiscent of September 2011, in the context of the persistent euro-zone turmoil. Stocks suffered a huge setback (S&P 500: -6.01%), with implied volatility jumping markedly and reaching a level not seen since the end of last year (VIX: 24.1%). While the riskier fixed-income market segments were severely impacted (Credit Spread Index: -1.62%, Convertibles: -4.65%), high grade corporate bonds rose significantly (Lehman Global: 1.72%). A global plunge in commodity prices (-12.95%) sent the index crashing to last September’s level. The US Dollar, in contrast, having recently emerged as a safe haven, gained 4.60%, nearing a 2-year high.

Luxembourg Introduces New Law for Hedge Funds (HedgeFund)
New York and London may be the hedge fund capitals of the world, but Luxembourg holds its own in the hedge fund world. It also has big plans for its alternative investment sector. The Association of the Luxembourg Fund Industry held its “Roadshow” conference in New York City on Friday where it detailed its plans to implement an alternative investment fund managers (AIFM) directive by 2013.

Quarterly hedge fund launches highest since 2007 (HFMWeek)
New hedge fund launches rose by 304 in the first quarter of 2012, the highest quarterly total since the end of 2007, as hedge fund capital increased to a record $2.13trn, according to Hedge Fund Research (HFR) data. The first quarter of a year is considered a strong period for start-ups, with the HFR’s Market Microstructure Industry Report also noting that Q1 2011 saw 298 new hedge funds launch.

Cioffi, Tannin Settlement With SEC Approved By U.S. Judge (Bloomberg)
A $1.05 million settlement between former Bear Stearns Cos. hedge-fund managers Ralph Cioffi and Matthew Tannin and the U.S. Securities and Exchange Commission was approved by a U.S. judge in Brooklyn, New York. Cioffi agreed to pay $800,000 to settle the suit and Tannin agreed to pay $250,000. U.S. District Judge Frederic Block initially had described the accord as “chump change.”

Think It’s Hard Out There Raising Fund VI? Try Fund I (WSJ)
It’s hard to imagine, at a time when even the best-known names in the industry are pulling out all the stops in order to attract capital, that anyone would want to set out to start a new shop or raise a first time private equity, real estate or hedge fund. But several such managers flocked last week to New York for advice and some tough love from limited partners and consultants at The Bootcamp and Consortium 2012, an annual forum for investors, minority and women-owned businesses presented by RG & Associates.

TCI pushes for Lloyds Banking Group plc to replace £10bn of “cocos” with ordinary shares (SMEWeb)
Activist hedge fund manager The Children’s Investment Fund (TCI) has called on regulators to force Lloyds Banking Group plc (LON:LLOY) to bolster the bank’s capital reserves. Christopher Hohn, the fund’s chief executive, has written to the UK’s Financial Services Authority urging it to compel Lloyds to replace £10bn of contingent convertible debt – or cocos – with ordinary shares. Hohn, whose TCI fund pushed for the sale of ABN Amro to Royal Bank of Scotland and helped derail a bid for the London Stock Exchange, would not comment on its holding in either Lloyds’ equity or debt.

Hedge Funds Slip 0.40% In June (Finalternatives)
Hedge funds shed 0.40% month to date as of June 13, according to the Bank of America Merrill Lynch investable hedge fund composite index. Hedge funds trailed the S&P 500 which managed to eke out a 0.35% gain.

Can Chuck Schumer win back Wall St. for Democrats? (Politico)
One of New York’s top hedge fund managers got an unusual request from Sen. Chuck Schumer recently: Could he organize a private dinner so the senator could meet Wall Street executives from across the political spectrum? “It was very candid,” Bill Ackman, the head of the multibillion-dollar hedge fund, Pershing Square Capital Management, said of the dinner.

Investors to Pour Trillions of ‘Core’ Assets Into Hedge Funds (Ai-Cio)
Hedge funds could receive a $1 trillion boost from institutional investors over the next five years as pension funds and managers of other large asset pools are regarding sector as core and complementary to their mainstream portfolios, Citi has claimed. Institutional investors could pile in enough new assets by 2016 to raise the current record $2.13 trillion managed by the hedge fund industry by around 50%, a report published by Citi’s Prime Finance Business Advisory Services has predicted.

Stanley Fink: Grocer’s son who became the ‘Godfather’ of hedge funds (Independent)
Stanley Fink, whose personal fortune is estimated at £120m, has been described as the “Godfather” of the hedge fund industry. He oversaw the growth of the Man Group to become one of the biggest players in the global market, before quitting as chief executive in 2007. His timing – a year before the collapse of Lehman Brothers

SEC Bars Three from Future Practice (HedgeFund)
The Securities and Exchange Commission has issued orders against two fund managers and an attorney banning them from further work in their respective fields. On Friday, the SEC barred Andrey Hicks “from association with an investment adviser, broker, dealer, municipal securities dealer, municipal advisor, transfer agent, or nationally recognized statistical rating organization.” The order against Hicks was issued after he failed to meet a May 18 deadline to show why he should not be subject to a ban.

TORA Responds to New Hong Kong Regulation by Implementing Solution to Help the Hedge Fund Community Meet Short Reporting Requirements (BobsGuide)
TORA, a leading provider of advanced trading technology and financial services, has announced the introduction of a reporting solution for the hedge fund community to help meet new regulatory requirements in Hong Kong that call for short selling positions to be reported starting from today. The TORA solution enables hedge funds to meet the Hong Kong Securities and Futures Commission’s (SFC) compulsory requirements by consolidating a report of short positions which comply with both the SFC’s approved list of equities, which can be shorted, and the newly prescribed reporting thresholds*.

Hartford Has Several Engines Of Growth To Reach $19 (Forbes)
Hartford Financial Services Group’s decision to focus on Property and Casualty and Group Benefits [1] appears to be the right move given the current market scenario. The company has been divesting its operations in its individual annuity, individual life, retirement plans and Woodbury financial services, on the advice of hedge fund manager and major shareholder, John Paulson.

Pivot Global Value Fund up 4.9% in May: 50% Net Short Europe (ValueWalk)
Pivot Capital Management is an alternative asset manager. Its flagship hedge fund, Pivot Global Value Fund was up 4.9% for the month of may. Year to date the fund is up 6.8%. Current assests under management for the value fund is over $1.5 billion. The fund is bearishly positioned, which likely contributed to the positive returns in May, a month many funds were down. Additionally, in November we reported that Pivot called China ‘The Biggest Bubble in History.’

SEC Releases FAQ for new Form PF Requirements (ComplianceWeek)
The Securities and Exchange Commission has issued a collection of “frequently asked questions” regarding the new Form PF required of registered investment advisers that manage $150 million or more in assets attributable to private funds. The document seeks to clarify the categorization of hedge funds, liquidity funds and private equity funds as it pertains to the filing. It also provides general guidance pertaining to the aggregation of assets/parallel funds and reporting requirements for a fund of funds.

Stanford Officer Pendergest Holt Said To Have Plea Deal (Bloomberg)
Laura Pendergest Holt, the former chief investment officer for R. Allen Stanford, has agreed to plead guilty and serve three years in prison for her role in a $7 billion fraud, three people familiar with the matter said. Pendergest Holt, 38, will plead guilty to a single obstruction charge, said one of the people, all of whom asked not to be identified because the plea agreement isn’t public.

Hedge Funds Boost Bullish Bets As Stimulus Pressure Rises (Bloomberg)
Hedge funds raised their bullish commodity bets as mounting speculation that central banks will announce more economic stimulus halted a slide in prices and drove gold to its longest rally since August. Money managers raised combined net-long positions across 18 U.S. futures and options by 9.1 percent to 587,327 contracts in the week ended June 12, rebounding from the lowest level this year, Commodity Futures Trading Commission data show. Gold holdings rose to a six-week high, while wagers on a rally in silver prices jumped to the highest since the start of May.

For a Gupta Juror, No Rush to Judge (WSJ)
During the four-week trial of former Goldman Sachs Group Inc. director Rajat Gupta, juror David Klein often glanced in different directions than his fellow jurors. “When they were intently focused on a witness on the stand, Mr. Klein would be eyeing Mr. Gupta,” said defense trial consultant Julie Blackman.

Education barriers leading to Dutch pensions HF exit, study to reveal (HFMWeek)
Many Dutch pension funds are looking to move out of alternatives altogether as they lack the time and resources required to understand the sector, an upcoming white paper from the country’s financial regulator is expected to say. A survey of 35 cross sector pension funds by The Dutch Central Bank (DNB) looking at “innovative investments” such as hedge funds is expected to be distributed to all of the country’s pension funds by the end of the month.

Northern Trust appoints new co-heads of global foreign exchange (HFMWeek)
Northern Trust, the Chicago-based investment management, asset and fund administration firm, has appointed William Huber and Mark Gossett as co-heads of global foreign exchange, following current head Peter Gloyne’s decision to retire. Huber, a 23-year veteran of Northern Trust, is currently chief dealer of Northern Trust’s global foreign exchange division based in Chicago.

Settlement of insurance claims key concern for HF managers, survey reveals (HFMWeek)
Poor management and settlement of insurance claims remains one of the biggest concerns for hedge fund managers, according to a survey published by London-based financial risks insurance broker Baronsmead Partners. The findings in the Hedge Fund Insurance Benchmarking Trends 2012 Survey illustrated that some of the problems identified by managers include: delays in claims payment due to the structure of the policy; excessive exclusions; and the outsourcing of claims handling to a third party/regional office.

Finding Workers for Hedge Funds (HedgeFund)
eVestment|HFN has done its share of news stories about hedge funds hiring new employees. But how do some of those positions get filled in the first place? Eric Fleming has an answer for anyone who’s interested.

Big Hedge Funds Lack Succession Plans (InstitutionalInvestor)
ISRAEL (IZZY) ENGLANDER CAN CERTAINLY AFFORD to kick back and relax. The veteran hedge fund investor has established an enviable record since founding Millennium Management in 1989, delivering outsize average annual returns of 16 percent and amassing personal wealth estimated at more than $1 billion. But at the age of 63, the white-haired Englander says he has no plans to retire. “I have no place to go,” he says. “My wife didn’t marry me to have lunch.”

Hedge Fund Industry’s Rising Stars Out to Give Back (InstitutionalInvestor)
The hedge fund industry clearly creates great riches for those who participate in it. Giving some back, to the industry or the community, is no less important for many of those with a lot to give. The 2012 Hedge Fund Rising Stars lineup contains more than a few examples of individuals engaged in charitable largesse. Simon Krinsky, a partner at fund-of-hedge-funds firm Hall Capital Partners, is a board member of an organization that works with low-­income high school students, providing year-­round mentoring and summer travel opportunities and adventures, as well as access to university campuses and other learning environments. Jason Karp, co-chief investment officer of hedge fund firm Carlson Capital, has created scholarships in his parents’ names for both his high school and his university, providing aid to students who otherwise could not afford the cost of tuition. Howard Shainker, co-­founder of hedge fund firm Bow Street, sits on the advisory board of a not-for-profit organization that defends environmental and human rights.