| January 13, 2012 | Vol III: No.1 |
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Industry NewsHedge Funds Try to Profit From Greece as Banks Face Losses: Hedge funds in New York and London are trying to profit from trading Greek government bonds as European banks brace for losses from a debt swap. Saba Capital Management LP, founded by former Deutsche Bank AG credit trader Boaz Weinstein, York Capital Management LP, the $14 billion fund started by Jamie Dinan, and London-based CapeView Capital LLP are among managers that now hold Greek bonds. They've amassed the stakes as the government lobbies investors to accept a swap that would cause losses of more than 50 percent for bondholders. For the deal to avoid triggering credit-default swaps that could cause losses for more of the region's banks, the agreement has to be voluntary. Hedge funds may not agree to the deal. Read more... _________________________________________________________________________Senrigan, Azentus Hedge Funds Said to Lose Money in 2011: Senrigan Capital Group Ltd. and Azentus Capital Management Ltd., two of Asia’s biggest hedge- fund startups since 2009, lost money in 2011 as the region’s funds had their second-worst performance on record, said four people familiar with the returns. Senrigan, which manages about $1 billion and is backed by Blackstone Group LP, is estimated to have lost more than 8.5 percent last year. Azentus lost 6.8 percent since it was started in April by a former Goldman Sachs Group Inc. executive. Read more... _________________________________________________________________________Goldman Vets’ Hedge Fund Falls 1.7%: A hedge fund launches this past summer by a pair of former Goldman Sachs traders couldn’t escape the wave of red ink inundating the industry in the second half of last year. Benros Capital lost 1.7% since its debut in July with US$300 million from Brummer & Partners. But founders Daniele Benatoff and Ariel Roskis may well count that as a win; the average hedge fund did much worse during the second half. Read more... _________________________________________________________________________Hedge Fund Compensation Report reveals a drop in bonuses: The 2012 Hedge Fund Compensation Report revealed that hedge fund managers anticipated an increase in base salary but a shortfall in year-end bonuses. The average reported cash compensation for 2011 was $311,000, just slightly higher than last year’s compensation. The annual industry report is based on data collected directly from hundreds of hedge fund managers and employees. Last year 45 percent of hedge fund professionals reported double-digit positive returns for their fund. This year that number dropped to only 16 percent. The number expecting their funds to be down 10 percent or less went from 3 percent to 22 percent. Only 4 percent expect their funds’ performance to sink by double digits. Read more... |
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Hedge Fund ArticlesThe great hedge fund humbling of 2011: Some of the best-known hedge fund managers have offered lots of excuses for underperforming the major stock market indexes last year, with many large funds posting double-digit losses. In letters to investors, managers pointed to things like Europe's debt crisis, a slower-than-expected economic recovery in the United States, and unforeseen events like Japan's nuclear disaster all coming together to create a tricky trading environment that was characterized by big and often unpredictable swings in stock prices. The result was a humbling year for the $1.7 trillion (1.1 trillion pounds) hedge fund industry, with the average fund dropping 4.8 percent and some stock-focused funds suffering an average 19 percent decline, according to research compiled by Hedge Fund Research and Bank of America Merrill Lynch analysts. Read more... _________________________________________________________________________What do hedge funds make of the eurozone crisis?: Hedge funds normally thrive in volatile times. Their job description is simple: to make money - for their investors, and for themselves - by spotting mistakes in the financial markets. If something is priced too high or too low, a fund manager will place a bet that pays off when the market corrects itself. The ones that get it right are among the highest paid people on the planet. So when prices are moving violently and irrationally up or down - like they have been doing lately - that should present great investment opportunities. But that's not how things have gone so far. Read more... _________________________________________________________________________Merlin White Paper - Understanding Investor Due Diligence: The investor due diligence process has evolved with the growth of the hedge fund industry. What was once a short and rather perfunctory process has grown into one which today is highly quantitative and detailed. While there is no one-size-fits-all formula for investors, one certainty is that managers who understand the components of the due diligence process will have an easier time meeting the requests of investors. This paper, based on numerous conversations with investors, seeks to identify and describe the components of a professional due diligence process – from simple annual return figures to detailed attribution analysis. The end goal is to provide a basic roadmap that can help fund managers understand the depth and breadth of this process and ultimately to help them achieve their fundraising goals. Read more... _________________________________________________________________________Top 10 LatAm Hedge Funds by Alternative Latin Investor: Increase in assets in Latin America has hedge funds in the region seeing a rise in productivity and interest. Here is a list of the top performing LatAm hedgefunds in 2011 (provided by Eurekahedge). ALI caught up with representatives of three of the top performing funds to dig a bit deeper in regards to their fund strategies and goals for the coming year. Read more... |
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RegulationsHedge fund boss gets prison for insider trading: A hedge fund manager from a prominent Denver family was sentenced in New York to one year and one day in prison on Wednesday after pleading guilty to insider trading charges. Drew "Bo" Brownstein, who controlled Big 5 Asset Management LLC, admitted in October to making nearly $2.5 million in profit by trading in April 2010 on a friend's tip about Apache Corp's (APA.N) forthcoming takeover of Mariner Energy Inc. Prosecutors said the tip about the $2.7 billion purchase came from Drew Peterson, whose father Clayton sat on Mariner's board. Read more... _________________________________________________________________________Hedge Funds Ask SEC to Let Them Solicit Private Funds Without Registration: The Managed Funds Association is urging U.S. regulators to remove restrictions on solicitation and advertising in private offerings to make it easier for hedge funds to raise money and promote their products. The Securities and Exchange Commission should amend its rules to allow private funds to “engage in communication and offering activity while remaining in compliance,” Richard H. Baker, the Washington-based lobby group’s president and chief executive officer, said in a letter requesting the rule change. The change would let hedge funds avoid the SEC’s registration process while openly seeking money from so-called accredited investors, those deemed sophisticated enough to understand riskier offerings. Read more... _________________________________________________________________________New Rules on Swaps Will Protect Big Traders: Wall Street investors will receive significant new protections under a plan adopted by federal regulators, an overhaul that comes in the wake of the collapse of MF Global. The new rules would not prevent a brokerage firm from repeating MF Global’s mistake of misusing customer money, nor would they apply to any futures industry clients like those of MF Global. Instead, the changes affect only customers who trade swaps, a complex derivative contract that allows companies to hedge exposure to interest rates and other financial products. These investors are usually Wall Street banks, hedge funds and large companies Read more... _________________________________________________________________________Impact assessment: Getting to grips with Solvency II: Hedge funds will be impacted by Solvency II in two main ways. The most significant effect, which could dissuade insurance firms from investing in the sector, comes through the high capital charges the new regulation will apply to hedge funds. Upon its implementation, insurance firms will have to maintain underlying capital equivalent to 49% of their total hedge fund investments, which analysts say could lead to redemptions. Read more... |
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From Headstrong's DeskUCITS IV Directive- Advantages and ShortcomingsDecember: The UCITS IV Directive (adopted by a vote of the European Council on 22 June 2010, following approval by the European Parliament in January 2010) is the fourth European Directive covering Undertakings for Collective Investment in Transferable Securities (“UCITS”). The first UCITS European Directive was introduced in 1985, and was later amended by two directives (collectively, “UCITS III” and consisting of two directives: the Management Directive (Directive 2001/107/EC) and the Product Directive (2001/108/EC)). The aim was to establish a single regulatory regime across the European Union for open-ended investment funds to invest in transferable securities (such as shares, bonds, etc.) to create wider investment and business opportunities for investors and asset managers and to define high levels of investor protection. Details _________________________________________________________________________Long-Term Capital Management (LTCM) Disaster: LTCM’s main strategy was to make convergence trades. These trades involved finding securities that were mispriced relative to one another, taking long positions in the cheap ones and short positions in the rich ones. Read more... _________________________________________________________________________Adaption of Cloud Computing by Hedge Funds: With help of cloud computing technology smaller hedge funds can gain access to sophisticated technologies almost at par with the bigger counterparts, they are increasingly considering cloud computing as an opportunity to gain fast access to best-ofbreed software applications at a fraction of the cost. Read more... _________________________________________________________________________ |
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