Despite rich equity market multiples and uncertainty surrounding the upcoming 3rd quarter earnings reports, Hennessee Group said that hedge fund investors continued to pile into stocks due to an uptick in merger activity during September.
The Hennessee Long/Short Equity Index gained +3.13% in September (+18.75% YTD), while the S&P 500 index finished September up +3.6%, faring much better than the average loss of -1.2% the S&P has historically posted during the month of September dating back to 1929.
Hedge funds have also taken on additional directional risk in order to participate in the ongoing equity market rally and Hennessee believes they remain cautious and aware that the market could turn sharply to the downside.
“Little of the bail out money given to banks seems to have been passed on to businesses or consumers. It must have gone somewhere, and it is possible that is has gone to the proprietary desks of the banks, which are putting it to work in the markets,” Charles Gradante Co-Founder of Hennessee Group, said. “That could lead to a potential problem if the public and institutions do not join the rally, and the banks eventually have to sell equities into a vacuum.”
“The current debate among hedge fund managers is ‘Deflation versus Inflation’,” Gradante said, “The weak dollar and deficits are inflationary, but the 30 year treasury below 4% (80 bps over the 10 year) points to deflation expectations. Hennessee research is noticing a growing propensity of hedge funds to short 20 and 30 year treasuries as yields break 4%. The U.S. Treasury is currently funding its long term debt with 3 to 10 year Treasuries. The need to finance America ’s debt on the long end of the curve with attractive yields is increasingly obvious.”
9 Oct 2009
European Hedge Fund Galas Raise Over $500.000
HedgeCo Archives - More than 250 hedge-fund industry leaders gathered together to raise nearly £250,000 ($400,000) at the 100 Women in Hedge Funds 2009 London Charity Gala, held yesterday evening in the UK Foreign & Commonwealth Office’s magnificent Locarno Suite. All proceeds from the event went to SHINE, the UK Support and Help in Education charity.
This follows a spectacular event on 29th September attended by 250 guests from the hedge fund industry in Geneva and beyond in an 18th century mansion overlooking the lake of Geneva, where the 100 Women in Hedge Funds 2009 Geneva Charity Gala raised SFr135,000 ($130,000) for local education charity Association Païdos.
The combined sum of £332,000 ($533,000) raised for these two charities will make a material difference to their work. In the case of SHINE it should be sufficient to fund for an entire year two new SHINE on Saturday programmes, for which there is a queue of eligible, eager participants. For Païdos, it will be able to more than double the number of children accepted onto its "Getting Back into Learning" classroom project.
Sarah Brown, wife of the UK Prime Minister, and a SHINE Patron, said, "Hundreds of young people will benefit from your generosity. For example, children with special educational needs will receive specialised individual tuition to help develop their reading, writing and math skills. For children who are disengaged or simply underachieving, SHINE’s Saturday programmes enrich the school curriculum, making learning fresh, new and exciting. Other SHINE-funded programmes stretch bright teenagers from low income families, to encourage them to raise their horizons and redouble their efforts."
Each year the Association honours an individual in Europe whose achievements are an extraordinary example of success in the hedge fund industry. In 2009, 100 Women in Hedge Funds awarded its European Industry Leadership Award to Mina Gerowin, Managing Director of Paulson Europe and a Partner of Paulson & Co.
"Mina is an exemplary leader at Paulson and in our industry at large," said Effie Datson, Chair of the Board of 100 Women in Hedge Funds. "We are honouring her in recognition of her professional talent, business ethics and demonstration of the kind of passion and dedication that define the hedge fund industry’s standard of excellence."
Ms. Gerowin specializes in European merger and event-driven investment, including directing European activist positions, distressed and restructuring investment and risk arbitrage of both debt and equity. At Paulson, she has led investments such as Stork and Ahold and runs some of the largest positions in their book. As evidence of how highly esteemed she is by her Paulson colleagues, many joined in honouring her at the Gala.
As this year’s theme for 100 Women in Hedge Funds philanthropic efforts globally is education, next month 100 Women in Hedge Funds will be hosting a New York City Gala on November 18th in aid of Computers for Youth.
This follows a spectacular event on 29th September attended by 250 guests from the hedge fund industry in Geneva and beyond in an 18th century mansion overlooking the lake of Geneva, where the 100 Women in Hedge Funds 2009 Geneva Charity Gala raised SFr135,000 ($130,000) for local education charity Association Païdos.
The combined sum of £332,000 ($533,000) raised for these two charities will make a material difference to their work. In the case of SHINE it should be sufficient to fund for an entire year two new SHINE on Saturday programmes, for which there is a queue of eligible, eager participants. For Païdos, it will be able to more than double the number of children accepted onto its "Getting Back into Learning" classroom project.
Sarah Brown, wife of the UK Prime Minister, and a SHINE Patron, said, "Hundreds of young people will benefit from your generosity. For example, children with special educational needs will receive specialised individual tuition to help develop their reading, writing and math skills. For children who are disengaged or simply underachieving, SHINE’s Saturday programmes enrich the school curriculum, making learning fresh, new and exciting. Other SHINE-funded programmes stretch bright teenagers from low income families, to encourage them to raise their horizons and redouble their efforts."
Each year the Association honours an individual in Europe whose achievements are an extraordinary example of success in the hedge fund industry. In 2009, 100 Women in Hedge Funds awarded its European Industry Leadership Award to Mina Gerowin, Managing Director of Paulson Europe and a Partner of Paulson & Co.
"Mina is an exemplary leader at Paulson and in our industry at large," said Effie Datson, Chair of the Board of 100 Women in Hedge Funds. "We are honouring her in recognition of her professional talent, business ethics and demonstration of the kind of passion and dedication that define the hedge fund industry’s standard of excellence."
Ms. Gerowin specializes in European merger and event-driven investment, including directing European activist positions, distressed and restructuring investment and risk arbitrage of both debt and equity. At Paulson, she has led investments such as Stork and Ahold and runs some of the largest positions in their book. As evidence of how highly esteemed she is by her Paulson colleagues, many joined in honouring her at the Gala.
As this year’s theme for 100 Women in Hedge Funds philanthropic efforts globally is education, next month 100 Women in Hedge Funds will be hosting a New York City Gala on November 18th in aid of Computers for Youth.
Credit Suisse/Tremont Hedge Fund Index Estimated to Finish Up +2.67% in September
HedgeCo Archive - Early estimates indicate the Credit Suisse/Tremont Hedge Fund Index (“Broad Index”) will finish up +2.67% in September (based on 65% of assets reporting).
Long/Short Equity and Emerging Markets managers experienced another positive month driven by equity market gains in September. At the end of the best quarter since 1998 for the Dow Jones Index, which had a gain of nearly 15%, market sentiment was bolstered by several positive macro indicators, such as an increase in the Global Purchasing Managers’ Index (PMI) that signaled expanding manufacturing output and pointed to a continuing stabilization of global economic activity. Inflation continued its moderate downward trend in the U.S. and in the Organization for Economic Co-operation and Development (OECD) countries, while central banks overall maintained low interest rates in the face of a weak recovery. Many equity indices finished in positive territory, although there were some late market corrections following reports of worse-than-expected U.S. home sales.
A number of Global Macro quantitative managers had a positive month, driven by long currency trades in the Yen and Euro and decreased FX volatility. Yield curves did not move significantly and therefore front end positions had relatively little impact on performance.
Credit-oriented managers in the Fixed Income Arbitrage and Event Driven sectors had a positive month, with performance coming from mortgage-related bonds, corporate bonds (especially financials), swap spread trades (which have been normalization trades focusing on the narrowing in the spread between LIBOR rates vs. Treasuries) and opportunities in government bond auctions.
Managed Futures also had another positive month, giving the strategy its third positive month for the year, as many trend followers’ models gained traction. Equity Market Neutral managers were also up in September. The value factor contributed positively to performance while factors such as momentum detracted from performance.
Long/Short Equity and Emerging Markets managers experienced another positive month driven by equity market gains in September. At the end of the best quarter since 1998 for the Dow Jones Index, which had a gain of nearly 15%, market sentiment was bolstered by several positive macro indicators, such as an increase in the Global Purchasing Managers’ Index (PMI) that signaled expanding manufacturing output and pointed to a continuing stabilization of global economic activity. Inflation continued its moderate downward trend in the U.S. and in the Organization for Economic Co-operation and Development (OECD) countries, while central banks overall maintained low interest rates in the face of a weak recovery. Many equity indices finished in positive territory, although there were some late market corrections following reports of worse-than-expected U.S. home sales.
A number of Global Macro quantitative managers had a positive month, driven by long currency trades in the Yen and Euro and decreased FX volatility. Yield curves did not move significantly and therefore front end positions had relatively little impact on performance.
Credit-oriented managers in the Fixed Income Arbitrage and Event Driven sectors had a positive month, with performance coming from mortgage-related bonds, corporate bonds (especially financials), swap spread trades (which have been normalization trades focusing on the narrowing in the spread between LIBOR rates vs. Treasuries) and opportunities in government bond auctions.
Managed Futures also had another positive month, giving the strategy its third positive month for the year, as many trend followers’ models gained traction. Equity Market Neutral managers were also up in September. The value factor contributed positively to performance while factors such as momentum detracted from performance.
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