Hedge funds are thriving in Europe, thanks to increased interest from pension funds and other institutions, both European and U.S. Regulatory changes that have made it easier for such investors to put money in alternatives.
The 50 firms in the Alpha Europe Hedge Fund 50 ranking collectively managed about $300 billion as of December 31, 2006, nearly 21 percent of the global hedge fund industry's then $1.46 trillion in assets.
The Alpha Europe Hedge Fund 50 has seen its asset totals soar since 2006. A year ago, no European firm managed close to $15 billion in single-manager hedge fund assets -- this year, three firms have more than that, led by Barclays Global Investors. BGI's $18.95 billion narrowly tops Man Investments, No. 2 with $18.8 billion in single-manager assets. At No. 3, with $15.83 billion in assets, is GLG Partners, led by former Goldman, Sachs & Co. partners Noam Gottesman and Pierre Lagrange.
For the first time in the four-year history of Alpha's Europe Hedge Fund 50 ranking, each of the top ten firms are headquartered in London, cementing the city's position as the hedge fund capital of Europe. To be included in this year's ranking, a firm had to have more than $2 billion in hedge fund assets.
1 Aug 2007
31 Jul 2007
China Beats Japan As Asia's Top Hedge Fund Destination
According to Alpha Magazine's list of the region's biggest single-manager hedge funds, investors are rushing into China to capitalize on the country's soaring equity market, and Asia's native hedge funds are cashing in on the action.
Tokyo-based Sparx Group Co. topped the ranking for the second year in a row. Sparx, one of Japan's first money managers to get into hedged investing, now manages $6.7 billion. The next two firms, Hong Kong-based Value Partners and Singapore's Arisaig Partners, make their debut on the Asia Hedge Fund 25, managing $4.8 billion and $2.1 billion, respectively.
Despite their domination in the 2006 Asia 25 ranking, Japanese firms clearly take a back seat to China-based firms this year. A year ago four of the top ten firms were headquartered in Japan and accounted for one-third of the total assets managed by the Asia 25. his year, weakened by poor Japanese equities performance, only two of the top ten firms are Japanese.
China's equity market picks up where Japan's leaves off; the MSCI China index returned 78.7 percent in 2006, spurring the growth of China-focused funds under firms like Value Partners and Arisaig Partners.
The ten biggest firms in Alpha's exclusive Asia Hedge Fund 25 are:
Rank; Firm Name; Firm/Fund capital ($ millions)
1: Sparx Group Co.; (Tokyo, Japan); $6,651
2 Value Partners; (Central, Hong Kong); $4,772
3 Arisaig Partners; (Singapore); $2,100*
4 Penta Investment Advisors; (Central, Hong Kong); $1,910
5 Ward Ferry Mgmt; (Central, Hong Kong); $1,781
6 Lapp Capital; (Singapore); $1,400*
7 Tree Line Investment Mgmt.; (Central, Hong Kong); $1,300*
8 Artradis Fund Mgmt.; (Singapore); $1,220
9 Tantallon Capital; (Singapore); $1,092
10 Asuka Asset Mgmt.; (Tokyo, Japan); $1,034
Alex Akesson
Editor for HedgeCo.Net
Email: alex@hedgeco.net
Tokyo-based Sparx Group Co. topped the ranking for the second year in a row. Sparx, one of Japan's first money managers to get into hedged investing, now manages $6.7 billion. The next two firms, Hong Kong-based Value Partners and Singapore's Arisaig Partners, make their debut on the Asia Hedge Fund 25, managing $4.8 billion and $2.1 billion, respectively.
Despite their domination in the 2006 Asia 25 ranking, Japanese firms clearly take a back seat to China-based firms this year. A year ago four of the top ten firms were headquartered in Japan and accounted for one-third of the total assets managed by the Asia 25. his year, weakened by poor Japanese equities performance, only two of the top ten firms are Japanese.
China's equity market picks up where Japan's leaves off; the MSCI China index returned 78.7 percent in 2006, spurring the growth of China-focused funds under firms like Value Partners and Arisaig Partners.
The ten biggest firms in Alpha's exclusive Asia Hedge Fund 25 are:
Rank; Firm Name; Firm/Fund capital ($ millions)
1: Sparx Group Co.; (Tokyo, Japan); $6,651
2 Value Partners; (Central, Hong Kong); $4,772
3 Arisaig Partners; (Singapore); $2,100*
4 Penta Investment Advisors; (Central, Hong Kong); $1,910
5 Ward Ferry Mgmt; (Central, Hong Kong); $1,781
6 Lapp Capital; (Singapore); $1,400*
7 Tree Line Investment Mgmt.; (Central, Hong Kong); $1,300*
8 Artradis Fund Mgmt.; (Singapore); $1,220
9 Tantallon Capital; (Singapore); $1,092
10 Asuka Asset Mgmt.; (Tokyo, Japan); $1,034
Alex Akesson
Editor for HedgeCo.Net
Email: alex@hedgeco.net
Hedge Fund Barbarian Films Announces Alliance With Sand Dollar Capital
Hedge fund Barbarian Films LLC has announced an alliance with SandDollar Capital LLC, a private equity firm founded by The Hennessee Group principals Charles Gradante and E. Lee Hennessee.
SandDollar Capital's Charles Gradante said, “We have seen consistent interest from individual investors, funds and institutions for non-correlated alternative investments. We see film investment as a logical solution however for some time were unable to find the right business model that would offer engaging returns while effectively managing the downside risks typically associated with film investment”.
Lee Hennessee added, “Barbarian is the first film fund to capitalize on the inefficiencies in the current film investment landscape”. SandDollar Capital LLC structures financing from professional investors and institutional sources on behalf of Private Equity funds.
Barbarian has also recently formed ties with the Endeavor Agency and has announced its first film investments including: Powder Blue featuring Forrest Whitaker, Jessica Biel and Ray Liotta.
Barbarian Films is an investment fund founded by a trio of long time entertainment insiders that invests in structured independently produced film platforms. The hedge fund includes a unique investment methodology and slates of projects from best-in-breed producers and production companies which collectively have generated over $2 Billion (US) in combined box office returns.
“We have used our intimate relationships with consistently successful, award winning producers to create a unique fund which is the first of its kind to approach lower budget film slates in a significant way.” said Aaron Kaufman, Managing Member of Barbarian Films.
SandDollar Capital LLC’s alliance with Barbarian is a multi-year relationship, which will include Barbarian’s future funds and investment vehicles.
SandDollar Capital's Charles Gradante said, “We have seen consistent interest from individual investors, funds and institutions for non-correlated alternative investments. We see film investment as a logical solution however for some time were unable to find the right business model that would offer engaging returns while effectively managing the downside risks typically associated with film investment”.
Lee Hennessee added, “Barbarian is the first film fund to capitalize on the inefficiencies in the current film investment landscape”. SandDollar Capital LLC structures financing from professional investors and institutional sources on behalf of Private Equity funds.
Barbarian has also recently formed ties with the Endeavor Agency and has announced its first film investments including: Powder Blue featuring Forrest Whitaker, Jessica Biel and Ray Liotta.
Barbarian Films is an investment fund founded by a trio of long time entertainment insiders that invests in structured independently produced film platforms. The hedge fund includes a unique investment methodology and slates of projects from best-in-breed producers and production companies which collectively have generated over $2 Billion (US) in combined box office returns.
“We have used our intimate relationships with consistently successful, award winning producers to create a unique fund which is the first of its kind to approach lower budget film slates in a significant way.” said Aaron Kaufman, Managing Member of Barbarian Films.
SandDollar Capital LLC’s alliance with Barbarian is a multi-year relationship, which will include Barbarian’s future funds and investment vehicles.
25 Jul 2007
Law Firm Considering Legal Action Against "Bear Funds"
The Law Firm of Klayman & Toskes, P।A. announced that it is investigating the possibility of taking legal action against Bear Stearns & Co., Inc on behalf of investors who lost money in the Bear Stearns High-Grade Structured Credit Strategies Fund and the Bear Stearns High-Grade Structured Credit Strategies Enhanced Leverage Fund ("the Bear Funds").
This investigation is being launched on the heels of Bear Stearns' July 18 announcement that "there is effectively no value left for the investors in the Enhanced Leverage Fund and very little value left for the investors in the High-Grade Fund।"
Over the past few years, many brokerage firms, including Bear Stearns, bundled mortgages and sold them to investors as interest-paying bonds. Accompanying these products came an alphabet soup of securities like CMOs, CDOs, RMBSs and Alt-As. Most of these products are part of hedge funds, and were purchased by wealthy investors and institutions.
However, some individuals were unsuitably steered to invest in these risky products. Many of these investors and institutions did not understand how these products work, nor were the risks of owning these products fully explained to them at the time of purchase.
Combined, the Bear Funds had investor capital of about $1.56 billion. With this capital, and additional leverage taken out on the capital, Bear Stearns bet heavily on the market for subprime mortgages and invested in thinly traded collateralized debt obligations. Its gamble turned out to be wrong. As a result of the slumping U.S. housing market, the Bear Funds have collapsed within a very short period of time, and investors have lost about $1.9 billion.
Because of the collapse of the Bear Funds, K&T anticipates that it will be filing numerous claims on behalf of institutions and individuals who invested in these Funds. Moreover, as Federal Reserve Chairman Ben Bernanke has said that losses from the subprime mortgage fallout could reach $100 billion, K&T is also looking into the possibility of filing claims against other large brokerage firms who sustained losses in their mortgage-backed securities and subprime mortgage products.
K&T represents high-net worth investors throughout the nation in securities litigation and arbitration matters, against major Wall Street brokerage firms for securities violations including misuse of margin, failure to supervise, unsuitability, and misrepresentation and omission of material fact.
This investigation is being launched on the heels of Bear Stearns' July 18 announcement that "there is effectively no value left for the investors in the Enhanced Leverage Fund and very little value left for the investors in the High-Grade Fund।"
Over the past few years, many brokerage firms, including Bear Stearns, bundled mortgages and sold them to investors as interest-paying bonds. Accompanying these products came an alphabet soup of securities like CMOs, CDOs, RMBSs and Alt-As. Most of these products are part of hedge funds, and were purchased by wealthy investors and institutions.
However, some individuals were unsuitably steered to invest in these risky products. Many of these investors and institutions did not understand how these products work, nor were the risks of owning these products fully explained to them at the time of purchase.
Combined, the Bear Funds had investor capital of about $1.56 billion. With this capital, and additional leverage taken out on the capital, Bear Stearns bet heavily on the market for subprime mortgages and invested in thinly traded collateralized debt obligations. Its gamble turned out to be wrong. As a result of the slumping U.S. housing market, the Bear Funds have collapsed within a very short period of time, and investors have lost about $1.9 billion.
Because of the collapse of the Bear Funds, K&T anticipates that it will be filing numerous claims on behalf of institutions and individuals who invested in these Funds. Moreover, as Federal Reserve Chairman Ben Bernanke has said that losses from the subprime mortgage fallout could reach $100 billion, K&T is also looking into the possibility of filing claims against other large brokerage firms who sustained losses in their mortgage-backed securities and subprime mortgage products.
K&T represents high-net worth investors throughout the nation in securities litigation and arbitration matters, against major Wall Street brokerage firms for securities violations including misuse of margin, failure to supervise, unsuitability, and misrepresentation and omission of material fact.
The Expanding Hedge Fund Practice Of Finn Dixon & Herling
Finn Dixon & Herling LLP announced today that they have significantly expanded their hedge fund practice.
The law firm recently made a number of lateral hires, resulting in what is believed to be the largest hedge fund practice group at a Connecticut law firm. In particular, Matthew Eisenberg, a prominent hedge fund attorney formerly of the law firm of Cobb & Eisenberg LLC, became a partner of the firm in the first quarter of 2007.
Mr। Eisenberg joins partners Harold B. Finn and Erik Bergman as leaders of the firm’s Hedge Fund/Alternative Investment Fund practice group. They are supported by an experienced team of attorneys and paralegals.
Brett Dixon, the firm’s administrative partner, stated “We are very excited about the significant recent growth of our hedge fund practice। The exceptional team of legal professionals that we have assembled provides Finn Dixon with substantially increased cumulative experience and capacity with regard to fund structurings and formations, as well as investment adviser and broker-dealer registration and compliance matters.”
Mr। Eisenberg added, “Finn Dixon’s hedge fund practice group works closely with the firm’s tax, private equity, mergers & acquisitions, banking/finance, employment law and litigation practice groups. These areas of expertise are critical to a sophisticated hedge fund practice, given the increasing complexity and hybridization of fund products and the business/regulatory environments in which they operate. Furthermore, Finn Dixon’s 'boutique' approach to client servicing, which emphasizes partner access and an individualized approach to client relationships, is well suited to the demands of fund managers.”
Finn Dixon provides a broad spectrum of legal services to the alternative investment community. Clients include hedge funds, funds of funds, private equity funds, commodity pools, investment advisers, broker-dealers and third party marketers. The firm's fund manager clients, ranging in size from $100 million to $10 billion, are located throughout North America, as well as in Europe and Asia.
The law firm recently made a number of lateral hires, resulting in what is believed to be the largest hedge fund practice group at a Connecticut law firm. In particular, Matthew Eisenberg, a prominent hedge fund attorney formerly of the law firm of Cobb & Eisenberg LLC, became a partner of the firm in the first quarter of 2007.
Mr। Eisenberg joins partners Harold B. Finn and Erik Bergman as leaders of the firm’s Hedge Fund/Alternative Investment Fund practice group. They are supported by an experienced team of attorneys and paralegals.
Brett Dixon, the firm’s administrative partner, stated “We are very excited about the significant recent growth of our hedge fund practice। The exceptional team of legal professionals that we have assembled provides Finn Dixon with substantially increased cumulative experience and capacity with regard to fund structurings and formations, as well as investment adviser and broker-dealer registration and compliance matters.”
Mr। Eisenberg added, “Finn Dixon’s hedge fund practice group works closely with the firm’s tax, private equity, mergers & acquisitions, banking/finance, employment law and litigation practice groups. These areas of expertise are critical to a sophisticated hedge fund practice, given the increasing complexity and hybridization of fund products and the business/regulatory environments in which they operate. Furthermore, Finn Dixon’s 'boutique' approach to client servicing, which emphasizes partner access and an individualized approach to client relationships, is well suited to the demands of fund managers.”
Finn Dixon provides a broad spectrum of legal services to the alternative investment community. Clients include hedge funds, funds of funds, private equity funds, commodity pools, investment advisers, broker-dealers and third party marketers. The firm's fund manager clients, ranging in size from $100 million to $10 billion, are located throughout North America, as well as in Europe and Asia.
27 Jun 2007
Hedge Fund Combines With Freedom In $3.4 Billion Dollar Deal
Hedge fund manager GLG Partners announced that it plans to access the public markets through a reverse acquisition transaction with Freedom Acquisition Holdings, Inc.
This transaction values GLG at approximately $3.4 billion, in order to finance the acquisition of GLG, Freedom will use the proceeds from its initial public offering and borrow the balance from a third party lender to obtain the $1 billion to pay the cash portion of the purchase price. In addition, Freedom and its subsidiaries will issue 230 million shares of common stock valued at $2.4 billion to the GLG equity holders.
Under the terms of the agreement, the owners of hedge fund manager GLG will receive $1 billion in cash and 230 million shares of Freedom common stock. The combined company will be named GLG Partners, Inc. Shares of the combined company are expected to trade on the New York Stock Exchange under the ticker symbol "GLG".
GLG is the largest independent alternative investment manager in Europe with over $20 billion in assets under management and the eleventh largest alternative asset manager in the world. GLG has built a highly scalable investment platform, infrastructure and support system, which represents a combination of world-class investment talent, cutting-edge technology and rigorous controls and risk management. GLG manages over 40 funds, as well as managed accounts for high net worth individuals and institutions, using both alternative and long only strategies and products.
"This strategic transaction is an important step in building GLG's global business, affording us the opportunity to increase brand awareness and expand in major targeted markets, including the US, Middle East and Asia," said Noam Gottesman, Founder, Managing Director and Co-CEO of GLG.
This transaction values GLG at approximately $3.4 billion, in order to finance the acquisition of GLG, Freedom will use the proceeds from its initial public offering and borrow the balance from a third party lender to obtain the $1 billion to pay the cash portion of the purchase price. In addition, Freedom and its subsidiaries will issue 230 million shares of common stock valued at $2.4 billion to the GLG equity holders.
Under the terms of the agreement, the owners of hedge fund manager GLG will receive $1 billion in cash and 230 million shares of Freedom common stock. The combined company will be named GLG Partners, Inc. Shares of the combined company are expected to trade on the New York Stock Exchange under the ticker symbol "GLG".
GLG is the largest independent alternative investment manager in Europe with over $20 billion in assets under management and the eleventh largest alternative asset manager in the world. GLG has built a highly scalable investment platform, infrastructure and support system, which represents a combination of world-class investment talent, cutting-edge technology and rigorous controls and risk management. GLG manages over 40 funds, as well as managed accounts for high net worth individuals and institutions, using both alternative and long only strategies and products.
"This strategic transaction is an important step in building GLG's global business, affording us the opportunity to increase brand awareness and expand in major targeted markets, including the US, Middle East and Asia," said Noam Gottesman, Founder, Managing Director and Co-CEO of GLG.
25 Jun 2007
Independent Valuations And Hedge Fund Risk Control
Recent financial statistics have shown that pension plans are beginning to out-pace high net individuals with respect to hedge fund investing. At the same time, sub-prime funds struggle in the aftermath of blow-ups such as Amaranth and Bayou.
According to Dr. Susan M. Mangiero, CFA, Accredited Valuation Analyst and certified Financial Risk Manager, "Pension fiduciaries are on the hook for making sure that they have done everything possible to avoid a hedge fund meltdown. We want to help plan sponsors before trouble starts. Issues such as independent valuations and good risk controls are essential but that is just the tip of the iceberg."
In an effort to assist plan sponsors in this area, Pension Governance is presenting the Hedge Fund Toolbox series today, (June 26th) and later this week (June 28). The discussion covers the role of the pension consultant and proper valuation policies and procedures.
The Hedge Fund Toolbox is a series of six webinars that focus on hedge fund economics, operations and legal considerations. These two events are hosted by Pension Governance as a way to shed light on a sometimes mysterious corner of the investment world.
Pension Governance is an independent research and analysis company that focuses on benefit plan investment risk, corporate strategy, valuation and accounting issues, with the fiduciary perspective in mind. The company is sponsored by HedgeCo.Net, Albourne Village, Lipper Hedge World and the National Association of Certified Valuation Analysts.
According to Dr. Susan M. Mangiero, CFA, Accredited Valuation Analyst and certified Financial Risk Manager, "Pension fiduciaries are on the hook for making sure that they have done everything possible to avoid a hedge fund meltdown. We want to help plan sponsors before trouble starts. Issues such as independent valuations and good risk controls are essential but that is just the tip of the iceberg."
In an effort to assist plan sponsors in this area, Pension Governance is presenting the Hedge Fund Toolbox series today, (June 26th) and later this week (June 28). The discussion covers the role of the pension consultant and proper valuation policies and procedures.
The Hedge Fund Toolbox is a series of six webinars that focus on hedge fund economics, operations and legal considerations. These two events are hosted by Pension Governance as a way to shed light on a sometimes mysterious corner of the investment world.
Pension Governance is an independent research and analysis company that focuses on benefit plan investment risk, corporate strategy, valuation and accounting issues, with the fiduciary perspective in mind. The company is sponsored by HedgeCo.Net, Albourne Village, Lipper Hedge World and the National Association of Certified Valuation Analysts.
24 Jun 2007
Congress Publishes Report on Hedge Funds
The Congressional Research Service recently published a report to Congress on pension fund investments in hedge funds.
The report indicates that pension funds that invest in hedge funds have increased to 24% in 2006, up from 19% in 2004. Total corporate pension fund assets allocated to hedge funds has grown from 1.3% in 2003, to approximately 2.1% in 2006.
The report also says that hedge funds have experienced a growth of 3,000% over the last 16 years.
It also describes the lack of SEC oversight, certain high-profile fund blowups, and the possible risk to the Pension Benefit Guaranty Corporation associated with investments by pension funds in hedge funds.
"In our market based economy, market-discipline of risk taking is the rule and government regulation is the exception." Says The Presidents Working Group on Financial Markets.
The report indicates that pension funds that invest in hedge funds have increased to 24% in 2006, up from 19% in 2004. Total corporate pension fund assets allocated to hedge funds has grown from 1.3% in 2003, to approximately 2.1% in 2006.
The report also says that hedge funds have experienced a growth of 3,000% over the last 16 years.
It also describes the lack of SEC oversight, certain high-profile fund blowups, and the possible risk to the Pension Benefit Guaranty Corporation associated with investments by pension funds in hedge funds.
"In our market based economy, market-discipline of risk taking is the rule and government regulation is the exception." Says The Presidents Working Group on Financial Markets.
$3 Billion Hedge Fund Hires New Manager
Henderson Global Investors, the independent asset manager with over £61 billion ($121.9 billion) under management, has appointed a new sales manager for their $3 billion hedge fund division. Jill Hodges joined last week and will report to Alastair Barrie, director of global hedge fund sales.
Kate O'Neill, Director of Pan European Distribution and Hedge Funds at Henderson, said: “We are delighted to have attracted someone of Jill's calibre to join the team. Henderson has built a credible hedge fund business exploiting the in-house talent we have developed across multiple asset classes. Jill's experience in financial markets and hedge funds combined with her strong network of contacts in Europe will support us in our efforts to continue to grow the business.”
Jill joins from Mt Thaler Investment Management where she was Director of Marketing responsible for sales, marketing and investor relations for European clients. She has also been an equity analyst at Credit Suisse First Boston in London and a Consultant for Ernst and Young Consulting in both Europe and the US. Jill has an MBA from the Wharton School of Business, University of Pennsylvania.
Henderson currently has over $3 billion under management in its hedge fund business spread across 13 funds which are split into four groups: (1) long / short directional equity funds; (2) market neutral funds with a regional focus; (3) equity long / short style rotational funds; and (4) fixed income multi strategy and single strategy funds.
Kate O'Neill, Director of Pan European Distribution and Hedge Funds at Henderson, said: “We are delighted to have attracted someone of Jill's calibre to join the team. Henderson has built a credible hedge fund business exploiting the in-house talent we have developed across multiple asset classes. Jill's experience in financial markets and hedge funds combined with her strong network of contacts in Europe will support us in our efforts to continue to grow the business.”
Jill joins from Mt Thaler Investment Management where she was Director of Marketing responsible for sales, marketing and investor relations for European clients. She has also been an equity analyst at Credit Suisse First Boston in London and a Consultant for Ernst and Young Consulting in both Europe and the US. Jill has an MBA from the Wharton School of Business, University of Pennsylvania.
Henderson currently has over $3 billion under management in its hedge fund business spread across 13 funds which are split into four groups: (1) long / short directional equity funds; (2) market neutral funds with a regional focus; (3) equity long / short style rotational funds; and (4) fixed income multi strategy and single strategy funds.
22 Jun 2007
Deutsche Bank Launches Hedge Fund Consulting Business
Deutsche Bank Securities Inc. announced plans to launch a hedge fund consulting business. John Budzyna has joined as a managing director and head of hedge fund consulting within the bank’s Global Prime Finance business. At Deutsche Bank, Budzyna will build and manage the new hedge fund consulting business. He is based in New York and reports to Barry Bausano and Jonathan Hitchon, Co-Heads of Global Prime Finance.
“We are pleased to welcome John to our team and confident that his vast experience offering strategic advice to hedge funds on accounting, operations and best practices will provide the insight necessary to make our hedge fund consulting business a success,” said Bausano.
Earlier this year, Deutsche Bank Global Prime Finance was named the #2 global provider of prime brokerage services to hedge fund clients by Global Custodian magazine.
Budzyna joins Deutsche Bank with over 30 years of experience in public accounting and consulting. He recently served as the Chief Executive Officer of Olympia Capital Associates, L.P., a hedge fund administrator. Prior to joining Olympia, Budzyna was a senior partner and co-head of the hedge fund practice at Ernst & Young and a partner in charge of the hedge fund practice at Arthur Andersen, where he spent 28 years.
“We are pleased to welcome John to our team and confident that his vast experience offering strategic advice to hedge funds on accounting, operations and best practices will provide the insight necessary to make our hedge fund consulting business a success,” said Bausano.
Earlier this year, Deutsche Bank Global Prime Finance was named the #2 global provider of prime brokerage services to hedge fund clients by Global Custodian magazine.
Budzyna joins Deutsche Bank with over 30 years of experience in public accounting and consulting. He recently served as the Chief Executive Officer of Olympia Capital Associates, L.P., a hedge fund administrator. Prior to joining Olympia, Budzyna was a senior partner and co-head of the hedge fund practice at Ernst & Young and a partner in charge of the hedge fund practice at Arthur Andersen, where he spent 28 years.
21 Jun 2007
Hedge Fund Contracts Acquisitions Group For Billion Dollar Project
New York hedge fund Fairhills Capital has entered into a contract with Corporate Acquisitions Group to identify, contract, and manage the process of acquiring up to $1 billion in private companies in the food service industry sector.
The final sale price includes approximately 80% in cash, as well as 20% future stock in the new entity. Current ownership is also being offered the opportunity to continue to run their respective companies in a salaried position.
The contract was established on February 2, 2007 between both parties. During the following 30 days, 13 companies in 6 states were brought into the project with a total value of $145 million, $15 million in EBIDTA, $14.7 million in real estate, and $54 million in other assets.
On April 13, 2007 the hedge fund began closing on the first business purchase within the project.
As of May 31, 2007, 33 companies were involved with a total project value of $432 million. Over $79 million had already closed and the project was anticipated to be completed and closed by the end of August 2007.
The 33 companies currently in the project represent sole proprietors, C Corporations, S Corporations, and LLC organizations in 22 states including Hawaii.
Corporate Acquisition Group has worked with hundreds of similar business purchases, and continues to offer such services to hedge funds, high net worth individuals, private equity groups, and business owners.
The final sale price includes approximately 80% in cash, as well as 20% future stock in the new entity. Current ownership is also being offered the opportunity to continue to run their respective companies in a salaried position.
The contract was established on February 2, 2007 between both parties. During the following 30 days, 13 companies in 6 states were brought into the project with a total value of $145 million, $15 million in EBIDTA, $14.7 million in real estate, and $54 million in other assets.
On April 13, 2007 the hedge fund began closing on the first business purchase within the project.
As of May 31, 2007, 33 companies were involved with a total project value of $432 million. Over $79 million had already closed and the project was anticipated to be completed and closed by the end of August 2007.
The 33 companies currently in the project represent sole proprietors, C Corporations, S Corporations, and LLC organizations in 22 states including Hawaii.
Corporate Acquisition Group has worked with hundreds of similar business purchases, and continues to offer such services to hedge funds, high net worth individuals, private equity groups, and business owners.
20 Jun 2007
Hedge Fund Citadel Licensed to Operate in Bermuda
Hedge fund Citadel Solutions LLC announced today that the Bermuda Monetary Authority has approved their new branch, making Citadel Solutions Bermuda Ltd. the first company licensed by the BMA to provide administration services to hedge funds.
Effective immediately, Citadel Solutions Bermuda Ltd. will provide middle office and fund administration services to hedge funds as part of the global Citadel Solutions team. It will operate as the headquarters for the firm’s offshore administration platform, servicing the needs of clients domiciled across Europe, Asia and other non U.S. locations.
Robin Bedford has been named Director of the Bermuda branch and will be responsible for leading the operation. He joined Citadel Solutions earlier this month and brings with him nearly a decade of hedge fund administration experience. Most recently, he was President of Dundee Leeds. Mr. Bedford commented, “Citadel Solutions has demonstrated commitment and dedication to become a premium provider of administration solutions. I am delighted to be part of this team.”
John Buckley, President of Citadel Solutions LLC said: “Approval by the BMA is an important step in the further development of our activities. With the addition of Robin to our leadership team, we are well-positioned to become a leader in offshore fund administration. Robin and the Citadel Solutions Bermuda team build upon our unique service offering, the delivery of Operational Alpha to our clients.”
Citadel Solutions LLC is a subsidiary of Citadel Investment Group launched in 2007. The firm brings together experts in hedge fund operations, financial control and technology to offer hedge fund administrative services.
Effective immediately, Citadel Solutions Bermuda Ltd. will provide middle office and fund administration services to hedge funds as part of the global Citadel Solutions team. It will operate as the headquarters for the firm’s offshore administration platform, servicing the needs of clients domiciled across Europe, Asia and other non U.S. locations.
Robin Bedford has been named Director of the Bermuda branch and will be responsible for leading the operation. He joined Citadel Solutions earlier this month and brings with him nearly a decade of hedge fund administration experience. Most recently, he was President of Dundee Leeds. Mr. Bedford commented, “Citadel Solutions has demonstrated commitment and dedication to become a premium provider of administration solutions. I am delighted to be part of this team.”
John Buckley, President of Citadel Solutions LLC said: “Approval by the BMA is an important step in the further development of our activities. With the addition of Robin to our leadership team, we are well-positioned to become a leader in offshore fund administration. Robin and the Citadel Solutions Bermuda team build upon our unique service offering, the delivery of Operational Alpha to our clients.”
Citadel Solutions LLC is a subsidiary of Citadel Investment Group launched in 2007. The firm brings together experts in hedge fund operations, financial control and technology to offer hedge fund administrative services.
19 Jun 2007
UK Hedge Fund Puts $91 Million In US' Northern Trust
UK fund of hedge funds Gottex Market Neutral Trust Limited has announced that Chicago based multi-bank Northern Trust has been selected to provide custody and fund administration services to £45.35 million pounds Sterling (approximately $91 million).
The Guernsey registered fund of hedge funds is a closed-ended investment company trading on the London Stock Exchange. It has a global focus and seeks to achieve its investment objective through investing in underlying, independently market neutral hedge funds.
Sue Baines, Global Fund Services sales manager at Northern Trust said, "We're delighted to be working with Gottex Fund Management as we continue to grow our alternative fund administration business. This is the first listed fund to be established under the recently introduced Guernsey registered closed-ended investment fund regime that enables regulatory consent to be granted within 72 hours of the application being submitted."
Northern Trust has a growing network of 84 offices in 18 U.S. states and has international offices in 13 locations in North America, Europe and the Asia-Pacific region. As of March 31, 2007, Northern Trust had assets under custody of $3.8 trillion, and assets under investment management of $756 billion. Northern Trust, founded in 1889, has earned distinction as an industry leader in combining high-touch service and expertise with innovative products and technology.
Founded in 1992, Gottex is a global investment management group specializing in absolute return strategies. With funds under management of approximately $11 billion, Gottex offers nine co mingled fund of hedge funds products and a variety of managed account solutions and specializes in conservative and market neutral strategies. Headquartered in Lausanne, Switzerland Gottex has offices in London, New York, Boston and Hong Kong, and affiliate offices in Sydney and Montevideo.
The Guernsey registered fund of hedge funds is a closed-ended investment company trading on the London Stock Exchange. It has a global focus and seeks to achieve its investment objective through investing in underlying, independently market neutral hedge funds.
Sue Baines, Global Fund Services sales manager at Northern Trust said, "We're delighted to be working with Gottex Fund Management as we continue to grow our alternative fund administration business. This is the first listed fund to be established under the recently introduced Guernsey registered closed-ended investment fund regime that enables regulatory consent to be granted within 72 hours of the application being submitted."
Northern Trust has a growing network of 84 offices in 18 U.S. states and has international offices in 13 locations in North America, Europe and the Asia-Pacific region. As of March 31, 2007, Northern Trust had assets under custody of $3.8 trillion, and assets under investment management of $756 billion. Northern Trust, founded in 1889, has earned distinction as an industry leader in combining high-touch service and expertise with innovative products and technology.
Founded in 1992, Gottex is a global investment management group specializing in absolute return strategies. With funds under management of approximately $11 billion, Gottex offers nine co mingled fund of hedge funds products and a variety of managed account solutions and specializes in conservative and market neutral strategies. Headquartered in Lausanne, Switzerland Gottex has offices in London, New York, Boston and Hong Kong, and affiliate offices in Sydney and Montevideo.
Reuters Launches Risk Management Interface For Hedge Funds
Reuters has announced the launch of a new risk management solution for the hedge fund industry. According to the press release, "Risk management is now vital to hedge funds as they trade an ever broader set of structured instruments across all asset classes."
JRisk On Demand can be accessed globally via a standard web-browser interface allowing users to view detailed intra-day risk measures as well as profit and loss and position information.
Andrew White, Global Head of Reuters Trade and Risk Management said, “JRisk On Demand marks a major milestone by providing tailored risk management to the hedge fund industry. We are meeting the demand for real-time, cross asset risk management coupled with the reliability synonymous with Reuters. As a hosted solution it makes state of the art risk management an easy and immediate reality for hedge funds.”
Reuters has 16,900 staff in 94 countries, including 2,400 editorial staff in 196 bureaus serving 131 countries. In 2006, Reuters revenues were £2.6 billion ($5.1 billion). Reuters acquired Palo Alto based Application Networks in June 2006 in order to benefit from state-of-the-art technology and experience in managing structured products and credit derivatives.
Reuters JRisk On Demand will be showcased on the Reuters stand at GAIM in Monaco 18th-20th June.
JRisk On Demand can be accessed globally via a standard web-browser interface allowing users to view detailed intra-day risk measures as well as profit and loss and position information.
Andrew White, Global Head of Reuters Trade and Risk Management said, “JRisk On Demand marks a major milestone by providing tailored risk management to the hedge fund industry. We are meeting the demand for real-time, cross asset risk management coupled with the reliability synonymous with Reuters. As a hosted solution it makes state of the art risk management an easy and immediate reality for hedge funds.”
Reuters has 16,900 staff in 94 countries, including 2,400 editorial staff in 196 bureaus serving 131 countries. In 2006, Reuters revenues were £2.6 billion ($5.1 billion). Reuters acquired Palo Alto based Application Networks in June 2006 in order to benefit from state-of-the-art technology and experience in managing structured products and credit derivatives.
Reuters JRisk On Demand will be showcased on the Reuters stand at GAIM in Monaco 18th-20th June.
18 Jun 2007
Hedge Fund Investors Call For Independent Commitee
Two hedge fund shareholders with major stakes in TD Ameritrade Holding Corp, JANA Partners LLC and SAC Capital Advisors LLC, today sent a letter to Ameritrade's Board of Directors questioning their recent announcement regarding the exploration of strategic combinations.
The two hedge fund investors called on the Board to create a special committee free from influence by the company's largest shareholder to explore such combinations. In addition, JANA and SAC provided the Board with their own analysis of what they called the "massive value creation opportunity" inherent in a combination with E*Trade Financial or Charles Schwab.
In today's letter, JANA and SAC challenged TD Ameritrade's suggestion that the timing may not be right for such a combination, and called on the Board to demonstrate why such a transaction at this time would not be in shareholders' best interests.
They also stated their belief that the Board's strategic review process, as described by TD Ameritrade this week, fails to cleanse the Board's review of what they called "glaring" conflicts of interest stemming from the influence of Toronto-Dominion, including Toronto-Dominion's desire to maintain substantial levels of ownership and influence in TD Ameritrade and its reliance on the company to advance its own business strategy.
The letter states, "TD Ameritrade has poured over $200 million into advertising since the merger with TD Waterhouse and maintains over 100 branches at an estimated annual cost of $75 million, yet has produced little in the way of asset growth. In the 12 months ended March 31, 2007, the number of total customer accounts has grown by less than 3%, and the number of more valuable qualified accounts (those with more than $2,000 in assets) has actually declined."
"Additionally, given the Board's desire to address these matters in full public view, we believe it is all the more important that shareholders have a full and accurate accounting of the Board's actions with respect to possible strategic combinations, so that they may judge for themselves the Board's conduct and whether each director has honored his fiduciary duties."
Jana Partners is a $5 billion dollar activist fund based in San Francisco. The fund, run by Barry Rosenstein, has core long and short positions in companies in which it constantly reviews strategic alternatives. It also invests in under followed orphan equities and other event-driven strategies.
SAC Capital Advisors is a group of hedge funds founded by Steven A. Cohen. Investors' money is channeled through seven different "portfolio companies" or fund, including a core fund, a global diversified fund, and a health-care fund, each with an offshore counterpart. Cohen and his business partners are the biggest investors in SAC Capital Advisors, comprising some 60% of its assets.
The two hedge fund investors called on the Board to create a special committee free from influence by the company's largest shareholder to explore such combinations. In addition, JANA and SAC provided the Board with their own analysis of what they called the "massive value creation opportunity" inherent in a combination with E*Trade Financial or Charles Schwab.
In today's letter, JANA and SAC challenged TD Ameritrade's suggestion that the timing may not be right for such a combination, and called on the Board to demonstrate why such a transaction at this time would not be in shareholders' best interests.
They also stated their belief that the Board's strategic review process, as described by TD Ameritrade this week, fails to cleanse the Board's review of what they called "glaring" conflicts of interest stemming from the influence of Toronto-Dominion, including Toronto-Dominion's desire to maintain substantial levels of ownership and influence in TD Ameritrade and its reliance on the company to advance its own business strategy.
The letter states, "TD Ameritrade has poured over $200 million into advertising since the merger with TD Waterhouse and maintains over 100 branches at an estimated annual cost of $75 million, yet has produced little in the way of asset growth. In the 12 months ended March 31, 2007, the number of total customer accounts has grown by less than 3%, and the number of more valuable qualified accounts (those with more than $2,000 in assets) has actually declined."
"Additionally, given the Board's desire to address these matters in full public view, we believe it is all the more important that shareholders have a full and accurate accounting of the Board's actions with respect to possible strategic combinations, so that they may judge for themselves the Board's conduct and whether each director has honored his fiduciary duties."
Jana Partners is a $5 billion dollar activist fund based in San Francisco. The fund, run by Barry Rosenstein, has core long and short positions in companies in which it constantly reviews strategic alternatives. It also invests in under followed orphan equities and other event-driven strategies.
SAC Capital Advisors is a group of hedge funds founded by Steven A. Cohen. Investors' money is channeled through seven different "portfolio companies" or fund, including a core fund, a global diversified fund, and a health-care fund, each with an offshore counterpart. Cohen and his business partners are the biggest investors in SAC Capital Advisors, comprising some 60% of its assets.
14 Jun 2007
Specialized China Fund Launch
Hong Kong and London based fund of hedge funds manager KGR Capital announced that it has launched the KGR Capital China Absolute Return Fund focused specifically on hedge funds invested in greater China.
The Cayman Islands domiciled hedge fund of funds has a minimum investment of $100,000. The initial strategy is to invest in about 10 locally invested hedge funds. The fund's manager is targeting returns of about 20% annually over the longer term and is expecting volatility of about 10%.
Mark White, chief executive of KGR Capital Europe said in a statement, "Early indications are that our selected managers have been able to maintain positive returns this month despite the recent sharp sell-off in the A-share market."
Hong Kong-based KGR Capital specializes in Asia strategies and was formed in 2002 by John Knox, Nick George and Christopher Rampton, who worked together in Asia at Jardine Fleming and JPMorgan. The firm launched its first specialist Asian fund of funds, the KGR Capital Asia Pacific Absolute Return Fund, in August 2003. KGR Capital employs 15 professionals at offices in Hong Kong and London.
The Cayman Islands domiciled hedge fund of funds has a minimum investment of $100,000. The initial strategy is to invest in about 10 locally invested hedge funds. The fund's manager is targeting returns of about 20% annually over the longer term and is expecting volatility of about 10%.
Mark White, chief executive of KGR Capital Europe said in a statement, "Early indications are that our selected managers have been able to maintain positive returns this month despite the recent sharp sell-off in the A-share market."
Hong Kong-based KGR Capital specializes in Asia strategies and was formed in 2002 by John Knox, Nick George and Christopher Rampton, who worked together in Asia at Jardine Fleming and JPMorgan. The firm launched its first specialist Asian fund of funds, the KGR Capital Asia Pacific Absolute Return Fund, in August 2003. KGR Capital employs 15 professionals at offices in Hong Kong and London.
Hedge Fund Manager Faces Prison Time
In an investigation conducted by the FBI, the US Postal Service, and the SEC, hedge fund manager Joseph Ferona now faces prison time after pleading guilty to a fraud charge. His sentencing is scheduled for Aug. 24, Ferona disappeared in 2005 but was arrested earlier this year in Austin, Texas.
From October 2003 through May 2005, Ferona devised a scheme to defraud investors of money by false pretenses by soliciting individuals to invest funds into a “hedge fund” known as Global Prosperity Fund. Ferona purported to operate this fund through Castle Rock Trading Company, based in Castle Rock and Franktown, Colorado.
However, he was not registered with the State of Colorado. As part of the scheme, Ferona made fraudulent representations to investors, including that the fund realized annual returns or profits in excess of 40%, that returns for 2005 were projected as reaching 50 percent, and that the fund earned double digit returns during both good and bad market conditions.
Ferona allegedly concealed massive trading loses by generating and distributing false and fictitious quarterly and monthly investor account statements, falsely depicting each investors’ fund balance as appreciating based on the falsely reported returns.
“There is no such thing as a ‘guaranteed’ or ‘insured’ investment,” said U.S. Attorney Troy Eid. “Investments that promise unrealistic returns with no risk are virtually always fraudulent.”
Ferona now faces 23 counts of mail fraud, each carrying a penalty of up to 20 years imprisonment, and up to a $250,000 fine. He faces five counts of wire fraud, each carrying up to 20 years in federal prison, and a $250,000 fine. He also faces 9 counts of money laundering, with four of the counts carrying up to 20 years imprisonment, and a $500,000 fine, and 5 of the counts carrying up to 10 years imprisonment, and up to a $250,000 fine.
From October 2003 through May 2005, Ferona devised a scheme to defraud investors of money by false pretenses by soliciting individuals to invest funds into a “hedge fund” known as Global Prosperity Fund. Ferona purported to operate this fund through Castle Rock Trading Company, based in Castle Rock and Franktown, Colorado.
However, he was not registered with the State of Colorado. As part of the scheme, Ferona made fraudulent representations to investors, including that the fund realized annual returns or profits in excess of 40%, that returns for 2005 were projected as reaching 50 percent, and that the fund earned double digit returns during both good and bad market conditions.
Ferona allegedly concealed massive trading loses by generating and distributing false and fictitious quarterly and monthly investor account statements, falsely depicting each investors’ fund balance as appreciating based on the falsely reported returns.
“There is no such thing as a ‘guaranteed’ or ‘insured’ investment,” said U.S. Attorney Troy Eid. “Investments that promise unrealistic returns with no risk are virtually always fraudulent.”
Ferona now faces 23 counts of mail fraud, each carrying a penalty of up to 20 years imprisonment, and up to a $250,000 fine. He faces five counts of wire fraud, each carrying up to 20 years in federal prison, and a $250,000 fine. He also faces 9 counts of money laundering, with four of the counts carrying up to 20 years imprisonment, and a $500,000 fine, and 5 of the counts carrying up to 10 years imprisonment, and up to a $250,000 fine.
13 Jun 2007
Scandinavian Hedge Fund Of Funds Announces Portfolio Exits
Petter Hoffström, CFO of Scandinavian hedge fund of funds Amanda Capital PLC announced today that several of its investment companies were sold, generating a cash flow of over EUR 1 million ($1.3 million) for Amanda.
Eltel Networks was sold to another private equity company, Eltel Networks is the Northern European market leader for the installation and maintenance of infrastructure for electricity and telecommunications. Eltel Networks headquarter is in Espoo, Finland and it employs 8,200 professionals across Europe primarily in the Nordics, the Baltics and Poland. The exit is due to be accounted in Amanda's result during the third quarter of this year.
In addition two other private equity funds have recapitalized their target companies. These transactions generate proceeds to Amanda, which will be accounted in Amanda's result in the second quarter in 2007.
Amanda Capital Group is a private equity investment company. Its parent company (Amanda Capital PLC) is the first publicly listed private equity hedge fund of funds in Scandinavia. The company has investments in 24 different private equity funds and in three funds of funds managed by Amanda. It is one of Finland's largest private equity fund investment management companies. In addition to its own investments, Amanda manages several private equity fund portfolios under consultancy agreements.
Amanda also manages five private equity hedge funds of funds, which have several domestic and international investors. Amanda Group currently has more than EUR 1.3 billion ($1.7 billion) in assets under management and has made investments in more than 100 private equity funds in Europe, the United States, Asia and Russia.
Eltel Networks was sold to another private equity company, Eltel Networks is the Northern European market leader for the installation and maintenance of infrastructure for electricity and telecommunications. Eltel Networks headquarter is in Espoo, Finland and it employs 8,200 professionals across Europe primarily in the Nordics, the Baltics and Poland. The exit is due to be accounted in Amanda's result during the third quarter of this year.
In addition two other private equity funds have recapitalized their target companies. These transactions generate proceeds to Amanda, which will be accounted in Amanda's result in the second quarter in 2007.
Amanda Capital Group is a private equity investment company. Its parent company (Amanda Capital PLC) is the first publicly listed private equity hedge fund of funds in Scandinavia. The company has investments in 24 different private equity funds and in three funds of funds managed by Amanda. It is one of Finland's largest private equity fund investment management companies. In addition to its own investments, Amanda manages several private equity fund portfolios under consultancy agreements.
Amanda also manages five private equity hedge funds of funds, which have several domestic and international investors. Amanda Group currently has more than EUR 1.3 billion ($1.7 billion) in assets under management and has made investments in more than 100 private equity funds in Europe, the United States, Asia and Russia.
Hedge Fund Activism, Friendly or Hostile?
With an estimated $1.2 trillion under management, hedge funds are having an impact on the financial markets. In one of the first studies to shed light on how this is happening, researchers at Wharton and three other business schools find that hedge funds' efforts to improve companies they hold big stakes in have spillover benefits for all shareholders: a quick 5% to 7% jump in stock prices.
The gains, measured as an "abnormal return" on top of the broad market's, were nearly 11% when a hedge fund pushed for the targeted company to be sold. This makes hedge funds far more effective than other activist shareholders, such as pension funds and mutual funds, the researchers say.
According to the study, the share-price boost came during the 40-day period surrounding a hedge fund's public announcement of a push for change. "The price gain came immediately upon the announcement," said Wei Jiang, a finance professor at Columbia Business School who is a visiting faculty member at Wharton. The gains were therefore caused by investors' anticipation of improved company performance to follow. "The improvements will occur anywhere from a year to two years down the road," she added.
Return on equity typically soared in the 12 months after a hedge fund announced it had targeted a company. The research is reported in a paper titled, "Hedge Fund Activism, Corporate Governance and Firm Performance." Co-authors are Alon Brav of Duke University, Frank Partnoy of the University of San Diego and Randall Thomas of Vanderbilt University.
Using a large hand-collected dataset of hedge fund activism in the U.S. over the period 2001 through 2005, the study found that most tactics are non-confrontational, and attain success or partial success in two-thirds of the cases. However, hedge funds seldom seek control of target companies. The market reacts favorably to hedge fund activism, as the abnormal return upon announcement of potential activism is in the range of 5-7 percent, with no apparent reversal in the subsequent year.
The study also revealed much about the types of companies hedge funds go after. "I thought hedge funds would target troubled firms, and in the end that turned out not to be the case," said Jiang. Instead, she said, hedge funds seek healthy firms with undervalued stock, and then use their clout to press for management changes, dividend increases or other moves to benefit shareholders.
The study looked at 888 cases involving shareholder activism by 131 hedge funds from the start of 2001 through 2005. The cases were identified from news accounts of activist funds, those pushing for corporate change rather than just holding the stock as a passive investment.
Fund activism ranges from friendly to hostile, often involving more than one type of pressure. Nearly two-thirds of the announcements in the study merely state that the fund intends to communicate regularly with the company's board to enhance shareholder value. In about a quarter of the cases, the fund makes a formal shareholder proposal for change. Proxy fights to replace board members occur in 11.5% of cases. Fund pressure is effective. In about 41% of cases, the funds get the changes demanded, while they achieve partial success in another 26%.
The gains, measured as an "abnormal return" on top of the broad market's, were nearly 11% when a hedge fund pushed for the targeted company to be sold. This makes hedge funds far more effective than other activist shareholders, such as pension funds and mutual funds, the researchers say.
According to the study, the share-price boost came during the 40-day period surrounding a hedge fund's public announcement of a push for change. "The price gain came immediately upon the announcement," said Wei Jiang, a finance professor at Columbia Business School who is a visiting faculty member at Wharton. The gains were therefore caused by investors' anticipation of improved company performance to follow. "The improvements will occur anywhere from a year to two years down the road," she added.
Return on equity typically soared in the 12 months after a hedge fund announced it had targeted a company. The research is reported in a paper titled, "Hedge Fund Activism, Corporate Governance and Firm Performance." Co-authors are Alon Brav of Duke University, Frank Partnoy of the University of San Diego and Randall Thomas of Vanderbilt University.
Using a large hand-collected dataset of hedge fund activism in the U.S. over the period 2001 through 2005, the study found that most tactics are non-confrontational, and attain success or partial success in two-thirds of the cases. However, hedge funds seldom seek control of target companies. The market reacts favorably to hedge fund activism, as the abnormal return upon announcement of potential activism is in the range of 5-7 percent, with no apparent reversal in the subsequent year.
The study also revealed much about the types of companies hedge funds go after. "I thought hedge funds would target troubled firms, and in the end that turned out not to be the case," said Jiang. Instead, she said, hedge funds seek healthy firms with undervalued stock, and then use their clout to press for management changes, dividend increases or other moves to benefit shareholders.
The study looked at 888 cases involving shareholder activism by 131 hedge funds from the start of 2001 through 2005. The cases were identified from news accounts of activist funds, those pushing for corporate change rather than just holding the stock as a passive investment.
Fund activism ranges from friendly to hostile, often involving more than one type of pressure. Nearly two-thirds of the announcements in the study merely state that the fund intends to communicate regularly with the company's board to enhance shareholder value. In about a quarter of the cases, the fund makes a formal shareholder proposal for change. Proxy fights to replace board members occur in 11.5% of cases. Fund pressure is effective. In about 41% of cases, the funds get the changes demanded, while they achieve partial success in another 26%.
12 Jun 2007
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