SEC Plans to Protect Lehman Investors

While coordinating with overseas regulators to protect Lehman's customers and maintain orderly markets, the SEC staff who have been on-site at the U.S. broker-dealer will remain in place to oversee the orderly transfer of customer assets to one or more SIPC-insured brokerage firms.

In cases such as this, the SEC says, Lehman Brothers' customers will benefit from their extensive protections under SEC rules, including segregation of customer securities and cash as well as insurance by the Securities Investor Protection Corporation. These safeguards are designed to ensure that a broker-dealer's customers will be protected.

"For several days, we have worked closely with regulators around the world including the FSA in the United Kingdom, the BaFin in Germany, and the FSA in Japan, as well as our counterparts in other markets around the world, to coordinate our actions in the interest of orderly markets," said SEC Chairman Christopher Cox. "In doing so we have also worked closely with the Treasury and the Federal Reserve and market participants. We are committed to using our regulatory and supervisory authorities to reduce the potential for dislocations from Lehman's unwinding, and to maintain the smooth functioning of the financial markets."

In the meantime, Lehman Brothers Holdings Inc. will continue to operate while the bankruptcy process facilitates the reconciliation of claims and the realization of value from its assets in an orderly fashion, according to the SEC.

Lehman Goes Banktrupt in High Profile Casualty Case

Lehman Brothers, Wall Street's fourth biggest investment bank has filed for bankruptcy, making it the largest and highest-profile casualty of the global credit crisis, with approximately $639 billion in assets.

The bank said the Chapter 11 filing will not include its broker-dealer operations and other units, including Neuberger Berman. Lehman is looking at selling its broker-dealer operations, and is still in advanced discussions with a number of potential buyers of its investment management division.

Investors in recent weeks had grown increasingly jittery about Lehman's $46 billion of mortgages and asset-backed securities, as well as its credit rating and its ability to raise capital.

Bankruptcy also represents a bad end to Chief Executive Dick Fuld's four-decade career at Lehman. Fuld, who piloted the investment bank through prior crises with aplomb, was widely seen as too slow to recognize Lehman's need to raise capital and shed bad assets.

Lehman listed its biggest unsecured creditors as Citigroup Inc, Bank of New York Mellon Corp, Aozora Bank, and Mizuho Financial Group Inc. Citi and Bank of New York Mellon are trustees for Lehman bonds.

The firm said that as of May 31, it owed about $110.5 billion on account of senior unsecured notes, about $12.6 billion on account of subordinated unsecured notes and about $5 billion on account of junior subordinated notes.

WhiteRock Says Markets May Be Rollercoastering but Recruitment is Accelerating

Recruiters at WhiteRock Group are seeing increased opportunity for job-seekers and hiring firms.

The meltdown in sub-prime mortgages, and the ensuing credit crunch, has led to uncertainty and turmoil throughout financial markets worldwide, says WhiteRock, but as with any deal, what’s bad news for one party is often very good news for another.

"There’s never been a better time to look for a job on Wall Street, or the Asian financial markets," says Gustavo Dolfino, founder and chief executive officer of WhiteRock Group. And amazingly, there’s never been a better time to be looking for talent either."

To understand why the recruitment business is booming even as the industry appears to be retrenching, one must understand that the overheated markets of the past few years have actually made recruiting more difficult.

Dolfino, who was quoted last week in Crain’s New York Business as well as the Wall Street Journal and is frequently interviewed for market perspective by CNBC, Bloomberg News and other financial news services, explains.

"With markets soaring these past few years, the price of top talent went through the roof. Everyone had golden handcuffs. Nobody wanted to work for anything but a top-tier firm. Now, you’ve got a situation where suddenly all those people who were ‘unhirable’ might be available. And they don’t necessarily want to work at a top-tier firm – those are the ones who’ve been in the paper everyday, mostly with bad news. Right now, the smart money is picking people up."

Dolfino pointed out that the greatest growth is currently in Asia, especially China, where "If you can get a CFO on the phone, you can get a job." He adds, "And we have everyone’s phone number."

To keep up with this still exploding demand, WhiteRock Group has opened three new offices, all in Asia, and brought on more top recruiting talent. The company is now nearly fifty professionals strong and expects to add to that number before year’s end.

Insider uncorks secret liquor store code

The highly descriptive terms used to describe wines sold by Sweden's alcohol retail monopoly Systembolaget are riddled with secret code, according to an inside source.

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Hedge Funds Hit An All Time Low

New investments in hedge funds for the first six months of 2008 was below $30 billion, according to Hedge Fund Research, way below the $118 billion raised for the same period the year before, making 2008 is the worst year on record for the industry as the average hedge fund dropped off more than 4%.

According to research, the unexpected downturn will lead investors to rethink their investments or ask fund managers to lower their fees from the current rate of 2% and reduce their 20& cut on profits. Problems at hedge funds may also invite a government probe.

Dan McAllister, treasurer and tax collector of San Diego County, attributed the hedge fund's popularity to it being seen as a panacea and a sure way to earn big money fast. "But maybe it's time to be a little cautious, and it's time to look at things with a more discreet eye," McAllister told the New York Times.

In anticipation of harder times ahead, fund managers are cutting employee Christmas bonuses, said a study slated to be released this week by Glocap, a hedge fund recruitment company. Recruiting firms like Heidrick and Struggle are maintaining a watch list of problematic hedge funds. Tim Holt, a partner in Heidrick who supervises the company's Wall Street recruitment task, has 100 hedge funds on its watch list and expects 50 to 80 to be added in the next few months.

Pegasus' Auto Loan Fund Shows Positive Trend

Hedge fund advisor and manager American Pegasus LDG, LCC., is seeing the 36th subsequent month of positive returns for the Pegasus Auto Loan Fund, which invests in US subprime auto loans.

The fund has returned an average of 1.55% per month with 100% positive months since inception in September of 2005.

Providing the opportunity to profit from stable high yields via sub-prime auto loans with collateral in the form of automobiles, the fund currently has $89 million under management and uses no leverage.

"In the $200 billion auto industry there is high demand for auto loan originations." The Pegasus preformance sheet shows, "In 2005, 4.7% of U.S. workers used public transportation and 90% workers own a car; 1/3 households own > 1 car; Average 1.9 cars/household"

That number rises and falls according to energy fluctuations, according to the Energy Information Administration, "Transportation costs have increased due to many factors related to travel and prices paid for transportation fuel, while being somewhat offset by improved fuel economy." But the numbers remain viable ant the US now has 765 motor vehicles per 1000 capita.

The American Pegasus Auto Loan Fund directly sources fully, collateralized sub prime US auto loans. Underwriting criteria is strictly enforced along with well designed risk controls.

Pegasus was founded in 1997 as an investment advisory firm focusing on equity investment in managed accounts. The advisory firm launched first equity long–short hedge fund was established in the same year. In 2001, Pegasus began to manage portfolios in currencies and commodities, launching a series of life settlement funds., followed by the American Pegasus Auto Loan Fund in 2005. American Pegasus Investment Management is registered with the SEC as an investment advisor.

International regulators and financial industry players continue to join the membership of the IFSB

The Council of the Islamic Financial Services Board (IFSB) has resolved to admit Korea's regulatory and supervisory authorities as the latest inclusion to the membership of the IFSB. The admission of the two Korean authorities, together with other new members has increased the IFSB membership to 175.

The newly admitted members are as follows:

1. Financial Services Commission & Financial Supervisory Service, Korea
2. Khaleeji Commercial Bank B.S.C.(c), Bahrain
3. Kuwait International Bank, Kuwait
4. Unicorn International Islamic Bank, Malaysia
5. Commercial Bank of Dubai, United Arab Emirates
6. Deutsche Bank AG, United Arab Emirates
7. Emirates Islamic Bank, United Arab Emirates
8. Tokio Marine Insurance Middle East, United Arab Emirates
9. Gatehouse Bank plc, United Kingdom

The new admissions reflect the continuing interest of the Islamic financial services industry in the work undertaken by the IFSB. The IFSB members now total 175 organisations from 34 jurisdictions comprising 42 regulatory and supervisory authorities, six international inter-governmental organisations and 127 market players and professional firms. The full list of the 175 IFSB members can be seen on www.ifsb.org. Their roles and responsibilities (by category) are detailed in the IFSB Articles of Agreement which is downloadable from the website.


The IFSB is an international standard-setting organisation that promotes and enhances the soundness and stability of the Islamic financial services industry by issuing global prudential standards and guiding principles for the industry, broadly defined to include banking, capital markets and insurance sectors.

Lend America Launches Exit Strategy

Lend America announced the launch of an exit strategy to help leading Wall Street firms and hedge funds quickly monetize their residential mortgage portfolios.

As the 12th largest direct-to-consumer FHA lender in the US, Lend America is offering investors the opportunity to refinance performing mortgage portfolios within 10 days and work with non-performing portfolios to maximize cash flow and deliver a profitable exit strategy.

"Lend America is already working with leading Wall Street firms and hedge funds who are trading and or holding adjustable rate or other performing paper, "commented Michael Ashley, Chief Business Strategist of Lend America. "Because of our significant number of highly trained loan specialist in FHA lending and our ability to place loans directly into GNMA Mortgage Backed Securities, many major investment firms consider Lend America one of the best resources to turn to for help and work with from spreadsheet to closing."

Lend America's model was developed to help any financial institution or investor looking to quickly monetize or improve cash flow from a residential mortgage portfolio.

Ashley continued, "Many investors are looking for instant liquidity or increased cash flow from mortgage investments in this challenging environment."

KP Secutiries and Sophie Capital Join Forces to Raise Funds

Hedge fund managers KP Securities and Sophia Capital Securities announced that they are joining forces, enhancing the 2 firms ability to raise capital for alternative investment managers. The transaction between the two firms was finalized on September 1, 2008.

The new combined company, Belvedere Global Investors LLC, is headquartered in Belvedere, California, a short distance from the San Francisco financial district. The company is a distribution boutique focused on alternative investments. It raises capital for investment manager clients that include hedge, private equity and venture capital funds and funds of funds, as well as for private companies seeking direct investments.

"This transaction will allow our team to continue deepening its geographic coverage of investing clients and fund managers, bringing under one roof a truly global collection of relationships", said Keith Pagan of KP Securities.

Over the past 4 years, the combined team, now run by Keith Pagan and Patrick Beaudan, the principals of Belvedere, has raised over $1.5 billion in capital for alternative investment managers in the U.S., Europe and Asia, working with investors in over 50 different countries.

"The combination of our firms enhances the depth of the professional assets we can deploy in supporting the capital raising efforts of an increasing range of clients in the alternative investment space, while preserving our focus on delivering top-notch investor relations services", said Patrick Beaudan.

As part of its activities, Belvedere also organizes private roundtables, where institutional investors meet select alternative investment managers over the course of a high-quality, one-day event that excludes vendors and the press.

Hedge Fund Man Group Hires New Middle East CEO

The CEO of Man Group, Peter Clarke, announced the appointment of the new CEO of the Middle East arm as Patrick Merville, to take effect from 1 October, following the retirement of Antoine Massad.

Man, a global leader in alternative investments, was the first hedge fund provider to open a local office in the Middle East 22 years ago. Under the leadership of Massad, Man has broken new ground and today enjoys clear leadership in the region.

Merville joined Man three years ago as deputy regional CEO and head of institutional business. He succeeds Antoine Massad who has decided to retire after nearly 20 years' service with Man to pursue private interests.

Mr Clarke said the appointment was testament to Man's ability to attract the best talent in the industry.

"Patrick takes the reins of the leading alternative investment firm in the Middle East at a time when sophisticated private and institutional investors are, increasingly, seeking an alternative to the traditional investment classes," he said.

"For Patrick, this is as a step up in his long career in alternatives. Patrick's continuing goal will drive the business to new levels of success in the region on the back of Man's range of innovative products and the region's growing role in the global economy."

Before joining Man, Mr Merville was a director at Merrill Lynch in London, where he spent six years, first as an institutional salesperson in emerging market equities and then in the hedge fund prime brokerage sales group. An experienced banker with exposure to hedge funds and alternative investments throughout his career he has also held roles at HSBC in New York as vice-president in institutional sales, emerging market equities, and at Credit Agricole where he was an associate in the private equity business.

Merville holds a BA in Economics from the American University of Beirut and an MBA in Finance from Columbia Business School.

Wall Street Jounal Columnist Speaks at Hedge Fund Summit

Wall Street Journal columnist Gregory Zuckerman and Ely Razin, senior director of strategy, Westlaw Business, will deliver a luncheon presentation on "State of the Hedge Funds for 2008" at a upcoming Hedge Fund General Counsel Summit, according to Incisive Media, publisher of Corporate Counsel magazine.

The event will take place September 25, 2008 at The Sheraton Hotel in Stamford, Connecticut. Targeted to general counsel and deputy counsel in the hedge fund industry, the one-day conference will present insights into the current state of the industry in today's uncertain times.

Zuckerman writes the "Heard on the Street" column for the Wall Street Journal and authored two recent articles on hedge funds: "Shakeout Roils Hedge Fund World" and "Hedge Funds Are Caught in a Tight Spot." He recently won the NY Press Club Journalism award, and was nominated for a 2008 Gerald Loeb award for coverage of the mortgage meltdown. Zuckerman is a frequent commentator for CNBC on hedge funds and stocks.

Additional industry experts and practitioners who will be speaking at the conference include, Tia Breakley, vice president, The Blackstone Group LP, David Brooks, managing director & deputy GC, Fortress Investment Group LLC, and Simon Lorne, vice chairman and chief legal officer, Millennium Management LLC.

Corporate Counsel's Hedge Fund General Counsel Summit is part of Incisive Media Conferences & Trade Shows, a producer of educational and networking events for business leaders and professionals.

Hedge Fund Gartmore Launches Absolute Return Fund

Hedge Fund manager Gartmore Investment Management Limited is launching the Gartmore European Absolute Return Fund, to be co-managed by Roger Guy and Guillaume Rambourg, subject to regulatory approval.

The new fund will be a UCITS III limited issue vehicle with capacity set at £200 million, the fund's three week offer period starts on 6th October before its launch on 31st October 2008.

The Gartmore European Absolute Return Fund, the first in a series of absolute return offerings planned by Gartmore, will seek to deliver positive absolute returns over the long-term in all market conditions by taking long and short positions in equities and derivatives. It will be managed using a similar strategy to Gartmore's flagship European equity long/short hedge fund - the Gartmore AlphaGen Capella Fund.

Commenting on the proposed launch, Richard Pursglove, Head of UK Retail at Gartmore, said: "Over the last decade we have transformed our business into a specialist provider of long-only and alternative products. This latest development is an important strategic addition to our retail fund range, and has been driven by substantial client interest from discretionary asset managers, wealth managers and IFAs seeking uncorrelated, positive returns."

He concluded: "Gartmore's substantial experience in shorting, combined with it long established hedge fund infrastructure, will be attractive to investors looking for absolute returns."

Gartmore is a leading provider of long-only and alternative investment solutions and one of the pioneers of managing hedge funds on behalf of institutional investors. Since entering the hedge fund arena in 1999, Gartmore has built an $11billon** hedge fund business and is one of the largest hedge fund providers in Europe.

Venus Capital Launches Venus (India) Index Plus Fund

Venus Capital Management, Inc. has launched the Venus Index Plus Fund. The general objective of the Fund is to outperform the S&P CNX Nifty India Index without changing the weights in the Index.

Venus Capital, after conducting a detailed analysis of India-dedicated hedge funds, found that most India funds, both inside and outside of India, underperformed the S&P CNX Nifty India index on a risk-adjusted basis. They have high Beta with a low Sharpe ratio. This became even more evident this year when the Indian markets dropped approximately 40% and a typical India fund lost 40-55% in the first six months of the year. Venus has segregated Alpha from Beta and has products for investors seeking either. However, Venus feels that “2 and 20” fees should not be paid to obtain Beta and hence, have launched the flat fee Index fund.

The Index fund is engineered to track and outperform the benchmark Indian Index without changing the weights of the Index constituents. It will be available in unlevered, 1x, 2x levered and short versions with daily liquidity, enabling institutional investors to time the market and take advantage of their macro views and also use as a hedge against exposure to long biased India managers.

Venus Capital expects this product to outperform the S&P CNX Nifty India index since the S&P CNX Nifty India Index futures typically roll at a discount to fair value of the underlying S&P CNX Nifty India index on a monthly basis and the left over cash (as futures require only 25% margin) can be deployed in short-term instruments..

The fund offers beta exposure to one of the fastest growing economies, in a cost efficient manner compared to traditional mutual funds and hedge funds. “We do not believe investors should pay 2 and 20 fees for Beta” said Vik, CEO of Venus Capital Management, Inc. Venus Capital has been in business since 1994 and is the oldest India-focused hedge fund company. The founder and CEO, Vik Mehrotra, has over 20 years of investment experience and is assisted by over 20 analysts and traders.

Investors can request a private placement memorandum for the Venus (India) Index Plus Fund by visiting the manager's website. The fund is open to accredited and qualified investors only and the minimum initial investment amount is $1,000,000.

Venus Capital Management, Inc. was founded in 1994. The company was registered with the Securities & Exchange Commission in the United States as a Registered Investment Advisory company in 2000. From inception and until today, the firm manages wealth for several family offices and institutions with an emphasis on increased allocations to Asia in a risk averse manner. Over the years, the firm has evolved from solely a money management firm for wealthy families to a more specialized firm today focused on making investments in Asia. This investment focus enables us to leverage the strengths of our investment team and capitalize upon the growth potential of the global markets.

Hedge Fund TriAlpha Explores Diversified Fund Launches

TriAlpha recently a launched property hedge fund of hedge funds, the TriAlpha Global Property Strategy Fund in June this year. The fund seeks absolute returns by focusing on hedge fund managers that specialise in the global property sector. In its first month the fund outperformed the FTSE EPRA Global Index by an estimated 11%.
Included in the portfolio are recognised names such as Credit Suisse, Thames River and New Star Property hedge funds.

“We are already seeing a high level of interest in the TriAlpha Global Property Strategy Fund and by having the fund available through Transact we are broadening the availability of this exciting new offering,” commented Cobus Kruger, director at TriAlpha.

Minimum investment for the TriAlpha Global Property Strategy Fund is $5 million (or equivalent).

Trialpha's five sub funds of the 'TriAlpha Alternative Strategy Unit Trust' have been also approved as restricted recognised schemes for distribution in Singapore.

"With our roots in Stonehage (our private wealth management parent company,) we have extensive experience in dealing with and providing investment solutions to private clients."
Cobus Kruger, Director at TriAlpha, says, "Our hedge fund of funds products have been received well by these clients, fitting in neatly with their investment objectives and risk profiles. With increasing numbers of private banks in Singapore we believe that our hedge fund of funds products will be an appropriate solution for their clients."

The five absolute return funds offer investors a variety of risk profiles and investment strategies, the 'TriAlpha Relative Value Fund', which invests in market-neutral, multi-strategy event driven, multi-strategy arbitrage and option arbitrage; aims to achieve stable, absolute returns with volatility similar to the Citigroup World Government Bond Index.

The 'TriAlpha Multi Strategy Fund' invests across Asia, European and U.S. hedge strategies, emerging markets, macro, event driven and arbitrage; aims to offer stable, absolute returns with volatility similar to the Citigroup World Government Bond Index.

The 'TriAlpha Growth Strategy Fund', which invests in Asia, European and US hedge strategies as well as emerging markets and macro hedge funds with a smaller exposure to arbitrage strategies than the Multi Strategy fund; looks to achieve absolute returns with lower volatility than the MSCI World Equity Index.

The 'TriAlpha Hedge Equity Fund' which invests in Asia, European and US hedge strategies; offers investors absolute returns with lower volatility than the MSCI World Equity Index.

And finaly, the 'TriAlpha Global Property Strategy Fund' will focus on hedge fund managers that specialise in the global property sector.

Unigestion Hires Former Julius Baer Manager as Head of hedge Funds

Privately owned asset manager, Unigestion, has appointed Konstantinos Iordanidis as Managing Director and Head of Hedge Funds. Unigestion has $11 billion invested in hedge funds, private equity funds and quantitative equity strategies.

Iordanidis is a co-founder of Z.I. Investment, LLC, a global macro hedge fund in Chicago and former Head of Asset Allocation at Julius Baer Asset Management in Zurich from 2003 to 2005. He joins from Olympia Capital Management in Paris where he has been Co-Chief Investment Officer since 2005.

Based in Geneva, his role will be to lead the development of Unigestion’s fund of hedge funds business which comprises 43 investment professionals based in Geneva, London, New York, Paris, Singapore and Guernsey.

The arrival of Iordanidis will provide the opportunity for Bernard Sabrier, Chairman of Unigestion, and Patrick Fenal, CEO, to devote more time to the overall management of the Group focusing on the strategic direction of Unigestion over the next decade. Both will continue to have a key involvement in the fund of hedge fund business, including close relationships with hedge fund managers and Unigestion’s clients.

"It is a natural move for us to reinforce our management structure as we continue to build a multi-disciplinary, multi-cultural and multi-geographic hedge fund team delivering superior quality products to our clients in a consistent and disciplined way." Patrick Fenal, CEO of Unigestion said.

"We are proud to have attracted such a talented individual to strengthen our team." Chairman of Unigestion Bernard Sabrier added, "No doubt he and the team will build on our existing expertise and continue to provide our clients with a combination of products and client service at the leading edge of the fund of hedge fund industry."

Hedge Fund Consolidation

A survey released Wednesday by Global Custodian ranked the world's top hedge fund administrators and found the industry could be in for consolidation in the near future.

The survey queried clients of 56 hedge fund administrators and received nearly 1,200 responses. It was the largest number of administrators the survey had ever analyzed and more hedge fund clients responded than ever before.

Among large firms, Citco Fund Services received the highest scores from its clients, followed by Goldman Sachs Administrative Services, IFS and PNC Global Investment Servicing. Smaller firms, however, scored somewhat higher with their clients. Kaufman Rossin Fund Services topped the list of smaller administrators, followed by ATC Fund Services, AIS Fund Administration and Pinnacle Fund Administration.


Despite the fact smaller firms tended to have more satisfied customers, Dominic Hobson, editor of Global Custodian, predicted greater merger and acquisition activity among administrators. He said it would be surprising if the industry were able to continue to support large numbers of providers.

"There is now evidence that a renewed round of consolidation is in the offing," Hobson said. "In any event, the buyers are likely to be different from the banks which dominated the acquisition process in the early years of this century."

Hobson predicts that in addition to administrators buying each other up, new firms will continue to form through back office spin-offs. There are also likely to be new start-ups looking to serve the smaller hedge funds now being dropped by major providers.

Morgan Stanley's Frontier Fund Issues Over 7 Million Shares

The Morgan Stanley Frontier Emerging Markets Fund, Inc. (the “Fund”) has issued 7,100,000 shares of common stock at a price of $20 per share resulting in gross proceeds to the Fund of approximately $142,000,000. The Fund’s shares began trading on August 25, 2008 on the New York Stock Exchange under the symbol “FFD.”

The newly organized, non-diversified closed-end fund’s investment objective is to seek long-term capital appreciation. "There can be no assurance that the Fund’s investment objective will be achieved." Morgan Stanley said as the Fund’s lead underwriter.

The Fund will seek to achieve its investment objective by investing, under normal circumstances, at least 80% of its net assets in equity securities of companies operating in frontier emerging market countries.

Frontier emerging market countries in which the Fund currently intends to invest include: Bahrain, Bangladesh, Botswana, Bulgaria, Croatia, Ecuador, Estonia, Ghana, Jamaica, Jordan, Kazakhstan, Kenya, Kuwait, Latvia, Lebanon, Lithuania, Macao, Mauritius, Namibia, Nigeria, Oman, Panama, Qatar, Romania, Saudi Arabia, Serbia, Slovenia, Sri Lanka, Trinidad and Tobago, Tunisia, Ukraine, United Arab Emirates and Vietnam.

The Fund's assets are managed within Morgan Stanley Investment Management's Emerging Markets Equity team. “We have a long tradition of emerging markets investing dating back to the mid-1980’s, with the objective of helping investors capture growth opportunities in developing economies,” said Ruchir Sharma, a Managing Director of Morgan Stanley Investment Management.

“We launched a Frontier Fund to invest in markets that we believe are continuing to grow and are not currently on most investors' radar screens. The Fund's registration in over 30 frontier markets across geographical regions gives us a wide footprint to make active country allocation decisions, and we are excited about the potential opportunities."

Endowment Model Approach to Asset Allocation and Investment

100 Women in hedge funds is presenting Notre Dame's Scott Malpass to discuss how endowments approach investments and stay the course in these curious and uncertain times. The event is being held at the Chicago Mercantile Exchange in Chicago on September 4, 2008.

"Staying ahead of the curve is critical for endowments, as performance will affect future gifts and their ability to properly fulfill their obligations."

Scott C. Malpass is vice president and chief investment officer at the University of Notre Dame, responsible for investment of the University's endowment, working capital, pension and life income assets of almost $7 billion. The endowment of some $6.2 billion is the 14th largest in American higher education and the largest at a Catholic university.

Having served as chief investment officer since 1989, Mr. Malpass works closely with the investment committee of the University's Board of Trustees in partnering with the most sophisticated investment management organizations throughout the world. The portfolio is widely diversified, with one of the highest allocations to alternative assets within the endowment community, and has accomplished top tier investment performance over both short and long-term time periods.

For the fiscal year ended June 30, 2000, the endowment returned a record 57.9 percent, the highest return for any American university and the subject of extensive media coverage in The Wall Street Journal, The Chronicle of Higher Education, U.S. News & World Report, The New York Times, and on CNBC. The University is recognized for its leadership in international, private capital and alternative investing, and its philosophy of building relationships with leading edge investment management firms and identifying niche investment opportunities that provide opportunities for superior investment performance.

Mr. Malpass is one of 12 leading chief investment officers profiled in the book Foundation and Endowment Investing: Philosophies and Strategies of Top Investors and Institutions, written by Lawrence E. Kochard and Cathleen M. Rittereiser and published by John Wiley and Sons in December 2007.

100 Women in Hedge Funds serves over 8,000 alternative investment management investors and practitioners through educational, professional leverage and philanthropic initiatives. Since its first session in 2002, 100 Women in Hedge Funds has hosted more than 150 events globally.

30 under 30 Top Traders

Trader Monthly submitted an annual roundup of the top trading talent age 30 or younger, the third 30 Under 30 club, "an eclectic group spanning all manner of gender, ethnicity, geography, product space and trading technique. Such diversity, mind you, was not preordained; our picks were based solely on money, pedigree and skills — although we did afford extra credit to those brave souls who trade their own dough."

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Professor Rajan Proposes Hedge Funds For India

In the April 2008, Draft Report of the Committee on Financial Sector Reforms headed by Professor Raghuram Rajan, it was proposed by the high-level committee that, “The presence of hedge funds would induce greater competitive pressure for other regulated fund management channels such as mutual funds.”

In an article by investment strategist Venkatesh, the strategist comments on the proposal, saying how hedge funds could improve asset price efficiency. "Besides," Venkatanesh says, "such funds, by virtue of their diverse investment styles, could provide investors an opportunity to enhance their risk-adjusted portfolio returns."

Included are some comments and reports on the subject;

Suppose a long-only (mutual fund) manager and a hedge fund manager both have a negative view on SBI, a positive view on HDFC Bank and a neutral view on ITC.

Long-only active managers will buy ITC in the same weight as their benchmark index, may overweight HDFC Bank and may not take any exposure in SBI. There is a reason for such a strategy. Active managers strive to beat their benchmark index. But they do not take too many active bets, lest their bets go wrong. Often, active funds tail the benchmark index with few active bets. Importantly, such managers cannot short-sell to take advantage of their negative view on a stock.

Hedge fund managers’ do not suffer from such constraint. In the above example, the hedge fund manager may overweight HDFC Bank, short-sell SBI and not take any exposure in ITC.

Better still, to neutralise any market risk, the hedge fund manager may buy HDFC Bank and short-sell SBI in such a way that the market risk in HDFC Bank is offset by short-selling SBI. Often, neutralising market risk on a portfolio would mean short-selling Nifty futures.

Making the most of a range-bound market

Exploiting price inefficiency

Hedge funds identify mispriced assets and exploit any price inefficiency. One way to do this is to employ statistical arbitrage.

Suppose a hedge fund manager finds that combination of one share of HDFC Bank and two short shares of SBI (1HDFC – 2SBI) has a stable statistical distribution. If the “spread” wanders far away from its mean, a hedge fund manager would set-up this strategy with a view that the “spread” will tighten. Such relative-value strategies can help arbitrate away asset price inefficiencies in a “normal” market.

Besides, hedge funds employ strategies to arbitrage price differentials between the derivatives and the spot market. Suppose a stock is trading at Rs 1,480 in the spot market. Assume that the hedge fund manager, based on her proprietary model, believes that the futures price should be only Rs 1,470 against its current market price of Rs 1,510.

The fund manager will short the futures contract and simultaneously buy the stock in the spot market. The trade will be profitable as long as difference between the spot price and the futures price is less than Rs 40.

As more hedge funds exploit such price differentials, disconnect between the spot and derivative markets could gradually reduce. And that could attract long-term hedgers to the market.

Using options to time investments

Higher risk-adjusted returns

Hedge funds create value for investors through their diverse investment styles. Here are some examples.

Relative-value strategies such as fixed-income arbitrage and market-neutral style strive to back-out beta exposure and provide alpha returns. Such strategies typically carry lower volatility than government bonds but generate higher returns. They, hence, act as returns-enhancers when combined with a bond portfolio.

The long-short investment style (such as 130 per cent long position and 30 per cent short position in equity) is a high-risk high-return strategy. The volatility of this strategy is lower than that of the traditional equity strategy. This strategy, hence, acts as return-enhancers when combined with equity portfolios.

The managed-futures investment style primarily takes exposure in commodity futures. This style acts as a risk-diversifier for an equity portfolio.

Of course, there are risks with such investments. Hedge funds typically employ high leverage. This causes a systemic risk in the event a fund folds because of high drawdowns. Besides, monitoring such managers is important because many of them may charge alpha fees for beta exposure.

It is not surprising that the committee has recommended that hedge fund investments be offered only to those who can invest Rs 1 and above. A similar such rule exists in the US.

Conclusion

It is important to understand that arbitraging price inefficiencies does not mean that hedge funds will prevent formation of market crashes or asset price bubbles. Hedge fund managers can be as irrational as the professional long-only managers and investors.

Yet, the introduction of hedge funds will be a welcome move to the Indian markets for two reasons — such funds can provide higher risk-adjusted returns for investors and can facilitate better asset price efficiency.

enhancek@gmail.com
alex@hedgeco.net

African Agricultural Land Fund Launch

Emergent Asset Management launched the African Agricultural Land Fund in August 2008, with a second closing to take place in September 2008.

The fund has raised almost €2 billion already ($2.9 billion), and wants to raise a total of €3 billion and is canvassing a range of investors. Minimum investment size is €500,000 for private investors and €5m for institutional investors.

The African Land Fund will offer investors the opportunity to participate in the growing Sub-Saharan agricultural sector. It will apply modern management disciplines and introduce improved farmland techniques to increase crop yields and investment returns.

Initially, the investment focus will be in South Africa. The portfolio will be expanded within Africa to include (but not limited to) countries such as Botswana, Zambia, Mozambique, Swaziland and the DRC.

Emergent has partnered with Grainvest, a firm of professional agricultural traders and one of the top five participants on the South African Securities Exchange, involved in agriculture locally, including farming, manufacturing, and transport and trading.

The Fund’s targeted return is 25% pa and will be denominated in Euros.

The Fund qualifies as a socially responsible Investment in keeping with the co-managers’ investment philosophy, endeavouring to make a positive contribution to the well-being of the local community.

FINCAD Targets Hedge Funds With Webinar

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

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

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

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

Hedge Fund buy-out and Launch of New Fund

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

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

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

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

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

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

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

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

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

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

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

Luxembourg platform smoothes way for hedge funds

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

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

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

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

Weekend News Update

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

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

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

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

Forex Market Platform Launch By Avalon

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

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

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

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

Hedge Fund Buys Into Trucking Agency

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

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

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

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

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

Software Stake Bought by Hedge Fund Firm

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

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

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

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

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

Investment Outsourcing for the Hedge Fund World

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

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

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

BUY-SIDE MOTIVATION VS SELL-SIDE ECONOMICS

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

INTEGRATING AN IRO WORKSTREAM

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

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

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

BUY-SIDE SKILLS & IRO MARKET PERSPECTIVES

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


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

EVALUATING AN IRO PARTNER

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

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

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

SUMMARY

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

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

Asia Stocks Edge Higher as China Approaches Policy Change

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

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

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

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

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

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

Hedge Fund SageCrest Goes Bankrupt

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

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

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

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

Hedge Fund Forum 2008

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

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

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

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

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

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

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

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

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

Trump To Launch India Hedge Fund

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

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

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

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

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

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

Hedge Fund Advisor Hires Mathematician and Boosts Assets

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

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

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

Hedge Fund Harbinger Buys Nearly 5%of Cablevision

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

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

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

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

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

Hedge Fund Correlation Research Report by Credit Suisse

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

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

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

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

Morningstar Hedge Fund Report, July 2008

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

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

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

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

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

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

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

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

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

More Service Providers

MAM Launches Hedge Fund-Like Returns Strategy

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

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

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

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

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

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

ActionsXchange Appoints Laura Pollard As Company Head

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

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

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

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

Partner Files Hedge fund Management Complaint

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

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

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

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

Castle Hall Hires Kosta Segounis

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

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

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

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

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

Blackstone Launches CleanTech Investment Arm

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

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

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

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