FINCAD Targets Hedge Funds With Webinar

FINCAD is hosting a webinar specifically targeted towards hedge funds titled, 'Hedge Funds: Scenario and Risk Analysis for your OTC Derivatives Portfolio' and will feature analysts from FINCADs professional services team.

"This is a rapidly growing and important customer sector for FINCAD, in the last year alone we have sold analytics software and support to nearly 100 hedge funds," said Bill Stewart, Global VP of sales. "Clearly, market conditions combined with investor demands for pricing transparency and consolidated risk assessment are all driving a growing need for comprehensive, easy to use analytic solutions."

The hour long webinar will include a demonstration of how to use some of FINCAD XL's latest pre-built workbook solutions to perform scenario and risk analysis on multi-asset class portfolios. It is being held on September 04, 2008 at 11:00am EDT.

"This a great opportunity for anyone in the derivatives industry to not only preview what our software has to offer but also see what FINCAD Professional Services has to offer," said Ben Clum, Director of Professional Services.

Hedge Fund buy-out and Launch of New Fund

The Directors of Cayman based Camelot Global Investments announced a management buy-out of their hedge fund, in cooperation with Merlin Global Enterprise.

Camelot will join Arkanar Financial Holdings, with the head office being relocated to Tallinn, Estonia. A branch will remain in Caymans.

The key staff members will stay, "It is important that we were able to maintain all trading and administrative staff," the board announced, "We have only lost the former majority shareholders who decided to retire and leave the industry."

Bob Torkelund has joined as Managing Director and co-shareholder, he will head the entire promotion, distribution and the servicing of funds. Torkelund will also lead the launches of new products according to market demand.

"I am really delighted to be able to be part of this young, dynamic team especially because we have been working together for a while on a consulting basis and have got to know each other very well and know where to support each other. The combination of my experience and contact network makes it a thrilling opportunity for both parties”, Torkelund said.

Apart from Torkelund, head trader Thomas Feldt and Jevgeni Geller are still shareholders and directors in the company. Having contributed largely to the past success of Camelot, they and are enthusiastic about the challenge. Geller will concentrate on business development, overseeing all operations to ensure continuity in performance and service. Feldt will continue to head the trading desk and will be responsible for investment strategy.

The investment strategy will reflect Camelot's previous success. Feldt analyses systematic trading and global macro strategy, making adjustments in conjunction with market change in order to ensure constant development in the returns.

On September 15th 2008 Arkanar Financial will be launching their first Cayman licensed fund in cooperation with Capita Financial, Gibraltar.

One of the significant differences with non-regulated funds is that they can offer investments from as little as $10 000 and subsequent deals from $1000.

Arkanar Financial Holdings also utilises electronic clearing facilities ( Euroclear /Clearstream), accepting deals on a -payment against delivery- basis which opens basically for a large number of Europeans banks to be able to invest on behalf of their clients, a big step for the more general investment population to be able to test hedge funds without having to risk a large part of their portfolio on one position.

The initial offering period will be running till September 30th.

Luxembourg platform smoothes way for hedge funds

A platform for asset managers and advisers to create SICAV SIF funds in Luxembourg has been launched by KMG SICAV SIF. The platform caters to all asset classes, including hedge funds. There are no restrictions on leverage.

Thee process allows managers to focus on investment management, the process allows managers to focus on investment management. . The platform takes care of incorporation, custody, transfers and administration. In addition it can also offer a Luxembourg address and office for the fund, organise annual general meetings of shareholders and supply investors with statements, day-to-day management and general organization as well as order placing and execution, investment performance reports, promotion and distribution and corporate branding.

The open-architecture platform provides a faster route to market with funds established and open for capital within a few weeks rather than months, which it usually takes for a traditional fund. The platform can also provide all back office support, administration and other services for funds.

The KMG SICAV SIF platform is an off the shelf solution, licensed and regulated in Luxembourg. Entities establishing a fund through the platform do not have to apply for additional licences.

Weekend News Update

Interesting story here by DanFonds on frontier markets; 'Ecobank's USD 2.5bn capital raising begins today.'

And here by Seth Berlin; 'Does Mimicking behavior lead to market crashes?'

Finaly, Avalon Capital Holdings Corporation has initiated alpha testing of its proprietary ECN system for the Forex market.

The system will be ideal, Avalon says, for traders seeking to execute large orders of a billion or more across many banks and hedge funds simultaneously.

Forex Market Platform Launch By Avalon

Avalon Capital Holdings Corporation, and its wholly owned subsidiary, Traders Development LLC, announced that it has initiated alpha testing of its proprietary ECN system.

The Avalon ECN is a liquidity aggregator, which takes the best prices from an unlimited number of price providers, and allows traders to execute off the best prices in the market. The system will be ideal for traders seeking to execute large orders of a billion or more across many banks and hedge funds simultaneously.

"The overall goal of the Avalon ECN is to significantly improve the institutional liquidity in the Forex Market by applying the latest software technologies in the Foreign Exchange Industry." Dr. Vladimir Karpenkov, Chairman of Avalon Capital Holdings Corporation said. "Additionally, the Avalon ECN is designed to reduce the cost for Retail Forex brokerages that are seeking interbank liquidity."

"The Forex Market is about reducing overhead, managing risk and acquiring new trading clients. With Avalon technology, companies ought to increase their profitability while reducing risk." Alex De Khtyar, President of Avalon Capital Holdings Corporations added.

Hedge Fund Buys Into Trucking Agency

In a Reglatory filing with the SEC, multibillion-dollar hedge fund, Tontine Associates, has bought 5% of trucking giant YRC, equaling 2.97 million shares of YRC common stock, for more than $48 million.

Jeffrey Gendell, founder of Tontine Associates, has made big investments recently in other struggling companies in the region. Earlier this year, he spent more than $11 million to acquire an 8.6 percent stake in Thermadyne Holdings Corp., a struggling producer of metal-cutting and welding equipment based in Chesterfield, Mo.

Gendell also bought more than 400,000 shares of TierOne Corp., a Lincoln, Neb., bank that has lost nearly $100 million in the past four quarters.

Stockpickr.com reports “Gendell’s specialty is picking a macro-styled theme, buying very large positions in companies that benefit from that theme, and then working with or pressuring management to improve shareholder returns”.

Gendell, among other things, is a donor to Duke University and a part-owner of the Cincinnati Reds baseball team.

Software Stake Bought by Hedge Fund Firm

Hedge fund firm Elliott Associates has taken a 9.9% stake in Epicor Software Corp. and is inquiring about possible strategic alternatives for the company.

According to a filing made with the Securities and Exchange Commission, Elliott now owns nearly 6 million shares of Epicor, just shy of 10% of the company. The firm has been steadily buying up shares since June but made particularly large acquisitions during the last month. It has also acquired more than $18 million worth of convertible bonds for Epicor over the past week.

Elliott also said it has made inquiries as to whether Epicor has considered exploring strategic alternatives. Such language is often a harbinger for an investor pushing for the sale of a company. Elliott earlier this year put pressure on MSC Software to put itself up for sale.

New York-based Elliott is known for its activism. In the recent past, it has launched a hostile takeover bid for IT company Packateer, pressed retailer Pier 1 to cut costs and helped Metrologic Instruments founder C. Harry Knowles take his company private. Metrologic has since been taken over by manufacturing giant Honeywell.

Hedge fund firm Breeden Capital Management also disclosed a 5.25% stake in medical equipment maker Hill-Rom. Former Securities and Exchange Commission Chairman Richard Breeden founded Breeden Capital, which uses an activist strategy to profit from companies that improve corporate governance. The firm's top holdings include H&R Block, medical equipment sterilization company Steris and diamond retailer Zales.

Investment Outsourcing for the Hedge Fund World

The growth of investment research outsourcing (IRO) was initially driven by economics. Sell-side Banks no longer had revenue streams to support the free distribution of research and therefore looked for a cheaper way. The answer was tapping into offshore brain pools that could produce high quality White Label research at a lower cost. By some estimates, you can get 3 analysts in India for the same price of 1 analyst in New York or London.

"IRO, loosely defined, is the offshoring of front-office work to a 3rd party provider. In this article, I will look at the potential of integrating an IRO workstream into the Buy-side and Hedge Fund World." Seth Berlin, Principal at Performance Thinking & Technologies reports.

Given today’s bear market, write-offs, and reduced budgets at investment banks, outsourcing of front-office analysis will only continue to grow. Estimates of IRO 2008 growth rate range from 20% to 40%. The growth rate would probably be even larger except for the ability to scale resources.

BUY-SIDE MOTIVATION VS SELL-SIDE ECONOMICS

While the Sell-side is clearly motivated by cost, the Buy-side has a completely different motivation. Most IRO firms tout time, depth of research, and resource scarcity as reasons for Buy-side motivation. While these perceptions are on the right track they don’t fully explain the value that IRO brings, especially around the time dimension. IRO firms state that an IRO workstream frees up higher level traders/analysts to spend more time on investment ideas while passing-off the “grunt” work of detailed research. This may be true but it is only half the picture. The value of IRO is the ability to create a 24*6 “Follow The Sun” investment process which moves from idea genesis through trade execution at a much quicker pace. In essence, when your research day is ending in New York or London, it is just beginning in India. In a world of clustered investment decisions, the ability to supercharge your investment process is the real-key to the buy-side IRO approach.

INTEGRATING AN IRO WORKSTREAM

Developing an IRO workstream can be as simple as making a call/sending an email or as complex as having an on-site IRO resource serve as a communication gateway to a dedicated external team. In developing the IRO workstream, it is important to first understand your investment process. Then, ask how an external resource can fit for specific time-bounded tasks.

While the Sell-side IRO model grew via a “hand over the wall” approach. The Buy-side model is much more dependent on communication and investment process integration. Thus, it is much more vital to define how, when, why, and what. It is also important to think about how your resources will be affected by having external IRO resources.

Most firms start out with a “direct connect” model of having a single dedicated IRO resource connect with 1 to many internal analysts. The IRO team grows organically as they prove their worth. As with any outsourced model, both teams have an implementation period where they “learn to dance with each other”. A side benefit of the IRO workstream is the documentation and formalization of investment workflows.

BUY-SIDE SKILLS & IRO MARKET PERSPECTIVES

IRO firms vary in terms of geography and scale with the largest firms having research centers in India. Most firms have experience in business due diligence, investment research, and valuation. However, beyond these additional bandwidth skills, many firms have niche skills. Some IRO firms have more experience with credit modeling while others offer abilities to perform quantitative modeling, or stress-testing. A few offer complementary services such as business surveys and systems development.


It is estimated that up to 20% of US Institutional Managers utilize IRO firms, with an annual global market size of $550 Million ($385M Sell-side & $185M Buy-side). Given current conditions, this market will continue to grow rapidly. This is the reason scale is perhaps the biggest challenge both for Buy-side clients as well as IRO firms.

EVALUATING AN IRO PARTNER

When looking at IRO partners, it is important to understand that the nature of the buy-side investment process is different from the sell-side roots of the industry. A buy-side IRO workstream includes heterogeneous, time-bounded tasks that involve real-time communication. A resource’s judgement is paramount. Therefore, while past client experiences are helping in identifying domain expertise, the success ultimately rests on the IRO resource. This is why you must see resume of potential resources, interview these resources, and “beta-test” any resources.

Scale is another key evaluation point. With this industry growing rapidly and another growth wave coming from the sell-side, IRO firms have to balance the needs of new and existing clients. This is not so easy in a high-growth environment where the experienced talent-pool is limited and resource scarcity raises expectations of employees. Therefore, HR issues such as training and resource turnover become important factors. The last thing you want to do as an asset manager is to train and re-train IRO resources. Scale also includes issues such as physical infrastructure and ability to protect your intellectual property. Lastly, a manager needs to understand how IRO firms manage the spectrum of client needs. With scale concerns, it may not be good to be a small fish in a big pond.

Domain expertise specific to your investment strategy is also an important consideration. Firms with domain expertise save learning curve time. IRO firms with domain expertise also will likely have the potential of add-on and swappable resources.

SUMMARY

In today’s world of data overload and time-constrained decisions, an IRO workflow managed correctly, can make you a better manager. It is also clear that this industry is moving beyond additional bandwidth into higher value service offerings. An IRO workflow can serve as a key input to a “Follow the Sun” investment model. Growth challenges lay ahead, but an IRO integration can streamline investment decisions.

For more info on IRO or to contact Seth Berlin, see www.p-t-t.com.

Asia Stocks Edge Higher as China Approaches Policy Change

In a Reuters release today, it is reported that Asian stock markets edged higher, rebounding from a two-year low.

Chinese shares surged on hopes for policies from Beijing to jumpstart growth, though many analysts said it was a long shot. Although world stock markets slid to the lowest since September 2006 on Tuesday, most Asian indexes turned higher as cheap valuations proved irresistible, especially with markets rife with chatter about fiscal stimulus in China.

"Bargain hunters have returned to the market on talks that a rescue package is on the way," said Francis Lun, general manager from Fulbright Securities in Hong Kong. "We are all waiting for a miracle," Lun added.

Despite the sudden turnaround in Asian stocks, apprehension about the earnings outlook was rife, according to Reuters, especially after the Bank of Japan on Tuesday described the world's second-largest economy as "sluggish" -- a term it has not used since the Asian financial crisis a decade ago.

Stephen Green, head of China research with Standard Chartered Bank in Beijing, said that given economic growth is still expected to stay above 8 percent this year and next, it is too early for the government to squeeze its budget to boost growth.

Rather, Beijing should consider relaxing loan quotas to stimulate bank lending to support growth. "It is too early for a fiscal stimulus package, and we should be responsible about calling for one," he said in a research note. "There is still room for monetary policy before we try fiscal policy."

Hedge Fund SageCrest Goes Bankrupt

In an effort to head off a forced asset sale, Windmill Management’s SageCrest Finance and SageCrest II filed for Chapter 11 bankruptcy after its assets fell sharply.

The hedge fund filed at U.S. Bankruptcy Court in Bridgeport, Conn. In a letter to investors, The fund said that the bankruptcy process would give SageCrest the time necessary to conduct an orderly liquidation of their assets to maximise the return to investors.

The fund described its investment strategy as making short-term loans to small- and mid-sized firms that cannot secure them from banks and specialty lenders. "Our position in a market where lending opportunities continue to outpace sources of capital provides an ideal point of departure for growth." The SageCrest website says, "Our investments target asset-rich and undervalued situations overlooked by, and with limited access to, the mainstream capital markets."

In its bankruptcy filing, SageCrest claimed fewer than 49 creditors and debts of between $1 million and $10 million. The hedge fund, which once boasted assets of as much as $650 million, said it now had between $50 million and $100 million.

Hedge Fund Forum 2008

The Greenwich Hyatt will be the scene of the 2008 Global Alpha Forum, the hedge fund event is for both fund managers operating in Connecticut and investors wishing to get to know those managers.

The Forum will be held on September 16 and 17, 2008, and will be followed on September 18 by the Green Hedge Trail, an opportunity for institutional investors to visit the offices of some of the world-class funds operating in the Greenwich area, to both meet the funds’ managers and to have some of their questions answered concerning strategies of the various funds included in the Trail.

The Forum is jointly sponsored by the Connecticut Hedge Fund Association, the association of hedge fund professionals representing over 150 member firms based in the “hedge fund capital of the world” of Fairfield County, Connecticut, and Opalesque, the world’s largest subscription-based publisher covering the alternative investment industry.

Rudolph W. Giuliani, Partner, Bracewell & Giuliani, will kick off the Forum at 9 am on Tuesday, September 16th. His address will be followed by panels discussing first Green Trading and Carbon Finance and then the 10 Days that Changed Capitalism.

Lawrence H. Summers, Managing Director, D.E. Shaw and former U.S. Secretary of the Treasury, will be interviewed as part of the luncheon on Day One. After lunch, a panel discussion will explore the Rise of the Sovereign Wealth Funds.

Once the main agenda is concluded, a Hedge Fund Manager Workshop is available that will present the secrets to Creating Reinsurance Firms and Banks: New Permanent Capital Vehicles for Hedge Funds and Funds of Funds. Following the first day’s sessions will be a Networking Event that begins at 5:30pm designed to allow plenty of time for attendees to become acquainted with one another or strengthen existing relationships.

Day Two sessions again begin at 9 am and will include panels on Hedge Fund Regulation, Institutional Investing and the Economic Outlook, all from a global perspective. The luncheon keynote on this day will be Eugene Ludwig, Chairman and CEO, Promontory Interfinancial Network and Former U.S. Controller of the Currency.

Another Hedge Fund Manager Workshop will be offered after the close of the main conference sessions. This workshop will address Islamic Finance: Tapping Middle Eastern Wealth through Islam-Compliant Vehicles.

The GAF was inaugurated in 2007 and that event attracted several hundred delegates and live coverage by both CNBC and Bloomberg Television. Along with the notables highlighted above, numerous financial media personalities will participate as panel moderators and interviewers and panelists consist of world-renowned experts in their subject areas. The GAF is poised to become “Davos on the Sound”—the center of thought leadership for issues impacting the alternative investment industry.

Trump To Launch India Hedge Fund

Trump Organization USA announced plans to launch a $1 billion hedge fund to invest in Indian real estate. Donald Trump Jr.'s interest in the Indian real estate market was sparked in 2007 when he visited the subcontinent for the Cityscape real-estate conference in Mumbai.

"We feel it is now time to invest in Indian realty projects as the quality has moved up and we see emergence of some high-end developers with a product level that will support our brand," Trump Jr. said.

Trump announced in late July that he intends to set up a hedge fund worth up to $1 billion to invest in Indian real estate, the privately held fund would initially target property in Mumbai.

Thirty year-old Trump did not give specific details about the fund, such as how he plans to raise the money, or where the first investment would be made. But in an interview with Bloomberg LP, he did say that it would start conservatively and expand as the opportunities presented themselves.

"The fund will be for acquisitions of real estate in the high end and across the spectrum," Trump said. "We'll start it off relatively small and grow it as we get more familiar with the Indian market. Our entry has to be in Mumbai, and that's where everything is going on right now in terms of the high-end real estate. That's the place where one is going to achieve the highest prices per square foot. It sets the tone for all of the other future developments."

When asked at the conference which cities Trump Organization would consider for business deals, Trump responded, "Certainly, the city I'm standing on (Mumbai), Delhi, Hyderabad and Bangalore, where the IT sector has witnessed a boom."

Hedge Fund Advisor Hires Mathematician and Boosts Assets

Hedge fund advisory firm D5 announced the launch of two new accounts, with each promising capacity of $50 million, for a possible $ 100 million on additional capital for the firm. The new accounts coincide with the hiring of mathematician and scientist Andrew Vizcarra as Director of research.

"Andrew's 10 years in the study and teaching of mathematics and statistics is a great asset to our research department and is a wonderful compliment to the fundamental nature of our strategy." Theodore Dumbauld, founder of D5 said, "Mr Vizarra will focus on both the enhancement of our current strategy and the exploration of universe expansion."

D5's strategy utilizes a relative value strategy, trading only a unique set of securities for which net asset values can be calculated.

Hedge Fund Harbinger Buys Nearly 5%of Cablevision

Harbinger Capital Management, an activist hedge fund has accumulated a 4.9% stake in Cablevision Systems Corp, according to The Wall Street Journal.

In a regulatory filing, Harbinger said that it had bought 11.45 million of Cablevision's Class A shares. Harbinger, now Cablevision's fifth biggest shareholder, was not present at meetings with the company's top executives and large investors this week, the Journal said, citing a person familiar with the meetings.

The move may have prompted CEO James Dolan to explore options. Cablevision shareholders rejected a $36.26-a-share buyout from the founding Dolan family last October. That bid was the family's fourth attempt to take the company private.

The Dolan family owns 75% of the voting rights for Cablevision. It remains unclear what Harbinger intends to do with its holding. Harbinger isn’t currently planning a proxy fight with the company, said a person close to the company.

Cablevision last month acquired 97% of Newsday Media Group ("Newsday") through the formation of a new partnership with Tribune Company. For Cablevision, the completion of this transaction adds a complementary print and online media group with local content in the New York area.

Hedge Fund Correlation Research Report by Credit Suisse

Hedge funds generally are more correlated in bull market runs and more de-correlation at market downturns. A comparison of the Credit Suisse/Tremont Broad Benchmark Index (HEDG), an asset-weighted broad benchmark of the hedge fund industry, to the MSCI World Index, a broad equity index, shows that the 12-month rolling correlation between the two has dropped from its peak of 0.97 in June 2006 to 0.61 in June 2008. The findings are given in a research report by Credit Suisse Index.

The report showed that during times of market stress sharp declines from HEDG’s previous peak levels of positive correlation with MSCI World demonstrated the ability to de-correlate from broad equity market indices.

Between July 2007 and June 2008, HEDG increased by 4.09% compared with a fall of 12.5% in the MSCI World Index and a decrease of 13% in the S&P 500.

The ability of hedge funds to maintain exposure to a range of asset classes allows them to preserve capital in down markets and, if successful, offer a more balanced investment option compared to traditional equity indices. In addition, the ability of hedge funds to monetise negative views through short selling is clearly effective during market downturns.

Morningstar Hedge Fund Report, July 2008

Hedge funds saw their worst monthly performance in the history of the Morningstar 1000 Hedge Fund Index. The index returned a negative 3.07% in July 2008, an eventful month for the markets.

In the first half of July, high oil prices and continued trouble in the U.S. banking sector caused equities to tumble and the U.S. dollar to slide, hitting a low point mid-month when the Federal Reserve expressed concerns about economic growth. The announcement of a U.S. government bailout plan for Freddie Mac and Fannie Mae, along with the Securities and Exchange Commission's short-sale restrictions on financial stocks allowed for a partial rebound in the second half of the month. "In July, the bet on long commodities and short financials didn't work as well for hedge funds,” said Daniel Farkas, hedge fund analyst for Morningstar.

Commodities showed their worst month in more than five years. The S&P GSCI Index, a commodities index heavily weighted in energy, fell more than 12% in July, as the price of crude oil plunged from its July 2 peak on weaker demand forecasts. European and Asian central banks attempted to combat inflation with interest rate hikes, causing a slide in those equities markets.

Consequently, the Morningstar Europe Equity, Morningstar Asia Equity, and Morningstar Emerging Markets Equity Hedge Fund Indexes saw much strife in July, though not as much as the Morningstar Global Equity Hedge Fund Index, which lost almost 8%. The Morningstar US Equity Hedge Fund Index also performed poorly, underperforming the S&P 500 Index by more than two percentage points.

"It's unusual for hedge funds to underperform equities in down markets, but hedge funds haven't been able to navigate the credit crunch that started last summer” added Farkas. The MSCI World Index outperformed the Morningstar 1000 Hedge Fund Index in four of the 24 down months since January 2003, the inception of the Morningstar 1000 Hedge Fund Index. Three of these four months occurred in the last year.

Because July also saw big losses in commodities, the Morningstar Global Trend Hedge Fund Index halted its upward trend. For the year, however, this index still outperformed every other Morningstar hedge fund category index by a wide margin. Year-to-date through June 2008, hedge funds in the Morningstar Global Trend category also experienced the highest inflows, at almost $10 billion. For the month of June, hedge funds overall saw more than $10 billion of inflows.

Multi-Strategy hedge funds had more than double the inflows of other categories, placing second only to Global Trend hedge funds. In a dynamic macro-economic environment, Multi-Strategy hedge funds can be more nimble than single-strategy hedge funds, quickly allocating assets to strategies with a brighter outlook, while pulling away from strategies with more dismal prospects. In July, however, most hedge fund strategies proved unprofitable, and the Morningstar Multistrategy Hedge Fund Index lost more than 3.67%.

Funds-of-Funds outperformed the Morningstar 1000 Hedge Fund Index in July, returning a negative 2.41%. Year-to-date, the Morningstar Hedge Funds of Funds Index has lost 2.52%.

Returns are based on hedge funds in the Morningstar hedge fund indexes that reported performance as of August 8, 2008.

More Service Providers

MAM Launches Hedge Fund-Like Returns Strategy

California based Martin Asset Management is replicating hedge-fund-like returns and risk factors through its ETF strategies without the heavy fees, lockups and non-transparent holdings, the boutique alternative investment firm said.

"Our approach allows investors to obtain the very same benefits as they would with a hedge fund without the limitations usually associated with hedge funds", says Francisco Martin, Senior Managing Director and Founder of Martin Asset Management.

"We use a similar investment philosophy as you would with 'Global Tactical Asset Allocation'." Martin said, "It is an investment strategy that attempts to exploit short-term market inefficiencies by taking positions in various markets with a view to profiting from relative movements across those markets."

The approach focuses on general movements in the markets rather than on performance of individual securities within them Positions are generally taken with a relatively short-term time horizon (3 – 6 months) – hence the term Tactical Asset Allocation – and in markets across the globe – hence the term Global.

"Our philosophy is simple; we don’t charge any management fees but participate with a 10% performance fee and a High Water Mark. The transparency of a separate managed account and the elimination of all hedge fund imposed barriers make our approach much more attractive to the investor," says Martin.

MAM is expected to launch its new product by August of 2008.

ActionsXchange Appoints Laura Pollard As Company Head

Hedge fund Provider, Fidelity ActionsXchange, has appointed Laura J. Pollard as executive vice president and head of the company. Pollard will report to Larry C. Renfro, president of Fidelity Developing Businesses, a new division that comprises a number of growing businesses and strategic initiatives for Fidelity.

“Working in partnership with ActionsXchange’s management team, Laura has done an outstanding job of leading the company over the past several months, and I am confident that her industry experience, proven strengths as a leader and ability to build strong relationships with clients will position her for success in her new role,” said Renfro. “Laura will lead a talented and experienced management team that will continue its focus on providing the most accurate, timely, and comprehensive global corporate actions information to our clients.”

Pollard, a 19-year Fidelity veteran, will lead all aspects of ActionsXchange’s day-to-day operations. Prior to her new role, Pollard spent the past two years as ActionsXchange’s senior vice president of client services, product development and implementation. Before joining ActionsXchange, Pollard spent four years at Fidelity Charitable Services and 13 years in a variety of leadership roles in Fidelity’s 401(k) retirement services and benefits outsourcing divisions.

ActionsXchange was formed in 1997 to offer corporate actions processing software and outsourcing solutions to financial institutions. Operating as an independent company, ActionsXchange partners with more than 50 major global financial institutions such as banks, asset managers, hedge funds and broker-dealers.

Partner Files Hedge fund Management Complaint

The Manager of the K Squared Funds, a New York-based group of hedge funds, was named as a defendant in a lawsuit filed by his ex-partner. The suit brings claims for fraud, breach of contract, unjust enrichment, and bad faith dealing in connection with the hedge funds.

Filed in the Commercial Division of New York Supreme Court, New York County, the complaint details how Kane and the hedge funds benefited by false attribution of income to Kane's ex-partner by profiting from the interest income while saddling the ex-partner with the tax bill, and how Kane failed to comply with his contractual obligations, keeping his ex-partner in the dark about the value of the hedge funds.

The complaint further alleges that Kane belatedly provided incomplete information purporting to show that the Funds were valued at less than $100 million. At the same time, the complaint cites a circular to investors in which Kane boasted that assets under management during the period in question actually exceeded $150 million -- well over the threshold at which he was obligated to pay his ex-partner management and incentive fees. Thus, the complaint alleges, Kane kept the fees that were rightfully due to his ex-partner. A conservative calculation of those fees puts them well into the six figures.

The defendant, Chris Kane of New Canaan, Connecticut, parted ways with his partner in 2006.

Castle Hall Hires Kosta Segounis

Castle Hall Alternatives, a provider of hedge fund operational due diligence, has hired Kosta Segounis as Senior Manager, he will supervise a team of analysts responsible for operational due diligence on numerous hedge funds.

"I am delighted to have the opportunity to join Castle Hall's team." Kosta said, "Operational due diligence has become an increasingly important element of managing a hedge fund portfolio, and Castle Hall offers a unique solution for investors who wish to work with an external partner to enhance their due diligence program."

Kosta previously held the position of Senior Consultant, Compliance, at Standard Life in Montreal. Kosta is a member of the Canadian Institute of Chartered Accountants and is also a CFA (chartered financial analyst) charterholder.

Chris Addy, Castle Hall's President and CEO, said "we are extremely pleased to add Kosta to our growing team of due diligence professionals. His knowledge and experience will be a great asset to our firm, particularly with respect to compliance best practices in the hedge fund industry."

Castle Hall Alternatives helps investors identify better hedge fund managers - firms which not only have attractive performance but also match operational best practices. Castle Hall's team of due diligence professionals uses a proprietary methodology to prepare a detailed operational assessment for each fund under review.

Blackstone Launches CleanTech Investment Arm

Alternative investment manager, The Blackstone Group, has launched a new business group focused on investments in the cleantech energy sector and will provide advice on renewable energy strategies across Blackstone’s asset base.

The team is being led by James D. Kiggen, who has joined the firm’s Corporate Private Equity group as a Senior Managing Director. Also joining as Principals from AllianceBernstein are Walter C. Vester and Richard L. Troyer.

“Jamie and his team’s understanding of rapidly evolving technology applications in solar and wind power generation, carbon sequestration, next generation ethanol, and other renewables will be a key input in Blackstone’s investment decisions." Garrett Moran, Senior Managing Director of The Blackstone Group, said, "We look forward to working with the new team across both conventional energy investments and new developments, including those at our portfolio company Sithe Global Power, as well as several other sizeable investments that we are currently evaluating.”

Blackstone's alternative asset management businesses include the management of corporate private equity funds, real estate funds, hedge funds, funds of funds, debt funds, collateralized loan obligation vehicles (CLOs) and closed-end mutual funds. The Blackstone Group also provides various financial advisory services, including mergers and acquisitions advisory, restructuring and reorganization advisory and fund placement service. Further information is available at www.blackstone.com.

Rupert Allan Hires Fund Of Hedge Fund Specialist

Established leader in the management of fund of hedge funds, Tremont Capital Management, has appointed Scott R. Metchick as Chief Investment Officer. Metchick brings to Tremont over 20 years of experience in the fund of hedge fund industry and a proven performance record.

Tremont says his demonstrated ability to manage a defined process-oriented investment philosophy while managing a global investment team complements the existing investment approach at Tremont, allowing the firm to deepen its presence in key global institutional and distribution markets.

"Investment excellence is core to our strategy of establishing a scalable, institutional standard multimanager fund of funds business," said Rupert Allan, President and Chief Executive Officer. "Scott's appointment represents the execution of the final phase of this strategy by capping a series of senior hires which, together with our existing expertise in the investment management group, completes the leadership team at Tremont."

"The role of the fund of hedge funds is even more important for investors in today's market which makes Tremont's over 20 years of experience and dedication to excellence critical factors in delivering the products and performance that our clients need and deserve," said Metchick. "I'm excited to join the firm and look forward to all that's ahead of us."

Metchick's hire as CIO, replacing Cynthia Nicoll who left Tremont for personal reasons, is the most recent in a succession of senior appointments in the investment team including Andrew Kaneb, former head of Global Equities at Lighthouse Partners, and Jim Purnell, who came from the structured product group at Dresdner Bank to lead the risk management group at Tremont.

Allan has moved quickly within a challenging external environment since becoming CEO last year, adding to his role as President. "Now more than ever," said Allan, "clients want to know that they are working with an investment manager that has the experience, the infrastructure and the ability to deliver on a mandate in various market conditions with the products and solutions they need. We now have the team in place to do just that."

AFS Launches Alternative Trading Feature

Archer Financial Services (AFS), has launched Balarie Capital Management ("BCM"), a division of AFS created with the specific purpose of helping Institutional and High Net Worth investors achieve diversification by providing them with products and services that are typically non-correlated with their traditional investment portfolios.

AFS, an Introducing Broker, is wholly owned by ADM Investor Services, Inc. The brokerage also announced the appointment of Emanuel Balarie as managing director of the division.

"Mr. Balarie brings on board industry expertise in both the commodities and managed futures arena" said Kurt Johnson, President of AFS. "The combination of his experience, BCM's consultative approach to managed futures investments, access to hundreds of Commodity Trading Advisors all over the globe, and the financial integrity and operational structure of ADMIS will allow us to provide investors with a wide array of products and services."

Emanuel Balarie added, "While the asset flow in the managed futures sector has increased significantly over the last several years, we still feel that there is a need for a firm that is able to provide a consultative approach to managed futures portfolios. The goal is not to recommend cookie-cutter type portfolios for every investor, but to look at the investor's individual profile and portfolio to determine the specific allocation that is most appropriate for the investor. This approach is especially attractive to institutions and investors that have to meet specific portfolio requirements."

BCM works with high-net worth investors, family offices, pensions, and endowment funds who are interested in adding managed futures to their investment portfolios. In addition, Balarie, through its affiliation with ADMIS, offers clearing and execution services for Commodity Trading Advisors, Fund of Funds, and professional traders.

Sector SPDR Growth

In an interview with Dan Dolan of Select Sector SPDRs on how the economic crunch is affecting trading rhythms, Dolan presented a broad overview of sector SPDRs and how more hedge funds and institutional investors are utilising the option of buying baskets of securities over single stock options.

Dolan developed and runs the Select Sector SPDR Trust, the ETFs which divide the S&P 500 into nine component sectors. With more than $27 billion in assets, the Trust is well into its 10th year of business.

"While most ETF providers continue to position their products as substitutes for traditional mutual funds, an attribute from which we also benefit, we're seeing increased usage of Select Sector SPDRs as substitutes for equities, to reduce single stock exposure." Dolan said, "SPDR trading volume has averaged well over 200 million shares per day in 2008 as institutional investors take advantage of the outstanding liquidity to implement their trading strategies."

Sometimes considered speculative and volatile, sector investing has finally earned a place in many portfolios either as part of “core and explore” strategies, or as a way of betting on sectors about which investors feel especially bullish. Some investors have even diversified some of their mutual fund holdings to ETFs, opting for passive products, especially during market routs.

Dolan characterizes his products as the “new blue chips,” substitutes for large concentrated positions in widely-held stocks, and a way to provide investors with downside protection by avoiding headline risk. Select Sector SPDRs were the first sector family of ETFs and is the largest based on assets and trading volume.

ARE Opportunity Fund Launch

Lee Hetfield has joined ARE Asset Management LLC, a distressed credit and distressed real estate asset management company in Florida, as Portfolio Manager.

Hetfield reports that as of May 30, 2008, ARE Asset Management launched ARE Opportunity Fund, Ltd. (British Virgin Islands). The fund works in purchasing mortgage loans, the strategy is generating returns using both loan modifications negotiated with borrowers to create loan re-performance, as well as loss mitigation techniques. Re-performing loans are held for income or sold to securitizers or other investors for a gain.

Loans that cannot re-perform, resulting in “REO” or real estate owned property, are resolved via a property sale or entered into a rental income program. The fund also opportunistically invests in senior commercial loans backed by improved real estate at low LTV’s (50-65% of 90 day liquidated value, 35%-45% of BPO), through high-yielding originations made by an affiliated commercial loan originator, SeaBreeze Financial.

The investment manager currently has $110 million under management under the strategy as that of the fund, and the results since launch have been encouraging: For the month of June the BVI fund was up 1.59%, net of expenses, and July looks to be up ~1.5% (early est.). Prior to the BVI fund launch The Manager has historically managed funds for offshore investors in fixed-term, LLC structures (in the same distressed/credit opportunities strategy).

The team is spearheaded by Jeffrey Kirsch with over 30 years of experience in commercial and residential real estate. He has managed the ARE group of companies, based in Miami, FL, since their founding in 1996. At ARE, Mr. Kirsch has overseen more than $1 billion in performing and non-performing mortgage transactions and has long-standing relationships with private and public-sector sellers.

Hedge Fund Platform To Expand Research Team

Alternative investment platform, Altegris Investments, has plans to expand their research team under the leadership of Mr. Allen Cheng, an accomplished hedge fund investment professional with extensive industry experience.

Cheng joins Altegris as Managing Director, Research and Investments, and will be a member of the Altegris Investment Committee, with responsibility for evaluating investment strategy and completing product review for the Altegris platform of alternative investments.

"Allen's breadth of experience in alternative investments, with both major financial institutions as well as private investment firms, complements the deep knowledge base of our research team," said Jon Sundt, President of Altegris Investments. "We are dedicated to maintaining a world-class research team, under Allen's expert leadership, to accomplish our mission of providing high quality alternative investments to wealth managers and high net worth investors."

Cheng joins Altegris from his recent role as Managing Director, Head of Fund of Funds Portfolio Management at Bank of America's Alternative Investment Group. He has significant experience in the alternative investment industry, particularly in the area of identifying, selecting, and monitoring hedge fund managers across multiple investment disciplines.

"Altegris offers clients a unique, open-architecture platform of alternative investments, supported by extensive review and ongoing monitoring," said Cheng. "I am energized by the opportunity to join this team specializing in alternative investments and to expand our in-depth research capabilities."

The Altegris team finds, selects and negotiates capacity with selected hedge funds, managed futures funds, and other alternative investments. Currently, investors have allocated more than $2.4 billion in trading level to alternative investments available through the Altegris platform. The Altegris Group of Companies includes Altegris Investments, APM Funds, and other affiliates.

(Update) HedgeWorld's Abrupt End Not In The Cards

In a press call with HedgeCo, a global forum for the alternative asset community, Joe Christinat of Thomson Reuters clarified the story of HedgeWorld's abrupt closing.

Christinat said that HedgeWorld will retain the format that it is in currently. They will continue to offer TASS database, and have the service provider/jobs/conference section as well as publish several newsletters including the alternative advantage newsletter.

Although unable to comment on the rumors of staff changes, Christinat said that they are continuing to follow the Thomson Reuters strategy since the purchase of Reuters by Thomson.

Launched in 1999, HedgeWorld became one of hedge fund industry’s premier information provider for individual and institutional accredited investors and their professional advisers, fund managers and service providers in the global hedge fund industry.

Global Consulting For Structured Finance In Film, Media & Entertainment

Noci Pictures Entertainment has launched a one-stop global film finance and production service consulting division. The fund is aimed at hedge funds, ultra high net worth investors, tax credit buyers, purchaser representatives, family offices, and private equity firms.

According to Noci, "Many established filmmakers and agencies involved in independent film finance and packaging face the same dilemma of throwing multiple film projects against the wall and hoping one will stick with a limited number of studios and private equity."

With a plethora of incentives ranging from United States state and federal tax incentives that in some instances can be monetized upfront to cover a portion of a budget and offset risk to private equity investors, to overseas co-production incentives that can be maximized to finance quality films, Noci Pictures Entertainment's stratrgy is to be a one stop resource, including arranging debt finance, foreign sales agency representation, talent packaging, and more.

Countries such as Canada, UK, Ireland, South Africa, Germany, Australia, And New Zealand have film finance incentives that can be accessed to finance any number of film projects, according to the company.

The Monetization of Hedge Fund Management Firms

Opalesque is hosting a Webinar on July 10th 2008 10 am New York time: The Monetization of Hedge Fund Management Firms.

The hedge fund publishing company says there are five methods to partially monetize interests in a hedge fund management company:
(1) a traditional IPO
(2) a reverse merger into a public shell (or SPAC)
(3) a listing on AIM, without any capital being raised
(4) selling less than 100% of the equity or
(5) selling a revenue interest.

Examples of traditional IPOs would include Man, Och-Ziff, Gottex, RAB Capital; BlueBay, Polar, and Ashmore (plus Fortress, Blackstone, and Partners Group, if extended to alternative asset managers). These should not be confused with the IPOs of publicly traded closed ended funds.

Examples of reverse mergers would include GLG and Asset Alliance. Examples of an AIM listing without raising capital would include Absolute and Charlemagne. An example of a partial sale would include Highbridge and examples of revenue interests would include AQR, First Quadrant, Avenue, Lansdowne, Winton, and most firms backed by seeding platforms.

With the exception of Man and the Partners Group in Switzerland, each of the IPOs has been a disappointment relative to their initial public offering price. As for Reverse mergers, GLG has not been a success thus far, even after GLG coughed up nearly $500 million in slippage to get the deal done. The Asset Alliance - Tailwind reverse merger which was announced nearly 5 months ago has gone radio silent, which is not a positive sign.

AIM listings without raising capital lack a third party value validation when offered to the public and Absolute has been nothing short of a disaster, while Charlemagne is off more than 50%. Selling less than 100% of the equity or a revenue interest seems to work best, but a minority equity stake often imposes restrictions under which hedge fund managers chafe, while revenue interests do not. Whether a less than 100% equity stake or a revenue interest, each method still begs the question of how to monetize the rest of the ownership.

The only way to fully monetize a hedge fund management business is to sell out. Unfortunately, a total sale usually ends up with the sellers leaving at the first opportunity and the buyer usually has great difficulty in maintaining the value that it purchased. Examples of this include Glenwood, RMF, HBV, and Old Lane. As such, buyers will naturally be(a)ware and pricing will usually be lower than in other industries as a result.

A new alternative is for the hedge fund manager to sponsor the creation of a reinsurer or bank that allocates all of its investable assets to the sponsoring manager, providing a significant amount of permanent capital for the manager (making the management firm more valuable) and producing significantly higher returns for investors than the manager's funds without a proportionate increase in risk. Once the reinsurer or bank is fully developed, it can acquire some or all of the hedge fund management firm.

In this manner, the monetization process is able to benefit from many of the better points of other monetization alternatives. For example, it permits a total sale (without the normal problem of loss of control) and creates a public market for the interests of the hedge fund manager, but as a reinsurer or bank, rather than as an asset manager (which probably means higher market multiples). Carefully crafted, the transaction can be structured on a very tax efficient basis, particularly if partnership taxation for publicly traded managers or deferred compensation for offshore funds is lost.

While this alternative is yet unproven, it is more or less how Warren Buffett transitioned from being a hedge fund manager and monetized his asset management business. This summer a $15 billion hedge fund manager is likely to announce a merger with a Swiss private bank as the first step in a similar process.

The Panel:

Joseph K. Taussig is the Founder of Taussig Capital and has acted as a merchant banker for numerous financial services startups since 1990. Most of the capital for these companies has been provided by the hedge fund industry or hedge fund investors and most of the startups invest their assets in hedge fund strategies.

Matthias Knab, Director of Opalesque Ltd, will moderate this webinar. Matthias Knab is an internationally recognized expert on hedge funds and alternatives and has frequently served as chairman of hedge fund conferences in New York, Tokyo, Shanghai, Hong Kong, Miami, Bahamas, Stockholm, Dubai etc. In addition, he has presented or moderated at hedge fund events in Sydney, Cape Town, Madrid, and Bombay, and lectured at numerous universities on the subjects of hedge funds and the state of the global alternative asset management industry.

Participation in the Webinar on June 5th at 10 am New York time is limited to founders (or partners owning more than 15%) of hedge fund or FoHF management companies who would like to learn more about creating a reinsurer or bank in order to generate significant amounts of permanent capital and provide superior returns (without a proportionate increase in risk) for their investors. Provided that a founder or 15% partner is present, additional colleagues from the hedge fund or FoHF management company may also participate.

Each week, Opalesque publications are read by more than 400,000 industry professionals from all over the globe.

Hedge Fund Blackstone Opens Office in Beijing

Global alternative asset manager the Blackstone Group is opening a representative office in Beijing with former Vice President of Beijing Mainstreets Investment Group, Mr. Shan Fu as chief representative.

"The opening of our Beijing office and the appointment of Shan further underlines our deep commitment to China and the Chinese market." Stephen Schwarzman, Chairman, CEO and Co- Founder, of Blackstone, said, "We welcome Shan to the firm and we look forward to working together."

Fu previously worked in China’s National Development and Reform Commission (“NDRC”), the State Economic and Trade Commission of China, the Office of Economic and Trade in State Council of China, and the Office of Production of the State Council of China.

Fu commented: "I am very excited about joining Blackstone as its Chief Representative in Beijing. I look forward to working with the Blackstone China team to channel the global reach and resources of Blackstone’s alternative asset and advisory platform and increase its presence in the China markets."

Jobs In The Hedge Fund Industry

Interesting article here by hedge fund consultant Richard Wison, Hedge Fund Jobs. I have received a few inquiries as to how this works, there are a few sites where applications are taken such as HedgeFundEmployment.com among others.

"Some hedge fund professionals never graduate from high school but make over $1m/year in their job trading or selling for a hedge fund," Wilson says. There are also some tips on resume and application process.

Hedge Fund Career Trends also offers tips and links.

Final Voting Results for CSX Put Hedge Funds On Board

Rail company CSX Corporation issued its final report, showing that four of hedge fund TCI Group's nominees (Children's Investment Fund Management) received a larger number of votes than four of CSX's nominees.

"We are delighted that the certified results confirm that Alex Behring, Chris Hohn, Gil Lamphere and Tim O'Toole have all been elected to the CSX Board." The Children's Investment Fund Management and 3G Capital Partners, said, "They bring valuable railroad and management experience to the CSX Board and look forward to working constructively with their fellow directors for the benefit of all CSX stakeholders. We thank our fellow shareholders for their patience during this lengthy process and expect all newly elected board members to be seated without further delay."

The TCI/3G proposal to repeal any recent by-law amendments, including the recent by-law limiting the right of shareholders to call a special meeting, was also approved.

CSX is appealing before the Second Circuit Court of Appeals.

Launch, Market Access to Brazil by UBS

The global Equities business of UBS announced the launch of Direct Market Access (DMA) for international clients to trade securities on the Bovespa stock exchange in Brazil. UBS is among the first broker-dealers to offer non-Brazilian clients direct electronic equities trading and execution in this major market.

Recent market regulation enacted in Brazil allows for non-domestic investors access to direct electronic trading on Bovespa (Bolsa de Valores de Sao Paulo), a Sao Paulo-based stock exchange. Bovespa is the second-largest stock exchange in the Americas, and the third largest in the world.

"We have a longstanding commitment to providing clients with seamless, direct, electronic access to the major markets all over the world." Mario Campos, Head of Latin America Sales & Trading, said, "We are pleased to be one of the first brokers to offer global clients with DMA in Brazil."

"International DMA is one milestone in providing advanced electronic trading in this market – other tools and strategies will follow very soon," said Will Sterling, Head of Institutional Electronic Trading. "Making DMA available for clients trading into Brazil is particularly exciting, given our global buy-side clients’ increasing focus on this region."

With offices in 50 countries, UBS is present in all major financial centers worldwide. Its shares are listed on the Swiss Stock Exchange (SWX), the New York Stock Exchange (NYSE) and the Tokyo Stock Exchange (TSE).