David Harding, founder of hedge fund Winton Capital Management, has disclosed an annual tax bill of £34m and urged other higher rate taxpayers to pay their fair share. Speaking to the Sunday Times, Harding publicly revealed he was taxed £34m from the £87m he generated in income last year. Harding, who owns 56% of Winton Capital Management, said if higher rate taxpayers want to be accepted by society, they need to pass the ‘smell test’ and pay the appropriate amount of tax.
Skybridge on hedge fund investing in uncertain times (Opalesque)
Max von Bismarck, partner and CEO (Europe) of Skybridge Capital, a fund of hedge fund house headquarted in New York with around $6.5bn in AuM, moved to the firm’s new Zurich offices a couple of months ago. He said during an IIR conference in Pfaeffikon, a town near Zurich, last week that the period of “great moderation” is clearly over. Indeed, the apparent decline in volatility in the early 2000s that coincided with the Fed Chairmanship of Alan Greenspan became known as The Great Moderation. The world has moved from being uni or bi-polar to now being a multi-polar world, that is, slightly more unstable, he said. With the internet and social media, the world is also hyper-connected and interdependent, which is empowering and disempowering at the same time (the latter because we see the world situations that we have little control over). The bell’s curve belly is no longer flat, it has got thinner and the tails have gotten fatter. That’s not so bad for hedge funds which have tools to deal with that, he noted, it’s just more complicated to handle.
Hedge Fund Acquisitions: Capital Trust To Sell Investment Management Platform To Blackstone (HedgeCo)
An affiliate of hedge fund investor giant Blackstone has acquired NY Capital Trust, Inc’s investment management business, operated through its subsidiary, CT Investment Management Co., LLC. Under the terms of the agreement, Blackstone will acquire CTIMCO and its fund co-investments for $20 million. The Blackstone Group L.P. (NYSE:BX) will also manage Capital Trust and purchase an 18.2% equity stake in the company. Following the closing, CTIMCO will be integrated into Blackstone’s Real Estate Debt Strategies business.
GLG poaches Mawby for corporate bond funds (WhatInvestment)
GLG, the asset management division of hedge fund firm Man Group, has appointed Jon Mawby to manage its corporate bond funds. Mawby joins from European Credit Management, where he was the lead credit portfolio manager on its multi asset offerings. He will take on responsibility for the GLG Strategic Bond fund and the GLG Global Corporate Bond fund effective immediately. The global fund is the top performing OEIC in the IMA Global Bond sector over five years, returning 94.24 per cent.
Macro forces lead Ragnhild Wiborg to close her Consepio fund (InvestmentEurope)
Ragnhild Wiborg, the founder president and senior partner of Wiborg Kapitalförvaltning AB in Sweden, as well as majority owner and portfolio manager of the Consepio fund, has announced the closure of the hedge fund. The company said that the fund had “recently disappointed investors and portfolio managers alike”, and blamed the ongoing macro environment, including quantiative easing, for undermining the ability of managers to make investment decisions based on equity fundamentals.
Global hedge fund assets increase despite lacklustre returns (Opalesque)
Latest research from HedgeFund Intelligence finds that global hedge fund assets increased by 4% in the first half of 2012 to over $2.2 trillion (including hedge funds in a UCITS format) although they remained well below their 2007 peak. And this came against a backdrop of what the firm calls ‘lacklustre returns’. Their 1st October report finds that assets in hedge funds of traditional types, domiciled offshore or structured as limited partnerships in the US, managed total combined assets of $2.147 trillion (including where they have parallel onshore versions) at the mid-point of 2012, up about 4% from the figure of $2.059 trillion at the end of 2011. If assets held in other hedge funds in onshore European UCITS structures (with no parallel offshore versions) were added to the total, it reached $2.245 trillion, up from $2.156 trillion at the end of last year.
36 South launches tail risk hedge fund investing in long-dated options (HedgeFundsReview)
36 South Capital Advisors is launching a tail risk protection strategy which is designed to make a positive return during extreme market events. Co-founder and chief investment officer Richard (Jerry) Haworth says extreme downside events are occurring more frequently than is priced into options. The Black Eyrar Fund will provide tail risk protection through the use of long-dated options, which Haworth believes are the best tool for the job. “They tend to be massively overvalued or massively undervalued. When they are massively undervalued, you get the most convexity or the most bang for your buck of all the tail risk hedging instruments out there.”
Bermuda-based company eases investors’ path into reinsurance (RoyalGazette)
A new company launched in Bermuda last week will make it easier for investors to generate capital through the reinsurance industry without investing a lot of time, money and talent. The company, called Multi-Strat Re, will give smaller hedge fund managers and other private investors a low-cost way to outsource virtually all aspects of setting up and running a reinsurance vehicle — from underwriting to processing claims. The unique platform is the brainchild of Joseph Taussig, of Taussig Capital — a boutique advisory firm that has assisted a number of top investors with getting involved in the reinsurance space. He’s helped hedge fund managers like David Einhorn, whose Greenlight Capital set up Greenlight Re in the Cayman Islands.
Cowen Group and Kellner Capital do securities lending business deal (SecuritiesLendingTimes)
Financial services firm Cowen Group has agreed to purchase KDC Securities from Kellner Capital. New York-based KDC Securities is the securities lending business and broker-dealer subsidiary of hedge fund manager Kellner Capital. Formerly called Kellner DiLeo & Company, the hedge fund manager rebranded in May as Kellner Capital and launched a new event-driven investment fund with more than $50 million in assets. Kellner Capital has now agreed to sell KDC Securities to Cowan Group, which provides alternative investment management, investment banking, research, and sales and trading services through two business segments.
U.S. hedge funds gained in August by buying riskier stocks and commodities: hedge fund news, week 39 (Opalesque)
In the week-ending 28 September 2012, it was reported that Goldman Sachs Group was scheduled to launch a new hedge fund offering to its wealthiest customers; Citigroup hired former Morgan Stanley Investment Management’s Andrew Mack for its new hedge fund launch; former Royal Bank of Canada and Bank of America Corp (NYSE:BAC) proprietary traders Stuart Lippman and David Liu have left Tandem Global to start a new fund at TIG Advisors; Hyaline Capital Management launched a top-down, macro-driven long/short equity hedge fund; Hal Lehr, a managing director and global head for cross-commodity trading at Deutsche Bank, resigned from the hedge fund with three associates to start a new fund; Gougenheim Investments CEO and founder Philippe Gougenheim said he would launch the Glasnost Macro Fund in early October; and three North Carolina college students launched a global macro hedge fund for Lumina Investments.
Tribunal Upholds FSA Decision to Ban and Fine Swiss Fund Manager and Two Former Cantor Fitzgerald Traders for Market Abuse (inAudit)
The Upper Tribunal (Tax and Chancery Chamber) has directed the Financial Services Authority (FSA) to fine Stefan Chaligné, a Swiss-based hedge fund manager £900,000, (plus disgorgement of the financial benefit he obtained of €362,950) and Patrick Sejean, a former senior salesman on Cantor Fitzgerald Europe’s (CFE) London-based French desk £650,000. The FSA did not seek to fine Tidiane Diallo, a former junior trader on the same desk, as it accepted that he was in a position of serious financial hardship. Had this not been the case, it would have sought to fine him £100,000. The Tribunal also directed the FSA to ban all three individuals from performing any role in regulated financial services.
EDHEC-Risk paper finds that hedge fund alpha is a form of fair reward (Opalesque)
A new paper from the Newedge research chair on advanced modelling for alternative investments at EDHEC-Risk evaluates hedge fund performance through a new non linear risk adjustment of returns. ‘Robust assessment of Hedge Fund Performance through Nonparametric Discounting’ by Caio Almeida and René Garcia prices exactly the usual set of risk factors considered in the hedge fund literature. The pair writes: “This nonlinear risk adjustment goes beyond the usual linear regression methodology used in many hedge fund performance papers, including nonlinear exposures based on option-like features.”
AE3 Capital plans emerging market bonds hedge fund (HedgeFundsReview)
Malta-based AE3 Capital has launched its first hedge fund, investing in emerging markets bonds with an emphasis on Eastern Europe. AE3 Capital was established earlier this year by managing partner and chief investment officer Aldi Reims, who was previously chairman of the management board at Latvian commercial bank Baltikums, and director and portfolio manager Artis Goba, who also worked at Baltikums as head of financial markets.
Hedge Fund Manager Who Paid To Play Sentenced (Finalternatives)
A hedge fund executive who pleaded guilty in a pay-to-play scandal at New York’s main public pension fund was spared prison time on Friday. Barrett Wissman, formerly of Dallas-based HFV Management, was one of the first cracks in the scam, pleading guilty in 2009 and agreeing to cooperate with prosecutors. He is one of eight people to plead guilty in the kickback scheme, which ensnared several high-profile alternative investment funds and a number of high-ranking New York State officials.
Centerbridge Credit Fund To Return US$500 Million (Finalternatives)
Quantitative easing has been a boon to Centerbridge Partners’ credit hedge fund. But it’s also proving a damper on opportunities for the US$8.3 billion hedge fund. Centerbridge on Friday told investors in its Credit Partners fund that it would return US$500 million. The firm said that it has as much as US$2 billion of the fund’s assets simply sitting in cash due to the paucity of enticing options.
SS&C Buys Boutique Administrator Gravity (Finalternatives)
SS&C Technologies continues to grow by acquisition with a deal for hedge fund administrator Gravity Financial. The Windsor, Conn.-based firm announced Friday that it bought the Canton, Mass.-based firm. The acquisition adds 40 customers and 10 staff members to SS&C’s SS&C GlobeOp business, the result of SS&C’s acquisition of GlobeOp Financial Services in May. Terms of the Gravity deal were not disclosed.
Harbinger, Falcone To Seek Dismissal Of SEC Fraud Case (Finalternatives)
Harbinger Capital Partners founder Philip Falcone and his hedge fund will ask a court to junk the Securities and Exchange Commission’s lawsuit against them. Lawyers for the billionaire and New York-based Harbinger, as well as lawyers for fomrer Harbinger executive Peter Jenson, told U.S. District Judge Paul Crotty on Friday that they intend to seek dismissal of the SEC’s claims, The Wall Street Journal reports. The regulator is expected to oppose the request.
MIT economist pitches cancer megafund (BostonGlobe)
Andrew W. Lo, the MIT finance professor and hedge fund manager, wants to bring Wall Street-style financial engineering to a crucial social need: curing cancer. Named this year as one of Time magazine’s 100 most influential people in the world, Lo runs an investment firm in Cambridge called AlphaSimplex Group, with $3 billion in assets. He is known for his “adaptive markets” financial theory, which maintains that prices and investors are not always rational.
Hedge funds didn’t cause financial crisis, RAND says (PIOnline)
Rest easy, hedge fund investors. Assuage your guilt. Hedge funds did not cause the financial crisis in 2008. They just made certain aspects much worse. That’s the conclusion of a new monograph — “Hedge Funds and Systemic Risk”— from RAND Corp., a non-profit research and policy organization. The report’s authors analyzed the extent to which hedge funds create or contribute to systemic risk. In the the context of the 2008 global market crash, their conclusion was that hedge funds did not play as significant a role in the crisis as credit-rating agencies, mortgage lenders and credit default swaps issuers.
Have hedge funds lost their mojo? (DallasNews)
I knew it wasn’t all wine and roses in the hedge fund industry these days, but geez things seem to have really taken a turn for the worse. One of Dallas’ largest and most respected hedge fund firms, WS Capital Management, announced a few weeks ago that it would turn out the lights because the party was over. The fund, operated by Reid Walker and G. Stacy Smith, managed $550 million in assets, which will be returned to investors. Dallas is home to more than 100 hedge funds, and there are always new ones starting and old ones closing, but WS Capital was one of the heavyweights. In a letter to investors, the firm cited “increased macroeconomic risks” for stock pickers and “liquidity” demands as reasons for the closure.
