HK Subprime Investments Cause Local Concern

The Hang Seng Index posted its biggest single-day loss in a month, as investors fretted about the recurring subprime credit crisis in the United States and its impact on regional banks and other financials.

"It's a very bad day for financial markets across Asia. What's happening to Fannie Mae and Freddie Mac is a clear indication of more troubles ahead in the mortgage market. What the U.S. Treasury is doing smacks of political desperation rather than genuine concern for the financial markets," said Benjamin Collett, head of hedge fund sales trading at Daiwa Securities SMBC Co. in Hong Kong.

The U.S. Treasury also announced plans to rescue Fannie Mae and Freddie Mac, further fuelling fears that the subprime crisis may have intensified.

While Chinese banks are sound and have very little exposure to subprime, the market is trading very short term and the selloff in the financial sector is just an extension of the overall market moves." Collet said.

The Hang Seng Index lost 3.8 percent, closing at the lowest since March 20.

DanFonds Launches Frontier Hedge Funds

A Copenhagen based Cayman fund, DanFonds, is trying a novel approach to the hedge fund market by launching its ‘Frontier Markets Fund’, a hybrid between the public market hedge fund approach and the private equity model.

In a press call with Alex Akesson on Friday, CEO of DanFonds, Daniel Broby referred to 'peak oil', and the 'commodity super cycle' and also how the writing off of debt by the Paris club have opened the market for frontier funds.

"What we are seeing is generational change; the industrialisation of the final countries that had been left behind." Broby said, "These are not markets for the faint hearted. They are corrupt, illiquid and difficult to access. On the other hand, that is compensated for by the risk premium and the expected returns."

With a philosophy of 'Globalisation is just an extension of industrialisation' and that 'frontier markets are the next emerging markets', their website says that frontier markets are at the very edge of the investable public securities universe.

However, there is potential for high return. With a combined market capitalisation of around $1.7 trillion, frontier markets are in the early stages of development and growing towards entry into the emerging markets indices.

"You either believe in the opportunity or you do not. We don't try to convince investors. We mearly structure the best way to capture that opportunity." Broby concluded.

When asked to comment on the new fund launches, Broby's staff responded, "200 years ago California was a frontier market." said Alexandra Hayles, Country Analyst.

While Klaus Jeppesen, Head of Risk commented, "traditional risk models just don't work in these countries. You have to start with a blank spreadsheet." "There are plenty of opportunities in Francophone Africa. You just have to know where to look for them." Brice Beumo, Director of DanFonds finished.

Danfonds operates from two locations in Denmark, its operational offices in the center of Copenhagen and its registered offices in Martofte. It has also established access to offices in selected frontier market locations using the facilities of Regus Worldwide.

Hutch on the Park to Reopen

Hugh Hefner has reportedly signed an agreement with Agilo, the London hedge fund that owns a Sports Cafe on Haymarket in London’s West End according to the TimesOnline.

The Playboy Club in the capital is reportedly set to open in 2010 to offer gaming at roulette wheels and blackjack tables. The original Playboy club on Park Lane in Mayfair was closed 27 years ago after a police raid over suspected gambling irregularities, despite no subsequent evidence of wrongdoing.

“We are looking for opportunities around the world. London will be logical for us. We had some very good years there,” Times Online quoted Dick Rosenzweig, executive vice-president of Playboy and Hefner’’s right-hand man, as saying.

Playboy could win its licence in as little as two months after applying if it meets all the requirements.

The former London club opened opposite Hyde Park in 1966, six years after the first Playboy Club was launched in Chicago. For 15 years, the London club, on five floors, was a welcome distraction from worries such as the IRA, strikes and riots.

"Nicknamed "the Hutch on the Park", the London venue's clientele included actors Sean Connery, Michael Caine and Joan Collins, and footballer George Best, who married former bunny Angie MacDonald-Janes.

The club was run by Victor Lownes, an American who became the highest-paid executive in Britain. Lownes, now 80, married Marilyn Cole, a former playmate of the year. He said: "It was a huge success and ran like a dream. We had a discotheque in the basement, several restaurants, a VIP room and a casino with roulette and blackjack. The average bunny lasted two years and then married a millionaire.

Jeff Georgino, Playboy's senior vice-president, said: "We are actively looking at locations which are on the market in London. We would love to get a casino licence ... It all depends on that."

FRM Hires Award Winning Hong Kong Manager

Global fund of hedge funds (FOHF) group Financial Risk Management ('FRM'), has hired Au King-lun, MH, PhD, as Chief Executive Officer of FRM Hong Kong.

"The firm has long been known for its strength in serving institutions and for its deep expertise in hedge funds." Dr Au said, "Asian investors are increasing allocations to hedge funds because of the absolute, uncorrelated returns and flexible investment strategies they can offer. FRM is in a strong position to deliver performance and products for this important and growing investor base."

With offices in Europe, Asia, North America and Australia, the new Hong Kong office is an effort to expand business efforts in Japan and Korea.

Dr. Au will join in September from HSBC, where he has been working for the past 11 years, most recently as Head of Institutional Business in Asia Pacific.

FRM opened its Hong Kong office in May 2008, building on its significant presence in Asia, including offices in Tokyo and Sydney, opened in 2000 and 2001 respectively. As one of the largest independent fund of hedge fund groups, FRM manages over $15 billion in assets for institutions and other sophisticated investors, including approximately 300 pension funds worldwide.

Dr. Au currently serves as Chairman of the Hong Kong Securities Institute and is a previous Chairman of the HK Investment Funds Association. In July Dr. Au was awarded the Medal of Honour (MH) by the Hong Kong SAR Government for his valuable contributions to the securities and asset management industry.

Alex Akesson
Editor for HedgeCo LLC
Email: alex@hedgeco.net

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Hedge Fund Man Group Shows Positive Product Return

Global Hedge fund Man Group has increased their assets under management from $74.6 billion at 31 March 2008 to $79.5 billion at 30 June 2008.

"Demand for our fund products has remained strong, both from private investors and institutions, with sales in our first quarter to 30 June 2008 totalling $5.0 billion." Jon Aisbitt, Chairman of Man Group said in a statement, "This success in asset raising reflects the Group's broad geographic presence and the continued attraction of conservatively structured alternative investment products."

Overall product performance was positive, with AHL, Glenwood, Man Global Strategies, and RMF all showing positive returns. Redemptions for the three months to 30 June 2008 totaled $2.5 billion, of which private investor were $1.5 billion.

Man is one of the worlds largest alternative investment management business, originaly founded in 1783, Man is now ranked in the top 40 companies of the FTSE 100 Index with a market capitalisation of about $20 billion.

Activist Hedge Fund Told To Cease and Desist

A preliminary injunction has ordered two officers of activist hedge fund Costa Brava Partnership III LP of Boston to cease and desist, refraining from all contact with former, current and future auditors of Telos Corporation.

Costa Brava officers, Andrew R. Siegel and Seth W. Hamot, who sit on Telos' board of directors, were accused of making repeated threats of litigation against the company's last two independent auditors. Both auditors resigned their engagements with Telos as a result of the conduct of Hamot and Siegel even though neither auditor had found fault with Telos on any accounting issues.

The actions were seen by Telos as tactics to break up the company on order to secure redemption of their public preferred stock.

In his order, Judge Matricciani also wrote that "Telos is likely to demonstrate that their (Hamot and Siegel) conduct was not just wrongful, but unlawful." The judge stated that the communications of Hamot and Siegel with Reznick may have violated Sarbanes-Oxley section 303 and SEC Rule 13b2-2, "providing another basis for liability for tortious interference with business or economic relations."

Attorneys for Hamot and Siegel have said they will file an appeal of the preliminary injunction with the Court of Special Appeals of Maryland.

Hedge Funds Back MEVIO

Hedge funds Sequoia Capital, Sherpalo Ventures, Kleiner Perkins Caufield & Byers, and DAG Ventures were led by Crosslink Capital in investing $15 million in entertainment network MEVIO.

Adam Curry, co-founder and president of MEVIO. "MEVIO is building a full-scale entertainment network that incorporates all of the positive elements of traditional media along with the benefits of scale and insight offered by the Internet."

"The first wave of online video was a total failure for brand advertisers," said Ron Bloom, co-founder and chief executive officer, MEVIO. "In order to attract the billions of dollars of brand advertising spending that is still dedicated to television programming, online companies will have to provide audience and frequency at a scale to compete with traditional broadcast, and build it around brand-safe content that is relevant and entertaining. MEVIO is building that network."

In May of 2008, the company attracted over 9 million unique monthly visitors, up over 800 percent in the last twelve months. For the second quarter of 2008, MEVIO estimates page-views to exceed 140 million, up over 1,800 percent quarter over quarter. With the launch of its vertical entertainment networks, the company is exploring syndication opportunities that management believes will dramatically enhance MEVIO's already impressive reach.

Report: SA Hedge Funds Growing

A Hedgeweek Special Report for March 2008 reports the strengthening of the South African hedge fund industry from just a handful of funds with aproximately ZAR1.4 billion ($0.18 billion) in as recently as mid-2002, to more than 130 funds with at least ZAR26 billion ($3.35 billion) in assets under management in the last five years.

In the report by Simon Gray, he says, "Industry members predict that the current soaring growth rate will be maintained for some time, pointing to plentiful capacity available in existing funds and a level of allocation to alternative assets which remains well below those in other markets."

The constrictive rules governing the South African hedge fund industry has constrained investors from investing in alternatives in Africa, Gray reports, instead, investors have focused more on Asia and Latin America.

Gray predicts that factors are set to change to the benefit of South African managers, many of which are now developing the extended track records of success that conservative institutions are looking for.

"The industry is becoming broader and more sophisticated as established asset managers launch alternative products, and the dominance of equity long/short and market neutral strategies gradually diminishes while the asset share of multistrategy funds soars." Gray concluded.

Hedgeweek was launched in October 2002 and is part of the London-based Hedgemedia group, founded by financial publisher Sunil Gopalan and internet entrepreneur Oliver Bradley. Hedgeweek now reaches over 3,000 senior executives at hedge fund companies and investor groups worldwide.

GLG's Hiring Spree

Soon after the scheduled departure of several senior traders and executives was announced, hedge fund GLG Partners has begun hiring new experts to fill in the gap.

Experts such as as Galia Velimukhametova, Fabrice Bay, and most recently Driss Ben-Brahim, a star Goldman Sachs emerging markets trader. He is to manage and hopefuly expand GLG's $1.2 billion special situations portfolio.

Galia Velimukhametova is to join the hedge fund's London office as a Portfolio Manager. With extensive background in the area, Galia will focus on distressed situations. Galia joins GLG from King Street Capital, where she was a Managing Director and Member of the European Investment Committee.

Fabrice Bay was previously a Managing Director at DWS/Deutsche Asset Management in Frankfurt, his significant experience in managing global long-only and 130/30 portfolios will play an important role in driving forward GLG's offerings in these areas, according to GLG.

As of March 31, 2008, GLG manages a net AUM (assets under management) of over $24.0 billion. GLG's capital appreciation strategies target long-term capital appreciation through diversified portfolios of global equities and bonds.

Since its inception in 1995, GLG has built on the roots of its founders in the private wealth management industry to develop into one of the world's largest and most recognized alternative investment managers, while maintaining its tradition of client-focused product development and customer service.

Verify

Northern Trust to Manage Auda Hedge Assets

New York based fund manager, Auda Hedge LLC has selected Northern Trust to provide fund administration, custody, banking and foreign exchange services to its fund of hedge fund program, with assets in excess of US$1 billion.

In January 2008, Northern Trust announced a worldwide exclusive partnership with youDevise to provide enhanced fund of hedge fund data to the fund of hedge fund community via the Hedge Information Provider ("HIP") system.

"Funds-of-hedge-funds have become the route chosen by many institutional investors when accessing hedge funds." Wilson Leech, head of Northern Trust's Global Fund services group said, "By fully integrating HIP onto Northern Trust's global platform we will be able to deliver an enhanced reporting capability and reduce operational risk, enabling our clients to make decisions faster and more effectively."

The HIP is an online portfolio management system developed specifically for funds-of-hedge-funds. It considerably improves the timeliness of information that funds-of-hedge-fund managers receive from underlying hedge funds regarding hedge fund holdings, current value, performance, liquidity and hedging, as well as a detailed breakdown of assets and transactions. HIP makes it possible for funds-of-hedge-fund managers to see portfolio management data daily that, historically, was only available monthly.

Where Northern Trust's UK entities undertake regulated business, they are authorized and regulated in the United Kingdom by the Financial Services Authority.

Interest Rates Top Swiss DMX Alternative Investment Indice

The DMX, Directional Markets Index, heads the list of investable Alternative Investment Indices provided by Alternative-Index Ltd, with a month-to-date performance of +0.71% and a stellar year-to-date performance of +16.61%. DMX is listed on the Vienna Stock Exchange.

The best performing sector for the DMX was the Interest Rates sector with a month-to-date attribution of +0.62%.

The DMX outperformed its peer, the FTSE Hedge Directional Index month-to-date by 2.13% (0.71% vs. -1.42%) and year-to-date by 21.42% (16.61% vs. -4.81%). The DMX also outperformed the MSCI Systematic Trading Index year-to-date by 12.17% (16.61% vs. 4.44%). The DMX's performance surpassed the HFRX Market Directional Index's performance month-to-date by 1.22% (0.71% vs. -0.51%) and year-to-date by 15.67% (16.61% vs. 0.94%).

Alternative-Index Ltd. is an Index specialist and provides investable Indices that represent the risk and return of investable alternative strategies and asset classes. The company is a 100% subsidiary of Swiss Alternative Investment expert Salus Alpha Group AG.

Dynamic Launches an Array Of Hedge Funds & FOHFs

Dynamic Funds ("Dynamic") has announced the launch of two global growth funds, the Dynamic Power Global Navigator Class and Dynamic Power Global Balanced Class.

The fund manager also launched a hedge fund of funds, the Dynamic Alternative Opportunities Fund, giving retail investors access to a basket of the Company's hedge fund products. Dynamic Alternative Opportunities Fund has the ability to invest in Dynamic hedge funds and closed-end funds, as well as externally managed hedge funds, private funds and other investment vehicles not generally available to the investing public.

"Dynamic Power Global Navigator Class is a go anywhere, do anything global growth fund," says Alexander Lane, VP and Portfolio Manager, "It offers investors exposure to global stocks with the safety profile of larger companies and the higher return profile of smaller companies."

The initial portfolio of the Dynamic Alternative Opportunities Fund will be composed of an approximately equal allocation of seven Dynamic hedge funds; the Power Hedge Fund, Alpha Performance Fund, Contrarian Fund, Power Emerging Markets Fund, Income Opportunities Fund, Strategic Value Fund, and Focus+ Alternative Fund.

The Dynamic Funds are managed by Goodman & Company, Investment Counsel Ltd., a subsidiary of DundeeWealth Inc. DundeeWealth is listed on the Toronto Stock Exchange.

Report Forecasts Funds Of Hedge Funds To Dominate European Market

According to a new report by DataMonitor, 'Hedge Funds in Europe 2008', the European hedge fund market is going through a period of growth but the extent of the mortgage-backed security crisis is still uncertain.

The report forecasts strong growth in funds of hedge funds over the next year, with less demand for single hedge funds according to 65% of asset managers in Europe.

Asset managers in Spain and Italy believe most strongly that the demand for funds of hedge funds will outstrip that for single hedge funds, followed by France, Germany and finally the UK.

Across the five core economies in Western Europe - France, Germany, Italy, Spain and the UK - institutional investors now dominate the market for hedge funds. On average, slightly more than two-thirds of asset managers confirmed that this group represents their biggest customer segment for hedge funds today.

40% of asset managers in Italy say mass market investors may also be put off by the price of hedge fund investment. In Spain, on the other hand, demand from mass market clients is being limited by competition from capital-protected and structured products and inadequate promotion of hedge fund products by banks and advisers.

DataMonitor, a provider of online database and analysis services for key industry sectors, has put out the report presenting views on the market for hedge fund investment based on a survey of 100 leading asset managers across Europe.

Covering mass market, high net worth and institutional customer groups, 'Hedge Funds in Europe 2008' is part of a series of reports looking at the market for alternative investments in Europe.

Investcorp's Emerging Hedge Fund Talent Fund Raises $2 Billion

Investcorp's hedge fund co-managers said they have raised over $2 billion for their Single Manager Platform. Debuted in 2005, the platform supports emerging talent in the hedge fund industry.

Deepak Gurnani, managing director and co-head of hedge funds said, "Reaching the $2 billion milestone is a testament to the quality of the managers who have partnered with us."

"We've tailored the program to the interests of sophisticated institutional investors that want to diversify their hedge fund holdings by including the industry's rising stars in their portfolios," Ibrahim Gharghour, managing director and co-head of hedge funds added.

Investcorp provides between $50 million and $100 million in seed capital to the managers along with support for marketing and ongoing risk monitoring to avoid style-drift and other operational concerns. Investcorp's hedge funds team of more than 100 professionals oversees approximately $8 billion in assets under management, of which approximately $2 billion is proprietary capital.

The Single Manager Platform is part of Investcorp's larger suite of hedge fund solutions, which includes fund of funds, customized portfolios and structured products. Today, it has more than 30 institutional investors in the platform, which comprises six managers with a range of investing strategies.

The six managers currently in the program are Cura Capital Management, a fixed income relative value manager based in New York, Interlachen Capital Group, a multi-strategy firm based in Minneapolis, Silverback Asset Management, a convertible arbitrage focused management firm based in Chapel Hill, North Carolina, Stoneworks Asset Management, a global macro investment platform based in London, Washington Corner Capital Management, a distressed and credit-based investment platform based in Florham Park, New Jersey and WMG Asia, an Asian long/short equity strategy management firm based in Hong Kong.

Hank Murphy is the head of development for the Single Manager Platform.

SGI Alternative Strategy Launch

Security Global Investors (SGI) announced a strategic initiative to intensify its capital raising efforts for alternative global equity product offerings.

SGI has been managing institutional assets since 1962 and currently has approximately $9 billion in assets under management, approximately $1 billion in global equity investment strategies. The global equity team manages a Global Long Only (GLO), A Global Long / Short Long-Biased (GLS), and is launching a new Global Market Neutral strategy (GMN) this year.

The company’s accelerated effort coincides with the hiring of industry veteran Sanjay Yodh to focus on the firm’s global alternative products. Yodh has more than a decade of institutional sales experience with J.P. Morgan and Deutsche Asset Management.

“We are a fundamental, research-driven team that employs a consistent, repeatable process. Our experience and focus on risk management makes SGI’s alternative products especially attractive for institutional investors in today’s volatile markets,” noted Yodh.

The performance of GLS, the transparency of the process and a deep 13-person investment team has garnered attention from hedge fund investors. John Boich, with more than 17 years experience in successfully managing global equity portfolios leads the team.

Boich spent eight years directing research and investment decisions for Montgomery Asset Management’s $4 billion global and international mandates. “We’ve always had a skilled team, a well-defined process, and competitive risk-adjusted performance track record,” Boich said.

6th Annual Hedge Fund Industry Awards

Winners of Alternative Investment News' 6th Annual Hedge Fund Industry Awards were announced on Wednesday evening June 25th at a black-tie dinner and ceremony at Cipriani Wall Street in New York City. The awards recognized hedge funds, fund of funds, consultants, endowments, foundations and corporate and public funds that stood out for excellence in alternatives investing during the year.

Nearly 500 leaders and luminaries from every facet of the industry were in attendance to see winners announced and awarded 'Oscar-Style'. Michael Steinhardt, a pioneer in the hedge fund world, and Phil Goldstein, Founder of Bulldog Investments were in attendance to accept their respective awards for Lifetime Achievement and Outstanding Contribution to the Industry.

Winners were awarded in nine other categories, and included Paulson & Co. for Hedge Fund Leader.

Also recognized and awarded were the 2008 Rising Stars of Hedge Funds, 20 up-and-coming, talented young professionals poised to be future leaders of the industry.

This year's award winners were as follows:

Hedge Fund Leader of the Year:
Paulson & Co.

Fund of Hedge Funds Leader of the Year:
Harcourt Investment Consulting

Emerging Manager of the Year:
Algebris Investments

Hedge Fund Launch of the Year:
AdultVest

Institutional Manager of the Year:
The Blackstone Group

Public Fund Investor of the Year:
Teacher Retirement System of Texas

Corporate Pension Fund of the Year:
Railway Pension Trustee Company

Nonprofit Investor of the Year:
Texas Christian University

Hedge Fund Consultant of the Year:
Jaeson Dubrovay, NEPC

Visit the awards website for additional information:
http://www.iialternatives.com/ain/2008awards/

EU Recommends a Tightening of Hedge Fund Transparency Laws

The EU Parliament has come up with new guidelines regarding hedge fund transparency,
'asset stripping' and proposed some investigative measures and rules so that companies are not left in the dark on the investment policies of hedge funds or private equity investors who buy up their shares.

They also want much more light to be shed on pay and bonus packaged for fund managers. The commission also asked that the EU address the issue of money laundering, specifically in the context of hedge and private equity funds.

MEPs in committee unanimously approved the report by Klaus-Heiner Lehne (EPP–ED, DE) which would - if approved by the plenary - become a formal request to the Commission to put forward EU legislation.

The EP committee proposes to oblige hedge funds and private equity funds to disclose and explain the companies whose shares they acquire or own, retail and institutional investors, prime brokers and supervisors - their investment policy and the associated risks.

The committee also asks the Commission to investigate the possibility to apply, to alternative investments, contract terms allowing for a clear limitation of risk, for measures to be taken if thresholds are exceeded, for a clear description of lock-up periods and for explicit conditions concerning cancellation and termination of investment contracts.

MEPs want the Commission to propose rules forbidding "asset stripping" by investors who misuse their financial power in a way that merely disadvantages the company acquired in the long term, without having any positive impact on its future - or the interests of employees, creditors and business partners. They therefore propose common EU rules to guarantee capital maintenance of companies.

Regarding private equity funds, Members in committee suggested, among several proposals, that the Commission should address the issue of irresponsible lending to private equity funds, where banks disclaim any responsibility for what the loan is used for and where the money that repays the loan comes from.

MFA Travels To China To Hold Alternative Investment Meetings

The Managed Funds Association MFA and CME Group (CME), a Strategic Partner member, recently arrived back from a jointly arranged trip to meet with Chinese government officials, policy makers and financial services representatives.

The MFA and CME co-sponsored a conference, "Global Markets and the Role of Alternative Investments" was held in June with the Tianjin Municipal People’s Government and China Foreign Exchange Administration Magazine.

"The conference agenda helped us to continue a dialogue about the important role of alternative investments in the capital markets and to strengthen relationships
in China as its economy and financial markets grow." Richard H. Baker, MFA President and CEO, said.

Members who participated in the conference included; Citadel Investment Group,
L.L.C.; Fairfield Greenwich Group (FGG); Harbinger Capital Partners Funds; Moore Capital Management, LLC; Tudor Investment Corporation; the D.E. Shaw Group; Paulson & Co., Inc.; and S.A.C. Capital Advisors, LLC.

"MFA’s visit to China is part of its ongoing international outreach with policy makers and its mission to provide information about the global alternative investment industry." MFA said.

MFA is the voice of the global alternative investment industry. Its members include
professionals in hedge funds, funds of funds and managed futures funds. MFA Members represent the majority of the largest hedge fund groups in the world who manage a substantial portion of the approximately $2 trillion invested in absolute return strategies.

Hedge Fund Nominees

AdultVest was nominated among others for the 'Hedge Fund Launch of the Year' Award, the alternative investment fund is the world’s first Investment Community designed specifically for the Adult Industry.

Other nominees include, Brevan Howard Asset Management, Citadel Investment Group, Odey Asset Management and Paulson & Co. for the 'Hedge Fund Leader of the Year' award.

Th winners will be celebrated 'Oscar-style' at a gala awards dinner and ceremony this evening, June 25th at Cipriani Wall Street, NYC. The award ceremony will be held in conjunction with Institutional Investor Conferences' Hedge Fund Investor Symposium, and will host more than 400 leaders in the hedge fund industry.

The 6th Annual Hedge Fund Industry Awards recognizes the hedge funds, fund of funds, endowments, foundations, and corporate and public pension funds that have stood out for their notable accomplishments in alternative investments during the past year.

Winners will be selected by the staff of Alternative Investment News and Institutional Investor Magazine.