Hedge funds increased bets on rising commodity prices to the highest since September on mounting confidence that growth in the U.S. will strengthen demand. Money managers boosted their combined net-long positions across 18 U.S. futures and options by 13 percent to 929,199 contracts in the week ended Feb. 7, Commodity Futures Trading Commission data show. That’s the highest since Sept. 20. Bullish wagers on copper rose to a six-month high, and soybean holdings jumped by the most this year.
Ex-Bear Stearns Managers Cioffi, Tannin to Pay $1.05 Million in SEC Suit (Bloomberg)
Former Bear Stearns Cos. hedge-fund managers Ralph Cioffi and Matthew Tannin, acquitted in 2009 of criminal charges they misled investors, agreed to pay $1.05 million to settle a related civil case brought by the U.S. Securities and Exchange Commission. Cioffi agreed to pay $800,000 and accept a three-year ban from the securities industry and Tannin agreed to a two-year ban and $250,000 payment, SEC attorney John Worland told U.S. District Judge Frederic Block in Brooklyn, New York, in a hearing today.
Hedge Funds Ride European Bank Rally (Financial Times)
Leading hedge funds have profited heavily from a rally in European banking stocks in recent weeks and are wagering that their gains will continue amid fresh measures to inject liquidity into the financial system from central banks. This year has seen some of the strongest performance numbers from equity-focused hedge fund managers since 2009.
5 Hedge Funds’ Top Stocks Soar After 2011 Rout (Forbes)
Hedge funds, coming off their second-worst year in two decades, are on the rebound this year, but they’re still trailing the broader market. Hennessee Group, a hedge fund adviser, said its composite index of hedge fund performance gained 2.5% in January, versus a gain of 4.4% for the S&P 500 Index ($INX) of the largest U.S. companies. That comes after a disappointing 2011 for most hedge funds, which control about $2 trillion in assets. As a group, they lost 5% in 2011, while the S&P 500 was flat. Equity hedge funds lost 8.3%, and macro funds, which have a wide array of holdings, dropped 3.8%, and event-driven funds declined 2.8%.
Hedge Funds Gain 1.78% In January (FINalternatives)
With event driven strategies leading the way, hedge funds gained about 1.78% in January 2012, trailing the S&P 500 which gained 4.36%. Event driven funds, according to the latest Hedge Fund Monitor from Bank of America Merrill Lynch, added 2.98% in January. Short bias funds, on the other hand, turned in the worst performance, losing 2.51%—on the bright side, short bias was the only strategy that lost ground last month.
Small Hedge Funds Outperformed Large Hedge Funds In January 2012. (Opalesque)
The Eurekahedge Hedge Fund Index was up 2.15% in January amid a strong resurgence in risk appetite, making it the strongest monthly return for the index since December 2010. The MSCI World Index gained 4.96%2 as markets overcame lingering concerns about the European debt situation and posted strong rallies. The capital-weighted Mizuho-Eurekahedge Index was up 1.80% during the month.
Soros Has Words For German Chancellor and Barack Obama (HFN)
Hedge fund guru George Soros has some words of advice for German Chancellor Angela Merkel. In an interview with German weekly news magazine, Der Spiegel, Soros revealed that while he admires Merkel for her “leadership qualities,” the chancellor is also “leading Europe in the wrong direction” in light of the eurozone crisis.
George Soros Gives $500,000 To Effort To Narrow Three-Strikes Law (LA Times)
Billionaire George Soros has written a $500,000 check to help finance a potential ballot measure that aims to lower the number of criminals serving prison terms of 25 year to life under California’s three-strikes law. The hedge-fund titan and longtime supporter of liberal causes made the donation on Jan. 30, according to records filed with the secretary of State’s office.
Warren Buffett’s Straw Man Argument Ignores One Fundamental Trend (Business Insider)
For value investors of a certain age (e.g. mine), discovering that Warren Buffett could be wrong is like suddenly not believing in Father Christmas. This twinkly-eyed, raspy-voiced, avuncular old gentleman almost embodies Clint Eastwood crossed with a Care Bear. And nobody can hold a candle to his long-term investment record.
Goldman Sachs Trader Plans Hedge Fund, Financial News Says (Businessweek)
Taimur Hassan, a former managing director at Goldman Sachs Group Inc., plans to start a commodities hedge fund this year, Financial News reported, citing company filings and sources familiar with the matter.
Global Deal: Investcorp Sells Redington Stake to Parent (WSJ)
Bahrain-based private equity fund Investcorp Monday said it sold its stake in IT services firm Redington to its parent company, while its half-year results plunged due to the eurozone crisis. “Asset-based income overall was impacted by negative returns on hedge funds with the hedge fund industry worldwide experiencing drawdowns due to the turbulence caused by the Eurozone crisis,” it said in a statement.
Barton Biggs says there’s a 1 in 4 chance the euro zone collapses (Reuters Hedge World)
Hedge fund investor Barton Biggs says there’s a 25 percent chance the euro zone breaks up, sending the world economy into another recession. He also says he’s avoiding U.S. banks stocks.
Wausau Paper Strikes Pact With Starboard Value (Market Watch)
Wausau Paper Corp. WPP -1.74% struck an agreement with its largest shareholder, activist hedge fund Starboard Value LP, to nominate two directors supported by Starboard to its board. Starboard Value has been angling for change at the paper products company, in which it holds a roughly 10% stake, according to FactSet Research. The hedge fund last month sent a letter to Wausau urging it to expand its strategic review to include a potential sale of its paper segment or the entire company.
Obama Budget Targets Carried Interest (CNN Money)
President Obama today released his $3.8 trillion budget proposal for fiscal year 2013, and once again he is proposing to change the tax treatment of carried interest from capital gains to ordinary income. Two things to note: (1) Obama neglects to identify venture capitalists as one of this tax loophole’s main beneficiaries, likely because VCs are more politically popular than are private equity or hedge fund managers. But, make no mistake, VCs would effectively have their taxes doubled by this change (which I support, by the way)…
Viteos Expands Family Office Services (HFN)
Hedge fund administrator Viteos is moving further into the family office sphere. The firm plans “additional investment in, and expansion of the Viteos presence in family offices,” according to a company statement.
Boutique Hedge Fund Aros Paradigm Fund Up 14.54% In January (Opalesque)
London-based boutique investment firm Aros Capital Partners has reported that its main hedge fund Aros Paradigm Fund returned 14.54% in January compared to its benchmark, HFRX Macro Index (EUR) which was down 1.28% during the same period. The strong results also brought the fund’s assets to $33.10m as at the end of last month. Aros Capital’s AuM is pegged at $410m. Aros Paradigm’s double-digit gain last month was a complete turnaround after the fund closed 2011 down 22.10%.
Morgan Stanleys David Darst To Headline at Brazil Hedge Forum (Hedge Co. Net)
The second annual Hedge Fund Brazil Forum, a South America focused international meeting of hedge fund managers and investors, is being held this year at the Copacabana Palace Hotel in Rio de Janeiro between the 6th-7th March. As the largest Latin American hedge funds conference, over 400 hedge fund investors, managers and consultants are expected to attend.
Koch Industries Sued for $21.5 Million In Madoff Hedge Fund Fraud Case (Hedge Co. Net)
Koch Industries is being sued in relation to the biggest Ponzi scheme in U.S. history. The hedge fund fraud that Bernie Madoff pulled off received money from a Koch feeder fund, according to Irving Picard, the Trustee for the liquidation of Bernard L. Madoff Investment Securities LLC.
European Insurers Expect To Increase Allocation To Hedge Funds As Result Of Solvency II (Hedge Funds Review)
Almost one-third of European insurers are likely to increase their allocations to hedge funds and private equity in a bid to increase yield once Solvency II is introduced, according to BlackRock.
Institutional Investors Likely To Increase Allocations To Hedge Funds In 2012, Reports Preqin (Hedge Funds Review)
More investors say they are willing to increase or start allocating to hedge funds this year, reports Preqin. Over a third plan to increase investment with only 9% reducing allocations this year.
Bruce Berkowitz Comes out of the Woods, Says He Likes BAC (Value Walk)
Fairholme Capital Management’s Bruce Berkowitz told Bloomberg TV’s Dominic Chu that he still really likes Bank of America even though the stock crushed his fund last year. “In the banking, I feel most comfortable with Bank of America. I like what Brian Moynihan is doing. I like the trends. I like the honesty,” the mutual fund manager, who is known for his bullish bets on financials, told Bloomberg TV.
Bruce Berkowitz On Financials ($BAC) (Frank Voisin)
In the embedded Bloomberg video below, Fairholme Funds’ Bruce Berkowitz gives the case for financial stocks, which is encapsulated in this quote.
Oil Myths: The Hedgeye Rebuttal (The Reformed Broker)
10 Tuesday AM Reads (The Big Picture)
Morning News: February 14, 2012 (Crossing Wall Street)
Frontrunning: February 14 (Zero Hedge)
Today’s Events: Retail Sales, Business Inventories, Fed Speeches (Zero Hedge)
Daily US Opening News And Market Re-Cap: February 14 (Zero Hedge)
Tuesday 7atseven: Gold Bugged (Abnormal Returns)
People Moves (Hedge Funds Review)
Premarket Read: What Downgrades? Apple Over $500, Valentine’s Day Blues (Barrons)
HFMWeek Daily Snapshot – 14 February (HFM Week)
Shorting Cupid, Soros Criticizes Merkel’s Austerity Push, LIBOR Investigation Shakes City And More (Reuters Hedge World)
PRESS DIGEST – Financial Times – Feb 13 (Reuters)
