Good Luck Trying To Start A Hedge Fund Right Now (BusinessInsider)
IF SETTING up a hedge fund were easy, more people would do it: bar inheritance or winning the lottery, there are few swifter paths to immense riches. Sadly for aspiring plutocrats, it is getting ever harder to launch a fund. Swaggering financiers once joked that launching with less than $1 billion of outside money to invest was hardly worth their time. Debuts that splashy are now notable only for their scarcity. A new fund typically opens with $50m-100m in assets under management. Even so, and despite buoyant stockmarkets, the number of launches is declining (see chart). Punier funds make for a less attractive business model. A $50m pile might once have been enough to sustain a small firm. Creaming off 2% of assets and 20% of profits–the standard hedge-fund fee formula–could generate around $2m a year given decent performance. No longer. Declining fees and low industry-wide returns have halved that amount.
A Hedge Fund Manager Explains Why He’s Cutting Back On Twitter (BusinessInsider)
A US based hedgie sent out a note to its clients over the weekend, saying they cut back on their use of Twitter. Add comment below if you got any. The note: 4/ Going off Twitter………………..Both me and Javad cut back out Twitter feeds by 95% last week. Is there any read-across from this? We have always seen “quantity” and not “quality” as our edge. Is there too much noise in the market now so that even noise traders like ourselves need to take a small step back? Or is it just Twitter that has peaked and become too mainstream? Don’t misread this believing that we trade based on Twitter, because we hardly ever do, but rather as a change of how we treat an information source.
Three Strategies That Could Shape Hedge Fund Growth (WSJ)
Although the hedge fund industry faced a number of challenges last year, from market volatility to increased regulatory scrutiny, it also reached an important milestone, surpassing records set in 2007 for assets under management (AuM) and absolute number of funds.¹ Those hedge funds around during the last peak have settled into a more measured and sustainable pace of growth, with money flowing mainly to hedge funds that adjusted to regulators’ and investors’ demands for more transparency while looking for new ways to streamline back-office operations. There are challenges ahead for the industry, however. With SEC registration now behind them, hedge funds will be subject to Form PF reporting on an ongoing basis and, for the first time, risk-based examinations. Many are also facing growing demands from institutional investors, which are making their mark as an increasingly vocal client base.
SEC Charges Former Executive with Insider Trading On Nonpublic Information Obtained as Part of Professional Group (SEC)
The Securities and Exchange Commission today charged a former corporate executive living in South Florida with insider trading based on confidential information that he learned as part of a professional organization. The SEC alleges that Mark D. Begelman purchased stock in Bluegreen Corporation in advance of a public announcement by BFC Financial Corporation that it was acquiring the company. Begelman was a member of the World Presidents’ Organization (WPO), which is a global professional group of business leaders who are current or former executives at major companies. The WPO has a specific written policy that discussions of a confidential nature are to be kept confidential. Nonetheless, Begelman took advantage of confidential information he learned from another WPO member and illegally traded ahead of the merger announcement for nearly $15,000 in illicit profits.
The Dell mirage (MarketWatch)
If so, you’ve probably come to the conclusion that Dell Inc. (NASDAQ:DELL) -1.19% has a lot going for it. It’s been trading at 10 times earnings. Michael Dell, the company’s founder and chief executive, says Dell is poised to make hay in the tablet- and cloud-computing markets. Then, of course, there’s the demand for the company. CEO Dell, along with Silver Lake Partners, wants to take the company private at $13.65 a share, The Blackstone Group L.P. (NYSE:BX) was offering $14.25. And Carl Icahn is suggesting he might offer close to $15 a share for the PC maker. Southeastern Asset Management says even at those prices, it could be argued Dell Inc. (NASDAQ:DELL) is still undervalued. As a stock, Dell’s six-month performance — it’s up 38% — has trumped some of the industry’s bellwethers including Apple Inc. (NASDAQ:AAPL) +0.84% (down 37.5%), Google Inc (NASDAQ:GOOG) +0.03% (up 17.5%) and International Business Machines Corp. (NYSE:IBM) -1.14% (down 3%).
The Rich List Gets Richer: Alpha to Rank the Next 25 Highest-Earning Managers (InstitutionalInvestorsAlpha)
Louis Bacon, Michael Platt, Seth Klarman and Alan Howard — these are some of the singular names in the hedge fund firmament who have made their fortunes as billionaires. Every single one of them has been featured on the Institutional Investor’s Alpha Rich List, the publication’s annual ranking of the 25 highest earning hedge fund managers globally. There’s one more thing they have in common: None of them are on the 2013 Rich List. The reason? Our proprietary survey calculates earnings of managers from performance fees and management fees, and last year a manager had to have earned at least $200 million, double the threshold in the preceding year. Fear not. They’re in good company.
Credit Suisse sells private equity unit to Blackstone (MoneyControl)
Credit Suisse Group AG (NYSE:CS) has agreed to sell a private equity business to The Blackstone Group L.P. (NYSE:BX), the latest move by an investment bank to sell a business with illiquid assets in order to appease regulators and bolster its balance sheet. The Volcker rule – named after former Federal Reserve Chairman Paul Volcker and part of the Dodd-Frank financial reform law – is expected to limit bank investments in private equity funds and was cited by Switzerland’s Credit Suisse Group AG (NYSE:CS) last summer as a reason for exploring a sale. …With USD 218 billion of capital under management, The Blackstone Group L.P. (NYSE:BX) is the world’s largest alternative asset manager, active in real estate, private equity, corporate credit and hedge funds. Like its peers, it has been seeking to expand its investment platform to manage more investor money.
MF Global Trustee Sues Corzine Over Firm’s Collapse (NYTimes)
A bankruptcy trustee has sued Jon S. Corzine and other former MF Global executives, claiming they were “grossly negligent” in the lead up to the brokerage firm’s collapse. The action by the trustee, Louis J. Freeh, comes just weeks after he agreed to postpone the lawsuit and enter mediation with Mr. Corzine. It is unclear when those talks broke down. In the complaint filed in United States Bankruptcy Court late on Monday, Mr. Freeh took aim at Mr. Corzine, a former Democratic senator and New Jersey governor who became MF Global’s chief executive in 2010. Mr. Freeh, the trustee for MF Global’s parent company and a former director of the F.B.I., also sued two of Mr. Corzine’s top deputies: Bradley I. Abelow, the chief operating officer, and Henri J. Steenkamp, the chief financial officer.
Physicist hedge fund guru posts lukewarm returns (CBSNews)
Having recently read James Weatherall’s book “The Physics of Wall Street” I was interested in the article “Against the Current,” about Andrew Tsai, a physicist turned hedge fund manager which appears in the April 2013 issue of Institutional Investor. Tsai is the chief investment officer of the Chalkstream Capital Group, a fund of hedge funds that was founded in 2003. The article discusses how Tsai needs to be exceptional as his clients are almost entirely partners and executives at hedge funds and major banks as well as asset managers who have entrusted Tsai with their personal capital. These are obviously people with high expectations. The fund’s strategy is to “traffic in areas where there is not a lot of capital chasing for returns.” Tsai added: “We think traditional asset allocation is very dangerous. We are not in the business of filing buckets: we are in the business of finding opportunities.”
