Tom Steyer’s announcement last week that he would step down from the hedge fund he founded, Farallon Capital, came as no surprise to those who have been paying attention to his political and nonprofit activities. The San Francisco billionaire has been playing an increasing role in California politics. Steyer has donated more than $21 million this year to support California Proposition 39, which would increase taxes on out-of-state businesses. Two years ago, he gave $5 million toward the successful effort to block California Prop 23, which would have suspended the state’s global warming law.
Foreign land owner wants better standards (NZCity)
US-based billionaire Julian Robertson says New Zealand needs to look after its land better. “I am not one of those that believes that New Zealand is pollution-free. And, in my opinion, you need to be better stewards of your land,” the owner of three luxury lodges in New Zealand told TVNZ’s Q+A programme on Sunday. “I think you need tougher environmental restrictions, and the foreigners ought to be held accountable for those, but so should be the citizens of New Zealand.” Mr Robertson, 80, a former hedge fund manager, has been coming to New Zealand since the late 1970s. He has donated 15 major artworks to Auckland City Gallery and in 2009 became New Zealand’s first honorary knight. He said it was not easy for foreigners to buy land in New Zealand.
Rich investors opt out of hedge funds (ThePost)
Rich private investors are turning their backs on hedge funds because moves to attract more conservative pension fund clients mean managers no longer deliver the big returns they crave. The fastest growing source of new money for hedge funds is now pension funds and insurance companies, which want managers to go easy on risky trades. Funds are finding it hard to say no to the big money these investors offer so rich clients are feeling neglected. The hedge fund industry’s changing investor base has also corresponded with explosive growth in size, leaving rich clients questioning how easy it will be for managers to make money in future. Global assets in hedge funds now top $2 trillion (R17.3 trillion), far more than the $200 billion or so run in the mid-1990s.
Dymon launches pvt equity fund with Temasek unit’s backing (Reuters)
Dymon Asia Capital is branching out to the private equity world, launching a fund with backing from a unit of Singapore state investor Temasek Holdings, a company email obtained by Reuters shows, indicating an uncommon move by a hedge fund. The firm aims to raise S$300 million ($246 million) for Dymon Asia Private Equity (DAPE), Keith Tan, Dymon’s managing partner told clients in an email this month.
Credit Suisse Stocks Chief Jain Said to Move to Hedge-Fund Unit (SFGate)
Credit Suisse Group AG equities chief Bob Jain will move to a job overseeing a unit that includes in-house hedge funds and be replaced by Timothy O’Hara, two people with knowledge of the decision said. Jain will run the Zurich-based bank’s alternatives unit reporting to asset-management chief Robert Shafir, 54, said one of the people, who requested anonymity because the changes aren’t public. An announcement may come next week, the people said. Jain didn’t respond to calls and e-mails seeking comment.
Execs reiterate need to remain focused on long-term allocation (PIOnline)
Executives overseeing investments for sovereign wealth funds and national pension plans, at a recent hedge fund conference, agreed on the need to stay focused on long-term investment goals amid capital market volatility, even as they differed on how strictly strategic asset allocation targets should be followed along the way. During an Oct. 17 panel discussion at the SkyBridge Alternatives Conference in Singapore, Mark Wiseman, CEO of the C$175 billion (US$177.8 billion) Canada Pension Plan Investment Board, Toronto, made the case for faithfully rebalancing to strategic allocation targets.
Romney’s money heads for Hollywood (IBNLive)
Barack Obama may enjoy more support in liberal-leaning Hollywood than Mitt Romney but the Republican presidential candidate has profited from a different connection with Tinseltown, backing a hedge fund that has financed dozens of movies, including Bridesmaids, Ted, and Cowboys and Aliens. Mr Romney has for at least two years been an investor in Elliott Associates, a $20bn fund run by Paul Singer, one of his biggest financial supporters and a long-term Republican fundraiser and donor, according to federal financial disclosures.
Sixth Hedge Fund Fight Nite is knockout success (HedgeWeek)
The sixth Jax Coco Hedge Fund Fight Nite, which featured seven bouts between members of the Hong Kong hedge fund community, raised over HKD500,000 for charity. Approximately 550 guests attended the black-tie event to support the fighters and to lend their contribution to the charities Operation Smile and Operation Breakthrough. Dinner was served and guests were welcomed by a dance performance by the Dancing Girls.
Hedge Fund Fees May Be Even Higher Than I Thought (BusinessInsider)
The entire eastern seaboard of the United States is waiting tentatively for Hurricane Sandy’s arrival. Our patio furniture has been safely stored indoors. Batteries and candles are well supplied in anticipation of the inevitable power loss, and with preparations done we wait for the slowly arriving worst storm many of us have ever seen. So naturally, I turned to Gretchen Morgensen’s article in the New York Times today (“The Perils of Feeding a Bloated Industry“). Gretchen focuses on the costs of active money management and questions whether society has received much benefit from the increasing share of GDP that is represented by the financial services industry. It’s a worthy question and one that society has a right to ask given events of the past few years. In this she highlights a recent academic paper (“The Growth of Modern Finance” by Robin Greenwood and David Scharfstein) and in clicking on the hyperlink to this paper I was fascinated to see included an estimate of hedge fund fees.
Dakota Lawsuit Setback (WSJ)
A racial discrimination lawsuit by a hedge-fund manager against the famous Dakota co-op on Central Park West is facing a potential setback: The major-league litigation firm hired to pursue the co-op has asked to withdraw from the case, citing unpaid legal fees. In a filing Friday, Kasowitz Benson Torres & Friedman LLP asked to withdraw from the case, citing “non-payment of very substantial legal fees” by Alphonse Fletcher Jr. and his hedge-fund firm, Fletcher Asset Management. A spokesman for Mr. Fletcher and the firm didn’t immediately comment.
AP1 outlines bold approach to hedge funds (eFinancialNews)
Martin Källström, the portfolio manager responsible for hedge funds at AP1, believes that the Skr221bn ($33bn) Swedish pension fund’s approach to hedge funds is very different to that of most other investors in the sector. It is less concerned about achieving strong risk-adjusted returns, and instead focuses on building a hedge fund portfolio that is likely to do well when the rest of the pension fund portfolio is doing badly. AP1 began a full-scale push into hedge funds in February and plans to ramp up the allocation to 5% of overall assets – roughly $1.6bn. Historically its hedge fund allocation consisted solely of a position in Cevian Capital, a Swedish activist manager with roughly €5bn under management.
Blackstone eyes hedge funds, property in Asia (AsianInvestor)
US-based Blackstone plans to increase investments in Asia with a particular focus on property, but it will also seek hedge fund seeding opportunities, says chief executive Stephen Schwarzman. “Prices in Asia have been, over the last few years, quite high,” he said while in Hong Kong on Friday. “We look at Asia now in a much more positive way.” Since the start of the year, the private equity giant has increased its headcount by 20% in the region, where it now has 191 staff.
Check Out Billionaire Hedge Funder Marc Lasry’s ‘Super Freaky’ Halloween Decorations (BusinessInsider)
In keeping with tradition, billionaire hedge fund manager Marc Lasry, who runs Avenue Capital, has once again made his Upper East Side mansion spectacularly spooky for Halloween. Lasry, who is married with five children, has decked out his palatial home with severed bloody heads, skeletons, ghouls, witches and less frightening inflatable decorations such as a mummy and Sponge Bob Square Pants.
Why the S&P Is Thrashing Hedge Funds (Barrons)
Of the thousands of hedge funds and other vehicles registered as Securities and Exchange Commission investment advisors, more than 150 have the word “alpha” in their names. But calling yourself alpha and actually generating it are entirely different things. Putting money into a Standard & Poor’s 500-stock index fund would have gained you more than 12% so far this year, while investing in the average hedge fund would have generated just 4.8% in returns, net of fees, through September, according to hedge-fund performance tracker HFR. Even most strategies correlated with equity markets trail the S&P by a wide mark. Put simply, alpha, or the value a manager adds to returns beyond his benchmark, just isn’t there. And that’s what the typical hedge fund promises investors, in return for its hefty fees.
Rajaratnam friend agrees to settle SEC charges (GulfNews)
A former chief financial officer at Xilinx, Inc. (NASDAQ:XLNX) on Friday became the latest executive to settle civil charges of being part of now-imprisoned hedge fund tycoon Raj Rajaratnam’s insider trading network. The technology executive, Kris Chellam of Saratoga, California, was charged by the US Securities and Exchange Commission of giving Rajaratnam confidential information on Xilinx in December 2006. The tip helped the Galleon Group founder, who was Chellam’s close friend, make nearly $1 million (Dh3.67 million) in illicit profits, the SEC said in its lawsuit.
Oshkosh rejects Carl Icahn’s $3-bn unsolicited offer (Domain-b)
US heavy-duty-vehicle maker Oshkosh Corporation (NYSE:OSK) yesterday rejected Carl Icahn’s $3-billion unsolicited takeover bid as too low and adopted a poison pill to ward off any further hostile moves from the billionaire activist-investor. The board of the Wisconsin-based company rejected Icahn’s $32.50-a-share in cash offer and called on investors not to participate in Icahn’s tender offer.
SEC Charges Denver-Based Insurance Executive with Insider Trading (SEC)
The Securities and Exchange Commission today charged an insurance company CEO with insider trading based on confidential information he obtained in advance of a private investment firm acquiring a significant stake in a Denver-based oil and gas company. The SEC alleges that Michael Van Gilder learned from a Delta Petroleum Corporation insider that Beverly Hills-based Tracinda — which has previously owned large portions of companies such as MGM Resorts International, General Motors, and Ford Motor Company — was planning to acquire a 35 percent stake in Delta Petroleum for $684 million.
Berens Capital’s assets in hedge funds of funds (PIOnline)
Berens Capital Management was not included in Pensions & Investments’ Sept. 17 special report on hedge funds and hedge funds of funds. As of June 30, Berens Capital managed $1.2 billion in hedge funds-of-funds assets, which would put the firm in 52nd place in P&I’s ranking. Of that total, 47% was managed on behalf of institutional investors, which would put the firm in the 43rd spot on P&I’s table chart of hedge funds-of-funds managers ranked by assets managed for institutions.
Betting on Hurricane Sandy may be unwise (Marketwatch)
As Hurricane Sandy bears down on the East Coast, some investors may be tempted to bet stocks will fall. They may want to think twice. …The study, published in 2008, looked at attempts to sell short, or bet against, insurance stocks in the days surrounding the two devastating hurricanes. Since insurance companies typically need to pay out claims in the wake a storm, the events can hurt their bottom line, providing bearish investors with a profit opportunity. Because of the complexity involved, short selling is a relatively rare tactic for individual investors to employ. Many consider it mostly the province of professionals like hedge funds and Wall Street trading desks.
Emerging managers seeing renaissance among investors (PIOnline)
Some of the world’s largest pension funds are increasingly turning to emerging managers to generate alpha, particularly in alternative asset classes where more nimble players might have an edge. “There is renewed interest in emerging managers, stemming in general from investors looking for diversity among managers — not necessarily just on an outperformance level but also (in terms of) diversity in investment ideas, which may be coming from smaller firms,” said Andrew Junkin, managing director at investment consultant Wilshire Associates Inc. based in Denver.
