Hedge Fund Millennium Will Charge Fees Even When It Loses Money (Bloomberg)
Izzy Englander’s Millennium Management has changed its terms to ensure that clients always pay a minimum fee, even if the hedge fund loses money. They will now pay annual fees of about 1% of assets or 20% of investment gains — whichever is greater, according to a client letter seen by Bloomberg. It’s part of an effort to “reflect current industry-standard approaches” adopted by other multi-strategy peers, Millennium said in the Feb. 21 letter. Citadel, for example, has a similar fee structure.
Taiga’s Opportunity-Driven Net Exposure (Hedge Nordic)
Stockholm (HedgeNordic) – Long-biased long/short equity vehicle Taiga Fund edged down 6.8 percent in 2022, as it “proved difficult to insulate the fund from a dismal year for small-caps in our region,” according to founder and co-portfolio manager Ola Wessel-Aas. Up 9.6 percent in the first two months of 2023, Taiga Fund has already recovered the losses incurred in last year’s challenging market environment. “Positive exposure to select energy-related stocks has been a particularly solid foundation coming into this year,” Wessel-Aas explains the fund’s rapid recovery.
Three Arrows Founders’ Bankruptcy Exchange to Offer Claims as Portfolio Margin (Coin Desk)
Zhu Su and Kyle Davies, the founders of bankrupt hedge fund Three Arrows Capital, last month teamed with the co-founders of troubled crypto exchange CoinFLEX to create Open Exchange, calling it the “world’s first public market place for crypto claims trading and derivatives.” The exchange, abbreviated to OPNX, will feature zero-proof audits for user balances and a portfolio margin feature that was pioneered by FTX, OPNX CEO Leslie Lamb said Thursday morning on a Twitter Spaces discussion. Users will also be able to use bankruptcy claims as margin as well as selling them on a public order book, Lamb added.
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Hedge Funds Up Leverage, but Fear Directional Bets with Blurred Macro Picture (Reuters)
Hedge funds are increasingly using more leverage to make wagers on the stock market this year, but they remain less inclined to bet on the market direction due to heightened macroeconomic uncertainties. Investors are focused on the economic picture as they try and assess the risk of upcoming recession as the U.S. Federal Reserve tries to bring inflation under control by hiking rates aggressively. On Wednesday, Federal Reserve’s chair Jerome Powell said future interest rates hikes could go higher than market participants anticipated to fight inflation.
Silvergate Contrarian Bet Soured for Peter Thiel-Backed Block.one, Bill Miller (Bloomberg)
Miller Value Partners, Block.one built late stakes in bank. Silvergate’s crypto ties force wind-down, liquidation plans. Just months before Silvergate Capital Corp. announced that it was winding down, banking’s first casualty from the crypto industry’s implosion, a company called Block.one was boosting its investment. Silvergate’s stock was plummeting, depositors were fleeing and the short-sellers were circling — but Block.one and its chief executive officer, Brendan Blumer, were big buyers. In November, they purchased stock amounting to a 9.27% stake in the lender, according to a statement late that month. By the end of December, the firm, whose long-time backers include Peter Thiel and Alan Howard, had boosted that position so that Block.one, together with Blumer, became Silvergate’s biggest holder with a combined 9.9% holding.
