Hedge fund Shariah Capital is looking for strategic partners in the Middle East among the local banks with international funds, and major investment institutions and high net worth individuals. “Hedge funds are all about diversification” they say.
But wealthy Muslim investors in the Gulf Arab region and Asia have traditionally frowned on hedge funds because they adopt strategies that are considered forbidden by Shariah. Shariah being Islamic law.
So several fund managers have been trying to develop Shariah compliant strategies that will emulate the strong returns of hedge funds and tap some of the estimated $750bn in Islamic assets parked equity and property related funds. The oil-rich Persian Gulf region has close to a trillion dollars of liquidity.
The ideal ‘fund of caution’ for the Arabian investor is an Islamic hedge fund of funds, argues Eric Meyer, President and CEO of US based Shariah Capital who visited Dubai for the Islamic Funds World Conference to promote what is believed to be the first Shariah compliant fund of hedge funds. “Islamic hedge funds have the advantage of not being highly borrowed, unlike many hedge funds. This is one reason for their strength. It is true that borrowing by hedge funds improves return in a bull market but this will also magnify losses in a downturn.” Meyer said.
The firm spent the past six years working with Islamic scholars, as well as Western financial and legal experts, to develop risk management tools that enable observant Islamic investors to participate in the alternative investment world. The hedge fund developed the software to screen thousands of publicly-traded companies for Shariah compliance in seconds in 52 securities markets around the world.
Meyer's firm initially sought the fatwas to launch its own Shariah-compliant fund of funds. Now, the division of Meyer Fund Management LLC has expanded its business strategy. It is making its investment vehicles available to other alternative investment managers who want to create their own Shariah-compliant funds to attract investors in the Middle East and Asia.
Amiri, a UK-based Islamic investment manager with a partner in Bahrain, also believes it has found a Sharia compliant way to emulate one of the conventional hedge fund strategies short selling. He plans to launch a global long short equity hedge fund in 2007 that it says will comply with Shariah.
A conventional short is forbidden by Shariah because it requires a hedge fund to sell something it does not own, while pay out interest to brokers, considered usury in Islam. The $1.3tn global hedge fund industry plans to develop a viable $50bn Islamic niche market in the next three years, according to sources.
16 Jan 2007
12 Jan 2007
London Hedge Fund Launch
Brevan Howard, the hedge fund manager, is planning to raise up to £1bn through the first hedge fund listed on the main London market, investing the proceeds in the four-year-old manager’s flagship global fund
BH has rapidly risen to be one of London’s biggest hedge fund managers, the fund manages $11bn, mainly used for macroeconomic bets. BH is planning the new fund to run a similar strategy to MW TOPS, which was listed in Amsterdam by Marshall Wace, a rival British hedge fund group, in December.
The Financial Services Authority (FSA) is in the process of relaxing rules to allow single-strategy hedge funds to float in London. The move will be a coup for the London Stock Exchange after it lost out to its European rivals last year because of its ban on listed specialist hedge funds.
Marshall Wace’s listing on Euronext Amsterdam last month was the largest ever for a single fund, raising €1.5 billion for MW TOPS. It came after Sir Andrew Large, the former Deputy Governor of the Bank of England and its chairman, attacked the FSA’s restrictions as anachronistic.
Single-strategy hedge funds, as distinct from funds of hedge funds, had been banned from full listings in London because they were not sufficiently diversified and because of restrictions on short-selling.
BH was set up in 2002 by Alan Howard, Credit Suisse’s former head of interest-rate derivatives trading. Since then, its main global fund has returned 10.2 per cent a year with low volatility.
BH has rapidly risen to be one of London’s biggest hedge fund managers, the fund manages $11bn, mainly used for macroeconomic bets. BH is planning the new fund to run a similar strategy to MW TOPS, which was listed in Amsterdam by Marshall Wace, a rival British hedge fund group, in December.
The Financial Services Authority (FSA) is in the process of relaxing rules to allow single-strategy hedge funds to float in London. The move will be a coup for the London Stock Exchange after it lost out to its European rivals last year because of its ban on listed specialist hedge funds.
Marshall Wace’s listing on Euronext Amsterdam last month was the largest ever for a single fund, raising €1.5 billion for MW TOPS. It came after Sir Andrew Large, the former Deputy Governor of the Bank of England and its chairman, attacked the FSA’s restrictions as anachronistic.
Single-strategy hedge funds, as distinct from funds of hedge funds, had been banned from full listings in London because they were not sufficiently diversified and because of restrictions on short-selling.
BH was set up in 2002 by Alan Howard, Credit Suisse’s former head of interest-rate derivatives trading. Since then, its main global fund has returned 10.2 per cent a year with low volatility.
Hedge Fund Picks SEI as Partner in Outsourcing
Rock Ridge Advisors has selected SEI to provide a operational outsourcing solutions for its hedge funds. SEI was selected in a competitive evaluation process among some of the most notable providers in the industry. The company's combination of deep industry expertise, advanced capabilities, robust infrastructure, and innovative technology were pointed to as key differentiators in the selection process.
"To be a successful investor in today's evolving markets we recognize the need to implement an efficient and innovative investment process with solid operational expertise," said Woody Jay, Rock Ridge's Co-managing Partner. The deal points to an industry trend as investors continue to push hedge funds to seek out larger institutional partners amid increased competition and regulatory scrutiny.
"As the hedge fund sector becomes more competitive and investor driven, the selection of an outsourcing partner becomes even more critical," said John Alshefski, head of Business Development for SEI's Investment Manager Services division. "We're seeing hedge fund clients looking for larger institutional partners with broad capabilities, resources and credibility. We're excited to partner with Rock Ridge Advisors as they look to grow their funds and provide new levels of service to their investors."
Rock Ridge Advisors is a Greenwich, CT.-based hedge fund managed by Woody Jay and Brian Pennington. Rock Ridge Advisors launched the Rock Ridge Funds eighteen months ago with $75 million in assets, and is growing rapidly, currently managing approximately $300 million for institutional clients.
"To be a successful investor in today's evolving markets we recognize the need to implement an efficient and innovative investment process with solid operational expertise," said Woody Jay, Rock Ridge's Co-managing Partner. The deal points to an industry trend as investors continue to push hedge funds to seek out larger institutional partners amid increased competition and regulatory scrutiny.
"As the hedge fund sector becomes more competitive and investor driven, the selection of an outsourcing partner becomes even more critical," said John Alshefski, head of Business Development for SEI's Investment Manager Services division. "We're seeing hedge fund clients looking for larger institutional partners with broad capabilities, resources and credibility. We're excited to partner with Rock Ridge Advisors as they look to grow their funds and provide new levels of service to their investors."
Rock Ridge Advisors is a Greenwich, CT.-based hedge fund managed by Woody Jay and Brian Pennington. Rock Ridge Advisors launched the Rock Ridge Funds eighteen months ago with $75 million in assets, and is growing rapidly, currently managing approximately $300 million for institutional clients.
Hedge Funds asked to Bid on Ameriquest
Ameriquest has had talks with several hedge funds recently, including Ellington Capital Management, a large Old Greenwich, Conn.-based hedge fund, to see if there would be any interest in bidding on their company.
News of the possible sale was first reported by trade publication Asset Securitization Report. The New York Post reported that a source familiar with the hedge fund said J.P. Morgan bankers representing Ameriquest asked the fund if it was interested, fund executives haven't decided if they want to proceed and receive an offering circular.
Ellington's strategy relies on their ability to identify and purchase undervalued securities. They manage around $4.5 billion, with over $3 billion dedicated to mortgage bonds. Ellington’s Managing Directors are also investors in its strategies, with over $50 million of their capital invested alongside its clients’ capital. One of the hedge fund's specialties is hedging what Wall Street terms "mortgage credit risk" or the risk that homeowners with less than stellar credit profiles - which is Ameriquest's customer base - might default or fall behind on their payments.
According to rival hedge fund managers, selling the privately held Ameriquest to Ellington is a good idea, "Ellington has hundreds of millions of dollars in sub-prime paper on their books, they have good risk management and they have the cash. If [Ameriquest] is cheap enough, why not?," said one rival hedge fund manager. This rival noted that Ameriquest's $295 million settlement with regulators last year over predatory lending abuses removed a significant barrier for a possible buyer.
News of the possible sale was first reported by trade publication Asset Securitization Report. The New York Post reported that a source familiar with the hedge fund said J.P. Morgan bankers representing Ameriquest asked the fund if it was interested, fund executives haven't decided if they want to proceed and receive an offering circular.
Ellington's strategy relies on their ability to identify and purchase undervalued securities. They manage around $4.5 billion, with over $3 billion dedicated to mortgage bonds. Ellington’s Managing Directors are also investors in its strategies, with over $50 million of their capital invested alongside its clients’ capital. One of the hedge fund's specialties is hedging what Wall Street terms "mortgage credit risk" or the risk that homeowners with less than stellar credit profiles - which is Ameriquest's customer base - might default or fall behind on their payments.
According to rival hedge fund managers, selling the privately held Ameriquest to Ellington is a good idea, "Ellington has hundreds of millions of dollars in sub-prime paper on their books, they have good risk management and they have the cash. If [Ameriquest] is cheap enough, why not?," said one rival hedge fund manager. This rival noted that Ameriquest's $295 million settlement with regulators last year over predatory lending abuses removed a significant barrier for a possible buyer.
Hedge Fund Managers Indicted for Fraud
The managers of KL Group in West Palm Beach, Fla. were indicted yesterday, accused of orchestrating an extensive fraud that raised more than $194 million from at least 250 investors.
KL operated many hedge funds until March 2, 2005, when the SEC filed an emergency civil action to halt the massive fraud by the group of Palm Beach, Florida based hedge funds, their principals, their unregistered investment advisers, and an affiliated registered broker-dealer. The three, Won Sok Lee, Yung Bae Kim and his brother Jung Bae Kim, are accused of promoting the KL hedge funds as successful, when, in fact, some of the funds suffered losses every quarter of their existence.
From 1999 to 2005, KL claimed to have raised at least $81 million from investors nationwide, boasting annualized returns of 125 to 150, and KL sent false account statements to investors showing similar gains. According to the complaint, the hedge funds were suffering tremendous trading losses and only about $11 million remains of the more than $81 million that investors put into the hedge funds.
The collapse of the KL Group was the subject of an article in The New York Times in August 2005 that detailed how the three principals used their expensively furnished West Palm Beach office and high-tech trading floor to lure some of Palm Beach’s elite to invest in the funds. Prosecutors say that some money was also siphoned off for the personal use of the three principals.
The scheme was further carried out, court filings say, by paying a handful of early investors with money from new investors and using counterfeit documents to report investment returns falsely to mislead lawyers and accountants as well as investors.
According to The New York Times, John Kim, who faces 35 counts of various criminal charges, including conspiracy to commit wire fraud, mail fraud and conspiracy to commit money laundering, pleaded not guilty yesterday in Federal District Court in West Palm Beach. Calls to lawyers for Mr. Kim were not returned. The other two individuals remain fugitives and are believed to be living outside of the country, according to an individual briefed on the case.
KL operated many hedge funds until March 2, 2005, when the SEC filed an emergency civil action to halt the massive fraud by the group of Palm Beach, Florida based hedge funds, their principals, their unregistered investment advisers, and an affiliated registered broker-dealer. The three, Won Sok Lee, Yung Bae Kim and his brother Jung Bae Kim, are accused of promoting the KL hedge funds as successful, when, in fact, some of the funds suffered losses every quarter of their existence.
From 1999 to 2005, KL claimed to have raised at least $81 million from investors nationwide, boasting annualized returns of 125 to 150, and KL sent false account statements to investors showing similar gains. According to the complaint, the hedge funds were suffering tremendous trading losses and only about $11 million remains of the more than $81 million that investors put into the hedge funds.
The collapse of the KL Group was the subject of an article in The New York Times in August 2005 that detailed how the three principals used their expensively furnished West Palm Beach office and high-tech trading floor to lure some of Palm Beach’s elite to invest in the funds. Prosecutors say that some money was also siphoned off for the personal use of the three principals.
The scheme was further carried out, court filings say, by paying a handful of early investors with money from new investors and using counterfeit documents to report investment returns falsely to mislead lawyers and accountants as well as investors.
According to The New York Times, John Kim, who faces 35 counts of various criminal charges, including conspiracy to commit wire fraud, mail fraud and conspiracy to commit money laundering, pleaded not guilty yesterday in Federal District Court in West Palm Beach. Calls to lawyers for Mr. Kim were not returned. The other two individuals remain fugitives and are believed to be living outside of the country, according to an individual briefed on the case.
10 Jan 2007
HFN Reports 2006 as Good Year for Hedge Funds
Early estimates from HFN Hedge Fund Aggregate Average shows plus 1.36% in December and finished 2006 at almost plus 12%. Although trailing the S&P 500 TR's +15.80%, 2006 was the best year for hedge funds since 2003 when they returned an average of just over plus 21%.
Since 2001, the HFN Aggregate Average has increased by over 11% while the S&P 500 has a yearly return of 2.94%, HFN reports an equal weighted average of all single manager hedge funds and CTA/managed futures products in the HedgeFund.net database, the HedgeFund.net database consists of over 7,000 current hedge funds and fund of funds.
Emerging markets were the place to be in 2006. Despite a turbulent summer, EM funds outperformed every other hedge fund strategy. The HFN Emerging Markets Average was +2.84% in December and finished 2006 +21.72%. The year ended strong for most emerging markets with the noticeable exception being Thailand where the implementation of capital controls, though only lasting one day, caused the country's equity market to finish down over 8% in December.
The energy sector ended a volatile year on a soft note. The HFN Energy Sector Average was flat in December, -0.01%, and +12.23% for 2006, but returns are more impressive taking into account that while crude oil prices were an average of 16.5% higher throughout the year, natural gas prices were an average of 22.5% lower compared to 2005.
Equity related strategies were prime beneficiaries of global market trends and other strategies which had notable years were distressed and convertible arbitrage funds.
Since 2001, the HFN Aggregate Average has increased by over 11% while the S&P 500 has a yearly return of 2.94%, HFN reports an equal weighted average of all single manager hedge funds and CTA/managed futures products in the HedgeFund.net database, the HedgeFund.net database consists of over 7,000 current hedge funds and fund of funds.
Emerging markets were the place to be in 2006. Despite a turbulent summer, EM funds outperformed every other hedge fund strategy. The HFN Emerging Markets Average was +2.84% in December and finished 2006 +21.72%. The year ended strong for most emerging markets with the noticeable exception being Thailand where the implementation of capital controls, though only lasting one day, caused the country's equity market to finish down over 8% in December.
The energy sector ended a volatile year on a soft note. The HFN Energy Sector Average was flat in December, -0.01%, and +12.23% for 2006, but returns are more impressive taking into account that while crude oil prices were an average of 16.5% higher throughout the year, natural gas prices were an average of 22.5% lower compared to 2005.
Equity related strategies were prime beneficiaries of global market trends and other strategies which had notable years were distressed and convertible arbitrage funds.
US and Europe Conduct Joint Probe into Hedge Fund Lending
US and European regulators are conducting a joint probe into banks and securities firms to see if they are setting careful limits when lending to hedge funds.
Officials want to know how much margin banks require hedge funds to provide up front to obtain loans and cover potential losses. They're hoping to avoid the kind of turmoil that engulfed financial markets when Long-Term Capital Management LP's losses forced the Fed to organize a rescue in 1998.
The SEC, the Federal Reserve Bank of New York and the UK Financial Services Authority last month met with top lenders to the hedge-fund industry asking about the amount of collateral required by prime brokers for loans. Officials from Germany, and Switzerland are also taking part. strict enough limits on loans to hedge funds.
“We are doing work on credit-risk management with the SEC,” David Cliffe, a spokesman for the FSA, said. “It's looking at the prime brokers in relation to the hedge funds.'' The Swiss Banking Commission in Bern has worked with British, US and German authorities on the issue.
Officials want to know how much margin banks require hedge funds to provide up front to obtain loans and cover potential losses. They're hoping to avoid the kind of turmoil that engulfed financial markets when Long-Term Capital Management LP's losses forced the Fed to organize a rescue in 1998.
The SEC, the Federal Reserve Bank of New York and the UK Financial Services Authority last month met with top lenders to the hedge-fund industry asking about the amount of collateral required by prime brokers for loans. Officials from Germany, and Switzerland are also taking part. strict enough limits on loans to hedge funds.
“We are doing work on credit-risk management with the SEC,” David Cliffe, a spokesman for the FSA, said. “It's looking at the prime brokers in relation to the hedge funds.'' The Swiss Banking Commission in Bern has worked with British, US and German authorities on the issue.
9 Jan 2007
ExPirate's Launch new Hedge Fund
Two former analysts and a portfolio manager from activist hedge fund Pirate capital have joined a new hedge fund started by another ex-Pirate colleague. Andrew Stotland, a former marketer at Tom Hudson’s Pirate Capital, formed FrontFour Capital Group and launched the event-driven fund at the beginning of the month.
Zachary George and David Lorber, former analysts at Pirate, and Carl Klein, the firm’s former fixed income portfolio manager, have now joined FrontFour Capital Management. The new hedge fund is expected to launch in the coming months. Its seed investment came from Weston-Atlas Partners, a joint venture between London-based alternative asset management firm Atlas capital Group and Weston Capital.
“New York-based FrontFour employs an event-driven strategy, investing across the capital structure, pairing fundamental analysis with the identification of specific catalysts,” Stotland said. He left Pirate Capital in August. He was responsible for raising the majority of the firms assets. George, Lorber and Klein were part of a group of staff members that left Pirate in September. They departed just as Pirate saw its performance fall below its historically high returns and the firm closed its funds to new investors so that it could control its overall growth. They are now principals at the new hedge fund.
Stotland was the last of the four marketers from Pirate to find a new venture after departing the firm last summer. Miguel Triay went to New York-based Argonaut Capital Management, which runs global macro funds. Kerry Baldwin went to Brian Lippey’s Connecticut-based Trigram Capital Management, which runs an Asia fund. Meanwhile, Gregory Teitel went to Florida-based fund of hedge funds Crystal Advisors.
Zachary George and David Lorber, former analysts at Pirate, and Carl Klein, the firm’s former fixed income portfolio manager, have now joined FrontFour Capital Management. The new hedge fund is expected to launch in the coming months. Its seed investment came from Weston-Atlas Partners, a joint venture between London-based alternative asset management firm Atlas capital Group and Weston Capital.
“New York-based FrontFour employs an event-driven strategy, investing across the capital structure, pairing fundamental analysis with the identification of specific catalysts,” Stotland said. He left Pirate Capital in August. He was responsible for raising the majority of the firms assets. George, Lorber and Klein were part of a group of staff members that left Pirate in September. They departed just as Pirate saw its performance fall below its historically high returns and the firm closed its funds to new investors so that it could control its overall growth. They are now principals at the new hedge fund.
Stotland was the last of the four marketers from Pirate to find a new venture after departing the firm last summer. Miguel Triay went to New York-based Argonaut Capital Management, which runs global macro funds. Kerry Baldwin went to Brian Lippey’s Connecticut-based Trigram Capital Management, which runs an Asia fund. Meanwhile, Gregory Teitel went to Florida-based fund of hedge funds Crystal Advisors.
RFA Introduces new Hedge Fund Protection Product
Richard Fleischman & Associates (RFA), the leader in IT solutions for the hedge fund community, today announced the general availability of the eHarbor file and e-mail data backup/restore solution for hedge funds.
"The best way for a hedge fund to protect itself from disaster is to prevent it from happening in the first place. No organization is immune from lost data and the staggering costs in both time and resources involved rebuilding databases and trading history," says Richard Fleischman, president of RFA. "eHarbor is an enterprise-quality storage solution available at an affordable price. This scalable storage solution grows with hedge funds and never becomes out-dated. eHarbor was designed to provide secure, off-site storage with unlimited backup and restore capability which helps clients save money on their IT investment while protecting their most valuable asset - their data."
RFA was stablished in 1990 and headquartered in New York City, Richard Fleischman & Associates currently serves more than 400 hedge funds globally, RFA maintains a world-class data center in Westchester, NY, providing fully equipped office and trading desk space, disaster recovery and business continuity services.
"The best way for a hedge fund to protect itself from disaster is to prevent it from happening in the first place. No organization is immune from lost data and the staggering costs in both time and resources involved rebuilding databases and trading history," says Richard Fleischman, president of RFA. "eHarbor is an enterprise-quality storage solution available at an affordable price. This scalable storage solution grows with hedge funds and never becomes out-dated. eHarbor was designed to provide secure, off-site storage with unlimited backup and restore capability which helps clients save money on their IT investment while protecting their most valuable asset - their data."
RFA was stablished in 1990 and headquartered in New York City, Richard Fleischman & Associates currently serves more than 400 hedge funds globally, RFA maintains a world-class data center in Westchester, NY, providing fully equipped office and trading desk space, disaster recovery and business continuity services.
Hedge Fund Manager Hired by L&G
Legal & General, the UK pension fund worth £218 billion, has appointed former hedge fund executive Ian King as head of L&G's active European equities. He was involved in 2006 in establishing KDR Europe, a European equity hedge fund, according to Reuters.
King will hold the post beginning from the end of January, the strategy is to revive its European active equity team after staff exits last year. His move to Legal & General Investment Management bucks a recent trend of managers at traditional asset management firms moving into the fast-growing hedge fund arena.
In a statement L&G said, "His (King's) immediate task will be to rebuild the active European equity team with the intention that the European equity portfolios are returned to active management by the mid-year." Before his work at KDR, L&G said, King worked at American Express Asset Management International for more than 10 years.
Legal & General is one of Britain's top 50 FTSE companies, with over 5.4 million customers L&G employs over 8,800 staff. The company has operations in the USA, France, the Netherlands and Germany, as well as the UK.
King will hold the post beginning from the end of January, the strategy is to revive its European active equity team after staff exits last year. His move to Legal & General Investment Management bucks a recent trend of managers at traditional asset management firms moving into the fast-growing hedge fund arena.
In a statement L&G said, "His (King's) immediate task will be to rebuild the active European equity team with the intention that the European equity portfolios are returned to active management by the mid-year." Before his work at KDR, L&G said, King worked at American Express Asset Management International for more than 10 years.
Legal & General is one of Britain's top 50 FTSE companies, with over 5.4 million customers L&G employs over 8,800 staff. The company has operations in the USA, France, the Netherlands and Germany, as well as the UK.
8 Jan 2007
Hedge Fund Technology Training 2007
Chameleon productions is holding a conference on the future of algorithmic trading this March in London. Chameleon is asking hedge fund managers and other high level investors to submit papers on working showcase application, case studies, progress through research, and evidence of outcomes, among other things. Submission deadline date: 14th January 2007.
The conference is aimed at attracting hedge fund managers, investment bankers, and asset managers who are considering algorithmic trading solutions for increasing investment returns. Algorithmic or rule based trading strategies are fast becoming the standard across a number of financial institutions.
Institutional and high net worth individuals are being targeted with algorithm-based strategies that are constantly gaining in sophistication. The conference will allow for sell-side financial institutions to market their algorithmic trading strategies and for buy-side financial institutions to determine how these can be complementary to their existing trade process.
Algorithmic Trading 2007 will be a focal point for research and discussion on new strategies within algorithmic trading and a forum for existing vendors to display their models and supporting technology.
In an environment where gaining investor confidence is becoming more and more difficult; the demands set by potential investors rest more on finding asset classes that provide diversification and stable positive returns. It has become increasingly important to start exploiting new algorithm based investment strategies.
The conference also aims to be the definitive breeding ground for a new type of investment professional. One that uses the power of mathematical inference to generate alpha and exploit anomalies found in global financial markets.
For more information see; http://www.chameleonproductions.co.uk/algorithmics.html
The conference is aimed at attracting hedge fund managers, investment bankers, and asset managers who are considering algorithmic trading solutions for increasing investment returns. Algorithmic or rule based trading strategies are fast becoming the standard across a number of financial institutions.
Institutional and high net worth individuals are being targeted with algorithm-based strategies that are constantly gaining in sophistication. The conference will allow for sell-side financial institutions to market their algorithmic trading strategies and for buy-side financial institutions to determine how these can be complementary to their existing trade process.
Algorithmic Trading 2007 will be a focal point for research and discussion on new strategies within algorithmic trading and a forum for existing vendors to display their models and supporting technology.
In an environment where gaining investor confidence is becoming more and more difficult; the demands set by potential investors rest more on finding asset classes that provide diversification and stable positive returns. It has become increasingly important to start exploiting new algorithm based investment strategies.
The conference also aims to be the definitive breeding ground for a new type of investment professional. One that uses the power of mathematical inference to generate alpha and exploit anomalies found in global financial markets.
For more information see; http://www.chameleonproductions.co.uk/algorithmics.html
Hedge Fund buys Access to Energy Trading and Delivery
Highbridge Capital Management, a $17 billion hedge fund is reported to have taken a $1 billion equity stake in the energy business of Louis Dreyfus Group, the old-line commodities trading firm, in a deal worth about
Highbridge Capital, which is majority owned by JPMorgan Chase, said it invested in Louis Dreyfus to gain more access to energy delivery and trading markets on its own. “We saw this as a real opportunity that is uncorrelated to everything else we’re doing,” said Glenn Dubin, managing partner of the hedge fund. He explained that he had considered trying to get the hedge fund into the energy trading business more heavily on its own, but concluded, “there was no way we could do this by ourselves.”
Highbridge and Dreyfus will jointly manage the venture, which will be called Louis Dreyfus Highbridge Energy and maintain its headquarters in Wilton, Conn. Before the Highbridge investment, Louis Dreyfus Energy was one of the 10 largest natural gas marketers in the United States and had worldwide interests in both the physical delivery of petroleum and natural gas as well as financial interests in energy.
JPMorgan Chase bought its stake in Highbridge in 2004 to gain exposure to the fast-growing hedge fund sector. The deal proved to be well-timed, as pension funds and other institutions continued to pour billions in to hedge funds, including Highbridge.
Highbridge Capital, which is majority owned by JPMorgan Chase, said it invested in Louis Dreyfus to gain more access to energy delivery and trading markets on its own. “We saw this as a real opportunity that is uncorrelated to everything else we’re doing,” said Glenn Dubin, managing partner of the hedge fund. He explained that he had considered trying to get the hedge fund into the energy trading business more heavily on its own, but concluded, “there was no way we could do this by ourselves.”
Highbridge and Dreyfus will jointly manage the venture, which will be called Louis Dreyfus Highbridge Energy and maintain its headquarters in Wilton, Conn. Before the Highbridge investment, Louis Dreyfus Energy was one of the 10 largest natural gas marketers in the United States and had worldwide interests in both the physical delivery of petroleum and natural gas as well as financial interests in energy.
JPMorgan Chase bought its stake in Highbridge in 2004 to gain exposure to the fast-growing hedge fund sector. The deal proved to be well-timed, as pension funds and other institutions continued to pour billions in to hedge funds, including Highbridge.
BGI gets Ahead with Hedge Fund Technology
"We didn't set out to be a hedge fund giant," said Blake Grossman, the head of Barclays Global Investors in San Francisco.
But it has!... BGI manages almost $1.7 trillion in assets and has a stake in 65 of the world's 100 largest pension plans, making them one of the most powerful forces in money management today.
New Technology goes into the picking of the shares, such as computer software called Optimizer, which crunches corporate earnings data and dozens of other variables for almost every stock in the world. Ph.D.s, mathematicians and other quantitative analysts, or quants, spend their time at BGI designing investing strategies for thousands of stocks, bonds and currencies and then use computers to pick which ones to buy and sell.
Grossman has used his quants to transform a firm built on index investing into one of the world's largest hedge fund managers. In an article by Bloomberg, it was reported that Grossman is converting corporate and public pension funds into what BGI calls a scientific approach to hedge funds.
Institutional investing is undergoing radical change, according to Grossman. Ten or 20 years ago, money managers who had been entrusted with people's retirement nest eggs refused to make risky investments or short stocks.
Now, these managers are adopting hedge fund strategies to generate the returns they will need to keep their promises to workers and retirees.
"As of Sept. 30, the firm had amassed $17 billion in long/ short funds......We think this artificial divide between long-only and long/short is one that's destined to become extinct over the next several years" Grossman said.
But it has!... BGI manages almost $1.7 trillion in assets and has a stake in 65 of the world's 100 largest pension plans, making them one of the most powerful forces in money management today.
New Technology goes into the picking of the shares, such as computer software called Optimizer, which crunches corporate earnings data and dozens of other variables for almost every stock in the world. Ph.D.s, mathematicians and other quantitative analysts, or quants, spend their time at BGI designing investing strategies for thousands of stocks, bonds and currencies and then use computers to pick which ones to buy and sell.
Grossman has used his quants to transform a firm built on index investing into one of the world's largest hedge fund managers. In an article by Bloomberg, it was reported that Grossman is converting corporate and public pension funds into what BGI calls a scientific approach to hedge funds.
Institutional investing is undergoing radical change, according to Grossman. Ten or 20 years ago, money managers who had been entrusted with people's retirement nest eggs refused to make risky investments or short stocks.
Now, these managers are adopting hedge fund strategies to generate the returns they will need to keep their promises to workers and retirees.
"As of Sept. 30, the firm had amassed $17 billion in long/ short funds......We think this artificial divide between long-only and long/short is one that's destined to become extinct over the next several years" Grossman said.
5 Jan 2007
Oil Losses May Impact Hedge Funds
The recent drop in oil prices has raised market speculation that hedge funds might be taking large losses in oil position investments. A lot like the big natural gas bet that sank the multi-billion dollar Amaranth fund in 2006.
Oil prices stayed under $56 on Friday after an almost 9% drop over the past two days to its lowest close in 18 months. Investors are worried about growing U.S. fuel stocks and mild weather. The hefty losses in oil as well as in other commodities also may have been triggered by funds switching into other assets, it was reported in the Scotsman.
"Weather is certainly a key driver of sentiment, but what has been set in motion is a far more general demand pessimism for the year ahead," said Barclays Capital in the Scotsman.com. "This has produced a market that is more sensitive than usual to any producer hedging, and which is inclined to attempt to break sharply lower."
A top Iranian oil official said they were hoping to keep markets balanced until the 12-member group meets on March 15, but OPEC was keeping an eye on hedge fund activity in the markets, "We have to see whether the funds overreact... If that's the case, we may have to consider meeting (before March)," said Iran's OPEC Governor Hossein Kazempour Ardebili.
Oil prices stayed under $56 on Friday after an almost 9% drop over the past two days to its lowest close in 18 months. Investors are worried about growing U.S. fuel stocks and mild weather. The hefty losses in oil as well as in other commodities also may have been triggered by funds switching into other assets, it was reported in the Scotsman.
"Weather is certainly a key driver of sentiment, but what has been set in motion is a far more general demand pessimism for the year ahead," said Barclays Capital in the Scotsman.com. "This has produced a market that is more sensitive than usual to any producer hedging, and which is inclined to attempt to break sharply lower."
A top Iranian oil official said they were hoping to keep markets balanced until the 12-member group meets on March 15, but OPEC was keeping an eye on hedge fund activity in the markets, "We have to see whether the funds overreact... If that's the case, we may have to consider meeting (before March)," said Iran's OPEC Governor Hossein Kazempour Ardebili.
Office Space
Massachusetts Secretary of State William F. Galvin is investigating whether leased office space and other services that investment bank UBS provides to hedge funds have created a conflict of interest that could hurt investors, Galvin's spokesman said in an announcement.
It was reported that UBS and other investment banks lease space to young hedge fund traders in various cities, hoping they may become larger clients eventually. The arrangement could amount to a conflict of interest, Brian McNiff, Galvin's spokesman, said in his announcement, comparing it to "soft dollar" payments. These drew criticism when they were commonly paid by mutual funds in the 1990s, because the services often benefit managers more than shareholders who cover their costs.
The investigation is focused on whether the hedge funds are paying higher trading fees to the banks to compensate them for the office space, and failing to disclose the expense to investors. "He's looking at potential violations of securities laws, and a conflict of interest would be one of those," McNiff said.
Galvin's probe was disclosed in stories in The New York Times and The Boston Globe on Tuesday. McNiff told the press he was aware only of Galvin's interest in UBS, which leases space to hedge fund traders in a downtown Boston office tower. The space comes with receptionists, espresso machines and consultants to manage information systems, the Times said.
McNiff said the investigation into what he called "hedge fund hotels" was at a preliminary stage, and it was too early to say whether the probe might lead to enforcement actions.
It was reported that UBS and other investment banks lease space to young hedge fund traders in various cities, hoping they may become larger clients eventually. The arrangement could amount to a conflict of interest, Brian McNiff, Galvin's spokesman, said in his announcement, comparing it to "soft dollar" payments. These drew criticism when they were commonly paid by mutual funds in the 1990s, because the services often benefit managers more than shareholders who cover their costs.
The investigation is focused on whether the hedge funds are paying higher trading fees to the banks to compensate them for the office space, and failing to disclose the expense to investors. "He's looking at potential violations of securities laws, and a conflict of interest would be one of those," McNiff said.
Galvin's probe was disclosed in stories in The New York Times and The Boston Globe on Tuesday. McNiff told the press he was aware only of Galvin's interest in UBS, which leases space to hedge fund traders in a downtown Boston office tower. The space comes with receptionists, espresso machines and consultants to manage information systems, the Times said.
McNiff said the investigation into what he called "hedge fund hotels" was at a preliminary stage, and it was too early to say whether the probe might lead to enforcement actions.
3 Jan 2007
Hedge Fund Provider Announces Stong Growth With New Wall Street Technology
Hedge fund provider LiquidPoint LLC, announced that it has far exceeded 2006 performance projections, ncluding huge increases in both options transaction volume and number of end-users.
Anthony Saliba, CEO of LiquidPoint stated, “LiquidPoint’s monthly contract volume in December was up over 100% compared to the same time frame last year. Our 2006 volume was 78% greater than last year. With the onset of penny markets, we have every reason to expect this trend to continue in 2007.”
LiquidPoint’s technology affiliate, First Traders Analytical Solutions (FTAS), delivered several high-impact enhancements in 2006. Among the new features delivered, the focus was on specific work flow efficiencies for Wall Street firms. Daniel Rooney, LiquidPoint’s Director of Sales, said,” Our user community increased in 2006 as we substantially increased our presence on the trading floor at key Wall Street firms.”
First Traders provides software products and services for the electronic options trading marketplace to Wall Street firms, executing brokerage firms, hedge funds, proprietary trading firms, the retail trading community and the U.S. options exchanges.
LiquidPoint’s client base includes hedge funds, institutions, prime brokers and their customers and other professional options traders. The HEAT™ System is also available through select prime brokers.
“These recent enhancements are satisfying a strong demand within this expanding industry, contributing to our firm’s growth. As the exchanges race to differentiate themselves. LiquidPoint and FTAS are working to ensure their customers have all they need to take advantage of industry changes and new opportunities.” Mr. Rooney said in a statement.
Anthony Saliba, CEO of LiquidPoint stated, “LiquidPoint’s monthly contract volume in December was up over 100% compared to the same time frame last year. Our 2006 volume was 78% greater than last year. With the onset of penny markets, we have every reason to expect this trend to continue in 2007.”
LiquidPoint’s technology affiliate, First Traders Analytical Solutions (FTAS), delivered several high-impact enhancements in 2006. Among the new features delivered, the focus was on specific work flow efficiencies for Wall Street firms. Daniel Rooney, LiquidPoint’s Director of Sales, said,” Our user community increased in 2006 as we substantially increased our presence on the trading floor at key Wall Street firms.”
First Traders provides software products and services for the electronic options trading marketplace to Wall Street firms, executing brokerage firms, hedge funds, proprietary trading firms, the retail trading community and the U.S. options exchanges.
LiquidPoint’s client base includes hedge funds, institutions, prime brokers and their customers and other professional options traders. The HEAT™ System is also available through select prime brokers.
“These recent enhancements are satisfying a strong demand within this expanding industry, contributing to our firm’s growth. As the exchanges race to differentiate themselves. LiquidPoint and FTAS are working to ensure their customers have all they need to take advantage of industry changes and new opportunities.” Mr. Rooney said in a statement.
Man Investments Supports Hedge Fund World Middle East Awards
Man Investments is supporting this year's Hedge Funds World Middle East Awards. Man said, "We believe that they will play a critical role in identifying the future stars of the region's hedge fund industry."
Awards will be made in six categories, including for the year's best hedge fund distributor and the most innovative project. The awards are being held as part of the Hedge Funds World Middle East conference, which runs from 5-8 March 2007 in Dubai.
The winners and finalists will receive their well deserved recognition and accolade at the Hedge Funds Awards ceremony and gala dinner at 19:00 – March 6th at The Events Arena, The Jumeirah Beach Hotel, Dubai. The deadline to enter the awards is the 12th of January.
For more information on the event see, http://www.hedgefundsworld.com/2007/awardsme/
Awards will be made in six categories, including for the year's best hedge fund distributor and the most innovative project. The awards are being held as part of the Hedge Funds World Middle East conference, which runs from 5-8 March 2007 in Dubai.
The winners and finalists will receive their well deserved recognition and accolade at the Hedge Funds Awards ceremony and gala dinner at 19:00 – March 6th at The Events Arena, The Jumeirah Beach Hotel, Dubai. The deadline to enter the awards is the 12th of January.
For more information on the event see, http://www.hedgefundsworld.com/2007/awardsme/
Predictions for Hedge Funds in the New Year
"A hedge-fund manager will buy Aston Martin." That's the forecast according to Bloomberg columnist Matthew Lynn. Pretty bold, but you never know, he also says that "farming will become a great way (for hedge funds) to get rich"
"High oil prices are causing a surge of interest in alternative energy, with ethanol leading the way. Making fuel from corn or other grains, however, means digging up a lot of fields....It has been more than a century since farmland was the basis for a financial aristocracy, but every asset comes back into its own if you just wait long enough. JPMorgan Chase & Co. already rates corn among the best investments for 2007.... Expect to hear the hedge-fund manager beside you in the bar boasting about how he has just snapped up 1 million acres in Ukraine."
And about the Aston Martin, he had this to say, "Ford Motor Co. has already put its world-beating luxury-car unit Aston Martin up for sale. The hedge funds are awash with money and have been snapping up all sorts of interesting companies. London-based RAB Capital Plc, for example, just took control of the A1 Grand Prix motor-racing business....London's loaded hedgehogs love to drive around in their shiny new Astons. What better synergies could there be than owning the company that makes them? You can sell it to the investors as a great deal and have fun messing around in the factory at the same time."
"High oil prices are causing a surge of interest in alternative energy, with ethanol leading the way. Making fuel from corn or other grains, however, means digging up a lot of fields....It has been more than a century since farmland was the basis for a financial aristocracy, but every asset comes back into its own if you just wait long enough. JPMorgan Chase & Co. already rates corn among the best investments for 2007.... Expect to hear the hedge-fund manager beside you in the bar boasting about how he has just snapped up 1 million acres in Ukraine."
And about the Aston Martin, he had this to say, "Ford Motor Co. has already put its world-beating luxury-car unit Aston Martin up for sale. The hedge funds are awash with money and have been snapping up all sorts of interesting companies. London-based RAB Capital Plc, for example, just took control of the A1 Grand Prix motor-racing business....London's loaded hedgehogs love to drive around in their shiny new Astons. What better synergies could there be than owning the company that makes them? You can sell it to the investors as a great deal and have fun messing around in the factory at the same time."
Activist Hedge Fund calls for sale Of Sunpower.
Activist hedge fund Chapman Capital LLC announced that it has notified the Board of Directors of Cypress Semiconductor Corporation of its recommendation that Cypress reorganize via a split-off and subsequent going-private LBO transaction.
A letter from Robert L. Chapman, Jr., Managing Member of Chapman Capital, has been sent to Cypress's full Board of Directors, accused the company of under performing and called for the launch of a large-scale "corporate reorganization" that would involve splitting from Sunpower Corp, in which Cypress has held a major stake insince 2002.
The letter, calling for the sale of SunPower, says "Our long term investment in Cypress was made following passive participation in over a dozen recent conference calls and presentations, on top of countless inquiries to semiconductor and solar cell industry experts. In fact, it is our view that Cypress may be experiencing a slight, short-term order shortfall in line with others in its industry, a condition with which we are comfortable given our long term perspective."
The letter, signed by Chapman Capital's managing member Robert Chapman, Jr., claimed that since it owns 1.5 million common shares in Cypress, its financial interest the company now exceeds CEO Thurman J. Rodgers' own, Chapman cited what he called the "needlessly protracted undervaluation placed by the market on Cypress's core semiconductor operations" as fueling the hedge fund's call for a corporate reorganization that would separate Cypress' core semiconductor operations from its controlling stake in SunPower.
Regarding Chapman Capital's growing concerns regarding relatively immaterial Cypress share ownership by its Board of Directors, Mr. Chapman stated further, "Cypress's core semiconductor business, which Mr. Rodgers founded nearly 25 years ago, deserves a much higher valuation than what it was ascribed the day Mr. Rodgers took it public two decades ago. Mr. Rodgers has stated publicly, 'you and I are going to make as much money as fast as we can on this.' Cypress's Board of Directors, despite their insignificant percentage ownership of Cypress, should expect that we are going to hold Mr. Rodgers to this promise."
Chapman Capital L.L.C. is a Los Angeles, CA based hedge fund focusing on takeover and turnaround investing. The firm currently manages over $300 million as the registered investment advisor to Chap-Cap Partners II Master Fund, Ltd. and Chap-Cap Activist Partners Master Fund, Ltd., the combined owners of approximately 1% of Cypress Semiconductor Corporation's common shares.
A letter from Robert L. Chapman, Jr., Managing Member of Chapman Capital, has been sent to Cypress's full Board of Directors, accused the company of under performing and called for the launch of a large-scale "corporate reorganization" that would involve splitting from Sunpower Corp, in which Cypress has held a major stake insince 2002.
The letter, calling for the sale of SunPower, says "Our long term investment in Cypress was made following passive participation in over a dozen recent conference calls and presentations, on top of countless inquiries to semiconductor and solar cell industry experts. In fact, it is our view that Cypress may be experiencing a slight, short-term order shortfall in line with others in its industry, a condition with which we are comfortable given our long term perspective."
The letter, signed by Chapman Capital's managing member Robert Chapman, Jr., claimed that since it owns 1.5 million common shares in Cypress, its financial interest the company now exceeds CEO Thurman J. Rodgers' own, Chapman cited what he called the "needlessly protracted undervaluation placed by the market on Cypress's core semiconductor operations" as fueling the hedge fund's call for a corporate reorganization that would separate Cypress' core semiconductor operations from its controlling stake in SunPower.
Regarding Chapman Capital's growing concerns regarding relatively immaterial Cypress share ownership by its Board of Directors, Mr. Chapman stated further, "Cypress's core semiconductor business, which Mr. Rodgers founded nearly 25 years ago, deserves a much higher valuation than what it was ascribed the day Mr. Rodgers took it public two decades ago. Mr. Rodgers has stated publicly, 'you and I are going to make as much money as fast as we can on this.' Cypress's Board of Directors, despite their insignificant percentage ownership of Cypress, should expect that we are going to hold Mr. Rodgers to this promise."
Chapman Capital L.L.C. is a Los Angeles, CA based hedge fund focusing on takeover and turnaround investing. The firm currently manages over $300 million as the registered investment advisor to Chap-Cap Partners II Master Fund, Ltd. and Chap-Cap Activist Partners Master Fund, Ltd., the combined owners of approximately 1% of Cypress Semiconductor Corporation's common shares.
Hedge Funds Voted Down
US hedge funds Ramius Capital Group and Moon Capital Management voted with a 47.6% share to remove the directors of South Korean online game developer Gravity Co. Ltd.
Gravity's other shareholders however, rejected the proposal to remove Chief Executive Il Young Ryu and Seung Taik Baik, the company's chief operating officer.
A spokesman for the hedge funds said that the majority of "disinterested" shareholders voted to remove the executives. "These results demonstrate that Gravity's minority shareholders clearly and overwhelmingly demand the immediate removal of Mr. Ryu and Mr. Baik as directors," Mark Mitchell, Ramius Capital's executive managing director, said in a statement.
The hedge funds had cited "consistent detrimental actions against shareholders by the executives and the board through various related-party transactions with companies that clearly have conflicts of interest with the company." The hedge funds also questioned the executives' decision to acquire another gaming company, Emile Chronicle Online, without seeking an independent valuation.
In a statement from Gravity, the management "urges the two hedge funds, Ramius and Moon, to offer constructive criticism and positive encouragement as responsible shareholders."
Gravity's other shareholders however, rejected the proposal to remove Chief Executive Il Young Ryu and Seung Taik Baik, the company's chief operating officer.
A spokesman for the hedge funds said that the majority of "disinterested" shareholders voted to remove the executives. "These results demonstrate that Gravity's minority shareholders clearly and overwhelmingly demand the immediate removal of Mr. Ryu and Mr. Baik as directors," Mark Mitchell, Ramius Capital's executive managing director, said in a statement.
The hedge funds had cited "consistent detrimental actions against shareholders by the executives and the board through various related-party transactions with companies that clearly have conflicts of interest with the company." The hedge funds also questioned the executives' decision to acquire another gaming company, Emile Chronicle Online, without seeking an independent valuation.
In a statement from Gravity, the management "urges the two hedge funds, Ramius and Moon, to offer constructive criticism and positive encouragement as responsible shareholders."
27 Dec 2006
Hegde Fund Funded Exco Doubles Oil Reserves
Exco Resources Inc. announced an agreement to buy producing oil and gas properties in Jackson Parish, Louisiana from Anadarko Petroleum Corp. for $1.6 billion, almost doubling its oil and gas reserves. The total acreage is approximately 66,000 net acres.
Exco's largest shareholder is legendary oilman and billionaire hedge fund manager T. Boone Pickens, who with his two hedge funds, owns 12.5% of Exco's outstanding shares. Pickens is also on the board of directors and this purchase is the largest of six announced this year by Exco.
Exco is the culmination of several acquisitions made in the last few years by Pickens and Exco CEO, Doug Miller. Pickens, 77, started Mesa Petroleum with $2500 in 1956, growing it into one of the world's leading independent oil and gas producers. He is also the founder and chairman emeritus of Clean Energy Fuels, the nation's largest supplier of natural gas to the transportation sector.
The fields are tapped by about 350 wells, and 96% of the proved reserves on the properties are in production, Exco said. The fields have proved reserves equivalent to about 466 billion cubic feet of gas of which 446 is producing today, Exco said. The acquisition also includes gathering systems, compression and treating plants.
Exco will use cash generated by the new fields to accelerate drilling on more than $2-billion of properties acquired since the public offering. The purchase of the Anadarko fields, expected to close in March, will be financed with a new revolving credit facility and a bridge loan from banks, Exco said in a separate statement.
Exco's largest shareholder is legendary oilman and billionaire hedge fund manager T. Boone Pickens, who with his two hedge funds, owns 12.5% of Exco's outstanding shares. Pickens is also on the board of directors and this purchase is the largest of six announced this year by Exco.
Exco is the culmination of several acquisitions made in the last few years by Pickens and Exco CEO, Doug Miller. Pickens, 77, started Mesa Petroleum with $2500 in 1956, growing it into one of the world's leading independent oil and gas producers. He is also the founder and chairman emeritus of Clean Energy Fuels, the nation's largest supplier of natural gas to the transportation sector.
The fields are tapped by about 350 wells, and 96% of the proved reserves on the properties are in production, Exco said. The fields have proved reserves equivalent to about 466 billion cubic feet of gas of which 446 is producing today, Exco said. The acquisition also includes gathering systems, compression and treating plants.
Exco will use cash generated by the new fields to accelerate drilling on more than $2-billion of properties acquired since the public offering. The purchase of the Anadarko fields, expected to close in March, will be financed with a new revolving credit facility and a bridge loan from banks, Exco said in a separate statement.
Wine and Hedge Funds
Aside from the hedge fund millionaires investing in the land rich wine making lifestyle, a new trend is now being seen among hedge fund investors in the buying of premium wines. Merryl Lynch noted the surge in wine investment in their 2003 World Wealth Report, which found that the rich were devoting 13% of their assets to so-called alternative investments. The category also included art, hedge funds, and foreign exchange.
Peter Meltzer, author of the recently published "Keys to the Cellar: Strategies and Secrets of Wine Collecting," said in an interview with Reuters that six magnums of Domaine de la Romanee-Conti sold earlier this year for $170,375. "There has been a phenomenal growth in the collection of premium wines," said Peter Meltzer, the caretaker of the Wine Spectator index, a gauge of the most frequently sold premium wines, mostly Bordeaux and Burgundies. A single bottle of Chateau Latour 1955 sold with commission for $28,440.
Wall Street wine mavens interested in purchasing a Burgundy vineyard or expanding their investments, have the opportunity to invest in the some 105 million bottles of chardonnay white wines and 75 million bottles of pinot noir reds produced annually. There are about 4,000 “domaines” and 59 types of soil beneath the Cote d’Or’s 50-kilometer (31-mile) stretch.
It seems however, that buying a bottle of the stuff is less risky than trying to go for buying the vinyard “Owning a domaine is a venture capitalist’s dream, high in risk and if the weather is good and you’re really lucky, you might make a 4 percent return. But owning a domaine is the greatest lifestyle imaginable.” Says Wasserman, a vinyard owner in his own right.
It takes three years after the first harvest for the wine to be ready for market,” says Wasserman, who has been a Burgundy wine trader for 40 of his 62 years. “You’re not making a cent for three years, and then your buyers must wait a minimum of three to four years after that before they can drink it. Perfection wouldn’t appear until the wine is six to eight years old…..The land will cost you $6 million, and that will produce 90 casks of
Peter Meltzer, author of the recently published "Keys to the Cellar: Strategies and Secrets of Wine Collecting," said in an interview with Reuters that six magnums of Domaine de la Romanee-Conti sold earlier this year for $170,375. "There has been a phenomenal growth in the collection of premium wines," said Peter Meltzer, the caretaker of the Wine Spectator index, a gauge of the most frequently sold premium wines, mostly Bordeaux and Burgundies. A single bottle of Chateau Latour 1955 sold with commission for $28,440.
Wall Street wine mavens interested in purchasing a Burgundy vineyard or expanding their investments, have the opportunity to invest in the some 105 million bottles of chardonnay white wines and 75 million bottles of pinot noir reds produced annually. There are about 4,000 “domaines” and 59 types of soil beneath the Cote d’Or’s 50-kilometer (31-mile) stretch.
It seems however, that buying a bottle of the stuff is less risky than trying to go for buying the vinyard “Owning a domaine is a venture capitalist’s dream, high in risk and if the weather is good and you’re really lucky, you might make a 4 percent return. But owning a domaine is the greatest lifestyle imaginable.” Says Wasserman, a vinyard owner in his own right.
It takes three years after the first harvest for the wine to be ready for market,” says Wasserman, who has been a Burgundy wine trader for 40 of his 62 years. “You’re not making a cent for three years, and then your buyers must wait a minimum of three to four years after that before they can drink it. Perfection wouldn’t appear until the wine is six to eight years old…..The land will cost you $6 million, and that will produce 90 casks of
26 Dec 2006
Higher Standards may be Welcomed by Hedge Funds
State Attorney General Richard Blumenthal, one of the nation's most outspoken advocates for increased hedge fund regulation has repeatedly urged regulators and legislators to consider raising the accredited investor standard.
Some hedge funds have now also expressed support for the proposal by the Securities and Exchange Commission that would shrink the pool of eligible hedge fund investors.
The number of households permitted to invest in hedge funds would be reduced by 88% if the change takes effect, according to SEC economists. Under the proposal, only investors worth $2.5 million or more, about 1.3 percent of U.S. households, would qualify. The proposal, which is open to a 60-day public comment period, also prohibits using the value of a primary home to meet the requirement.
"Raising net worth requirements is a critically significant first step toward helping protect vulnerable investors in the higher risk world of hedge fund investment," Blumenthal said in a statement.
"Especially in areas like Connecticut, increasing real estate values have escalated the retailization of hedge funds -- and entitled and exposed exponentially growing masses of middle class investors to hedge funds," Blumenthal said.
Industry insiders agree. "The change is long overdue," said the head of a Connecticut-based multibillion-dollar fund of funds, who declined to give his name because of company policy.
"It's totally appropriate that the SEC should be updating the standard, which has not increased for inflation for many, many years," the fund manager said. The new rule would have "virtually no impact" on the industry in terms of the amount of assets being pumped into hedge funds, he said.
Victor Zimmermann Jr., managing partner of the Stamford office of Curtis, Mallet-Prevost, Colt & Mosle LLC, a law firm with many hedge fund clients, agreed that the impact would not be extreme. "The industry has changed quite a bit in the last five or 10 years," he said. "It is much more dominated by institutional money, rather than individuals."
Even hedge fund startups, which historically sought out wealthy individuals for seed money, are now turning to large banks as initial seed investors, Zimmermann said. "It is just fewer and fewer funds relying on individual investors," he said.
Zimmermann said hedge funds probably won't oppose the SEC rule, recognizing that it wouldn't have much impact on the industry and at the same time might satisfy some state regulators such as Blumenthal who have been clamoring for more oversight.
Some hedge funds have now also expressed support for the proposal by the Securities and Exchange Commission that would shrink the pool of eligible hedge fund investors.
The number of households permitted to invest in hedge funds would be reduced by 88% if the change takes effect, according to SEC economists. Under the proposal, only investors worth $2.5 million or more, about 1.3 percent of U.S. households, would qualify. The proposal, which is open to a 60-day public comment period, also prohibits using the value of a primary home to meet the requirement.
"Raising net worth requirements is a critically significant first step toward helping protect vulnerable investors in the higher risk world of hedge fund investment," Blumenthal said in a statement.
"Especially in areas like Connecticut, increasing real estate values have escalated the retailization of hedge funds -- and entitled and exposed exponentially growing masses of middle class investors to hedge funds," Blumenthal said.
Industry insiders agree. "The change is long overdue," said the head of a Connecticut-based multibillion-dollar fund of funds, who declined to give his name because of company policy.
"It's totally appropriate that the SEC should be updating the standard, which has not increased for inflation for many, many years," the fund manager said. The new rule would have "virtually no impact" on the industry in terms of the amount of assets being pumped into hedge funds, he said.
Victor Zimmermann Jr., managing partner of the Stamford office of Curtis, Mallet-Prevost, Colt & Mosle LLC, a law firm with many hedge fund clients, agreed that the impact would not be extreme. "The industry has changed quite a bit in the last five or 10 years," he said. "It is much more dominated by institutional money, rather than individuals."
Even hedge fund startups, which historically sought out wealthy individuals for seed money, are now turning to large banks as initial seed investors, Zimmermann said. "It is just fewer and fewer funds relying on individual investors," he said.
Zimmermann said hedge funds probably won't oppose the SEC rule, recognizing that it wouldn't have much impact on the industry and at the same time might satisfy some state regulators such as Blumenthal who have been clamoring for more oversight.
New Laws Create Investment Opportunities in Russia
Sberbank, Russia's central bank, says that in 2006 48 Russian banks were fully owned by foreigners, and the total share of non-residents in Russian banks stood at 12.92%.
According to a report by Reuters, the lower house of Russian parliament has just made it easier for foreigners to gain exposure to the booming sector by passing legislation that would put foreign and domestic investors on an equal footing when buying shares in Russian banks, also making it easier for Russian banks to go public.
The new rules would oblige residents and non-residents to inform regulators if they purchase more than a 1% stake in a Russian bank and seek permission to build a stake of more than 20%, according to the report by Reuters.
After approval by the upper chamber of parliament and signed into law by President Vladimir Putin, the amendments should pave the way for a $7.6 billion additional share issue by Russia's largest bank, state-owned Sberbank, as well as a $4 billion initial public offering by domestic rival VTB.
"These amendments will clearly facilitate secondary trading and be positive for all banking stocks traded in Russia," Alfa Bank analysts said in a research note, suggesting the new law will have a positive effect on Russian banks going public.
According to a report by Reuters, the lower house of Russian parliament has just made it easier for foreigners to gain exposure to the booming sector by passing legislation that would put foreign and domestic investors on an equal footing when buying shares in Russian banks, also making it easier for Russian banks to go public.
The new rules would oblige residents and non-residents to inform regulators if they purchase more than a 1% stake in a Russian bank and seek permission to build a stake of more than 20%, according to the report by Reuters.
After approval by the upper chamber of parliament and signed into law by President Vladimir Putin, the amendments should pave the way for a $7.6 billion additional share issue by Russia's largest bank, state-owned Sberbank, as well as a $4 billion initial public offering by domestic rival VTB.
"These amendments will clearly facilitate secondary trading and be positive for all banking stocks traded in Russia," Alfa Bank analysts said in a research note, suggesting the new law will have a positive effect on Russian banks going public.
Citigroup buys Morgan Stanley Fund
Citigroup has agreed to buy wealth manager fund Quilter from rival Morgan Stanley as it seeks to expand in the UK. The acquisition places Citigroup among the top 10 wealth managers in the UK, the bank said in an e-mail.
Quilter, which manages $11 billion, will become part of the bank's global wealth-management division in Europe, run by Marianne Hay, Citigroup said.
Quilter has more than 18,000 clients and 300 employees in 10 offices in Britain, Ireland and the Channel Islands. The fund manages assets worth more than 5.6 billion pounds, has 18,000 clients and employs 300 staff, said the companies, which did not disclose details of the transaction such as the price paid by the bank.
"With strategic investments geared especially for Brazil, India and greater China, Quilter is an important step in establishing a meaningful presence in the UK, with an excellent platform to support the further growth of our Private Bank and international Smith Barney businesses," said Todd Thomson, Chairman and CEO of Citigroup Global Wealth Management, in the Citigroup statement. The bank said it plans to fuse Quilter into its CWA unit.
Quilter, which manages $11 billion, will become part of the bank's global wealth-management division in Europe, run by Marianne Hay, Citigroup said.
Quilter has more than 18,000 clients and 300 employees in 10 offices in Britain, Ireland and the Channel Islands. The fund manages assets worth more than 5.6 billion pounds, has 18,000 clients and employs 300 staff, said the companies, which did not disclose details of the transaction such as the price paid by the bank.
"With strategic investments geared especially for Brazil, India and greater China, Quilter is an important step in establishing a meaningful presence in the UK, with an excellent platform to support the further growth of our Private Bank and international Smith Barney businesses," said Todd Thomson, Chairman and CEO of Citigroup Global Wealth Management, in the Citigroup statement. The bank said it plans to fuse Quilter into its CWA unit.
Goldman Sachs names New Hedge Fund Manager
Goldman Sachs has named the new head of their alternative investments asset-management units as Marc Spilker, he will be overseeing hedge funds and private equity.
Goldman named Spilker, 42, to replace George Walker, who left in May to run the funds unit at Lehman Brothers. Spilker will report to Eric Schwartz and Peter Kraus, co-heads of Goldman Sachs Asset Management.
Spilker is a 16-year veteran of the investment bank, he was co-head of U.S. equituies trading and global head of volatility trading. He previously headed currency options and Japanese fixed-income.
Goldman named Spilker, 42, to replace George Walker, who left in May to run the funds unit at Lehman Brothers. Spilker will report to Eric Schwartz and Peter Kraus, co-heads of Goldman Sachs Asset Management.
Spilker is a 16-year veteran of the investment bank, he was co-head of U.S. equituies trading and global head of volatility trading. He previously headed currency options and Japanese fixed-income.
Asia's $100 Million Bonuses
Some traders in Tokyo and London are rumoured to be in the $100 million bonus club. The "giant" bonuses at Morgan Stanley and the $40 million John Mack took home has started rumors inside Wall Street about who might be in the running to get $100 million checks this year.
Several members of the $100 million club are in Goldman Sachs Asian offices. Morgan Sze, a head trader in Goldman's principal strategies group based in Hong Kong, is mentioned by several sources as a possible member of the club according to the New York Post. Sze's counterpart in London, Pierre-Henri Flamand is also rumored to be receiving a $100 million bonus.
Raanan Agus, who is the New York-based head of Goldman's principal strategies hedge fund group makes bets using nearly $10 billion of the firm's capital, could get $70 million. "Apparently, a $100 million payout isn't as uncommon as some originally thought," said one Goldman source in the Post.
Goldman CEO Lloyd Blankfein is likely to get about $50 million, while co-presidents Gary Cohn and Jon Winkelried are expected to receive between $40 million and $45 million, sources said. Goldman bonuses make up between 80% and 90% of the traders and bankers annual salaries.
Word of the nine-figure bonuses came as Goldman named Marc Spilker to oversee its money management unit's alternative investments operation, which includes private equity and hedge funds.
Several members of the $100 million club are in Goldman Sachs Asian offices. Morgan Sze, a head trader in Goldman's principal strategies group based in Hong Kong, is mentioned by several sources as a possible member of the club according to the New York Post. Sze's counterpart in London, Pierre-Henri Flamand is also rumored to be receiving a $100 million bonus.
Raanan Agus, who is the New York-based head of Goldman's principal strategies hedge fund group makes bets using nearly $10 billion of the firm's capital, could get $70 million. "Apparently, a $100 million payout isn't as uncommon as some originally thought," said one Goldman source in the Post.
Goldman CEO Lloyd Blankfein is likely to get about $50 million, while co-presidents Gary Cohn and Jon Winkelried are expected to receive between $40 million and $45 million, sources said. Goldman bonuses make up between 80% and 90% of the traders and bankers annual salaries.
Word of the nine-figure bonuses came as Goldman named Marc Spilker to oversee its money management unit's alternative investments operation, which includes private equity and hedge funds.
16 Dec 2006
SEC Votes on new Hedge Fund Rules
The Securities and Exchange Commission has voted to propose several new rules to provide additional protection to investors in hedge funds and other pooled investment vehicles.
The proposing release, which has not yet been published on the SEC's website, will need to explain why there is more risk associated with hedge funds than, for example, raising money to start a coffee kiosk or a pet rock distribution organization. Investors and hedge fund managers may decide that the explanation is insufficient and decide to challenge the SEC's authority to make this distinction.
In an email to the company's clients, HedgeCo lawyer Jay Gould describes one of the proposals being discussed as the reinstatement of the Anti Fraud Provision under the Investment Advisers Act of 1940. This proposal would make it a fraudulent, deceptive, or manipulative act, for an investment adviser to a pooled investment vehicle to make false or misleading statements or to otherwise defraud investors or prospective investors in that pool.
The other one being the application to hedge funds of the Amendment to Private Offering rules under the Securities Act of 1933. This proposal would define a new category of accredited investor that would apply to offers and sales of securities issued by hedge funds and other private investment pools. The proposed definition would include any person who meets either the net worth test or income test, or owns at least $2.5 million in investments.
The increased investor standard will only apply to hedge funds and not to private companies that rely on other exemptions of the federal securities laws. Comments are due 60 days after publication in the Federal Register.
The proposing release, which has not yet been published on the SEC's website, will need to explain why there is more risk associated with hedge funds than, for example, raising money to start a coffee kiosk or a pet rock distribution organization. Investors and hedge fund managers may decide that the explanation is insufficient and decide to challenge the SEC's authority to make this distinction.
In an email to the company's clients, HedgeCo lawyer Jay Gould describes one of the proposals being discussed as the reinstatement of the Anti Fraud Provision under the Investment Advisers Act of 1940. This proposal would make it a fraudulent, deceptive, or manipulative act, for an investment adviser to a pooled investment vehicle to make false or misleading statements or to otherwise defraud investors or prospective investors in that pool.
The other one being the application to hedge funds of the Amendment to Private Offering rules under the Securities Act of 1933. This proposal would define a new category of accredited investor that would apply to offers and sales of securities issued by hedge funds and other private investment pools. The proposed definition would include any person who meets either the net worth test or income test, or owns at least $2.5 million in investments.
The increased investor standard will only apply to hedge funds and not to private companies that rely on other exemptions of the federal securities laws. Comments are due 60 days after publication in the Federal Register.
Germany to Determine if Hedge Funds are a "Systemic Risk"
Germany's Deputy Finance Minister Thomas Mirow held a briefing with reporters on Germany's upcoming presidency of the Group of Eight in 2007, the G8 are the top 8 major industrialized countries, and Mirow plans to examine next year whether hedge funds pose systemic risks.
Mirow said hedge funds were "insufficiently transparent" and the industry had already seen one big hedge fund fail although with few market repercussions. He said industrial nations would try and coordinate efforts to reduce risks posed from hedge funds by promoting more transparency but not necessarily through regulations.
He said, "All over the world, people who are in charge of the stability of the international financial system are dealing with the problem,....There is a sufficient amount of experts saying we should have a closer look at it so to prevent a possible crisis," he added.
"What we would like to know is are there systemic risks, yes or no, and if so, what could we do to deal with it in a reasonable manner," he said.
Mirow's comment came as the U.S. Securities and Exchange Commission prepared to vote on a proposal on Wednesday to raise the limit investors can invest in hedge funds to $2.5 million from $1 million set in 1982.
The SEC's proposed rule, if adopted, would shut the door on a lot of the just-barely wealthy who have been piling into hedge funds lately, although one market analyst said it would likely not affect larger funds with big clients.
U.S. Treasury Secretary Henry Paulson has also weighed in on the issue on December 8 and said it was important to make sure hedge fund liquidity and borrowing were closely monitored, but said they were making a helpful contribution to financial markets.
Mirow said hedge funds were "insufficiently transparent" and the industry had already seen one big hedge fund fail although with few market repercussions. He said industrial nations would try and coordinate efforts to reduce risks posed from hedge funds by promoting more transparency but not necessarily through regulations.
He said, "All over the world, people who are in charge of the stability of the international financial system are dealing with the problem,....There is a sufficient amount of experts saying we should have a closer look at it so to prevent a possible crisis," he added.
"What we would like to know is are there systemic risks, yes or no, and if so, what could we do to deal with it in a reasonable manner," he said.
Mirow's comment came as the U.S. Securities and Exchange Commission prepared to vote on a proposal on Wednesday to raise the limit investors can invest in hedge funds to $2.5 million from $1 million set in 1982.
The SEC's proposed rule, if adopted, would shut the door on a lot of the just-barely wealthy who have been piling into hedge funds lately, although one market analyst said it would likely not affect larger funds with big clients.
U.S. Treasury Secretary Henry Paulson has also weighed in on the issue on December 8 and said it was important to make sure hedge fund liquidity and borrowing were closely monitored, but said they were making a helpful contribution to financial markets.
Morgan Stanley Gives Record Bonuses
Controversial "Mack the Knife" CEO, John Mack was recently cleared by the SEC after investigations into accusations of hedge fund insider trading. Now he has received a record bonus of $40 million as chief executive officer of Morgan Stanley.
Mack, son of Lebanese immigrants, was given $36.2 million in stock, and about $4 million in options to buy Morgan Stanley shares, the company said in a filing with the U.S. Securities and Exchange Commission. The firm also granted more than $57 million in bonuses for seven other top executives.
The bonus is 44% more than Morgan Stanley gave him last year, the previous record was the $38.3 million bonus Henry Paulson received in 2005 as CEO of Goldman Sachs Group Inc. Shares of Morgan Stanley, the second-biggest U.S. securities firm by market value, are having their best year since 2003 after Mack put the firm on course for record earnings.
Mack, who's also Morgan Stanley's chairman, received the 2006 bonus in stock and options, according to the filing. Last year, Mack declined the $28 million bonus he was offered because he had worked at Morgan Stanley for only five months. He accepted a pro-rata payout of $11.5 million in stock and also received a $337,534 salary.
Since Mack joined, Morgan Stanley has fired more than 1,000 under performing brokers, made acquisitions to bolster the firms energy, fixed-income and hedge fund businesses and created new incentives to keep top-producing employees. Morgan Stanley has surpassed analysts' profit estimates by at least 20% for the past four quarters.
Mack, son of Lebanese immigrants, was given $36.2 million in stock, and about $4 million in options to buy Morgan Stanley shares, the company said in a filing with the U.S. Securities and Exchange Commission. The firm also granted more than $57 million in bonuses for seven other top executives.
The bonus is 44% more than Morgan Stanley gave him last year, the previous record was the $38.3 million bonus Henry Paulson received in 2005 as CEO of Goldman Sachs Group Inc. Shares of Morgan Stanley, the second-biggest U.S. securities firm by market value, are having their best year since 2003 after Mack put the firm on course for record earnings.
Mack, who's also Morgan Stanley's chairman, received the 2006 bonus in stock and options, according to the filing. Last year, Mack declined the $28 million bonus he was offered because he had worked at Morgan Stanley for only five months. He accepted a pro-rata payout of $11.5 million in stock and also received a $337,534 salary.
Since Mack joined, Morgan Stanley has fired more than 1,000 under performing brokers, made acquisitions to bolster the firms energy, fixed-income and hedge fund businesses and created new incentives to keep top-producing employees. Morgan Stanley has surpassed analysts' profit estimates by at least 20% for the past four quarters.
14 Dec 2006
Ritchie sells Hedge Fund to Refund Investors
Ritchie Capital Management Ltd. has "decided to terminate the restructuring and effect an orderly disposition of the assets,'' of its flagship hedge fund, the Multistrategy Global Fund.
After consulting with investors, an email was sent to Ritchie's clients revealing their negotiations with an undisclosed buyer for the assets of the hedge fund, and the plan to return the cash to investors. Ritchie Capital has been struggling the past two years with returns that were below average, the fund suffered last year from losing energy bets.
Thane Ritchie, the founder of the company, had previously planned to refund 80% of clients' money over the next 2 1/2 years and keep the fund open for at least three years. The fund, which invests in everything from bonds to energy, lost more than 2% through August from the start of 2005. That compared with an average gain of 14% for competing funds, according to data compiled by Hedge Fund Research Inc. in Chicago.
The sale does not include the mostly private-equity investments that the firm separated into a so-called side pocket last year. Those holdings accounted for about 20% of the fund. The deal would be structured so that Ritchie Capital will continue to manage the assets, Doug Rothschild, the firm's chief administrative officer, said in an interview with Bloomberg. Based in Geneva, Illinois, Richie capital oversees about $2.8 billion including borrowed money.
After consulting with investors, an email was sent to Ritchie's clients revealing their negotiations with an undisclosed buyer for the assets of the hedge fund, and the plan to return the cash to investors. Ritchie Capital has been struggling the past two years with returns that were below average, the fund suffered last year from losing energy bets.
Thane Ritchie, the founder of the company, had previously planned to refund 80% of clients' money over the next 2 1/2 years and keep the fund open for at least three years. The fund, which invests in everything from bonds to energy, lost more than 2% through August from the start of 2005. That compared with an average gain of 14% for competing funds, according to data compiled by Hedge Fund Research Inc. in Chicago.
The sale does not include the mostly private-equity investments that the firm separated into a so-called side pocket last year. Those holdings accounted for about 20% of the fund. The deal would be structured so that Ritchie Capital will continue to manage the assets, Doug Rothschild, the firm's chief administrative officer, said in an interview with Bloomberg. Based in Geneva, Illinois, Richie capital oversees about $2.8 billion including borrowed money.
12 Dec 2006
Hedge Fund Averages Up this year
An index of managers compiled by Hedge Fund Research climbed 2.45% in November, leaving it up 11.69% this year. Five of the six hedge-fund strategy indexes run by Dow Jones also rose last month.
Hedge funds also outperformed the benchmark Standard & Poor's 500 stock market index in November for the first time since May as managers benefited from a falling U.S. dollar, sliding bond yields and a rebound in energy prices.
Managers tracked by Hedgefund.net returned 2.18% on average last month, compared to 1.65% for the S&P 500, leaving them up 10.65% so far this year.
A rebound in energy prices also helped hedge funds focused on that sector. Energy funds tracked by Hedge Fund Research gained 4.41% in November, leaving them up 16.59% so far this year.
Hedge funds also outperformed the benchmark Standard & Poor's 500 stock market index in November for the first time since May as managers benefited from a falling U.S. dollar, sliding bond yields and a rebound in energy prices.
Managers tracked by Hedgefund.net returned 2.18% on average last month, compared to 1.65% for the S&P 500, leaving them up 10.65% so far this year.
A rebound in energy prices also helped hedge funds focused on that sector. Energy funds tracked by Hedge Fund Research gained 4.41% in November, leaving them up 16.59% so far this year.
Hedge Funds and the Middle East
The Middle East accounted for 8%, or $28.9bn, of the global hedge fund market last year. According to a new Bank of New York study, hedge funds will draw a forecast $140.3bn in investments from the Middle East by 2010, accounting for 15% invested globally. Institutional investors provide 40% of the global market, which will increase to 65% by 2010, the study said.
The report by the Bank of New York and Casey, Quirk and Associates LLC, entitled “Institutional Demand for Hedge Funds 2: A Global Perspective”, also estimates that by 2010 nearly 25% of institutional investors will have investments in hedge funds, up from 15% today. It estimates institutional investors will account for more than 50% of flows into hedge funds through 2010 compared to 30% today.
The forecast demand for hedge funds is set to triple to $1 trillion by 2010, up from $360 billion today, as investors continue to embrace alternative investments, the report shows.
The report by the Bank of New York and Casey, Quirk and Associates LLC, entitled “Institutional Demand for Hedge Funds 2: A Global Perspective”, also estimates that by 2010 nearly 25% of institutional investors will have investments in hedge funds, up from 15% today. It estimates institutional investors will account for more than 50% of flows into hedge funds through 2010 compared to 30% today.
The forecast demand for hedge funds is set to triple to $1 trillion by 2010, up from $360 billion today, as investors continue to embrace alternative investments, the report shows.
11 Dec 2006
Hedge Fund buys stake in A1 Grand Prix
RAB Capital has bought a stake in the A1 Grand Prix. The RAB Special Situations hedge fund, run by Philip Richards, has taken an 80% stake worth £100m. The fund has been known in the past for taking large positions in natural-resources firms.
According to The Times Online, as part of the deal, A1’s management will be restructured, Tony Teixeira will move up to chairman while Peter da Silva, Brazilian-born motor-racing fanatic who has spent 20 years at Siemens, has been appointed chief executive. Ben Hill of RAB will also join the board.
Philip Richards said A1, which was launched two years ago and pits nation against nation rather than team against team as in Formula One, represents an opportunity to make a lot of money in China. “Our focus has always been on western-owned and western-run companies that sell successfully to Asia.
"A1 fits with this. Motor racing is one of the fastest-growing sports in Asia, it is watched by both the elite and the masses. It is also the only single event that spans the region and so offers a unique advertising opportunity for global brands.” Richards said.
“We’ve made a fortune selling natural resources, copper, zinc, coal and so on, to the Chinese. This is the same: we’re selling motor racing to Asians, and with it the only event available for global brands to advertise across the continent in the context of a western company.”
According to The Times Online, as part of the deal, A1’s management will be restructured, Tony Teixeira will move up to chairman while Peter da Silva, Brazilian-born motor-racing fanatic who has spent 20 years at Siemens, has been appointed chief executive. Ben Hill of RAB will also join the board.
Philip Richards said A1, which was launched two years ago and pits nation against nation rather than team against team as in Formula One, represents an opportunity to make a lot of money in China. “Our focus has always been on western-owned and western-run companies that sell successfully to Asia.
"A1 fits with this. Motor racing is one of the fastest-growing sports in Asia, it is watched by both the elite and the masses. It is also the only single event that spans the region and so offers a unique advertising opportunity for global brands.” Richards said.
“We’ve made a fortune selling natural resources, copper, zinc, coal and so on, to the Chinese. This is the same: we’re selling motor racing to Asians, and with it the only event available for global brands to advertise across the continent in the context of a western company.”
Gargoyle's flagship Hedge Fund Exceeds Forecast
Gargoyle Asset Management announced today that its flagship hedge fund, the Gargoyle Hedged Value Master Fund, has exceeded $200 million in assets under management.
This fund is designed to allow investors to participate in the large cap U.S. equity market with enhanced performance and lower risk. Since January 2000, this Fund has shown a cumulative return of 118%. During the same period, the S&P 500 is up 6%. The Gargoyle Hedged Value Funds’ results are driven by a relative value stock selection process tightly coupled to an index option writing strategy. The skillful blending of those components has provided a consistent edge for the Gargoyle funds in all market environments.
Joshua B. Parker and Alan L. Salzbank are the fund’s managers. Additionally, Mr. Parker is a partner in Gargoyle's sister business, one of the country's largest independent market makers for equity options.
The Gargoyle company philosophy endeavors to protect and to grow the treasure of its investing partners through the use and appropriate application of equity options. Their website states that when used properly, equity options, have the potential to enhance investment performance and simultaneously to reduce investment risk.
This fund is designed to allow investors to participate in the large cap U.S. equity market with enhanced performance and lower risk. Since January 2000, this Fund has shown a cumulative return of 118%. During the same period, the S&P 500 is up 6%. The Gargoyle Hedged Value Funds’ results are driven by a relative value stock selection process tightly coupled to an index option writing strategy. The skillful blending of those components has provided a consistent edge for the Gargoyle funds in all market environments.
Joshua B. Parker and Alan L. Salzbank are the fund’s managers. Additionally, Mr. Parker is a partner in Gargoyle's sister business, one of the country's largest independent market makers for equity options.
The Gargoyle company philosophy endeavors to protect and to grow the treasure of its investing partners through the use and appropriate application of equity options. Their website states that when used properly, equity options, have the potential to enhance investment performance and simultaneously to reduce investment risk.
BB&T Asset Management adds Hedge Funds to its Invesment Lineup
BB&T Asset Management, $15 billion investment adviser and subsidiary of BB&T Corporation, said they are now offering a broader range of alternative investment strategies to the bank's Wealth Management and Institutional Services clients.
These strategies will include hedge funds, private equity funds, private real estate funds, structured notes, commodity funds, covered call writing strategies, and multiple tax-efficient single-stock risk management strategies.
"We continue to develop our alternative investment services in order to meet the needs of our clients," said Shawn Gibson, director of Alternative Investments. "Research has shown that these asset classes can add significant diversification and performance benefits to investors, especially if they are invested with the top managers. And our platform includes some of the top alternative investment managers in the world, according to several industry experts."
BB&T Asset Management's Alternative Investment Group will be looking at high investment minimums strategies ranging from $1 million to $10 million, access to the top performing managers, and diversification among managers and strategies. The new lineup of products and services appeals to both conservative and aggressive investors," said BB&T Asset Management President Keith Karlawish.
"We are committed to building out our alternative investment capabilities and will continue to explore the various strategies that are available in the market," Karlawish said. "Our ability to offer these strategies allows us to deliver a complete menu of services and products to our clients."
Raleigh, N.C.-based BB&T Asset Management is a registered investment adviser and subsidiary of BB&T Corporation with more than $15 billion in discretionary assets under management.
Winston-Salem, N.C.-based BB&T Corporation has $118.5 billion in assets under management, BB&T operates more than 1,450 financial centers in the Carolinas, Virginia, Maryland, West Virginia, Kentucky, Tennessee, Georgia, Florida, Alabama, Indiana and Washington, D.C.
These strategies will include hedge funds, private equity funds, private real estate funds, structured notes, commodity funds, covered call writing strategies, and multiple tax-efficient single-stock risk management strategies.
"We continue to develop our alternative investment services in order to meet the needs of our clients," said Shawn Gibson, director of Alternative Investments. "Research has shown that these asset classes can add significant diversification and performance benefits to investors, especially if they are invested with the top managers. And our platform includes some of the top alternative investment managers in the world, according to several industry experts."
BB&T Asset Management's Alternative Investment Group will be looking at high investment minimums strategies ranging from $1 million to $10 million, access to the top performing managers, and diversification among managers and strategies. The new lineup of products and services appeals to both conservative and aggressive investors," said BB&T Asset Management President Keith Karlawish.
"We are committed to building out our alternative investment capabilities and will continue to explore the various strategies that are available in the market," Karlawish said. "Our ability to offer these strategies allows us to deliver a complete menu of services and products to our clients."
Raleigh, N.C.-based BB&T Asset Management is a registered investment adviser and subsidiary of BB&T Corporation with more than $15 billion in discretionary assets under management.
Winston-Salem, N.C.-based BB&T Corporation has $118.5 billion in assets under management, BB&T operates more than 1,450 financial centers in the Carolinas, Virginia, Maryland, West Virginia, Kentucky, Tennessee, Georgia, Florida, Alabama, Indiana and Washington, D.C.
8 Dec 2006
Hedge Fund Survey
Hennessee Group's 12th annual hedge fund manager survey reported that hedge fund assets grew 21% from $1.009 trillion as of June 30, 2005, to $1.2 trillion by Oct. 31.
"Hedge funds are evolving in a manner similar to that of investment banks of old," said Charles Gradante, managing principal of Hennessee's survey. "The fact that they’re getting into venture capital and private equity is no big surprise," Mr. Gradante said. Though the investment vehicles once were "pigeonholed" as bond and stock players, today’s hedge funds have taken significant positions in tech and biotech companies, are floating bonds and are even funding movies made by actor Tom Cruise after his split with Paramount Pictures. A New York-based hedge fund, Fortress Investment Group, with $26 billion in assets, has become the first in the nation to file for an IPO.
The 2006 Hennessee survey also found that the number of hedge funds grew 10%, from 8,050 to 8,900. The survey was conducted on 440 hedge funds from 97 management companies representing over $256 billion in assets.
Though hedge funds traditionally have stood apart from regulated investments like mutual funds, the survey found that 86% of hedge funds are registered with a regulatory agency, such as the Securities and Exchange Commission, the NASD or state authorities. That compares with 61% in the earlier period.
Mr. Gradante likened the changes in hedge funds to the evolution of investment banks such as Lehman Brothers and Goldman Sachs from the 1930s to the early 1990's. "Hedge funds are evolving in the same way investment banks evolved," he said. "They’ll play an important role in financing venture capital in the future." Mr. Gradante also noted that one of the white-shoe investment banks, Goldman Sachs, also is the nation’s No. 1 hedge fund.
"Hedge funds are evolving in a manner similar to that of investment banks of old," said Charles Gradante, managing principal of Hennessee's survey. "The fact that they’re getting into venture capital and private equity is no big surprise," Mr. Gradante said. Though the investment vehicles once were "pigeonholed" as bond and stock players, today’s hedge funds have taken significant positions in tech and biotech companies, are floating bonds and are even funding movies made by actor Tom Cruise after his split with Paramount Pictures. A New York-based hedge fund, Fortress Investment Group, with $26 billion in assets, has become the first in the nation to file for an IPO.
The 2006 Hennessee survey also found that the number of hedge funds grew 10%, from 8,050 to 8,900. The survey was conducted on 440 hedge funds from 97 management companies representing over $256 billion in assets.
Though hedge funds traditionally have stood apart from regulated investments like mutual funds, the survey found that 86% of hedge funds are registered with a regulatory agency, such as the Securities and Exchange Commission, the NASD or state authorities. That compares with 61% in the earlier period.
Mr. Gradante likened the changes in hedge funds to the evolution of investment banks such as Lehman Brothers and Goldman Sachs from the 1930s to the early 1990's. "Hedge funds are evolving in the same way investment banks evolved," he said. "They’ll play an important role in financing venture capital in the future." Mr. Gradante also noted that one of the white-shoe investment banks, Goldman Sachs, also is the nation’s No. 1 hedge fund.
Hedge Fund Breaks Asset Record
MW Tops, an Amsterdam hedge fund, has outperformed in a variety of market conditions, breaking the world record for a listed hedge fund float after successfully raising €1.5 billion. Capital was first allocated to the Tops strategy in 2002 by Marshall Wace Asset Management Limited, a London hedge fund manager.
The amount is well over three times as much as the previous record holder, an offering from the Anglo-French hedge fund group Boussard & Gavaudan, which raised €440 million, according to the Times Online.
MW Tops is chaired by the former Bank of England deputy governor Sir Andrew Large. Marshall Wace Asset Management was established in 1997 by Paul Marshall and Ian Wace and transferred its business in 2003 to Marshall Wace LLP, a limited liability partnership incorporated in England and Wales.
According to Marshall Wace, the greatest interest in new hedge fund managers is being shown by rich individuals or family offices, private fund management operations devoted to managing wealth.
New investors include institutions precluded from conventional investment in illiquid, unlisted hedge funds, including some pension funds and insurance companies, as well as wealthy individuals. Investors are also attracted by the liquidity and visibility of a listed stock, where a price is also quoted. Traditional hedge funds are highly illiquid, with investors paying big penalties for sudden redemptions.
The minimum investment was set at €75,000 for the initial offering, but small investors will from today have access to MW Tops for the price of a €10 share in the secondary market.
The amount is well over three times as much as the previous record holder, an offering from the Anglo-French hedge fund group Boussard & Gavaudan, which raised €440 million, according to the Times Online.
MW Tops is chaired by the former Bank of England deputy governor Sir Andrew Large. Marshall Wace Asset Management was established in 1997 by Paul Marshall and Ian Wace and transferred its business in 2003 to Marshall Wace LLP, a limited liability partnership incorporated in England and Wales.
According to Marshall Wace, the greatest interest in new hedge fund managers is being shown by rich individuals or family offices, private fund management operations devoted to managing wealth.
New investors include institutions precluded from conventional investment in illiquid, unlisted hedge funds, including some pension funds and insurance companies, as well as wealthy individuals. Investors are also attracted by the liquidity and visibility of a listed stock, where a price is also quoted. Traditional hedge funds are highly illiquid, with investors paying big penalties for sudden redemptions.
The minimum investment was set at €75,000 for the initial offering, but small investors will from today have access to MW Tops for the price of a €10 share in the secondary market.
7 Dec 2006
4 Billion Hedge Fund Rewrites Contract
Deephaven Capital Management, a $4 billion hedge fund is close to making a multimillion-dollar contract with Knight Capital Group.
Knight bought the hedge fund more than three years ago and Deephaven is listed on the companys website as their in house asset management business.
Deephaven is an alternative investment manager founded in 1994, with more than 120 people in Minneapolis, Hong Kong, and London. The new contracts are expected to be completed as early as next week and could give Deephaven chief Colin Smith and his deputies millions more than they previously earned.
Smith and other Deephaven managers have been in heated negotiations with Jersey City-based Knight since September. That has some investors speculating that the firms principals might separate from Knight or try to buy majority control of the firm, according to the New York Post.
Any deal struck between the two parties comes as profits from Deephaven have continued to boost Knight's earnings at a time when the traditional trading business has slowed.
In the third quarter alone, Deephaven contributed $50 million to Knight's $203 million in overall revenue - a threefold increase from the year before.
As Deephaven's assets under management surpass the $4 billion mark, the cash from management fees alone could amount to $80 million a year.
Under the current contracts, which are set to expire at the end of the year, Deephaven's management team earned roughly $20 million through September, according to an analysis by CIBC World Markets.
Knight bought the hedge fund more than three years ago and Deephaven is listed on the companys website as their in house asset management business.
Deephaven is an alternative investment manager founded in 1994, with more than 120 people in Minneapolis, Hong Kong, and London. The new contracts are expected to be completed as early as next week and could give Deephaven chief Colin Smith and his deputies millions more than they previously earned.
Smith and other Deephaven managers have been in heated negotiations with Jersey City-based Knight since September. That has some investors speculating that the firms principals might separate from Knight or try to buy majority control of the firm, according to the New York Post.
Any deal struck between the two parties comes as profits from Deephaven have continued to boost Knight's earnings at a time when the traditional trading business has slowed.
In the third quarter alone, Deephaven contributed $50 million to Knight's $203 million in overall revenue - a threefold increase from the year before.
As Deephaven's assets under management surpass the $4 billion mark, the cash from management fees alone could amount to $80 million a year.
Under the current contracts, which are set to expire at the end of the year, Deephaven's management team earned roughly $20 million through September, according to an analysis by CIBC World Markets.
The Hedge Fund Hearings
The Senate Judiciary Committee conducted re-investigation hearings Dec. 5 on the hedge fund industry, looking into the handling of hedge fund giant Pequot Capital.
The Committee hearing focused on the regulation and enforcement issue. It is trying to determine whether the Securities & Exchange Commission might have been improperly influenced when it allowed Morgan Stanley Chief Executive John Mack to avoid questioning in an inquiry.
Although the SEC has cleared Pequot Capital and Morgan Stanley chief John Mack, questions still linger over allegations that the initial investigation was quashed when the lead investigator sought to subpoena Mack. Now two Senate investigations are underway to determine whether the SEC failed to thoroughly conduct the initial investigation and whether politics played a role in that failure.
The inquiry is focused on the trades that involved Morgan Stanley and Pequot, where Mack previously worked as chairman. As the hearings proceed industry observers will be looking for clues into just how much enthusiasm lawmakers have for imposing broader controls on the hedge fund industry.
Many hedge funds done tremendously well, attracting more capital and allowing them to pull off larger, higher-profile deals. But lawmakers and the media have focused on the blow up of a few funds, such as Amaranth Advisors.
Such problems have been relatively few in number, and the damage has largely been contained. Yet they have nonetheless led to calls for more regulation of hedge funds, which have been drawing more money from pension funds and even from some smaller, individual investors.
Earlier this year there was an effort to require hedge funds to register as investment companies, which would force them to disclose a certain amount of information about their strategy. The U.S. Court of Appeals in Washington overturned an SEC rule that would have required hedge fund registration. Some industry executives fear that would depress returns because funds would tip off their moves to rivals.
If the government were to impose leverage limits, the impact on the markets could be significant, industry observers say. Firms use debt to boost their return on investment. If deals become less profitable as a result of leverage limits, big pension funds may cut back on their allocations to alternative investments. Deals could become less competitive, and deal volume and price could decline as a result, weakening the investment market overall.
The Committee hearing focused on the regulation and enforcement issue. It is trying to determine whether the Securities & Exchange Commission might have been improperly influenced when it allowed Morgan Stanley Chief Executive John Mack to avoid questioning in an inquiry.
Although the SEC has cleared Pequot Capital and Morgan Stanley chief John Mack, questions still linger over allegations that the initial investigation was quashed when the lead investigator sought to subpoena Mack. Now two Senate investigations are underway to determine whether the SEC failed to thoroughly conduct the initial investigation and whether politics played a role in that failure.
The inquiry is focused on the trades that involved Morgan Stanley and Pequot, where Mack previously worked as chairman. As the hearings proceed industry observers will be looking for clues into just how much enthusiasm lawmakers have for imposing broader controls on the hedge fund industry.
Many hedge funds done tremendously well, attracting more capital and allowing them to pull off larger, higher-profile deals. But lawmakers and the media have focused on the blow up of a few funds, such as Amaranth Advisors.
Such problems have been relatively few in number, and the damage has largely been contained. Yet they have nonetheless led to calls for more regulation of hedge funds, which have been drawing more money from pension funds and even from some smaller, individual investors.
Earlier this year there was an effort to require hedge funds to register as investment companies, which would force them to disclose a certain amount of information about their strategy. The U.S. Court of Appeals in Washington overturned an SEC rule that would have required hedge fund registration. Some industry executives fear that would depress returns because funds would tip off their moves to rivals.
If the government were to impose leverage limits, the impact on the markets could be significant, industry observers say. Firms use debt to boost their return on investment. If deals become less profitable as a result of leverage limits, big pension funds may cut back on their allocations to alternative investments. Deals could become less competitive, and deal volume and price could decline as a result, weakening the investment market overall.
5 Dec 2006
Hedge Funds in Stock
Brookville Capital Management, a 4 year old hedge fund with less than ten employees and about $221 million in assets under management, has been bought by Morgan Stanley.
Morgan Stanley has already acquired a large stock of hedge funds, in late October the giant agreed to buy FrontPoint Partners, a hedge fund with about $5.5 billion, for about $400 million. Last month said it would buy a minority stake in Avenue Capital Group, which oversees about $12 billion of distressed debt investments, and in Landsdowne Partners. John Mack, Morgan Stanley’s chief executive, has assembleed these hedge funds to help the firm catch up with rivals like Goldman Sachs in offering clients alternative investments.
The company said in a memorandum that the expansion is part of Morgan Stanley's aggressive push to catch up with rivals in providing hedge funds and other alternatives to traditional money management products such as mutual funds. The price of the acquisition was not disclosed in the memo.
Brookville is based in New York and was formed in August 2002 by former Bankers Trust New York Corp. traders David Reiss, Jacob Gulkowitz and Abraham Gulkowitz. The hedge fund specializes in what is known as credit arbitrage, taking long and short positions in companies whose stock prices are driven by takeover speculation and other "event-driven" opportunities, the memo said.
The memo was signed by Owen Thomas, president of Morgan Stanley's asset management division, along with alternatives investment chief Stu Bohart and the group's strategic acquisitions and absolute return strategies head, Yie-Hsin Hung.
Morgan Stanley has already acquired a large stock of hedge funds, in late October the giant agreed to buy FrontPoint Partners, a hedge fund with about $5.5 billion, for about $400 million. Last month said it would buy a minority stake in Avenue Capital Group, which oversees about $12 billion of distressed debt investments, and in Landsdowne Partners. John Mack, Morgan Stanley’s chief executive, has assembleed these hedge funds to help the firm catch up with rivals like Goldman Sachs in offering clients alternative investments.
The company said in a memorandum that the expansion is part of Morgan Stanley's aggressive push to catch up with rivals in providing hedge funds and other alternatives to traditional money management products such as mutual funds. The price of the acquisition was not disclosed in the memo.
Brookville is based in New York and was formed in August 2002 by former Bankers Trust New York Corp. traders David Reiss, Jacob Gulkowitz and Abraham Gulkowitz. The hedge fund specializes in what is known as credit arbitrage, taking long and short positions in companies whose stock prices are driven by takeover speculation and other "event-driven" opportunities, the memo said.
The memo was signed by Owen Thomas, president of Morgan Stanley's asset management division, along with alternatives investment chief Stu Bohart and the group's strategic acquisitions and absolute return strategies head, Yie-Hsin Hung.
Hedge Fund Clones
Goldman Sachs has set up a hedge fund replication tool in a move that could lead to a shake-up of the $1,300bn hedge fund industry.
With a minimum investment of £10.00 ($19.87)and £10.00 Issue Price, Goldman’s Absolute Return Tracker index will undercut the high fees of the hedge fund sector with a 1% flat fee. Hedge funds and funds of funds can charge 47%. At maturity, the investor receives a one-for-one exposure to the performance of theiiindex return.
According to the Financial Times the tracker is set to be among the first of a flood of hedge fund cloning products likely to be launched in a revolution being compared with the arrival of index trackers in the mutual fund world a generation ago. “There is a lot of dead wood in the industry – people who should not be running hedge funds,” said Harry Kat, professor of risk management at London’s Cass Business School, who has just launched his own hedge fund replication tool.
Replication strategies are based on academic research that suggests hedge fund performance is largely driven by movements in underlying markets, such as equity, bond and commodity prices, rather than the intrinsic skill of managers.
Goldman has spent two years developing the algorithm that underpins its platform. The performance characteristics of thousands of hedge funds will be fed into the system monthly and Art is designed to decompose these data and calculate the aggregate position of the hedge fund universe. This position can then be replicated, potentially allowing Goldman to generate hedge fund performance at a fraction of the cost.
It will be far more liquid, with trading available on a daily basis. “This may be ideal for any large institution that has been looking at hedge funds but doesn’t like the fact that it takes six months to put money [in] and to take it out again,” said Edgar Senior, executive director in Goldman’s fund derivatives structuring team.
With a minimum investment of £10.00 ($19.87)and £10.00 Issue Price, Goldman’s Absolute Return Tracker index will undercut the high fees of the hedge fund sector with a 1% flat fee. Hedge funds and funds of funds can charge 47%. At maturity, the investor receives a one-for-one exposure to the performance of theiiindex return.
According to the Financial Times the tracker is set to be among the first of a flood of hedge fund cloning products likely to be launched in a revolution being compared with the arrival of index trackers in the mutual fund world a generation ago. “There is a lot of dead wood in the industry – people who should not be running hedge funds,” said Harry Kat, professor of risk management at London’s Cass Business School, who has just launched his own hedge fund replication tool.
Replication strategies are based on academic research that suggests hedge fund performance is largely driven by movements in underlying markets, such as equity, bond and commodity prices, rather than the intrinsic skill of managers.
Goldman has spent two years developing the algorithm that underpins its platform. The performance characteristics of thousands of hedge funds will be fed into the system monthly and Art is designed to decompose these data and calculate the aggregate position of the hedge fund universe. This position can then be replicated, potentially allowing Goldman to generate hedge fund performance at a fraction of the cost.
It will be far more liquid, with trading available on a daily basis. “This may be ideal for any large institution that has been looking at hedge funds but doesn’t like the fact that it takes six months to put money [in] and to take it out again,” said Edgar Senior, executive director in Goldman’s fund derivatives structuring team.
1 Dec 2006
Nomura launches Fund of Funds in Ireland
Garry Topp, a director at Nomura International said on Thursday that the company hoped to raise more than $100 million for a new open-ended global fund of funds invested in property securities which offered investors downside protection.
Based in Ireland, Nomura said its Global Property 80% Protected Fund would initially be spread across six funds run by Morgan Stanley, Henderson, and Credit Suisse, with each focusing on European, U.S. or Asian securities such as property company shares an real estate investment trusts (REITs). The fund's relative regional weightings will be reviewed every quarter. Nomura said it will charge a 1.5% annual management fee for the fund. The fund has invested 100% in property from the start, but wants to to ensure a continuous level of protection for 80% of the fund's highest value.
Topp said property securities offered investors a reasonable proxy for direct property and provided a more flexible form of global real estate investment. "The benefits of liquidity is that it allows people to move around the different parts of the property cycle around the world, allowing them to move between residential developers in the U.S., say, and offices in Australia," he said.
Topp said the fund was primarily aimed at the high-net-worth and the sophisticated end of the retail investment market. But he said it would also interest institutional investors looking to take some profits on their existing property investments and to put the proceeds to work in a liquid and diversified global property portfolio that offered them protection over any future gains.
The European branch of Nomura is headquartered in London, with offices in major financial centers across Europe. Nomura works closely with Asian and American networks, as well as with Tokyo. Their four business lines (Global Markets, Investment Banking, Merchant Banking and Asset Management) are co-ordinated globally, however each European operating entity is incorporated and regulated separately and reports to local management as well as to Tokyo-based business heads.
Based in Ireland, Nomura said its Global Property 80% Protected Fund would initially be spread across six funds run by Morgan Stanley, Henderson, and Credit Suisse, with each focusing on European, U.S. or Asian securities such as property company shares an real estate investment trusts (REITs). The fund's relative regional weightings will be reviewed every quarter. Nomura said it will charge a 1.5% annual management fee for the fund. The fund has invested 100% in property from the start, but wants to to ensure a continuous level of protection for 80% of the fund's highest value.
Topp said property securities offered investors a reasonable proxy for direct property and provided a more flexible form of global real estate investment. "The benefits of liquidity is that it allows people to move around the different parts of the property cycle around the world, allowing them to move between residential developers in the U.S., say, and offices in Australia," he said.
Topp said the fund was primarily aimed at the high-net-worth and the sophisticated end of the retail investment market. But he said it would also interest institutional investors looking to take some profits on their existing property investments and to put the proceeds to work in a liquid and diversified global property portfolio that offered them protection over any future gains.
The European branch of Nomura is headquartered in London, with offices in major financial centers across Europe. Nomura works closely with Asian and American networks, as well as with Tokyo. Their four business lines (Global Markets, Investment Banking, Merchant Banking and Asset Management) are co-ordinated globally, however each European operating entity is incorporated and regulated separately and reports to local management as well as to Tokyo-based business heads.
Judge Favours Hedge Funds in Company Sale
Delaware Vice Chancellor Stephen Lamb ordered Metromedia International Group Inc. to hold a shareholder vote on its plan for asset sale.
The deal follows years of lawsuits among its 20% owner, John Kluge, and 18% owner Stuart Subotnick, against minority investors, many of them hedge funds, over the company's failure to hold annual shareholders' meetings or file income statements with the U.S. Securities and Exchange Commission.
Metromedia claimed that since it has been unable to file financial statements for several years due to accounting issues, it can not legally hold a shareholder vote on the sale. Instead, it planned to file for Chapter 11 bankruptcy protection to execute the sale, even though it is not insolvent.
Hedge funds Esopus Creek Value LP and Black Horse Capital, which together hold 8.2% of the over-the-counter traded stock, sued the company and certain directors on Aug. 18 in Delaware to force it to hold a vote on the sale.
According to court documents released on Thursday, Judge Lamb favoured the hedge funds that sued the communications company. He ruled that the proposed sale has "glaring inequities," in that it allows preferred stockholders to vote on the deal but not common shareholders. He also ruled that preferred shareholders would get "excess" payments through the sale compared with those accorded common stockholders. "Metromedia's proposed transactional scheme, though technically within the letter of the law, works a profound inequity upon the company's common stockholders," Lamb ruled.
Metromedia, founded by billionaire media mogul John Kluge, had previously disclosed that it plans to sell its main asset, a 50.1% stake in Magticom, a leading wireless phone provider in the Republic of Georgia, for $480 million. The proposed buyers of Metromedia include Emergent in Salford Georgia, of which Badri Patarkatsishvili is a major client, and Istithmar, described in the company's press release as a "leading alternative investment house in Dubai, United Arab Emirates."
The deal follows years of lawsuits among its 20% owner, John Kluge, and 18% owner Stuart Subotnick, against minority investors, many of them hedge funds, over the company's failure to hold annual shareholders' meetings or file income statements with the U.S. Securities and Exchange Commission.
Metromedia claimed that since it has been unable to file financial statements for several years due to accounting issues, it can not legally hold a shareholder vote on the sale. Instead, it planned to file for Chapter 11 bankruptcy protection to execute the sale, even though it is not insolvent.
Hedge funds Esopus Creek Value LP and Black Horse Capital, which together hold 8.2% of the over-the-counter traded stock, sued the company and certain directors on Aug. 18 in Delaware to force it to hold a vote on the sale.
According to court documents released on Thursday, Judge Lamb favoured the hedge funds that sued the communications company. He ruled that the proposed sale has "glaring inequities," in that it allows preferred stockholders to vote on the deal but not common shareholders. He also ruled that preferred shareholders would get "excess" payments through the sale compared with those accorded common stockholders. "Metromedia's proposed transactional scheme, though technically within the letter of the law, works a profound inequity upon the company's common stockholders," Lamb ruled.
Metromedia, founded by billionaire media mogul John Kluge, had previously disclosed that it plans to sell its main asset, a 50.1% stake in Magticom, a leading wireless phone provider in the Republic of Georgia, for $480 million. The proposed buyers of Metromedia include Emergent in Salford Georgia, of which Badri Patarkatsishvili is a major client, and Istithmar, described in the company's press release as a "leading alternative investment house in Dubai, United Arab Emirates."
Judge Favours Hedge Funds in Company Sale
Delaware Vice Chancellor Stephen Lamb ordered Metromedia International Group Inc. to hold a shareholder vote on its plan for asset sale, the deal follows years of lawsuits among its 20% owner, John Kluge, and 18% owner Stuart Subotnick, against minority investors, many of them hedge funds, over the company's failure to hold annual shareholders' meetings or file income statements with the U.S. Securities and Exchange Commission.
Metromedia claimed that since it has been unable to file financial statements for several years due to accounting issues, it can not legally hold a shareholder vote on the sale. Instead, it planned to file for Chapter 11 bankruptcy protection to execute the sale, even though it is not insolvent.
Esopus Creek Value LP and Black Horse Capital, which together hold 8.2% of the over-the-counter traded stock, sued the company and certain directors on Aug. 18 in Delaware to force it to hold a vote on the sale.
According to court documents released on Thursday, Judge Lamb favoured the hedge funds that sued the communications company. He ruled that the proposed sale has "glaring inequities," in that it allows preferred stockholders to vote on the deal but not common shareholders. He also ruled that preferred shareholders would get "excess" payments through the sale compared with those accorded common stockholders. "Metromedia's proposed transactional scheme, though technically within the letter of the law, works a profound inequity upon the company's common stockholders," Lamb ruled.
Metromedia, founded by billionaire media mogul John Kluge, had previously disclosed that it plans to sell its main asset, a 50.1% stake in Magticom, a leading wireless phone provider in the Republic of Georgia, for $480 million. The proposed buyers of Metromedia include Emergent in Salford Georgia, of which Badri Patarkatsishvili is a major client, and Istithmar, described in the company's press release as a "leading alternative investment house in Dubai, United Arab Emirates."
Metromedia claimed that since it has been unable to file financial statements for several years due to accounting issues, it can not legally hold a shareholder vote on the sale. Instead, it planned to file for Chapter 11 bankruptcy protection to execute the sale, even though it is not insolvent.
Esopus Creek Value LP and Black Horse Capital, which together hold 8.2% of the over-the-counter traded stock, sued the company and certain directors on Aug. 18 in Delaware to force it to hold a vote on the sale.
According to court documents released on Thursday, Judge Lamb favoured the hedge funds that sued the communications company. He ruled that the proposed sale has "glaring inequities," in that it allows preferred stockholders to vote on the deal but not common shareholders. He also ruled that preferred shareholders would get "excess" payments through the sale compared with those accorded common stockholders. "Metromedia's proposed transactional scheme, though technically within the letter of the law, works a profound inequity upon the company's common stockholders," Lamb ruled.
Metromedia, founded by billionaire media mogul John Kluge, had previously disclosed that it plans to sell its main asset, a 50.1% stake in Magticom, a leading wireless phone provider in the Republic of Georgia, for $480 million. The proposed buyers of Metromedia include Emergent in Salford Georgia, of which Badri Patarkatsishvili is a major client, and Istithmar, described in the company's press release as a "leading alternative investment house in Dubai, United Arab Emirates."
30 Nov 2006
Research shows Big Gains in '07 for Hedge Funds
Hedge funds, which control about $1.3 trillion in assets worldwide, have attracted $44.5 billion in the third quarter, the most since at least 2003, Hedge Fund Research said last month. Hedge funds are becoming more institutionalised and have begun to build organisations with often hundreds of employees.”
Union Bancaire Privee, the world’s second-largest manager of funds that invest in hedge funds believes that hedge funds will continue to attract superior investment talent in 2007, making more money in stocks than in bonds, with bets on rising markets likely to be more profitable than those on declining prices, the hedge fund manager said returns will be “significantly equity-driven” while opportunities to profit from falling prices will be “less numerous” next year, said Jan-Erik Frogg, head of alternative investments at UBP, which manages more than $33 billion in hedge-fund assets.
Event driven hedge funds in the Credit Suisse Tremont Index are up an average of 12% in the 10 months through October. The Standard & Poor’s 500 Index, which is a common indicator of US stocks, has added 11% in the period, while Lehman Brothers Aggregate Bond Index has climbed 4.6%.
Fund managers such as Union Bancaire Privee have benefited from well established hedge funds re opening to new investments from their biggest clients as they see more opportunities. Hedge funds that take new capital are “not announcing to the whole world they’re re-opening, they like to take money from sources they trust and work well with,” Mr Frogg said.
Union Bancaire Privee, the world’s second-largest manager of funds that invest in hedge funds believes that hedge funds will continue to attract superior investment talent in 2007, making more money in stocks than in bonds, with bets on rising markets likely to be more profitable than those on declining prices, the hedge fund manager said returns will be “significantly equity-driven” while opportunities to profit from falling prices will be “less numerous” next year, said Jan-Erik Frogg, head of alternative investments at UBP, which manages more than $33 billion in hedge-fund assets.
Event driven hedge funds in the Credit Suisse Tremont Index are up an average of 12% in the 10 months through October. The Standard & Poor’s 500 Index, which is a common indicator of US stocks, has added 11% in the period, while Lehman Brothers Aggregate Bond Index has climbed 4.6%.
Fund managers such as Union Bancaire Privee have benefited from well established hedge funds re opening to new investments from their biggest clients as they see more opportunities. Hedge funds that take new capital are “not announcing to the whole world they’re re-opening, they like to take money from sources they trust and work well with,” Mr Frogg said.
IncreMental Conference on Asset Classes
IncreMental Advantage, LLC announced today that they will be holding their first conference on due diligence for board members and fiduciaries of pension funds, endowments and foundations on February 6, 2007 at the Harvard Club in New York City.
The conference, which will cover both the role of the board member in selecting investments and sessions on the major alternative asset classes, will bring some of the top experts in many fields together. Last month IncreMental held a 'Hedge Fund Due Diligence Conference' to shed light on all aspects of researching hedge funds. Following the success of that meeting, this one will explain the basics of each asset class.“It isn’t easy to be on the board of a pension fund. You are trying to make sure that you have everything that you need for your fellow employees, but there are so many different options out there,” said Justin Meyer, Senior Research Analyst with IncreMental Advantage. “How do you know when you have the right team? This conference will give you the answers.”
The conference is even more relevant in the wake of the decision by the US Court of Appeals in Chao v Merino. In that case, two pension fund fiduciaries were found to be personally liable for over $175,000 because of the actions of a vender with whom they had contracted. “The court sent a very clear message,” said Meyer. “You have a responsibility to protect the money that is entrusted to you. And if you don’t take that responsibility seriously enough, you are looking at a lot of trouble.”
IncreMental Advantage is a think tank that publishes research developments on issues ranging from hedge funds to advertising to water utilities. Their research is highly regarded among institutional investors and senior executives from all over the world. The world’s largest companies sponsor and send their senior executives to their conferences.
The conference, which will cover both the role of the board member in selecting investments and sessions on the major alternative asset classes, will bring some of the top experts in many fields together. Last month IncreMental held a 'Hedge Fund Due Diligence Conference' to shed light on all aspects of researching hedge funds. Following the success of that meeting, this one will explain the basics of each asset class.“It isn’t easy to be on the board of a pension fund. You are trying to make sure that you have everything that you need for your fellow employees, but there are so many different options out there,” said Justin Meyer, Senior Research Analyst with IncreMental Advantage. “How do you know when you have the right team? This conference will give you the answers.”
The conference is even more relevant in the wake of the decision by the US Court of Appeals in Chao v Merino. In that case, two pension fund fiduciaries were found to be personally liable for over $175,000 because of the actions of a vender with whom they had contracted. “The court sent a very clear message,” said Meyer. “You have a responsibility to protect the money that is entrusted to you. And if you don’t take that responsibility seriously enough, you are looking at a lot of trouble.”
IncreMental Advantage is a think tank that publishes research developments on issues ranging from hedge funds to advertising to water utilities. Their research is highly regarded among institutional investors and senior executives from all over the world. The world’s largest companies sponsor and send their senior executives to their conferences.
Judge holds Hedge Fund manager in Contempt of Court
U.S. District Judge Kenneth Ryskamp in West Palm Beach ruled that John Kim, 38, head portfolio manager of collapsed West Palm Beach hedge fund firm KL Group, was in contempt of court for allegedly defying an asset freeze by spending money that is to be returned to investors.
Ryskamp cited Kim's use of $384,658 from the sale of a home in South Korea, and $110,000 from selling his wife's Mercedes and his Porsche 911. Investigators say the hedge fund took in more than $200 million from about 230 investors from 1999 to February 2005, when SEC examiners raided KL's luxurious offices overlooking Palm Beach.
KL Group closed March 1 after the SEC and FBI spent two days examining the firm's offices at the Esperante building in downtown West Palm Beach. An investigation by the SEC and court-appointed receiver Guy Lewis, a former U.S. Attorney for South Florida, indicates a shortfall of at least $200 million and perhaps as much as $300 million in KL Group's six hedge funds.
SEC records do not show any Florida hedge fund failures with losses larger than KL Group. An undetermined number of South Floridians were among the investors in the KL funds.
Ryskamp cited Kim's use of $384,658 from the sale of a home in South Korea, and $110,000 from selling his wife's Mercedes and his Porsche 911. Investigators say the hedge fund took in more than $200 million from about 230 investors from 1999 to February 2005, when SEC examiners raided KL's luxurious offices overlooking Palm Beach.
KL Group closed March 1 after the SEC and FBI spent two days examining the firm's offices at the Esperante building in downtown West Palm Beach. An investigation by the SEC and court-appointed receiver Guy Lewis, a former U.S. Attorney for South Florida, indicates a shortfall of at least $200 million and perhaps as much as $300 million in KL Group's six hedge funds.
SEC records do not show any Florida hedge fund failures with losses larger than KL Group. An undetermined number of South Floridians were among the investors in the KL funds.
29 Nov 2006
Hedge Funds and Artificial Intelligence
Investment firms have increasingly begun exploring mathematics to it fullest, as arbitrage opportunities disappear so quickly now, neural networks have emerged that can consider thousands of scenarios at once.
Ray Kurzweil, an inventor and new hedge fund manager, said at a conference sponsored earlier this month by the Capital Group Companies, "Artificial intelligence is becoming so deeply integrated into our economic ecostructure that some day computers will exceed human intelligence......Machines can observe billions of market transactions to see patterns we could never see."
Microsoft executive and chairman of the Nasdaq stock market, Michael Brown, is an investor in Kurzweil's new hedge fund, FatKat, and Bill Gates once described him as "the best person I know at predicting the future of artificial intelligence."
Complicated stock-picking methods are nothing new. For decades, Wall Street firms and hedge funds like D.E. Shaw have snapped up people with math and engineering doctorates, the so-called quants, and assigned them to find hidden market patterns. When these analysts discover subtle relationships, like similarities in the price movements of Microsoft and IBM, investors seek profits by buying one stock and selling the other when their prices diverge, betting that historical patterns will eventually push them back into synchronicity.
"Five years ago it would have taken $500,000 and 12 people to do what today takes a few computers and co-workers," said Louis Morgan, managing director of HG Trading, a three-person hedge fund in Wisconsin. "I'm executing 1,500 to 2,000 trades a day and monitoring 1,500 pairs of stocks. My software can automatically execute a trade within 20 milliseconds - five times faster than it would take for my finger to hit the buy button."
Orhan Karaali, a computer scientist and director at the $1.7 billion hedge fund Advanced Investment Partners said "A machine that can generate complicated rules a person would never have thought of, and that can learn from past mistakes is a powerful tool."
The Apama Algorithmic Trading Platform has made it possible for day traders to build complicated trading algorithms almost as easily as they drag an icon across a digital desktop. Studies estimate that a third of all stock trades in the United States were driven by automatic algorithms last year, contributing to an explosion in stock market activity. Between 1995 and 2005, the average daily volume of shares traded on the New York Stock Exchange increased to 1.6 billion from 346 million.
Ray Kurzweil, an inventor and new hedge fund manager, said at a conference sponsored earlier this month by the Capital Group Companies, "Artificial intelligence is becoming so deeply integrated into our economic ecostructure that some day computers will exceed human intelligence......Machines can observe billions of market transactions to see patterns we could never see."
Microsoft executive and chairman of the Nasdaq stock market, Michael Brown, is an investor in Kurzweil's new hedge fund, FatKat, and Bill Gates once described him as "the best person I know at predicting the future of artificial intelligence."
Complicated stock-picking methods are nothing new. For decades, Wall Street firms and hedge funds like D.E. Shaw have snapped up people with math and engineering doctorates, the so-called quants, and assigned them to find hidden market patterns. When these analysts discover subtle relationships, like similarities in the price movements of Microsoft and IBM, investors seek profits by buying one stock and selling the other when their prices diverge, betting that historical patterns will eventually push them back into synchronicity.
"Five years ago it would have taken $500,000 and 12 people to do what today takes a few computers and co-workers," said Louis Morgan, managing director of HG Trading, a three-person hedge fund in Wisconsin. "I'm executing 1,500 to 2,000 trades a day and monitoring 1,500 pairs of stocks. My software can automatically execute a trade within 20 milliseconds - five times faster than it would take for my finger to hit the buy button."
Orhan Karaali, a computer scientist and director at the $1.7 billion hedge fund Advanced Investment Partners said "A machine that can generate complicated rules a person would never have thought of, and that can learn from past mistakes is a powerful tool."
The Apama Algorithmic Trading Platform has made it possible for day traders to build complicated trading algorithms almost as easily as they drag an icon across a digital desktop. Studies estimate that a third of all stock trades in the United States were driven by automatic algorithms last year, contributing to an explosion in stock market activity. Between 1995 and 2005, the average daily volume of shares traded on the New York Stock Exchange increased to 1.6 billion from 346 million.
28 Nov 2006
Hedge Funds and Film Companies
Hedge fund managers are beginning to see film financing as a high return sector that is on the rise, the global audio visual sector is expected to be worth $1.3 trillion by 2008 and is not correlated to returns in the stock, bond or commodities markets.
Hedge fund investors are developing a trend of financing film producers with a proven record of success directly. In dealing with the producer, the investors avoid the expensive and time consuming hassle of working through a major studio production agency.
Mark DiSalle, CEO of BioPassword, now has plans to launch his own hedge fund, Colosseum pictures. BioPassword is an Issaquah company that has developed software to protect computer passwords based on how users type. DiSalle bought the BioPassword technology for $500,000 in a bankruptcy sale three years ago, he said its roots can be traced to Morse code operators in World War II who figured out how to determine message senders based upon tapping patterns. BioPassword has already acquired over $25 million in venture capital and strategic investments.
Some major studios are also actively looking to outside financing sources to back independently produced films. Outside financing reduces the studio’s risk, reduces the amount of cash they have tied up in projects, and still allows them to obtain product for distribution in their existing pipeline.
Other hedge funds investing in film include Mark Cuban, entrepreneur and owner of the Dallas Mavericks, and eBay founder Jeff Skoll, each have a fledgling film company. Billionaire Phillip Anschutz is financing big budget films, David Sacks, a founder of PayPal, financed "Thank You for Smoking," for $7.5 million, and it has worldwide gross of over $27 million. Bob Yari, who made millions in real estate development, is backing the production of numerous films. Bill Pohlad, a multi-millionaire whose family owns the Minnesota Timberwolves, made "Brokeback Mountain" for $14 million and it has grossed $184 million worldwide. A recent $220 million deal with an individual producer included investors such as J.P. Morgan, D.E. Shaw, and GE Capital. George Soros also bought the DreamWorks library in a deal that valued the 59 film library portfolio at $900 million, later releasing all of them.
Hedge fund investors are developing a trend of financing film producers with a proven record of success directly. In dealing with the producer, the investors avoid the expensive and time consuming hassle of working through a major studio production agency.
Mark DiSalle, CEO of BioPassword, now has plans to launch his own hedge fund, Colosseum pictures. BioPassword is an Issaquah company that has developed software to protect computer passwords based on how users type. DiSalle bought the BioPassword technology for $500,000 in a bankruptcy sale three years ago, he said its roots can be traced to Morse code operators in World War II who figured out how to determine message senders based upon tapping patterns. BioPassword has already acquired over $25 million in venture capital and strategic investments.
Some major studios are also actively looking to outside financing sources to back independently produced films. Outside financing reduces the studio’s risk, reduces the amount of cash they have tied up in projects, and still allows them to obtain product for distribution in their existing pipeline.
Other hedge funds investing in film include Mark Cuban, entrepreneur and owner of the Dallas Mavericks, and eBay founder Jeff Skoll, each have a fledgling film company. Billionaire Phillip Anschutz is financing big budget films, David Sacks, a founder of PayPal, financed "Thank You for Smoking," for $7.5 million, and it has worldwide gross of over $27 million. Bob Yari, who made millions in real estate development, is backing the production of numerous films. Bill Pohlad, a multi-millionaire whose family owns the Minnesota Timberwolves, made "Brokeback Mountain" for $14 million and it has grossed $184 million worldwide. A recent $220 million deal with an individual producer included investors such as J.P. Morgan, D.E. Shaw, and GE Capital. George Soros also bought the DreamWorks library in a deal that valued the 59 film library portfolio at $900 million, later releasing all of them.
27 Nov 2006
Investec-Rowland-Blackfish Hedge Fund
The Rowland family and Investec have both invested $20m in Blackfish-Investec Resources Special Sitaution Fund and plan to raise a further $250m from other institutions and high net worth families. The fund plans to buy or sell underlying commodities to hedge equity investments. The pair have teamed up after the big success in revamping Western Goldfields earlier this year.
The two companies, having pooled their skills, expertise and resources plan to establish an event driven special situations hedge fund with a long strategic bias and opportunistic shorting. The fund will in the main target undervalued companies in the natural resources sector as well as seek to profit from shorting overvalued situations or use short positions as a hedge.
The financial and infrastructural support will be carried out by Investec Bank, contributing seed capital, personnel, systems and marketing support. The hedge fund offers a differentiated deal flow, and an investment philosophy to achieve returns throughout the commodity cycle.
The hedge fund is to be led by Martyn Konig and George Rogers, the Fund Advisors are supported by the Commodities and Resource Finance team of Investec, Blackfish Capital Managements Natural Resource team and the Fund's Advisory Panel.
The two companies, having pooled their skills, expertise and resources plan to establish an event driven special situations hedge fund with a long strategic bias and opportunistic shorting. The fund will in the main target undervalued companies in the natural resources sector as well as seek to profit from shorting overvalued situations or use short positions as a hedge.
The financial and infrastructural support will be carried out by Investec Bank, contributing seed capital, personnel, systems and marketing support. The hedge fund offers a differentiated deal flow, and an investment philosophy to achieve returns throughout the commodity cycle.
The hedge fund is to be led by Martyn Konig and George Rogers, the Fund Advisors are supported by the Commodities and Resource Finance team of Investec, Blackfish Capital Managements Natural Resource team and the Fund's Advisory Panel.
Update-Ashburton Launches Chindia Fund
The Jersey based asset management firm Ashburton has launched a new fund which invests in both China and India, the Chindia Equity Fund plans to provide access to proven expertise in these rapidly-expanding economies.
Economic forecasts expect China to grow at a rate of 8% to 10% a year, while a growth rate of 8% per year is projected for India, combined, these two countries will be the second largest economic power in the next 15 years worth approximately US$16trillion, according to Ashburton.
The Chindia Equity fund, managed by Jonathan Schiessl has a minimum investment of £10,000. An initial fee of 5% is charged as well as a 1.75% annual management fee. Schissel has had responsibility for the Asia-Pacific region for the past six years at Asbhurton.
Schiessl said: “This growth will be primarily driven by demographics as the working population of both countries is expected to increase by 250m by 2020. Furthermore, reliance on growth from exports is decreasing in both China and India, and consumer demand is growing exponentially as a result of an expanding generation with much higher aspirations. Combined, these two countries will be the second largest economic power in the next 15 years and the opportunities this offers to investors is tremendous."
The Ashburton Chindia Equity Fund is open for investment from 10 November 2006 and launching on 1 December 2006, which allows clients to invest in these fast growing regions. Ashburton has successfully obtained the all important Foreign Institutional Investor (FII) status in India and established links in China that enable the fund to directly access these markets.
Economic forecasts expect China to grow at a rate of 8% to 10% a year, while a growth rate of 8% per year is projected for India, combined, these two countries will be the second largest economic power in the next 15 years worth approximately US$16trillion, according to Ashburton.
The Chindia Equity fund, managed by Jonathan Schiessl has a minimum investment of £10,000. An initial fee of 5% is charged as well as a 1.75% annual management fee. Schissel has had responsibility for the Asia-Pacific region for the past six years at Asbhurton.
Schiessl said: “This growth will be primarily driven by demographics as the working population of both countries is expected to increase by 250m by 2020. Furthermore, reliance on growth from exports is decreasing in both China and India, and consumer demand is growing exponentially as a result of an expanding generation with much higher aspirations. Combined, these two countries will be the second largest economic power in the next 15 years and the opportunities this offers to investors is tremendous."
The Ashburton Chindia Equity Fund is open for investment from 10 November 2006 and launching on 1 December 2006, which allows clients to invest in these fast growing regions. Ashburton has successfully obtained the all important Foreign Institutional Investor (FII) status in India and established links in China that enable the fund to directly access these markets.
24 Nov 2006
India as Asia's top Performer
India's benchmark BSE index is up nearly 45% this year, making it Asia-Pacific's best performer. It rose 42 percent in 2005, 13 percent in 2004 and 73 percent in 2003 as investors poured money into stocks to ride the rapid expansion of Asia's fourth-largest economy.
Indian software, banking and infrastructure-related stocks were still attractive investments, but the runaway rises of recent years can no longer be expected, the head of fund management at HSBC Asset Management (India) said. Mihir Vora, who oversees of 33 billion rupees of equity investments, said on Tuesday his funds were underweight on stocks in the commodities, energy and personal care sectors.
"Returns still will resemble corporate profitability growth of 15-20% compounded for next few years,...We have gone up very significantly in a short period of time," he said, adding other risks included a renewed rise in oil prices, interest rates and a change in sentiment on emerging markets.
State-run banks looked good value and, in a time of rapid growth in credit demand, their extensive branch networks were an advantage in raising term deposits that could be lent out.
"Their valuations are amongst the cheapest in the sector and the market. They are undervalued and the volatility in earnings has gone," Vora said.
Government and private investment to upgrade infrastructure could ensure steady earnings growth for companies in the engineering and construction sectors, and demand for outsourcing of software services would continue to be robust, he said.
Indian software, banking and infrastructure-related stocks were still attractive investments, but the runaway rises of recent years can no longer be expected, the head of fund management at HSBC Asset Management (India) said. Mihir Vora, who oversees of 33 billion rupees of equity investments, said on Tuesday his funds were underweight on stocks in the commodities, energy and personal care sectors.
"Returns still will resemble corporate profitability growth of 15-20% compounded for next few years,...We have gone up very significantly in a short period of time," he said, adding other risks included a renewed rise in oil prices, interest rates and a change in sentiment on emerging markets.
State-run banks looked good value and, in a time of rapid growth in credit demand, their extensive branch networks were an advantage in raising term deposits that could be lent out.
"Their valuations are amongst the cheapest in the sector and the market. They are undervalued and the volatility in earnings has gone," Vora said.
Government and private investment to upgrade infrastructure could ensure steady earnings growth for companies in the engineering and construction sectors, and demand for outsourcing of software services would continue to be robust, he said.
23 Nov 2006
Hedge Fund Blogger Celebrities
Tyler Cowen, an economics professor at the George Mason University started a blog three years ago with colleague Alex Tabarrok. The blog, called Marginal Revolution, has had more than 6 million visitors, Cowen has become an economics celebrity. Since he began writing about economics and hedge funds in "understandable language", people are approaching him on the street and, "I'm invited to give a speech or something at least once a week," Cowen said.
The readers find commentary about regulating hedge funds combined with a section featuring odd inventions such as a fan that attaches to chopsticks and cools noodles as they're being eaten? The postings are injecting life into the field often called the dismal science.
He isn't the only economist who has found an audience on the Web. Nobel laureate Gary S. Becker and former Harvard President Lawrence H. Summers are among those who have set up blogs, which are typically part lecture, part journal and part college seminar, with reader participation expected. Becker started a blog two years ago with federal appeals court judge Richard A. Posner.
Gregory Mankiw, a Harvard lecturer and former chairman of President Bush's Council of Economic Advisors, started a blog in the spring to supplement his lectures for the popular course "Social Analysis 10: Principles of Economics." He had been getting queries from students who weren't enrolled in the class and thought the blog was the best way to make information accessible to all. He quickly had 5,000 readers a day.
Econo-fans are responding, Becker figures, because the blogs put important pocketbook issues into understandable language. Whereas former Federal Reserve Chairman Alan Greenspan had "Greenspeak" — the carefully convoluted jargon whose comprehensibility rivaled that of Klingon — the blogs connect economics to daily life.
"Most people are afraid of economics. It seems so technical," Becker said. "But what is surprising is that if you put economics in a simple enough phrase, people are very much interested in it." Most of the economists say their readers aren't students. Cowen describes his fans as "high IQ, possibly nerdy, looking for kicks or for something different."
The readers find commentary about regulating hedge funds combined with a section featuring odd inventions such as a fan that attaches to chopsticks and cools noodles as they're being eaten? The postings are injecting life into the field often called the dismal science.
He isn't the only economist who has found an audience on the Web. Nobel laureate Gary S. Becker and former Harvard President Lawrence H. Summers are among those who have set up blogs, which are typically part lecture, part journal and part college seminar, with reader participation expected. Becker started a blog two years ago with federal appeals court judge Richard A. Posner.
Gregory Mankiw, a Harvard lecturer and former chairman of President Bush's Council of Economic Advisors, started a blog in the spring to supplement his lectures for the popular course "Social Analysis 10: Principles of Economics." He had been getting queries from students who weren't enrolled in the class and thought the blog was the best way to make information accessible to all. He quickly had 5,000 readers a day.
Econo-fans are responding, Becker figures, because the blogs put important pocketbook issues into understandable language. Whereas former Federal Reserve Chairman Alan Greenspan had "Greenspeak" — the carefully convoluted jargon whose comprehensibility rivaled that of Klingon — the blogs connect economics to daily life.
"Most people are afraid of economics. It seems so technical," Becker said. "But what is surprising is that if you put economics in a simple enough phrase, people are very much interested in it." Most of the economists say their readers aren't students. Cowen describes his fans as "high IQ, possibly nerdy, looking for kicks or for something different."
Hedge Fund Regulator Opposes Over-regulation
Hedge fund regulator and Edinburgh's top financial services commissioner Charlie McCreevy said in a statement Tuesday that Europe’s hedge fund managers may shift operations from the continent to less-regulated jurisdictions if the European Union started regulating the investments designed for wealthy clients and institutions.
This is why the 25-nation group made a decision last week to leave scrutiny of the funds at a country level. “If we went too far we could drive the industry out of Europe,” McCreevy said. Hedge funds have attracted attention from regulators and politicians concerned that their growing influence in financial markets may hurt investors.
Earlier this month, International Financial Services London said European managers oversee $401 billion of hedge fund assets under management, about $317 billion of that is managed in London. Criticism of hedge funds in Germany followed a campaign by some managers to oust Deutsche Boerse executives. “There are some people who are philosophically opposed to hedge funds and who would like to have them regulated out of existence,” McCreevy said.
US Senate Finance Committee chairman Charles Grassley requested more scrutiny of the $1.3 trillion industry after the collapse of Amaranth Advisors in September. The Financial Services Authority in the UK said earlier this year it was probing whether the funds treated customers fairly and whether they accurately valued their assets. Former German chancellor Gerhard Schroeder last year sought unified international rules for hedge funds after ordering a three-ministry probe into the funds.
The SEC is probing potential insider trading by hedge funds, while US Treasury Secretary Henry Paulson said on Tuesday his department would “continually assess their actions and impact on the market.”
Amaranth’s collapse was the biggest since Long-Term Capital Management’s 1998 demise. In Europe, rules that can help limit the effects of a fund’s collapse are already in existence, McCreevy said.
This is why the 25-nation group made a decision last week to leave scrutiny of the funds at a country level. “If we went too far we could drive the industry out of Europe,” McCreevy said. Hedge funds have attracted attention from regulators and politicians concerned that their growing influence in financial markets may hurt investors.
Earlier this month, International Financial Services London said European managers oversee $401 billion of hedge fund assets under management, about $317 billion of that is managed in London. Criticism of hedge funds in Germany followed a campaign by some managers to oust Deutsche Boerse executives. “There are some people who are philosophically opposed to hedge funds and who would like to have them regulated out of existence,” McCreevy said.
US Senate Finance Committee chairman Charles Grassley requested more scrutiny of the $1.3 trillion industry after the collapse of Amaranth Advisors in September. The Financial Services Authority in the UK said earlier this year it was probing whether the funds treated customers fairly and whether they accurately valued their assets. Former German chancellor Gerhard Schroeder last year sought unified international rules for hedge funds after ordering a three-ministry probe into the funds.
The SEC is probing potential insider trading by hedge funds, while US Treasury Secretary Henry Paulson said on Tuesday his department would “continually assess their actions and impact on the market.”
Amaranth’s collapse was the biggest since Long-Term Capital Management’s 1998 demise. In Europe, rules that can help limit the effects of a fund’s collapse are already in existence, McCreevy said.
22 Nov 2006
Hedge Fund buys 4 million shares in Pogo Producing
Activist hedge fund Third Point LLC, said in a statement on Tuesday that the company has acquired a 7.2% stake of U.S. oil and gas producer Pogo Producing Co.
In a filing with the Securities and Exchange Commission, the hedge fund said it also bought options to purchase 200,000 additional shares in addition to the 4 million shares of Pogo common stock.
Third Point, which has about $4 billion in assets under management, holds stakes in several publicly traded companies. The hedge fund is New York based and is known for taking activist positions. The fund, run by Chief Investment Officer Danies Loeb, has frequently been a loud critic of the companies in which it invests.
In the filing with the SEC, Third Point said it believes Pogo "represents an attractive investment." The fund also said it "may suggest or take a position with respect to potential changes in the operations, strategy, management or capital structure of such companies as a means of enhancing shareholder value."
Pogo Producing Company explores for, develops and produces oil and natural gas. Headquartered in Houston, Pogo owns approximately 4,800,000 gross leasehold acres in major oil and gas provinces in North America, 6,354,000 acres in New Zealand and 1,480,000 acres in Vietnam. Pogo common stock is listed on the New York Stock Exchange under the symbol “PPP.”
In a filing with the Securities and Exchange Commission, the hedge fund said it also bought options to purchase 200,000 additional shares in addition to the 4 million shares of Pogo common stock.
Third Point, which has about $4 billion in assets under management, holds stakes in several publicly traded companies. The hedge fund is New York based and is known for taking activist positions. The fund, run by Chief Investment Officer Danies Loeb, has frequently been a loud critic of the companies in which it invests.
In the filing with the SEC, Third Point said it believes Pogo "represents an attractive investment." The fund also said it "may suggest or take a position with respect to potential changes in the operations, strategy, management or capital structure of such companies as a means of enhancing shareholder value."
Pogo Producing Company explores for, develops and produces oil and natural gas. Headquartered in Houston, Pogo owns approximately 4,800,000 gross leasehold acres in major oil and gas provinces in North America, 6,354,000 acres in New Zealand and 1,480,000 acres in Vietnam. Pogo common stock is listed on the New York Stock Exchange under the symbol “PPP.”
21 Nov 2006
Rare Coin Dealer faces 18 years
The guilty party in the 2005 loss of up to $13 million in a rare-coin fund managed by Maumee coin dealer Thomas W. Noe, has played out with Noe receiving the maximum sentence for his involvement in the scandal.
Judge Thomas J. Osowik sentenced Noe to 18 years in prison for for stealing state money from the Ohio Bureau Compensation fund. The judge also has scheduled a hearing to determine what restitution Noe must pay. Prosecutors are seeking at least $13.7 million, the amount they say Noe stole from the coin funds. Osowik also fined Noe $139,000, plus the nearly $3 million cost of the investigation.
Noe began stealing and spending state money seven years ago in order to buy yachts, positions on state boards, a multimillion dollar house in the Florida Keys and other luxuries in order to present himself as having a "bottomless cup of wealth and luxury", while managing the $50 million rare-coin investment for the state.
Osowik also ordered that Noe begin serving the state sentence after he finishes a 27-month prison term on an unrelated federal conviction for illegally funneling $45,400 to President Bush’s reelection campaign. Ohio Democrats used the scandals Noe sparked to help reclaim the governor’s office and other statewide posts in the Nov. 7 election. "Tom Noe violated the public trust by using $50 million as his own ATM, living a lavish lifestyle at the expense of real people whose lives depended on agency monies."
The loss of up to $13 million in the rare-coin fund managed by the Maumee coin dealer was made public on the heels of the unrelated MDL Capital loss of $215 million from what was a $355 million investment. The hedge fund founded by Aliquippa entrepreneur Mark D. Lay, also lost $215 million last year in a case involving the activities of the Ohio Bureau of Workers’ Compensation investment fund.
MDL Capital also manages $500 million for the Pennsylvania State Workers Insurance Fund, and $91 million of the nearly $27 billion portfolio of the Pennsylvania State Employees Retirement System. MDL Capital is one of 13 fixed-income portfolio managers. Since it started in December 2000, the annualized return on its portfolio has been 4.5 percent.
Judge Thomas J. Osowik sentenced Noe to 18 years in prison for for stealing state money from the Ohio Bureau Compensation fund. The judge also has scheduled a hearing to determine what restitution Noe must pay. Prosecutors are seeking at least $13.7 million, the amount they say Noe stole from the coin funds. Osowik also fined Noe $139,000, plus the nearly $3 million cost of the investigation.
Noe began stealing and spending state money seven years ago in order to buy yachts, positions on state boards, a multimillion dollar house in the Florida Keys and other luxuries in order to present himself as having a "bottomless cup of wealth and luxury", while managing the $50 million rare-coin investment for the state.
Osowik also ordered that Noe begin serving the state sentence after he finishes a 27-month prison term on an unrelated federal conviction for illegally funneling $45,400 to President Bush’s reelection campaign. Ohio Democrats used the scandals Noe sparked to help reclaim the governor’s office and other statewide posts in the Nov. 7 election. "Tom Noe violated the public trust by using $50 million as his own ATM, living a lavish lifestyle at the expense of real people whose lives depended on agency monies."
The loss of up to $13 million in the rare-coin fund managed by the Maumee coin dealer was made public on the heels of the unrelated MDL Capital loss of $215 million from what was a $355 million investment. The hedge fund founded by Aliquippa entrepreneur Mark D. Lay, also lost $215 million last year in a case involving the activities of the Ohio Bureau of Workers’ Compensation investment fund.
MDL Capital also manages $500 million for the Pennsylvania State Workers Insurance Fund, and $91 million of the nearly $27 billion portfolio of the Pennsylvania State Employees Retirement System. MDL Capital is one of 13 fixed-income portfolio managers. Since it started in December 2000, the annualized return on its portfolio has been 4.5 percent.
Hedge Fund Investment possibilities in India, Pakistan and China
Emerging markets are again catching the eye of more foreign firms as an investment destination.
Morgan Stanley sees India's FDI rising to $10 billion, or 1 percent of GDP by 2008, with the flows mostly targeting low capital services and manufacturing for the domestic market, rather than factories for exports like many in China.
Since the start of 2002, the Pakistan market has risen 741%, topping the 297% gain for India's Sensex. Still, Pakistan stocks only trade at about 10.6 times forecast profits, while Indian stocks trade at 20 times earnings. Pakistan, one of the world's hottest emerging markets despite current instability, has an economy that grew by 6.6% in the financial year that ended in June, a rate that the government expects will rise to 7% this year. Liberal rules on foreign investment are luring overseas players, with foreign investors pouring $307 million into the market since July 1.
Pakistan's biggest listed firm, Oil and Gas Development Co., is planning the the $1.4 billion sale of global depository receipts (GDRs) and local shares in December. Money from the Middle East, and increasingly Singapore and elsewhere in East Asia, has been helping drive growth, with infrastructure, energy, financial services and makers of consumer goods such as motorcycles seen as attractive plays.
Last month, MCB Bank raised $150 million in a London GDR issue. Earlier this month, Pakistan Mobile Communications (Pvt.) (Mobilink) attracted nearly $4 billion in orders for its $250 million bond, the country's first corporate offshore bond issue.
The Karachi 100 index is up 12 percent this year on daily turnover that exceeds $400 million, making it more active than markets such as Thailand, Indonesia, and Malaysia.
In China the government wants foreign money to help with an estimated $350 billion worth of projects to build an efficient road network, expand ports and address a woeful power deficit. Michael J. Cannon-Brookes, vice president of business development for China and India at IBM, said to Reuters in Bejing; "In manufacturing you need infrastructure to run your plants, get your goods to market and bring in supplies. That's clearly a strong selling point for China."
Morgan Stanley sees India's FDI rising to $10 billion, or 1 percent of GDP by 2008, with the flows mostly targeting low capital services and manufacturing for the domestic market, rather than factories for exports like many in China.
Since the start of 2002, the Pakistan market has risen 741%, topping the 297% gain for India's Sensex. Still, Pakistan stocks only trade at about 10.6 times forecast profits, while Indian stocks trade at 20 times earnings. Pakistan, one of the world's hottest emerging markets despite current instability, has an economy that grew by 6.6% in the financial year that ended in June, a rate that the government expects will rise to 7% this year. Liberal rules on foreign investment are luring overseas players, with foreign investors pouring $307 million into the market since July 1.
Pakistan's biggest listed firm, Oil and Gas Development Co., is planning the the $1.4 billion sale of global depository receipts (GDRs) and local shares in December. Money from the Middle East, and increasingly Singapore and elsewhere in East Asia, has been helping drive growth, with infrastructure, energy, financial services and makers of consumer goods such as motorcycles seen as attractive plays.
Last month, MCB Bank raised $150 million in a London GDR issue. Earlier this month, Pakistan Mobile Communications (Pvt.) (Mobilink) attracted nearly $4 billion in orders for its $250 million bond, the country's first corporate offshore bond issue.
The Karachi 100 index is up 12 percent this year on daily turnover that exceeds $400 million, making it more active than markets such as Thailand, Indonesia, and Malaysia.
In China the government wants foreign money to help with an estimated $350 billion worth of projects to build an efficient road network, expand ports and address a woeful power deficit. Michael J. Cannon-Brookes, vice president of business development for China and India at IBM, said to Reuters in Bejing; "In manufacturing you need infrastructure to run your plants, get your goods to market and bring in supplies. That's clearly a strong selling point for China."
Hedge Fund Mergers show Substantial Profits
Atticus, a New York-based hedge fund that manages more than $12 billion has been having talks with Freeport-McMoRan Copper & Gold Inc. Freeport has already undertaken the world's biggest mining takeover, valued at about $26 billion when the mining company acquired hedge-fund Phelps Dodge Corp.
Phelps Dodge Corp manager Timothy R. Barakett saw his investment jump by about $517 million, capping a 13-month campaign to find a buyer for the mining company and get more of its cash. Shares of Phelps Dodge are trading at below Freeport's offer price, which may mean investors don't expect a higher bid, analysts said.
Atticus Capital is the largest Phelps Dodge shareholder, with about a 10% stake.
Barakett had been seeking a buyer for the copper producer since he opposed a proposal by Phelps Dodge CEO J. Steven Whisler to acquire two Canadian nickel producers for $40 billion. Before that, Barakett successfully pushed for the company to give more of its $2.5 billion cash pile to investors, after a rally in metals prices sent profit to a record.
"Some of their efforts have done shareholders of Phelps Dodge a great service," said John Rosenberg, who helps manage $900 million including Phelps Dodge shares at Geneve Capital Group in Stamford, Conn. "There's a place in the market for activism."
According to financial research firm Dealogic, the value of global mergers and acquisitions for 2006 reached a record $3.368 trillion, beating the previous high set in 2000 of $3.332 trillion. Private equity firms such as hedge funds accounted for 22% of total global M&A volume in the first nine months of the year, hitting a new record of $570.1 billion in deals.
Phelps Dodge Corp manager Timothy R. Barakett saw his investment jump by about $517 million, capping a 13-month campaign to find a buyer for the mining company and get more of its cash. Shares of Phelps Dodge are trading at below Freeport's offer price, which may mean investors don't expect a higher bid, analysts said.
Atticus Capital is the largest Phelps Dodge shareholder, with about a 10% stake.
Barakett had been seeking a buyer for the copper producer since he opposed a proposal by Phelps Dodge CEO J. Steven Whisler to acquire two Canadian nickel producers for $40 billion. Before that, Barakett successfully pushed for the company to give more of its $2.5 billion cash pile to investors, after a rally in metals prices sent profit to a record.
"Some of their efforts have done shareholders of Phelps Dodge a great service," said John Rosenberg, who helps manage $900 million including Phelps Dodge shares at Geneve Capital Group in Stamford, Conn. "There's a place in the market for activism."
According to financial research firm Dealogic, the value of global mergers and acquisitions for 2006 reached a record $3.368 trillion, beating the previous high set in 2000 of $3.332 trillion. Private equity firms such as hedge funds accounted for 22% of total global M&A volume in the first nine months of the year, hitting a new record of $570.1 billion in deals.
20 Nov 2006
Investcorp to offer Global Depositary Reciepts
Investcorp, one of the leading institutional investors in hedge funds with approximately $9.8 billion under management has said their bank has decided to proceed with an offer of ordinary shares in the form of Global Depositary Receipts (GDRs).
The new GDRs application for admittance for trading on the London Stock Exchange will be listed under the ticker symbol IVC.
Nemir A. Kirdar, Investcorp’s president and chief executive officer, said: “This offering and our GDR listing on London’s main market will help us scale our platform to capture the accelerating growth in alternative investments in the Gulf, while also further enhancing our international presence through improved brand awareness.”
The program offers clients a selection of funds of hedge funds with varying risk/return profiles. These are invested across different strategies through approximately 40 hedge fund managers. Investcorp launched the world’s first collateralized debt structure backed by hedge funds.
Investcorp specializes in four lines of business, hedge funds, private equity and venture capital in North America and Western Europe and real estate in the United States. Its investment products are offered to institutional and individual clients, primarily in the Persian Gulf.
Investcorp also plans to expand existing product lines in the fiscal year 2007 by launching a private equity fund targeted at North American and European institutional investors, and a real estate fund dedicated to mezzanine investments.
40% of Investcorp is owned by more than half of its total staff. A further 40% is owned by a group of the Firm’s most prominent clients, some of whom are also Directors of the Firm. The balance of the stock is held by public shareholders through Investcorp’s listing on the Bahrain Stock Exchange.
The new GDRs application for admittance for trading on the London Stock Exchange will be listed under the ticker symbol IVC.
Nemir A. Kirdar, Investcorp’s president and chief executive officer, said: “This offering and our GDR listing on London’s main market will help us scale our platform to capture the accelerating growth in alternative investments in the Gulf, while also further enhancing our international presence through improved brand awareness.”
The program offers clients a selection of funds of hedge funds with varying risk/return profiles. These are invested across different strategies through approximately 40 hedge fund managers. Investcorp launched the world’s first collateralized debt structure backed by hedge funds.
Investcorp specializes in four lines of business, hedge funds, private equity and venture capital in North America and Western Europe and real estate in the United States. Its investment products are offered to institutional and individual clients, primarily in the Persian Gulf.
Investcorp also plans to expand existing product lines in the fiscal year 2007 by launching a private equity fund targeted at North American and European institutional investors, and a real estate fund dedicated to mezzanine investments.
40% of Investcorp is owned by more than half of its total staff. A further 40% is owned by a group of the Firm’s most prominent clients, some of whom are also Directors of the Firm. The balance of the stock is held by public shareholders through Investcorp’s listing on the Bahrain Stock Exchange.
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