Believe it or not, the housing crash wasn’t all heartache and tears. When the mortgage bubble burst a few select investors made a boatload. One of them was hedge fund titan John A. Paulson. In what has been called “the greatest trade ever,” Paulson earned $15 billion for himself and his clients as the rest of the markets fell hard. But thanks to artificially low interest rates, incessant money printing, and ongoing stimulus plans, the same opportunity is beginning to build.
Investing: Hedges on the edge (FT)
The Church of England, the Cern particle physics laboratory in Geneva and the Fire and Police Pension Association of Colorado may at first glance have little in common. But there is one thing: they all have hundreds of millions invested in hedge funds. All three cautious investors are among a wave of institutions – from endowment funds to retirement schemes – that have begun piling into a once freewheeling industry seen by many inside and outside the financial world as emblematic of boomtime excess.
Secondary hedge fund market adopts cautious stance as autumn approaches (HedgeFundsReview)
As summer comes to a close, hedge fund secondary market buyers seem to be taking a cautious position for now, bidding opportunistically on better-known names but shying away from new, lesser-known supplies. Tullett Prebon expects to complete a number of managed secondary market sale mandates in August. These should provide some impetus to buy-side activity by September.
Argentina Takes on Angry Hedge Fund (CourthouseNews)
Argentina claims in court that subpoenas from a hedge fund about the country’s massive bond default dating back to 2001 are part of an “ongoing campaign of harassment.” Argentina filed a motion to quash in Federal Court. Cyprus-based NML Capital Ltd. is trying to depose nonparty oil companies Apache Oil Corp. and EOG Resources, both of Houston.
Hedge Funds Bet France Would Collapse (DallasBlog)
Major hedge fund investors are making big-time bets that France would soon crumble. They believe that yields on French debt are too low, considering the government’s new Socialist policies. Reuters reports that, “hedge funds are going against market consensus and betting that ultra-low French government bond yields are unsustainable, believing a sluggish economy and the new government’s policies will eventually force up borrowing costs.”
Clients of ex-hedge fund boss speak of misfortune (MoneyWeb)
Two years ago the late Herman Pretorius, of the now infamous Relative Value Arbitrage Fund (RVAF), had a ‘vision’ that he would one day bring immense harm to many people. He voiced these concerns to his Dominee, who advised him to walk a truthful and righteous path. Preaching at Pretorius’s funeral last month, the same Dominee told the assembled congregation that Pretorius had lost his way. He was not preaching just to family and friends, but to investors too – because in many cases investors were also friends and the relationships stretch back years, and even generations.
Continued hedge fund redemptions point to lack of investor confidence (HedgeFundsReview)
Redemptions from hedge funds continued in July with outflows reaching $9.2 billion, reports analytics and research provider eVestment. This is the fourth month in the past five when outflows topped new money. This shows a clear picture of reduced investor confidence, especially in equity strategies, says eVestment. In July approximately $4.4 billion was redeemed from directional equity-focused strategies, making it the fifth consecutive month of equity hedge fund outflows and the 12th month in the last 13 that outflows have been recorded for these funds.
China deliberates on listing of “sunshine” funds, Silk Road launches M3 Fund… (HedgeWeek)
People moves are the initial focus of this week’s Asia blog, in what has been a fairly quiet seven days for Asia’s hedge fund industry. Starting with prime brokerage, it was reported by AsianInvestor that the Royal Bank of Scotland has hired William Egan from Barclays as head of mandate sales for prime services in Asia Pacific; a newly created role and the first of David Gray’s hires since he joined from UBS to head up prime services and client execution for the region. Egan will be based in Singapore and will focus on winning mandates across FX, rates, futures and options. Egan will report regionally to Gray and functionally to Fred Matt, RBS’s global head of prime services sales in London.
Hedge Funds Aggressively Buy 10 yr Treasury Notes: BAC (ValueWalk)
Bank of America Merrill Lynch’s Hedge Fund Monitor details an analysis of the investable hedge funds’ strategy in play so far this year. Bank of America Corp (NYSE:BAC)’s Investable Hedge funds index is up 0.19 percent till Aug 22, and down 2.48 percent in its performance in S&P 500 (INDEXSP:.INX). The hedge funds performed the best in long/short investment in Equities (up 0.8 percent) and Events (up 0.68 percent) . Commodity trading was the worst performer for the year and was down 1.17 percent.
Cramer: 8 Things I’d Do if I Were at a Hedge Fund (TheStreet)
Yeah, I would take profits, too. I am thinking about what I would be doing at a hedge fund and I know I would have several priorities: 1. Be ready for a disappointing Jackson Hole speech because, I, unlike others, don’t believe that QE3 is even a factor now that housing is coming back. 2. Be ready for more disappointment from China as Doug Kass’ points about China are coming home to roost. 3. Be ready for a September-is-horrible bunch of articles, and because “Sell in May” wasn’t bad it might have more resonance.
Singapore More Attractive To U.K. Hedge Funds Than London (Finalternatives)
London’s status as a major hedge fund center may be in jeopardy, according to a new poll of British industry players. Asked where they’d most like base their operations, 462 U.K. investment bankers and hedge fund managers picked Singapore more often than either London or New York. Indeed, 31% told Astbury Marsden that Singapore is the most ideal location, followed by New York at 20% and their own capital, London, at 19%. Indeed, London only narrowly beats out Hong Kong and Dubai, named by 16% and 15% of respondents, respectively.
Stamford officials hear Bridgewater plans (StamfordAdvocate)
Mayor Michael Pavia and several other city officials got their first look Thursday at Harbor Point developer Building and Land Technology’s plans to turn the former boatyard on Bateman Way into a hedge fund headquarters. Carl Kuehner, the developer’s CEO, and its spokesman John Freeman joined Bridgewater Associates senior executives Joseph Parsons and Paul Darrah at the Government Center Thursday to lay out their plans for the 14-acre waterfront parcel in the South End. Pavia said the meeting was productive, but that the project is still in preliminary stages.
Hedge Fund Specialists to Speak at Third Annual ETF Conference (Hedgeco)
Hedge fund research specialist Morningstar announced the speakers and agenda for its third annual ETF Invest Conference Oct. 3-5 at the Radisson Blu Aqua Hotel in Chicago. Liz Ann Sonders, senior vice president and chief investment strategist, Charles Schwab, will deliver the opening keynote address on Wednesday, Oct. 3; and Christopher Gardner, CEO of Gardner Rich LLC and author of the best-selling book The Pursuit of Happyness, will speak during a keynote luncheon on Thursday, Oct. 4.
Connie Mack sponsored bill to help donor get $2b from Argentina (MiamiHerald)
Hedge-fund heavyweight Paul Singer… and his employees have been a top contributor to 23 Republicans running for Congress, but few received more money than Rep. Connie Mack. Elliott Management employees are Mack’s top financial backer, giving a total of $38,413, according to the Center for Responsive Politics. Mack is close to Singer in another way. Several months before he announced his Senate candidacy, Mack was the leading sponsor of a bill designed to pressure Argentina to pay Elliott $2 billion that the hedge fund claims it is owed.
Hedge funds begin to see trading advantage of social media data (HedgeFundsReview)
Hedge funds are increasingly using social media to inform their trades. Although use has been limited mainly to quantitative strategies, it is now becoming more mainstream for other hedge funds. Twitter, StockTwits and integrated social computing platform Newsgator are the main social media sources for hedge funds, explains Seth Maguire, director of assets and financial technology at Gnip. The company, based in Colorado, aggregates and delivers information from social media. Hedge funds are a new client group for Gnip and have been growing in number over the last 18 months.
Out in the ecosystem: Zeid Barakat, co-founder of Flyberry Capital (Boston)
I recently spoke with fellow MIT Sloan entrepreneur Zeid Barakat, co-founder of Flyberry Capital, for their take on the potential of the ‘big data’ in finance. Flyberry was recently named one of two finalists in the Lion’s Path Battle-Fin Tournament. …Big data has become a pretty popular term, but its definition changes depending on who you ask. The idea is that there is an unprecedented amount of information being generated, either within companies or in the public domain. It’s been estimated that the volume of business data worldwide, across companies doubles every 1.2 years.
Plaintiffs in Tuberville securities case oppose partial stay (LubbockOnline)
The plaintiffs in the securities fraud case against Tommy Tuberville and a former partner in a hedge fund are encouraging a federal judge to reject the Texas Tech football coach’s request to halt further depositions in the case until partner John David Stroud’s criminal case in Alabama state court is resolved. Their response to Tuberville’s motion, filed in U.S. District Court in Opelika, Ala., on Wednesday, argues that waiting for the conclusion of a criminal action against Stroud for securities fraud “could be a very long stay indeed.”
Third Point Re to expand with London office (Artemis)
Bermuda headquartered, hedge fund backed, reinsurer Third Point Reinsurance Company is planning to expand its footprint in the reinsurance marketing with the opening of an office in London’s financial district. Pending regulatory approval, Third Point Re are launching a subsidiary called Third Point Re Marketing (UK) Limited, which they incorporated as a company at the beginning of August. We understand the London satellite office will target reinsurance business in the UK and Europe, bringing Third Point Re’s capacity closer to potential customers. It’s likely that underwriting will remain the domain of the Bermudian office at this time and the London office will deal with business development and client relationship management.
Redrow founder Steve Morgan seeks to buy housebuilder (Telegraph)
Mr Morgan, who owns 40pc of the company, made the approach via his Bridgemere Securities investment vehicle. The approach is backed by another major investor, Toscafund, with 13.8pc, and hedge fund Penta Capital. Redrow’s board said in a statement on Friday that it will now establish a committee of independent directors to consider the putative offer, which is just a 0.7pc premium to the 151p closing price of Redrow shares on Thursday.
Herman Cain: Mitt Romney ‘not about the money’ (Politico)
Herman Cain, who has previously praised Mitt Romney for his wealth, said Thursday that the GOP presidential nominee isn’t “about the money” because he turned down a $30 million-a-year hedge fund job. “With governor Romney, it’s not about the money,” Cain said on “Fox & Friends.” “And the reason he turned it down is because his call to serve his country is greater than making another $30 million a year. And that’s part of his character that a lot of people don’t see because he’s a humble man.”
Xstrata shareholder Knight Vinke to vote against Glencore deal (Financial-News)
US hedge fund Knight Vinke Asset Management LLC, a shareholder of Xstrata Plc (LON:XTA), said on Friday it would vote against the takeover of the British miner by Swiss commodities trader Glencore International Plc (LON:GLEN) unless the terms of the deal are “materially” improved. The statement comes after the one by Xstrata’s second-largest shareholder Qatar Holding with over 12% which said yesterday that it would not accept Glencore’s offer of 2.8 new shares for each Xstrata share held. Qatar has asked earlier for 3.25 Glencore shares for each Xstrata stock, saying that such a ratio would provide more appropriate benefits to shareholders.
AFTA the BST Awards (WatersTechnology)
The American Financial Technology Awards are once again upon us, as the call for nominations went out yesterday. So what does that mean for you? Well, if you are a hedge fund, bank, exchange, traditional asset manager or any other type of end-user, then we want to hear about the projects that you’ve been working on over the last 12 months. Naturally, all the company/product details will remain confidential and will be seen only by our soon-to-be-announced judging panel. Additionally, your reference clients will also remain confidential.
Knight accepts Nasdaq’s $62 mn Facebook payback plan (Business-Standard)
After heaping criticism on Nasdaq OMX Group’s initial offer for compensating brokers for its botching of Facebook’s initial public offering, trading firm Knight Capital Group Inc said it accepts the exchange’s latest plan, which would pay out $62 million. The plan, which Nasdaq has called its “definitive word” on the Facebook debacle, is under consideration by the SEC and brings into question the extent to which an exchange can be liable for technical slip-ups. U.S. exchanges match hundreds of billions of dollars of securities transactions every day.
Hayworth raises off a Soros mailer (CapitalNewYork)
The super PAC, called Friends of Democracy, was started with seed money from Jonathan Soros, son of financier George Soros, and has pledged to focus on a dozen or so swing districts. “Ten days ago, thousands of voters in the 18th Congressional district received a filthy piece of mail, courtesy of a super-PAC funded by the son of George Soros,” Hayworth writes in the email to supporters.
Expats in Singapore arm children for Chinese century (ChannelNewsAsia)
As far back as 25 years ago, US investor Jim Rogers already believed China would be the next economic superpower and young people around the world should prepare for the future by learning Mandarin. Now 69, the billionaire had a chance to practise what he preached when he moved in 2007 to Singapore with his wife Paige Parker, 43, after visiting Hong Kong and Shanghai in search of an ideal place to bring up his children.
George Soros – Gained $9 Billion in Net Worth Since Helping Obama Get Elected (AuburnJournal)
The Democrats hate rich people right? Well, if this is true, why did Obama help George Soros almost double his net worth during this horrible economy that damaged so many others? Obama was hoisted into power from a nobody 1st term senator with Soros’ massive funding in 2008. Then, Soros invested heavily in South American oil sources which Obama subsequently loaned BILLIONS of American tax dollars to assist in the production.
Startup NuScale holds its own in game of nuclear giants (Reuters)
Nuclear power startup NuScale Power LLC is competing against some of the biggest names in the business for a U.S. federal grant to develop the next generation of nuclear reactors — and it is playing the safety card. The smart money may be on Babcock & Wilcox Co, a long-time provider of reactors for U.S. submarines, in the competition to be one of two companies to split a $452 million grant, according to industry experts.
‘Alternative Alternatives’ investment funds gain 2.18% in July (+2.05% YTD) (Opalesque)
‘Alternatives Alternatives’ investment funds finished the month of July with strong gains, according to a first estimation based on 712 single- and multi-manager funds currently listed in 25 categories in the Opalesque Solutions A SQUARE Fund Database (Source). The Opalesque A SQUARE Index advanced* 2.18% last month and 2.05% so far in 2012. Estimates for June and May were corrected to -0.49% and -1.41%, respectively. The A SQUARE Funds of Funds Index gained 1.27%, but is still down 1.56% in 2012.
SEC Issues Financial Literacy Study Mandated by the Dodd-Frank Act (SEC)
The Securities and Exchange Commission today issued a staff study with findings on what investors want to know about financial professionals and investment products and services, and when and how investors want to receive such information. “Understanding the needs of investors is critical to carrying out the Commission’s investor protection mission,” said SEC Chairman Mary L. Schapiro. “The study provides important data and insights that will assist the Commission in its ongoing efforts to help retail investors make informed investing decisions.”
Insurers seek yield in riskier investments (PIOnline)
Rock-bottom interest rates are driving life insurers to seek shelter in higher-yielding, riskier asset classes, a departure from their usual staple of corporate bonds. Low interest rates took a toll on the performance of life insurers during the second quarter. At Genworth Financial Inc., the risk-based capital ratio of the carrier’s U.S. life insurance unit fell 20 percentage points from the first quarter, to 405%, because of declines in equity markets and interest rates.
Lyxor Makes Employee Move (HedgeFund)
French hedge fund firm Lyxor Asset Management has appointed one of its own to be in charge of the firm’s North American business development division. Michael Bernstein has been with Lyxor since 2009, working most recently as head of the U.S. pensions and consultants division.
Walker Smith to shut (Absolutereturn-Alpha)
WS Capital Management, Reid Walker and G. Stacy Smith’s Dallas-based small- and mid-cap equity hedge fund firm, is shutting down. A letter sent on August 28 to investors in the approximately $550 million shop cited two broad reasons for the closure: the increased macroeconomic risks for stock pickers and the firm’s frustrations with increasing liquidity and operational demands. “For a long short fund that focuses on stock picking, the market gyrations and correlation that are driven by macro events are frustrating,” Walker and Smith wrote in the letter. “We would rather see a market crash and full cycle rather than continue to…
Denver Water Commissioners pension plan to tap consultant pool (PIOnline)
Denver Board of Water Commissioners Employees’ Retirement Plan is searching for an investment consultant, confirmed Antoinette Chavez, contract development specialist. The contract will start Jan. 1 and run for three to five years. Ms. Chavez declined to name the incumbent. The $241 million pension fund’s asset allocation is 28% domestic equity, 26% fixed income, 17% international equity, 10% each global equity and real estate, 8% hedge funds of funds and 1% cash.
Moore Capital Slashes U.S. Equity Portfolio (InstitutionalInvestor)
Louis Bacon’s Moore Capital Management has heavily slashed the size of its U.S. equity portfolio. The New York City–based macro firm reported $1.6 billion in equity related investments at the end of June, down from more than $6.3 billion at the end of the first quarter. At year-end 2011 Moore reported $2.8 billion in U.S. equity investments. The firm, which in July announced it would return $2 billion in assets to investors at the end of August from Moore Global Investments (MGI) — which is managed by Bacon — has been struggling of late. MGI lost 3.18 percent in the second quarter and was only up 0.35 percent in the first half. It was up 1.51 percent through July 19.
