Six months after hedge-fund manager Bill Ackman purchased a $2 billion stake in The Procter & Gamble Company (NYSE:PG), the lineup of major investors at the consumer products giant has taken a subtle but noteworthy shift. Hedge funds like Ackman’s Pershing Square Capital Management now own 4.4 percent of institutional shares, double their holdings from June 30. While their overall share of the company is still small, they could be an influential voting bloc for change if the company’s current turnaround efforts falter. “These guys are lining up and making their bets,” said Pete Sorrentino, a portfolio manager with Huntington Asset Advisors in Norwood.
Cliff Asness: Not All Hedge Fund Products Are Worth Hedge Fund Fees (Forbes)
Cliff Asness has no problems with fees. In fact, he loves them: “particularly when they’re coming to me.” The problem AQR Capital Management’s co-founder has is when investors pay big fees for strategies and exposures that don’t offer the proper bang for the buck. “You don’t just pay for something, you pay for how unique it is,” Asness told me when he visited Forbes last week.
Total number of single-manager hedge funds reached record level of 7,867 in 3Q12 (Opalesque)
In the week-ending 14 December 2012, Hedge Fund Research reported that new hedge fund launches and liquidations had maintained the pace of recent quarters in 3Q12 despite macroeconomic risks, political uncertainties and regulatory changes; Michael Cagney, a hedge-fund manager backed by China’s largest social-networking website, is starting a series of loan funds that targets Ivy League graduates; and UK-listed F&C A. M. launched the F&C Real Estate Equity Long/Short UCITS fund.
Arden Asset Management launches $700 million mutual fund (CPIFinancial)
The Arden Alternative Strategies Fund, which offers investors access to hedge fund strategies, seeks to achieve capital appreciation. In pursuing this objective, the fund seeks to achieve a relatively low correlation to the major equity and fixed income markets in a daily liquidity format. The fund complements Arden’s core business of providing customised hedge fund solutions, managed accounts, commingled vehicles and other vehicles for its global institutional and pension fund clients.
SEC Increases Its Scrutiny Of PE Valuations? (PEHub)
In recent years, private equity has largely avoided the scrutiny facing the hedge fund industry. All this is changing, mostly due to the passage of the Dodd-Frank Wall Street Consumer Protection Act in 2010. Under Dodd-Frank private equity advisors, typically general partners, must register with the Securities and Exchange Commission. So far, 1,504 hedge and private equity fund advisors have registered with the agency since passage of the Dodd-Frank Act.
Greenwich Hedge Fund Index up 0.36% in November, 4.6% YTD (Opalesque)
Hedge fund managers returned modest gains on average amidst volatile markets in November 2012, with the Greenwich Global Hedge Fund Index up +0.36% for the month. Most strategies reported positive results for the month, with the notable exception of Managed Futures. The GGHFI’s gain of +0.36% trails global equity returns in the S&P 500 Total Return (+0.58%), and MSCI World Equity (+1.07%) equity indices. 62% of constituent funds in the GGHFI ended the month with gains.
Now It’s All About ETFs (ResourceInvestor)
Exchange traded funds (ETFs) could soon replace traditional mutual funds as the primary investment vehicle for individuals because of the huge cost, tax, and liquidity advantages they offer. That’s the learned opinion of my friend, Tom Lyden, who runs a site dedicated to this versatile security. Tom’s site offers updates on new ETF launches, research tools, and a free newsletter presenting a half dozen investment ideas a day. He finds ETFs so attractive that he has converted his own management practice for high net worth individuals at www.globaltrend.com from one focused on mutual funds, to an ETF orientation.
SAC E-Mails Show Cohen Consulted on Dell Trade at Heart of Probe (SFGate)
Two days before Dell Inc.(NASDAQ:DELL) was set to report second-quarter 2008 earnings, Jon Horvath, a technology analyst at SAC Capital Advisors LP, e-mailed his boss Michael S. Steinberg and another portfolio manager to warn that the computer maker would miss earnings estimates. “I have a 2nd hand read from someone at the company,” Horvath began the Aug. 26 message, which provided details on gross margins, expenditures and revenue. “Please keep to yourself as obviously not well known.”
Aletheia hedge fund manager defrauded investors, SEC says (LATimes)
Federal regulators accused a Santa Monica hedge fund manager of defrauding investors by saddling them with losing securities trades while claiming winners for himself. The Securities and Exchange Commission alleged that Peter J. Eichler Jr., chief executive of Aletheia Research and Management Inc., made about $2 million by allocating a disproportionately large share of money-making trades to his personal brokerage accounts. He steered another $2 million in improper profits to favored employees and clients, the SEC alleged.
This year it was curtains for many hedge funds (eFinancialNews)
But scratch beneath the surface and you find that 2012 was characterised by mediocre performance, an increasing attrition rate and the growing sway of institutional clients, for whom lower volatility, de-correlation from equities and an institutional infrastructure are just as important as returns. Hedge fund liquidations rose to 211 in the third quarter, up from the 192 in the second quarter, bringing total liquidations to 825 in the trailing 12 months, slightly ahead of the 2011 total of 775. Several big names announced their retirement, including Greg Coffey, a former trader at GLG Partners and Moore Capital; Chris Rokos, the “R” in Brevan Howard; and Driss Ben-Brahim, a former Goldman Sachs partner and GLG trader.
Hedge funds down, not out in tricky US natgas market (Reuters)
David Coolidge may still be the king of U.S. natural gas hedge fund managers but his $2 billion Velite Capital has made less than half of last year’s money while one of his biggest rivals is headed for a loss in an unusually tricky year for traders. Andy Rowe, former trader at Citigroup’s Smith Barney, also has a much smaller profit to show for this year than in 2011 at SandRidge Capital, another gas-focused fund in Houston.
Book review: The Hedge Fund Mirage (SCMP)
You would think that a person who made a living allocating to hedge funds for more than a decade would take a kinder view of this sector. But Simon Lack, a money manager, earlier this year released a book with devastating conclusions about hedge funds. Lack’s book, The Hedge Fund Mirage , says that for the 13 years up to 2010, investors lost US$308 million through their hedge fund investments, when returns are calculated as gains in excess of Treasury bond yields. That compares starkly with the US$324 million in fees earned by hedge fund managers over the same period, according to Lack.
Weavering Capital founder charged with fraud (NEBusiness)
THE founder of a collapsed £370m hedge fund has been charged with a raft of fraud offences. Magnus Peterson, the founding director of Weavering Capital, was charged with two offences of false accounting, one offence of fraudulent trading, one offence of fraud by abuse of position and two offences of forgery. The alleged offences took place on various dates during 2003 to 2009, said the Serious Fraud Office. Weavering was primarily an investment adviser to a Cayman Islands incorporated hedge fund, Weavering Macro Fixed Income Fund.
Ghana Ordered to Free Argentine Ship in Hedge Fund Dispute (Bloomberg)
A United Nations court said Ghana must release an Argentine naval ship seized in a dispute between the Latin American nation and a hedge fund that says it’s owed money over defaulted government bonds. The International Tribunal for the Law of the Sea ordered the ARA Libertad freed after the African country detained it on Oct. 2, citing a court order obtained by NML Capital Ltd., which is run by billionaire hedge fund investor Paul Singer’s Elliott Management Corp. Argentina and Ghana must bear their own costs in the dispute, the Hamburg-based court said in a ruling today on its website.
Hedge Funds Reduce Bullish Bets by Most in a Month (Bloomberg)
Hedge funds cut bullish commodity bets by the most in a month as the Federal Reserve warned the U.S. budget impasse may damage the economy, increasing concern about demand just as prices head for the first loss since 2008. Speculators and money managers decreased net-long positions across 18 U.S. futures and options by 11 percent to 802,817 contracts in the week ended Dec. 11, U.S. Commodity Futures Trading Commission data show. Sugar holdings tumbled 68 percent, the most in five years, and those for wheat dropped to the lowest since June. Wagers on higher crude-oil prices tumbled 21 percent, the most since May.
Build Your Own Hedge Fund (WSJ)
Hedge funds had a two-decade run as the investment of choice for wealthy investors. But lackluster performance since the financial crisis and high fees are prompting some investors to roll up their sleeves and build their own. Since the market bottom in March 2009, hedge funds have gained 33%, according to indexer Hedge Fund Research, compared with a 110% rise for the Standard & Poor’s 500-stock index. In the past year, hedge funds have risen 4%, versus 15% for the S&P 500.
UBS faces $1 billion day of reckoning over interest rate rigging (Reuters)
UBS AG (NYSE:UBS) is expected to be hit with a $1 billion-plus fine to settle charges of rigging Libor interest rates this week, making it the second bank to be brought to book for its role in the global scandal. The fine, to be imposed by regulators in Britain and the United States, would be the latest blow for the Swiss bank that suffered a rogue trading scandal last year, paid a $780 million fine to settle a U.S. tax investigation in 2009 and nearly collapsed in 2008 under the weight of huge subprime losses.
Dyal Capital takes minority stake in Pinnacle Asset (PIOnline)
Dyal Capital Partners announced Friday that it acquired a minority stake in Pinnacle Asset Management. Pinnacle manages $2.3 billion in commodities-oriented hedge funds of funds; its day-to-day operations will not be affected by Dyal Capital’s investment, according to a news release. Terms of the deal are not being disclosed.
Bad trip for guru in 2012 (NYPost)
Ray Dalio, who runs the world’s largest hedge-fund firm, the $130 billion Bridgewater Associates, is in danger of losing his hard-won serenity. Dalio, known for practicing transcendental meditation and creating a cult-like atmosphere at the Westport, Conn., firm, is just weeks away from stumbling to a loss for the year. The loss comes just 12 months after Dalio achieved near-genius status for doing what few hedge-fund titans have done: chalking up two back-to-back years of huge double-digit gains in his main macro fund.
Enzon to Review Potential Sale After Icahn Wants Talk (BusinessWeek)
Enzon Pharmaceuticals, Inc.(NASDAQ:ENZN), a developer of cancer treatments, said it is considering selling all or part of the business after billionaire investor Carl Icahn expressed interest in talking to the company. Lazard Ltd. was hired to help explore the possibility of a sale, Piscataway, New Jersey-based Enzon said today in a statement. To conserve cash, Enzon suspended development and testing of its androgen receptor treatment.
