HedgeCo News - The Los Angeles Times reports that hedge funds and banks are taking over some of the major US newspapers as they begin to emerge from bankruptcy protection.
"Distressed debt" hedge funds such as Angelo, Gordon & Co. and Alden Global Capital and Oaktree Capital Management have been buying up cheap, delinquent debt, then taking it to Bankruptcy Court for a settlement that transforms the debt into a large share of company stock, the LA Times reported, with itself, Tribune Co., being one of the newspapers under siege along with KTLA-TV Channel 5 among others.
The hedge funds, such as Angelo, Gordon & Co, as well as JPMorgan will be major shareholders in both Tribune and Freedom The LA Times reported. People with knowledge of the the hedge funds' strategy, say that the hedge funds want quality, branded journalism that still draws advertisers and therefore is worth preserving.
"The hedge funds will have to remain patient if they want to reap what they've sown in newspapers," the LA Times quoted. "The funds probably don't even have a firm exit strategy in place, and it will take sure signs of an economic recovery to grease deals and liquidity events."
Analysts believe, the LA Times said, that the newspaper industry had gotten so beaten down during the crisis that they have become a bargain for hedge funds.
7 Jun 2010
Opalesque: Hedge Funds Engage in "Armageddon Strategies"
HedgeCo News - Opalesque has released the 32nd issue in a series of regional roundtable forums - the 2010 Opalesque West Coast Roundtable. The 25 page Roundtable publication covers “Armageddon” strategies and how plan sponsors have changed their game during the past 18 months.
"All we did was provide huge amounts of liquidity." John Burbank from Passport Capital said regarding the massive deficits run up in an effort to stabilize the markets and economies, "The markets are as vulnerable to financial shocks and at least as highly leveraged than they were before the financial crisis. The Fed has more than doubled its balance sheet and will have to exit markets at some point or its legitimacy will be called into question".
Burbank added that a number of people have asked Passport to design funds comprised of macro trades that would help them hedge against systemic risks.
Jay Gould from Pillsbury also helped creating distaster insurance or “armageddon strategy” funds which work under the premise that U.S. will experience a very difficult time over the next several years, “including hyper-inflation, the abandonment of the U.S. dollar as the world’s reserve currency, further complications associated with our huge deficit spending, and a rush toward hard assets.”
The Roundtable discussion also includes:
• Overview of the latest products and research from funds and CTAs on intermarket correlations and quantitative trading
• A discussion on the impact the regulatory changes will have on the markets: How will mandating more OTC products to clear/trade on an exchange impact liquidity? What is more important in a derivatives contract - liquidity or flexibility?
• The democratization of alternatives: More funds using the 1940 Act format will be offering real CTA strategies with daily liquidity
• Running a hedge fund from the West Coast: Why this location counts and where West beats the East Coast.
The Roundtable was sponsored by the CME Group and the Opalesque 2010 Roundtable Series Sponsors Custom House Group and Taussig Capital. The following West Coast based experts participated:
• John Burbank, Managing Member and Chief Investment Officer, Passport Capital
• Jay Gould, Partner, Pillsbury
• Jeremy Evnine, President, Evnine & Associates, Inc.
• Matt Osborne, Executive Vice President & CIO, Altegris
• Ranjit Sufi, Manging Director, Nuveen
• Rishi Narang, Founding Principal, Telesis Capital
• Tina Lemieux, Managing Director of Hedge Fund and Broker Services, CME Group
• Tom Shanks, Founder and CEO, Hawksbill
Matthias Knab, founder of Opalesque and internationally recognized expert on hedge funds and alternatives, moderates the Opalesque Roundtables.
"All we did was provide huge amounts of liquidity." John Burbank from Passport Capital said regarding the massive deficits run up in an effort to stabilize the markets and economies, "The markets are as vulnerable to financial shocks and at least as highly leveraged than they were before the financial crisis. The Fed has more than doubled its balance sheet and will have to exit markets at some point or its legitimacy will be called into question".
Burbank added that a number of people have asked Passport to design funds comprised of macro trades that would help them hedge against systemic risks.
Jay Gould from Pillsbury also helped creating distaster insurance or “armageddon strategy” funds which work under the premise that U.S. will experience a very difficult time over the next several years, “including hyper-inflation, the abandonment of the U.S. dollar as the world’s reserve currency, further complications associated with our huge deficit spending, and a rush toward hard assets.”
The Roundtable discussion also includes:
• Overview of the latest products and research from funds and CTAs on intermarket correlations and quantitative trading
• A discussion on the impact the regulatory changes will have on the markets: How will mandating more OTC products to clear/trade on an exchange impact liquidity? What is more important in a derivatives contract - liquidity or flexibility?
• The democratization of alternatives: More funds using the 1940 Act format will be offering real CTA strategies with daily liquidity
• Running a hedge fund from the West Coast: Why this location counts and where West beats the East Coast.
The Roundtable was sponsored by the CME Group and the Opalesque 2010 Roundtable Series Sponsors Custom House Group and Taussig Capital. The following West Coast based experts participated:
• John Burbank, Managing Member and Chief Investment Officer, Passport Capital
• Jay Gould, Partner, Pillsbury
• Jeremy Evnine, President, Evnine & Associates, Inc.
• Matt Osborne, Executive Vice President & CIO, Altegris
• Ranjit Sufi, Manging Director, Nuveen
• Rishi Narang, Founding Principal, Telesis Capital
• Tina Lemieux, Managing Director of Hedge Fund and Broker Services, CME Group
• Tom Shanks, Founder and CEO, Hawksbill
Matthias Knab, founder of Opalesque and internationally recognized expert on hedge funds and alternatives, moderates the Opalesque Roundtables.
4 Jun 2010
Pastor's Hedge Fund Fraud Verdict Upheld
HedgeCo news - A Colorado Springs pastor found guilty in 2008 of hedge fund fraud lost his appeal in a Court yesterday according to the Colorado Springs Gazette.
The pastor, Douglas Alan Scott, was charged with taking part in a $12 million hedge fund scam, more than 400 investors were solicited from his parish for a fraudulent hedge fund, XL Capital Partners Inc.
The conviction was upheld in a 14-page, three-judge panel, who unanimously upheld the jury’s guilty verdict on charges of theft and securities fraud, the paper reported.
The appeal was held because the defense alleged flaws in the jury instruction, the evidence presented and in the prosecution's closing arguments. The panel dismissed the arguments, saying the errors were insignificant.
Scott is sentenced to 15 years probation and ordered to pay $1.4 million in restitution.
The pastor, Douglas Alan Scott, was charged with taking part in a $12 million hedge fund scam, more than 400 investors were solicited from his parish for a fraudulent hedge fund, XL Capital Partners Inc.
The conviction was upheld in a 14-page, three-judge panel, who unanimously upheld the jury’s guilty verdict on charges of theft and securities fraud, the paper reported.
The appeal was held because the defense alleged flaws in the jury instruction, the evidence presented and in the prosecution's closing arguments. The panel dismissed the arguments, saying the errors were insignificant.
Scott is sentenced to 15 years probation and ordered to pay $1.4 million in restitution.
People Moves: Kathryn Graham Joins London Board Of 100 Women In Hedge Funds
HedgeCo News - Kathryn Graham has been appointed to the 100 Women in Hedge Fund's London Board, a non-profit organization for professionals in the alternative investments industry.
"I joined 100 Women in Hedge Funds in 2008 as a member because of its dedication to providing educational seminars, networking events and philanthropy work and now I look forward to contributing as a London Board member." Ms. Graham said "I have been very impressed with both the quality and creativity of the organisation's work and look forward to building on this success".
Ms. Graham is a Director of BT Pension Scheme Management Limited, the pensions advisory arm of the BT Pension Scheme, the largest in the UK. She joined BTPSM in 2004 to help establish a new team mandated to invest up to 5% of the BT Scheme directly into single manager hedge funds.
In 2007, she took responsibility for Manager Selection across the BT scheme before moving in 2009 to set up a new team tasked with managing Liability Risk. She has more than 15 years experience in capital markets and hedge funds both as an end buyer and structurer. She began her career at SG Warburg in 1994 and also worked at UBS and Progressive Alternative Investments before joining BTPSM. She was educated at Edinburgh University, where she was awarded an MA in Economics and Mathematics.
Ms. Graham is a member of the BTPSM Investment Committee, through which she is fully involved in all aspects of the scheme’s investments. She has a special interest in improving the treatment of investors in offshore vehicles and most recently has been heavily involved in lobbying for changes to the EU Alternatives Directive alongside other like-minded investors. She is a Trustee of the Hedge Fund Standards Board, a Director of a number of BTPSM offshore vehicles, is an occasional board member at the UNPRI, and was one of the Hedge Fund Journal’s “50 Leading Women in Hedge Funds”.
Ms. Graham is the seventh member of its London Board. She joins an already well established London board that includes London Board Chair - Effie Datson, Product Head of the dbSelect Platform for Deutsche Bank; London Board Vice Chair - Carole Philippe, Global General Counsel, Aviva Investors; Treasurer - Olivia Bernard, CFO, Massena Capital Partners; Philanthropy Board Champion - Kristen Weldon (Eshak), Managing Director, The Blackstone Group; Swiss Board Champion - Claire Smith, Research Analyst, Partner, Albourne Partners Limited, and Anne Popkin, Chair of the Board of 100WHF Association. The Board manages 2,000 members in London, and has extended its European reach to Paris, Geneva and Zurich. Amanda Pullinger serves as the organisation’s global Executive Director.
"I joined 100 Women in Hedge Funds in 2008 as a member because of its dedication to providing educational seminars, networking events and philanthropy work and now I look forward to contributing as a London Board member." Ms. Graham said "I have been very impressed with both the quality and creativity of the organisation's work and look forward to building on this success".
Ms. Graham is a Director of BT Pension Scheme Management Limited, the pensions advisory arm of the BT Pension Scheme, the largest in the UK. She joined BTPSM in 2004 to help establish a new team mandated to invest up to 5% of the BT Scheme directly into single manager hedge funds.
In 2007, she took responsibility for Manager Selection across the BT scheme before moving in 2009 to set up a new team tasked with managing Liability Risk. She has more than 15 years experience in capital markets and hedge funds both as an end buyer and structurer. She began her career at SG Warburg in 1994 and also worked at UBS and Progressive Alternative Investments before joining BTPSM. She was educated at Edinburgh University, where she was awarded an MA in Economics and Mathematics.
Ms. Graham is a member of the BTPSM Investment Committee, through which she is fully involved in all aspects of the scheme’s investments. She has a special interest in improving the treatment of investors in offshore vehicles and most recently has been heavily involved in lobbying for changes to the EU Alternatives Directive alongside other like-minded investors. She is a Trustee of the Hedge Fund Standards Board, a Director of a number of BTPSM offshore vehicles, is an occasional board member at the UNPRI, and was one of the Hedge Fund Journal’s “50 Leading Women in Hedge Funds”.
Ms. Graham is the seventh member of its London Board. She joins an already well established London board that includes London Board Chair - Effie Datson, Product Head of the dbSelect Platform for Deutsche Bank; London Board Vice Chair - Carole Philippe, Global General Counsel, Aviva Investors; Treasurer - Olivia Bernard, CFO, Massena Capital Partners; Philanthropy Board Champion - Kristen Weldon (Eshak), Managing Director, The Blackstone Group; Swiss Board Champion - Claire Smith, Research Analyst, Partner, Albourne Partners Limited, and Anne Popkin, Chair of the Board of 100WHF Association. The Board manages 2,000 members in London, and has extended its European reach to Paris, Geneva and Zurich. Amanda Pullinger serves as the organisation’s global Executive Director.
3 Jun 2010
Credit Suisse: Hedge Funds Post Negative Returns in May
HedgeCo News - Hedge fund performance was negative across most strategies in May, according to Jordan Drachman, Head of Research for Alternative Beta Strategies at Credit Suisse.
"The Credit Suisse Liquid Alternative Beta Index (CSLAB) generated negative performance in May, returning -2.64% for the month, bringing year-to-date performance to +0.27%." Dr. Drachman said, "All four Liquid Alternative Beta (LAB) sector indices also posted negative performance in May, suggesting that hedge fund managers across different strategies suffered as a result of the month's increased market volatility. Despite negative returns, hedge funds appear to have outperformed global equity markets, as represented by the MSCI World Index, which lost -9.91% in May and is down 7.59% year-to-date."
LAB is a series of indices that seek to replicate the aggregate return profiles of alternative investment strategies using liquid, tradable instruments that are selected and weighted using an objective and transparent rules-based methodology. An algorithm determines the appropriate factors and weightings employed in seeking to replicate the returns of specific hedge fund strategies.
"The Credit Suisse Liquid Alternative Beta Index (CSLAB) generated negative performance in May, returning -2.64% for the month, bringing year-to-date performance to +0.27%." Dr. Drachman said, "All four Liquid Alternative Beta (LAB) sector indices also posted negative performance in May, suggesting that hedge fund managers across different strategies suffered as a result of the month's increased market volatility. Despite negative returns, hedge funds appear to have outperformed global equity markets, as represented by the MSCI World Index, which lost -9.91% in May and is down 7.59% year-to-date."
LAB is a series of indices that seek to replicate the aggregate return profiles of alternative investment strategies using liquid, tradable instruments that are selected and weighted using an objective and transparent rules-based methodology. An algorithm determines the appropriate factors and weightings employed in seeking to replicate the returns of specific hedge fund strategies.
"Hedge Fund Manager" on the Run From FBI Arrested in Poland
HedgeCo News - An American fugitive, Alexsander Efrosman, also known as Alex Besser, has been arrested in Krakow, Poland, the Associated Press reports.
The Polish police arrested the Staten Island "hedge fund manager", who is wanted by the FBI for fraud and money laundering.
AP reports that the U.S. Commodity Futures Trading Commission alleges that Efrosman/Besser stole about $5 million from customers of two fraudulent hedge funds that he claimed to manage, Century Maxim Fund, Inc. and AJR Capital Inc.
The commission says that investors were shown fake financial statements for trades that never occurred and the fake earnings were used in the solicitation of new investors to his hedge funds.
The Polish police arrested the Staten Island "hedge fund manager", who is wanted by the FBI for fraud and money laundering.
AP reports that the U.S. Commodity Futures Trading Commission alleges that Efrosman/Besser stole about $5 million from customers of two fraudulent hedge funds that he claimed to manage, Century Maxim Fund, Inc. and AJR Capital Inc.
The commission says that investors were shown fake financial statements for trades that never occurred and the fake earnings were used in the solicitation of new investors to his hedge funds.
2 Jun 2010
Hedge Fund Nominees Wanted: 40 Under 40 M&A Advisor Recognition Awards
HedgeCo News - Nominations are now being accepted by for candidates for the 2010 40 Under 40 M&A Advisor Recognition Awards in the professional classifications of, Investment Banking, Private Equity, Hedge Fund, Law, Valuation, Research, among others.
Nominees will be evaluated by their career accomplishments and professional expertise. Consideration will be given to their community/charitable involvement and special circumstances.
The 2010 40 Under 40 M&A Advisor Recognition Awards will be announced on July 26, 2010 at the inaugural Awards Gala.
Eligible candidates are invited to submit a nomination directly or be nominated by their firm, associates, friends or family. To qualify, nominees must be under 40 years of age as of July 25, 2010. An independent committee of M&A industry business leaders will judge all nominations and finalists will be invited to attend the Awards Gala in Los Angeles.
Nominees will be evaluated by their career accomplishments and professional expertise. Consideration will be given to their community/charitable involvement and special circumstances.
The 2010 40 Under 40 M&A Advisor Recognition Awards will be announced on July 26, 2010 at the inaugural Awards Gala.
Eligible candidates are invited to submit a nomination directly or be nominated by their firm, associates, friends or family. To qualify, nominees must be under 40 years of age as of July 25, 2010. An independent committee of M&A industry business leaders will judge all nominations and finalists will be invited to attend the Awards Gala in Los Angeles.
Citigroup Hedge Fund Investors Awarded 100% Return on Losses
HedgeCo News - Investors in Citigroup's fixed-income municipal arbitrage hedge fund have been awarded over $550,000 by the Financial Industry Regulatory Authority (FINRA).
The Wall Street Journal reports that the MAT 3 Municipal Arbitrage Fund was "a risky investment that not only exposed investors to a 100% or more loss of principal, but was 2.5 times more volatile than the S&P 500 and 7.8 times more volatile than a traditional portfolio of municipal bonds," according to lawyers.
FINRA said that the bank understated the hedge fund's risk to investors and awarded a 100% return on the investors' losses.
"We are disappointed and disagree with this decision as it is inconsistent with other panels, which have dismissed similar claims." Citigroup Spokesman Alex Samuelson said in an interview with WSJ. Citigroup also said the hedge funds were offered only to clients who knew about and could afford the risks.
The Wall Street Journal reports that the MAT 3 Municipal Arbitrage Fund was "a risky investment that not only exposed investors to a 100% or more loss of principal, but was 2.5 times more volatile than the S&P 500 and 7.8 times more volatile than a traditional portfolio of municipal bonds," according to lawyers.
FINRA said that the bank understated the hedge fund's risk to investors and awarded a 100% return on the investors' losses.
"We are disappointed and disagree with this decision as it is inconsistent with other panels, which have dismissed similar claims." Citigroup Spokesman Alex Samuelson said in an interview with WSJ. Citigroup also said the hedge funds were offered only to clients who knew about and could afford the risks.
1 Jun 2010
UCITS Funds of Hedge Funds Monitor Launched
HedgeCo News - Investment manager Northern Trust is enhancing its hedge fund monitor with a new compliance module designed to support the demands of Undertakings for Collective Investment in Transferable Securities (UCITS) funds of hedge funds.
"Our latest hedge fund monitor enhancement helps fund managers running UCITS funds of hedge funds to monitor their compliance with restrictions on liquidity, concentration risk and exposure to underlying non-UCITS funds," said Ian Headon, senior product manager for alternative asset servicing at the $647.3 billion Northern Trust.
UCITS' are a set of European Union directives that allow collective investment schemes to operate throughout the European Union on the basis of a single authorisation from one member state. UCITS funds must operate within a strict regulatory framework that imposes standards on liquidity, concentration risk, transparency and other attributes.
"Northern Trust is committed to meeting the asset servicing needs of traditional and alternative investment managers, often with complex fund structures and multi-jurisdictional requirements," said Wilson Leech, head of Northern Trust's Global Fund Services business.
"Our latest hedge fund monitor enhancement helps fund managers running UCITS funds of hedge funds to monitor their compliance with restrictions on liquidity, concentration risk and exposure to underlying non-UCITS funds," said Ian Headon, senior product manager for alternative asset servicing at the $647.3 billion Northern Trust.
UCITS' are a set of European Union directives that allow collective investment schemes to operate throughout the European Union on the basis of a single authorisation from one member state. UCITS funds must operate within a strict regulatory framework that imposes standards on liquidity, concentration risk, transparency and other attributes.
"Northern Trust is committed to meeting the asset servicing needs of traditional and alternative investment managers, often with complex fund structures and multi-jurisdictional requirements," said Wilson Leech, head of Northern Trust's Global Fund Services business.
People Moves: Insparo Expands Hedge Fund Team
HedgeCo News - UK-based limited liability investment group, Insparo Asset Management, has appointed Man Investments’ Emma Robinson as Investor Relations Manager to the Africa and Middle East Fund, which has returned over 45% since the start of 2009.
The Africa and Middle East Fund has a range of hedge fund and emerging market investors in Europe, Middle East and the US. Emma will also take on responsibility for the firm’s investor communications and client liaison.
“The return our Africa and the Middle East strategy has made in the last 18 months has, unsurprisingly, drawn a lot of attention from investors." Jamie Allsopp, the fund's investment manager, said, "Frontier markets are in relatively robust fiscal positions when compared to their OECD counterparts, and the investment community is generally underweight this enormous growth opportunity. With the confluence of our historic returns and our optimistic outlook for our region we feel that it is the right time to increase our capabilities in client services.”
Before joining Insparo, Emma spent two years at Man Investments as an institutional sales assistant before heading up Man’s UK consultant relationship management. Prior to joining Man, Emma was with recruitment consultancy Venn Group.
The Africa and Middle East Fund has a range of hedge fund and emerging market investors in Europe, Middle East and the US. Emma will also take on responsibility for the firm’s investor communications and client liaison.
“The return our Africa and the Middle East strategy has made in the last 18 months has, unsurprisingly, drawn a lot of attention from investors." Jamie Allsopp, the fund's investment manager, said, "Frontier markets are in relatively robust fiscal positions when compared to their OECD counterparts, and the investment community is generally underweight this enormous growth opportunity. With the confluence of our historic returns and our optimistic outlook for our region we feel that it is the right time to increase our capabilities in client services.”
Before joining Insparo, Emma spent two years at Man Investments as an institutional sales assistant before heading up Man’s UK consultant relationship management. Prior to joining Man, Emma was with recruitment consultancy Venn Group.
28 May 2010
Hedge Funds & FoHFs Expect Competition
HedgeCo News - International hedge fund advisory firm, Rothstein Kass, released a survey report "A Call to Action" on key trends impacting the fund of funds sector. Findings suggest that the hedge fund industry expects intense competition for investment capital as firms work to enhance transparency.
Nearly half of survey respondents indicated that they anticipate increased competition from single-manager vehicles, and over 45 percent expect greater competition from institutional investors replicating fund of funds. As the sector confronts this challenge, 60 percent of fund of funds are providing greater transparency to investors in response to market conditions.
"The growth of the fund of funds sector was propelled by its ability to offer portfolio diversification, superior results consistent with specific risk profiles and to some extent, peace of mind. Though investor resolve was shaken by market events and high-profile incidents of malfeasance, the fund of funds industry was sustained by an institutional investment community that recognized that the fundamental benefits were unchanged by short-term market volatility," said Howard Altman, Co-CEO and Co-Managing Principal of Rothstein Kass.
"As they seek to raise new capital, however, fund of funds managers are finding that institutional investors are placing a greater emphasis on due diligence processes. By continuing to act institutional themselves, fund of funds can provide a window into their operating environment to restore investor confidence and effectively compete with single manager vehicles and fund of funds replication strategies that are more aggressively pursuing institutional assets."
Results were based on online and telephone interviews with 103 fund of fund managers and executives representing a total of 93 companies and 294 funds.
Rothstein Kass commissioned market research firm Infosurv to conduct the research to gain insight into the trends shaping the fund of funds space and the outlook for the future. 34 percent of participants' underlying funds reported assets under management under $50 million, with 36 percent reporting assets under management between $50 and $150 million. 19 percent of survey respondents indicated assets under management between $150 and $500 million, with the balance, 11 percent reporting assets under management over $500 million. Survey participation included but was not limited to Rothstein Kass clients.
Notable findings include:
-- 60 percent of respondents indicated that they are providing increased
transparency in response to market conditions
-- 58 percent of survey participants would consider lowering fees in
exchange for longer investment lock-up periods
-- 34 percent of fund of funds are providing increased liquidity in
response to market conditions
-- 47 percent of respondents suggested that of existing service
providers, they would be most likely to review or change their fund
administrator relationship this year
-- 25 percent of participants indicated that they would be most likely to
review or change their custodian, with 28 percent most likely to
review or change their auditor or legal counsel
"The institutional investment community's trust in the alternative investment sector has not been shattered, but it's fair to say it has been rattled. As they work to thoroughly address the market-driven demand for greater transparency, for many fund of funds, the dynamics of the relationship have changed," said Jeff Kollin, a Director in the Financial Services practice of the Rothstein Kass Business Advisory Services Group. "Fund of fund managers also understand that they will be judged, to a greater extent, on the quality of professional relationships. As a result alignment with reputable third-parties has become a key differentiator in the marketing of these investment vehicles."
Nearly half of survey respondents indicated that they anticipate increased competition from single-manager vehicles, and over 45 percent expect greater competition from institutional investors replicating fund of funds. As the sector confronts this challenge, 60 percent of fund of funds are providing greater transparency to investors in response to market conditions.
"The growth of the fund of funds sector was propelled by its ability to offer portfolio diversification, superior results consistent with specific risk profiles and to some extent, peace of mind. Though investor resolve was shaken by market events and high-profile incidents of malfeasance, the fund of funds industry was sustained by an institutional investment community that recognized that the fundamental benefits were unchanged by short-term market volatility," said Howard Altman, Co-CEO and Co-Managing Principal of Rothstein Kass.
"As they seek to raise new capital, however, fund of funds managers are finding that institutional investors are placing a greater emphasis on due diligence processes. By continuing to act institutional themselves, fund of funds can provide a window into their operating environment to restore investor confidence and effectively compete with single manager vehicles and fund of funds replication strategies that are more aggressively pursuing institutional assets."
Results were based on online and telephone interviews with 103 fund of fund managers and executives representing a total of 93 companies and 294 funds.
Rothstein Kass commissioned market research firm Infosurv to conduct the research to gain insight into the trends shaping the fund of funds space and the outlook for the future. 34 percent of participants' underlying funds reported assets under management under $50 million, with 36 percent reporting assets under management between $50 and $150 million. 19 percent of survey respondents indicated assets under management between $150 and $500 million, with the balance, 11 percent reporting assets under management over $500 million. Survey participation included but was not limited to Rothstein Kass clients.
Notable findings include:
-- 60 percent of respondents indicated that they are providing increased
transparency in response to market conditions
-- 58 percent of survey participants would consider lowering fees in
exchange for longer investment lock-up periods
-- 34 percent of fund of funds are providing increased liquidity in
response to market conditions
-- 47 percent of respondents suggested that of existing service
providers, they would be most likely to review or change their fund
administrator relationship this year
-- 25 percent of participants indicated that they would be most likely to
review or change their custodian, with 28 percent most likely to
review or change their auditor or legal counsel
"The institutional investment community's trust in the alternative investment sector has not been shattered, but it's fair to say it has been rattled. As they work to thoroughly address the market-driven demand for greater transparency, for many fund of funds, the dynamics of the relationship have changed," said Jeff Kollin, a Director in the Financial Services practice of the Rothstein Kass Business Advisory Services Group. "Fund of fund managers also understand that they will be judged, to a greater extent, on the quality of professional relationships. As a result alignment with reputable third-parties has become a key differentiator in the marketing of these investment vehicles."
Hedge Fund Adviser & Politician Charged in Fraud Case
HedgeCo News - Hedge fund adviser Kenneth Starr has been charged with investment fraud in an alleged $30 million scheme in which Andrew Stein, a former New York City politician, has also been described as an "associate", the Wall Street Journal reports.
Starr, who has advised Wesley Snipes and Goldie Hawn, was named in a criminal complaint filed by federal prosecutors, allegedly using his access to hedge funds and celebrities, to "burnish an image of trustworthiness", according to the Journal.
"The criminal complaint didn't name the alleged victims, but described them as an unnamed hedge fund manager and well-known philanthropist, an actress, a former executive of a talent agency, an elderly heiress and a jeweler who is a convicted felon." The paper reported.
The SEC said Starr provided investment adviser services to more than 30 high net worth individuals and has AUM over $700 million.
Starr remains detained while Stein, who is accused of making false statements to the IRS, was released on a $250,000 bond.
Starr, who has advised Wesley Snipes and Goldie Hawn, was named in a criminal complaint filed by federal prosecutors, allegedly using his access to hedge funds and celebrities, to "burnish an image of trustworthiness", according to the Journal.
"The criminal complaint didn't name the alleged victims, but described them as an unnamed hedge fund manager and well-known philanthropist, an actress, a former executive of a talent agency, an elderly heiress and a jeweler who is a convicted felon." The paper reported.
The SEC said Starr provided investment adviser services to more than 30 high net worth individuals and has AUM over $700 million.
Starr remains detained while Stein, who is accused of making false statements to the IRS, was released on a $250,000 bond.
26 May 2010
Comada Partners with Custom House to Deliver Online Transaction Tracking Platform for Hedge Fund Investors
HedgeCo News - Transaction technology developer Comada today announced that it has partnered with hedge fund administrator Custom House to launch a new platform for fund managers and their investors. Launched this week, the platform allows investors in hedge funds administered by Custom House to invest, track and receive investment and redemption confirmations electronically. Most importantly, it achieves this via browser-based architecture that precludes the need to download software to a desktop computer, seamlessly integrating with, and extending in-house legacy technology.
"The hedge fund industry has needed an application like this for some time now," said Rupert Vaughan Williams, Co-Founder of Comada. "We are delighted to be working with Custom House who are committed to best of breed technology. This platform significantly raises the bar for hedge fund investing. Users of this technology can now rely on robust infrastructure that electronically processes and reconciles transactions from a single reference point. It is specifically designed to minimise the operational risks of the day to day management of portfolios of alternative investments."
Comada specialises in designing and delivering transaction-based solutions for the managed assets industry, particularly hedge funds. Its core management team has been working together in the industry for almost two decades. It provides both bespoke and off-the-shelf solutions for hedge fund managers and their clients. Comada partnered with Custom House to deliver an advanced platform that would further integrate investors into the investment cycle and help reduce operational risk.
Dermot Butler, Chairman of hedge fund administrator Custom House commented: "We wanted to deliver a service to our customers which they could rely on. It is now possible for both managers and investors to track the progress of investments and redemptions electronically, real time, 24 hours a day. Thanks to our partnership with Comada, we believe we are the first hedge fund administrator to be able to offer this particular kind of service."
Custom House is responsible for the administration of more than $40 billion in hedge fund assets globally, across a range of different investment strategies. It has established its credentials as being a first mover and innovator in the arena of hedge fund administration.
"The hedge fund industry has needed an application like this for some time now," said Rupert Vaughan Williams, Co-Founder of Comada. "We are delighted to be working with Custom House who are committed to best of breed technology. This platform significantly raises the bar for hedge fund investing. Users of this technology can now rely on robust infrastructure that electronically processes and reconciles transactions from a single reference point. It is specifically designed to minimise the operational risks of the day to day management of portfolios of alternative investments."
Comada specialises in designing and delivering transaction-based solutions for the managed assets industry, particularly hedge funds. Its core management team has been working together in the industry for almost two decades. It provides both bespoke and off-the-shelf solutions for hedge fund managers and their clients. Comada partnered with Custom House to deliver an advanced platform that would further integrate investors into the investment cycle and help reduce operational risk.
Dermot Butler, Chairman of hedge fund administrator Custom House commented: "We wanted to deliver a service to our customers which they could rely on. It is now possible for both managers and investors to track the progress of investments and redemptions electronically, real time, 24 hours a day. Thanks to our partnership with Comada, we believe we are the first hedge fund administrator to be able to offer this particular kind of service."
Custom House is responsible for the administration of more than $40 billion in hedge fund assets globally, across a range of different investment strategies. It has established its credentials as being a first mover and innovator in the arena of hedge fund administration.
24 May 2010
Silk Invest To Launch Fronteir Fund Including Pakistan Reigon
HedgeCo News - Specialist asset management boutique Silk Invest has announced the launch of a new UCITS III frontier fund, The Silk Road Equities fund, which will invest in Africa, the Middle East and the Caucasus and Caspian region. The fund is to be launched later this year, according to hedge fund industry magazine, FundStrategy.
These regions have traditionally been shunned by emerging market funds as being too illiquid. "We have handled such illiquidity in the past with the award winning Silk Road Fixed Income fund, which covers the same geographies." Silk Invest said.
"Pakistan is the 27th largest economy in the world and still classified as a frontier market." Daniel Broby, the chief investment officer said. "Investment in the Caucasus and Caspian region have tended to focus on the oil and gas resources of the region. We, however, are focused on the opportunity afforded by the strong growth of the consumer."
The fund will have both institutional and retail share classes and will charge a 20% performance fee above a hurdle rate of 8%.
These regions have traditionally been shunned by emerging market funds as being too illiquid. "We have handled such illiquidity in the past with the award winning Silk Road Fixed Income fund, which covers the same geographies." Silk Invest said.
"Pakistan is the 27th largest economy in the world and still classified as a frontier market." Daniel Broby, the chief investment officer said. "Investment in the Caucasus and Caspian region have tended to focus on the oil and gas resources of the region. We, however, are focused on the opportunity afforded by the strong growth of the consumer."
The fund will have both institutional and retail share classes and will charge a 20% performance fee above a hurdle rate of 8%.
2 Year Sentence In Hedge Fund Fraud Case
HedgeCo News - Wall Street Journal reports that Mark Kurland, former partner at hedge fund New Castle Funds LLC was sentenced to over two years in prison. Kurland pled guilty to insider trading in January with connections to the Galleon/Rajaratnam case.
The insider trading case involves the employees of some of America’s best-known companies, including International Business Machines Corp, McKinsey & Co and Intel Capital, an arm of Intel Corp, and Danielle Chiesi, an executive at New Castle Funds LLC was also indicted on multiple counts of conspiracy and securities fraud.
At a hearing Friday, Judge Victor Marrero said, "He had a choice. As a leader of the financial industry, he could have led by law-abiding example. Instead, he chose to follow," the judge also said, according to WSJ, that Kurland surrendered "to a spree of the financial market's virtual mob mentality that nearly brought down this country's financial industry in the quest for ever bigger and faster gains."
The judge als ordered a forfeit of $900,000 in proceeds from the alleged scheme the Journal reported.
Kurland reports to prison on July 23.
The insider trading case involves the employees of some of America’s best-known companies, including International Business Machines Corp, McKinsey & Co and Intel Capital, an arm of Intel Corp, and Danielle Chiesi, an executive at New Castle Funds LLC was also indicted on multiple counts of conspiracy and securities fraud.
At a hearing Friday, Judge Victor Marrero said, "He had a choice. As a leader of the financial industry, he could have led by law-abiding example. Instead, he chose to follow," the judge also said, according to WSJ, that Kurland surrendered "to a spree of the financial market's virtual mob mentality that nearly brought down this country's financial industry in the quest for ever bigger and faster gains."
The judge als ordered a forfeit of $900,000 in proceeds from the alleged scheme the Journal reported.
Kurland reports to prison on July 23.
19 May 2010
Hedge Fund Industry Review: May 2010
HedgeCo News - North American hedge funds' assets under management crossed the $1 trillion mark for the first time since November 2008, the May 2010 Eurekahedge Report announced.
Global hedge funds' assets also exceeded the $1.5 trillion mark and are on track to surpass $1.75 trillion by year-end and distressed debt hedge funds saw 13th consecutive month of positive returns, up 50.34% since March 2009 the report said.
Japanese hedge funds gained 2.99% in the month and 7.23% YTD – the best April YTD returns since 2004. Winners of the Asian Hedge Fund Awards 2010 will be published on Eurekahedge, Friday, 21st May 2010.
The report details analyses and insights into the state of the hedge fund industry in recent months up to April through a comprehensive qualitative and quantitative presentation of the industry’s asset flows and performance, with a special feature on key trends in funds of hedge funds.
Global hedge funds' assets also exceeded the $1.5 trillion mark and are on track to surpass $1.75 trillion by year-end and distressed debt hedge funds saw 13th consecutive month of positive returns, up 50.34% since March 2009 the report said.
Japanese hedge funds gained 2.99% in the month and 7.23% YTD – the best April YTD returns since 2004. Winners of the Asian Hedge Fund Awards 2010 will be published on Eurekahedge, Friday, 21st May 2010.
The report details analyses and insights into the state of the hedge fund industry in recent months up to April through a comprehensive qualitative and quantitative presentation of the industry’s asset flows and performance, with a special feature on key trends in funds of hedge funds.
Hedge Fund Lawyers: SEC Proposes Stock-by-Stock Circuit Breaker Rule
HedgeCo News - The SEC is filing proposed rules under which they would pause trading in certain individual stocks if the price moves 10% or more in a five-minute period, according to hedge fund law firm Pillsbury Investment Funds.
In consultation with FINRA, the SEC wants to set uniform market-wide standards for individual securities in the S&P 500 Index that experience a rapid price movement, the attorneys said.
These proposed rules reflect a consensus that was achieved among the exchanges and FINRA after SEC Chairman Mary Schapiro convened a meeting of exchange leaders and FINRA at the SEC early last week. That meeting took place after the market dropped significantly and after approximately 30 S&P 500 Index stocks fell at least 10 percent in a five-minute period.
"The market disruption of May 6 was exacerbated by disparate trading rules and conventions across the exchanges, and that it is important that all the exchanges quickly reach a consensus on a set of uniform circuit breakers that would be triggered when needed." Chairman Schapiro said.
Under the proposed rules, which are subject to SEC approval following the completion of the comment period, trading in a stock would pause across U.S. equity markets for a five-minute period in the event that the stock experiences a 10 percent change in price over the preceding five minutes. The pause would give the markets the opportunity to attract new trading interest in an affected stock, establish a reasonable market price, and resume trading in a fair and orderly fashion. Initially, these new rules would be in effect on a pilot basis through Dec. 10, 2010.
The markets will use the pilot period to make appropriate adjustments to the parameters or operation of the circuit breaker as warranted based on their experience, and to expand the scope to securities beyond the S&P 500 (including ETFs) as soon as practicable.
The SEC intends to promptly publish the proposed rules for a 10-day public comment period, and determine whether to approve them shortly thereafter.
During the pilot period, Chairman Schapiro has asked the SEC staff to consider ways to address the risks of market orders and their potential to contribute to sudden price moves, as well as to consider steps to deter or prohibit the use by market makers of "stub" quotes, which are not intended to indicate actual trading interest.
The staff will study the impact of other trading protocols at the exchanges, including the use of trading pauses and self-help rules. The SEC staff also will continue to work with the exchanges and FINRA to improve the process for breaking erroneous trades, by assuring speed and consistency across markets.
"The SEC staff is working with the markets to consider recalibrating market-wide circuit breakers currently on the books — none of which were triggered on May 6. These circuit breakers apply across all equity trading venues and the futures markets," the Pillsbury Investment Funds attorneys concluded.
In consultation with FINRA, the SEC wants to set uniform market-wide standards for individual securities in the S&P 500 Index that experience a rapid price movement, the attorneys said.
These proposed rules reflect a consensus that was achieved among the exchanges and FINRA after SEC Chairman Mary Schapiro convened a meeting of exchange leaders and FINRA at the SEC early last week. That meeting took place after the market dropped significantly and after approximately 30 S&P 500 Index stocks fell at least 10 percent in a five-minute period.
"The market disruption of May 6 was exacerbated by disparate trading rules and conventions across the exchanges, and that it is important that all the exchanges quickly reach a consensus on a set of uniform circuit breakers that would be triggered when needed." Chairman Schapiro said.
Under the proposed rules, which are subject to SEC approval following the completion of the comment period, trading in a stock would pause across U.S. equity markets for a five-minute period in the event that the stock experiences a 10 percent change in price over the preceding five minutes. The pause would give the markets the opportunity to attract new trading interest in an affected stock, establish a reasonable market price, and resume trading in a fair and orderly fashion. Initially, these new rules would be in effect on a pilot basis through Dec. 10, 2010.
The markets will use the pilot period to make appropriate adjustments to the parameters or operation of the circuit breaker as warranted based on their experience, and to expand the scope to securities beyond the S&P 500 (including ETFs) as soon as practicable.
The SEC intends to promptly publish the proposed rules for a 10-day public comment period, and determine whether to approve them shortly thereafter.
During the pilot period, Chairman Schapiro has asked the SEC staff to consider ways to address the risks of market orders and their potential to contribute to sudden price moves, as well as to consider steps to deter or prohibit the use by market makers of "stub" quotes, which are not intended to indicate actual trading interest.
The staff will study the impact of other trading protocols at the exchanges, including the use of trading pauses and self-help rules. The SEC staff also will continue to work with the exchanges and FINRA to improve the process for breaking erroneous trades, by assuring speed and consistency across markets.
"The SEC staff is working with the markets to consider recalibrating market-wide circuit breakers currently on the books — none of which were triggered on May 6. These circuit breakers apply across all equity trading venues and the futures markets," the Pillsbury Investment Funds attorneys concluded.
18 May 2010
Hedge Fund Launch: QQP's Global Equity Strategies Fund
HedgeCo News - Luxembourg based Global Equity Strategies Fund (QQP) has launched operations today May 18th, 2010.
The new global long-short equity fund, has a member of the Hedge Fund Association (AIMA), TQ Capital Partners Limited (TQCP) as its investment advisor. The hedge fund
aims to achieve superior risk adjusted returns through a systematic investment strategy.
QQP is a Specialised Investment Fund (SIF) incorporated in Luxembourg as a SICAV and administered by Pictet & Cie (Europe) S.A. QQP is an open-end long-short equity investment fund authorised and regulated by the Luxembourg Commission de Surveillance du Secteur Financier (CSSF).
"We are proud to advise QQP on investment strategies which aim to generate superior risk-adjusted returns and to assist in creating a leading investment fund." The managing partners of TQCP stated.
TQCP is a London based long-short equity fund advisor authorised and regulated by the UK Financial Services Authority (FSA). TQCP has a global investment approach, combining top-down macro-economic analysis with bottom-up investment principles. A combination of quantitative and qualitative risk-management measures is applied to protect invested funds.
The new global long-short equity fund, has a member of the Hedge Fund Association (AIMA), TQ Capital Partners Limited (TQCP) as its investment advisor. The hedge fund
aims to achieve superior risk adjusted returns through a systematic investment strategy.
QQP is a Specialised Investment Fund (SIF) incorporated in Luxembourg as a SICAV and administered by Pictet & Cie (Europe) S.A. QQP is an open-end long-short equity investment fund authorised and regulated by the Luxembourg Commission de Surveillance du Secteur Financier (CSSF).
"We are proud to advise QQP on investment strategies which aim to generate superior risk-adjusted returns and to assist in creating a leading investment fund." The managing partners of TQCP stated.
TQCP is a London based long-short equity fund advisor authorised and regulated by the UK Financial Services Authority (FSA). TQCP has a global investment approach, combining top-down macro-economic analysis with bottom-up investment principles. A combination of quantitative and qualitative risk-management measures is applied to protect invested funds.
Chicago Hedge Fund Manager Showcase
HedgeCo.net - "We are very excited about the turnout for our Chicago Manager Showcase." Evan Rapoport, Co-Founder of HedgeCo Networks said, "We had a nice mix of high net worth investors, family offices, fund of funds and institutions."
Each manager had five minutes to introduce themselves to the entire room, before breaking down into smaller groups. The interaction between the hedge fund managers and guests was successful and both parties seemed to be totally engaged.
The keynote speaker, Rob Stein, gave a dissertation on the current climate of the economy. Other speakers at the event included Steve Hall from Lattice Capital Management, Lonny Bernath from Headline Capital Management, Kevin Lennil from Exagroup, Bruce Bernstein from Rockmore Capital Management, and Kurt Hovan from Hovan Capital Management.
After the presentations, hedge fund managers, hosts and speakers mingled during a networking hour. Enjoying excellent food and an open bar, the social aspect of the event lasted longer than planned.
"There ended up being an 11 to 1 ratio of investors to fund managers, this is something you just don't see at other similar conferences. Our managers also really seemed to enjoy sitting down face to face with small groups of investors, rather than presenting to the whole room at once." Rapoport said.
Each manager had five minutes to introduce themselves to the entire room, before breaking down into smaller groups. The interaction between the hedge fund managers and guests was successful and both parties seemed to be totally engaged.
The keynote speaker, Rob Stein, gave a dissertation on the current climate of the economy. Other speakers at the event included Steve Hall from Lattice Capital Management, Lonny Bernath from Headline Capital Management, Kevin Lennil from Exagroup, Bruce Bernstein from Rockmore Capital Management, and Kurt Hovan from Hovan Capital Management.
After the presentations, hedge fund managers, hosts and speakers mingled during a networking hour. Enjoying excellent food and an open bar, the social aspect of the event lasted longer than planned.
"There ended up being an 11 to 1 ratio of investors to fund managers, this is something you just don't see at other similar conferences. Our managers also really seemed to enjoy sitting down face to face with small groups of investors, rather than presenting to the whole room at once." Rapoport said.
17 May 2010
IMC Expands Investment Grade Credit Team
HedgeCo - Specialist asset management company, IMC asset management, announced the hiring of a team of four senior investment professionals, and the launch of investment grade corporate capability platform.
The investment grade platform consisting of a long/short and a long-only capability, it will be formally launched and open to clients on 1st June 2010.
The team joins from Lombard Odier Darier Hentsch (LODH). Rodrigo Araya, who joins IMCam as Head of Investment Grade Credit Strategies, was responsible for the entire fixed income business at LODH while continuing to directly head the credit business.
The other team members joining are Oscar Jansen (who joins as Senior Portfolio Manager), Robert Manning (Head of Investment Grade Credit analysis) and Henk Wiersma (Senior Investment Grade Credit Analyst), who were running several high performing credit mandates and funds at LODH.
“The addition of this highly experienced and successful team will significantly expand the scope of asset management credit strategies delivered by IMCam to our institutional and HNWI client base." Sander Nieuwland, CEO of IMCam commented, "We are delighted to welcome such high quality individuals, with a very strong nine year track record, and a shared vision of excellence. We believe credit is an important area of opportunity for investors and in these turbulent markets there is a greater need for talent and experience than ever."
IMCam, part of the IMC Group, established in 1998, is a specialist asset manager of European and US credit products, including distressed debt and asset-backed securities.
Other recent key hires which reinforce IMCam’s ambitious growth plans and expansion into new business areas include W. Gregory Drennen – Head of US Structured Debt (ex Clinton Group, Goldman Sachs and Citigroup), Jan-Hein Cremers – Head of Behavioural Quantitative Management (FDO Partners and State Street) and Vivina Berla – MD Business Development and Investor Relations (ex Merrill Lynch and Gartmore)
The investment grade platform consisting of a long/short and a long-only capability, it will be formally launched and open to clients on 1st June 2010.
The team joins from Lombard Odier Darier Hentsch (LODH). Rodrigo Araya, who joins IMCam as Head of Investment Grade Credit Strategies, was responsible for the entire fixed income business at LODH while continuing to directly head the credit business.
The other team members joining are Oscar Jansen (who joins as Senior Portfolio Manager), Robert Manning (Head of Investment Grade Credit analysis) and Henk Wiersma (Senior Investment Grade Credit Analyst), who were running several high performing credit mandates and funds at LODH.
“The addition of this highly experienced and successful team will significantly expand the scope of asset management credit strategies delivered by IMCam to our institutional and HNWI client base." Sander Nieuwland, CEO of IMCam commented, "We are delighted to welcome such high quality individuals, with a very strong nine year track record, and a shared vision of excellence. We believe credit is an important area of opportunity for investors and in these turbulent markets there is a greater need for talent and experience than ever."
IMCam, part of the IMC Group, established in 1998, is a specialist asset manager of European and US credit products, including distressed debt and asset-backed securities.
Other recent key hires which reinforce IMCam’s ambitious growth plans and expansion into new business areas include W. Gregory Drennen – Head of US Structured Debt (ex Clinton Group, Goldman Sachs and Citigroup), Jan-Hein Cremers – Head of Behavioural Quantitative Management (FDO Partners and State Street) and Vivina Berla – MD Business Development and Investor Relations (ex Merrill Lynch and Gartmore)
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