Hedge Funds 01 (Aug 08 - Nov 15)

[winston]

Asia-focused hedge funds hit record high in July-Eurekahedge

* 125 hedge fund start-ups between Jan and July - Eurekahedge
* 25 pct of funds headquartered in UK, 19 pct in HK
* 40 pct of Asia-focused funds have below $20 mln in AUM

SINGAPORE, Sept 22 (Reuters) - The number of hedge funds investing in Asia hit a record high of 1,278 in July, Singapore-based fund tracker Eurekahedge said on Wednesday, as new funds look to raise their exposure to Asia's fast-growing economies.

This compares with around 1,200 funds in existence at the end of 2009 and exceeds the previous peak of 1,240 in 2007.

Hedge funds have been making a beeline for Asia, attracted by strong economic growth and lighter regulation in Singapore and Hong Kong at a time when Western countries are looking to tighten control of hedge funds following the financial crisis.

"The 125 Asian hedge fund launches in the first seven months of the year represent a return to the healthy growth seen before 2008," Eurekahedge said in a report.

It said the rise was a result of growing interest in Asia as well as the ease in setting up hedge funds in the region compared to several years ago.

Other factors cited by the fund tracker included increasing availability of complex financial products in Asian markets, lower set-up costs compared with the West and efforts by local governments to attract global fund managers.

Most Asia-focused hedge funds continued to focus on stocks, although the proportion adopting long/short equities strategies fell to 44 percent compared with 48 percent at the end of July 2008 and 60 percent in July 2004.

Eurekahedge estimated that one quarter of hedge funds investing in Asia are headquartered in Britain. Another 19 percent are based in Hong Kong, 13 percent in Singapore and 11 percent in the United States.

Australia and Japan accounted for 9 percent and 6 percent, respectively.

Hedge funds investing in Asia remained puny relative to their European and North American counterparts, with 40 percent of the funds reporting assets under management of $20 million or less.

Another 26 percent of Asia-focused funds had $21-50 million in assets and just 1 percent had assets in excess of $1 billion.

Asia-focused funds have performed better than global funds in August, but their overall performance so far this year has lagged.

The Eurekahedge index on Asia-focused hedge funds excluding Japan was up 0.66 percent in August, but was flat for the year.

That compares with a 0.46 percent rise in the Singapore-hedge fund tracker's global index in August. Still, the global index is up 1.71 percent year-to-date.


Source: Reuters

[winston]

Singapore hedge fund Amoeba Capital to close down

SINGAPORE, Oct 8 (Reuters) - Amoeba Capital Partners, a Singapore-based hedge fund manager, is shutting down and will return money to investors by the end of the year from its sole $135 million long/short equity fund, its founder said on Friday.

Ashutosh Sinha, chief investment officer of Amoeba Capital Partners and a former Morgan Stanley portfolio manager, told Reuters he needed a break.

"I wanna take some time off after working non-stop as a fund manager for more than 15 years," he said.

"It is a very simple story. By 31st December we will return all the capital to our investors." The long/short fund, which started operation in 2006, was up 5.1 percent year-to-date by the end of August, but Sinha said there were redemptions which scaled down the size of the fund from a peak of $750 million.

Prior to founding Amoeba Capital in 2006, Sinha was managing director, head of Asian investments, and co-portfolio manager for global emerging markets at Morgan Stanley .

The closure of Amoeba Capital was earlier reported by financial website AsianInvestor.


Source: Reuters

[winston]

The simple difference between $400,000 and $4.8 million

We often warn our readers of the impracticality of the "two and 20" most hedge funds charge their clients... That's 2% of total assets and 20% of any gains. This fee structure guarantees the fund manager gets paid regardless of performance.

For example, a manager with $1 billion under management earns $20 million just for walking in the door on January 1. And the 20% "kicker" encourages excessive risk.

A recent article in the British newspaper Telegraph quantifies how damaging "two and 20" is to the investor using Warren Buffett's historical returns. An excerpt from the article is below:

As you are aware, Warren Buffett has produced a stellar investment performance over the past 45 years, compounding returns at 20.46 per cent per annum. If you had invested $1,000 in the shares of Berkshire Hathaway when Buffett began running it in 1965, by the end of 2009 your investment would have been worth $4.8m.

However, if instead of running Berkshire Hathaway as a company in which he co-invests with you, Buffett had set it up as a hedge fund and charged 2 per cent of the value of the funds as an annual fee plus 20 per cent of any gains, of that $4.8m, $4.4m would belong to him as manager and only $400,000 would belong to you, the investor. And this is the result you would get if your hedge fund manager had equaled Warren Buffett's performance. Believe me, he or she won't.

So, $1,000 invested alongside Buffett earned you $4.8 million over the past 45 years. That same $1,000 invested with Buffett while paying "2 and 20," earns $400,000. I know the numbers seem unbelievable, but it shows you the power of compounding.

http://www.growthstockwire.com/

[winston]

Long article. Link below:-

Betting on Beijing By MICHAEL SHARI

Shanghai-based hedge-fund manager Frederic Durr has turned in stellar results by buying smaller companies in markets the government favors.

WHEN HEDGE-FUND MANAGER Frederic Durr launched his Maoming Fund in Shanghai with just $8 million in March 2006, he didn't bother to look at China's best-known companies.

He figured that large-caps like PetroChina (PTR) or Industrial and Commercial Bank of China (1398.Hong Kong) already were covered by so many analysts that he'd never find a unique investment angle.

Instead, this opportunistic, value-oriented Swiss investor has recorded strong returns by roaming China's vast mainland in search of lesser-known companies with midsize market caps of $2 billion to $3 billion.


http://online.barrons.com/article/SB500 ... =djembwr_h

[winston]

Who cares about the Hedge Funds ? It's the machines that's providing the Liquidity ..

You're Not Going to Like What Happens Now the FBI Is Involved By Jeff Clark

The game ends when the kid who owns the football gets called home for dinner.

That's the rule we followed as kids on the playground. It's the same rule we better follow today on Wall Street.

You can't play football without a ball. And you can't trade without liquidity.

The kids who've provided liquidity to the market for most of the past year just got called home.

The FBI raided the offices of several prominent hedge funds earlier this week. It's claiming the hedge funds engaged in insider trading, front running, and a variety of other abuses that gave them an edge over the investing public.

Duh.

We all know this stuff happens on Wall Street. And we all know nothing is ever going to come from these allegations.

What is going to happen, though, is the hedge funds that provided liquidity to the stock market are going to take their ball and go home. They're not going to cheat when we've tripled the number of referees on the field and all the new refs are charged with watching each of their players. And if the hedge funds can't cheat, they can't make the oversized returns that justify the enormous quarterly bonuses.

So for the next few months, or until the end of the FBI investigation, hedge fund portfolio managers are home for dinner. Without the liquidity the hedge funds provide, the stock market is likely to be especially volatile.

The public might cheer the FBI's attempt to level the playing field. After all, once you kick the cheaters out of the game, you get a more honest score. That should be a good thing. Somehow, though, I suspect the investing public isn't quite prepared for such honesty.

An honest market doesn't have the Fed propping up asset prices. It doesn't have firms like Goldman Sachs making money on 100% of its trading activities. And it doesn't have algorithmic trading programs restricting the daily range of the S&P 500 to just two or three points.

An honest market rises and falls.

For most of this year, while the hedge funds have engaged in activities the FBI considers illegal, investors have enjoyed the rise. It'll be interesting to see if their enjoyment continues through the end of the year.

http://www.growthstockwire.com/

[winston]

Racing Against The Hedge Funds By Joseph Meth

I was interested to read that hedge funds have found the past year as trying as I did. The headline on Marketwatch.com was In risk-on, risk-off year, hedge funds come up short” and the lead paragraph stated that

“Several of the largest hedge funds lagged the return on equities and bonds this year as big market swings combined with massive monetary stimulus to disrupt trading strategies.?”

An index of managers compiled by Chicago-based Hedge Fund Research Inc. rose 7.11% this year, through the end of November and early December as compared with a 7.88% gain in the S&P 500 Index.

Those hedge funds that only invest in equities returned even less at 6.89%. The article went on to point out the returns up to the beginning of December for some of the larger and better-known all equity head funds:

One of the factors contributing to the less than stellar performance of many hedge funds this year were this year’s violent market swings.

Tech stocks will probably continue to be strong in the first half. See “Inverted Head-and-Shoulder Potential on NASDAQ Composite“; the NASDAQ composite is up 12.8% since that post.

There’s “The Resurrection of Financials“. Have you seen what XLF has been doing over the past several days?

Finally, how about “Steels: Your Second Chance“. The five steel stocks in that post are up an average of 4.84% over three trading days and none are down.

http://www.dailymarkets.com/stock/2010/ ... dge-funds/

[winston]

Sounds like arthridis ..

Singapore hedge fund Artradis to close, founder to start new funds

SINGAPORE, Jan 25 (Reuters) - Atradis Fund Management, once Singapore's biggest hedge fund manager with about $4.5 billion, plans to wind down its operations and return money to investors after it lost money in the last two years, co-founder Stephen Diggle said on Tuesday.

Diggle, however, plans to remain in the industry by turning his family office into a fund manager. He told Reuters he would set up two new funds and take over two of Artradis's existing funds.


Source: Reuters

[winston]

Tiger Asia Hedge Fund `Disappointed' With 0.5% Gain in 2010 as Shorts Hurt By Gillian Wee

Tiger Asia Management LLC, the New York-based hedge-fund being investigated by U.S. and Hong Kong regulators, told clients it is disappointed with its 2010 results after many of its short positions performed poorly.

The fund gained 0.5 percent after fees in the year ended Dec. 31, Tiger Asia told investors in a Feb. 1 letter signed by founder Bill Hwang. The fund beat benchmarks for China and Japan and lagged behind markets in Hong Kong and Korea, according to the letter, a copy of which was obtained by Bloomberg News.

“We are disappointed with 2010 performance,” Hwang said in the letter. “Although many of our positions last year were profitable, and our short positions generally underperformed their markets, shorts were a major drag on returns.”.

Assets under management declined to about $2 billion from $3 billion as of Sept. 30, according to a person familiar with the fund who asked not to be named because the information is private. Tiger Asia told clients in October that it had received a subpoena from the U.S. Securities and Exchange Commission following allegations of insider trading from Hong Kong’s securities regulator.

The firm is also being investigated in a parallel review by the U.S. Attorney’s office for the district of New Jersey, according to a Nov. 9 note to investors.

Shawn Pattison, a spokesman for the hedge fund, declined to comment.

Tiger Asia’s 0.5 percent gain compares with a 6.4 percent increase in Hong Kong’s Hang Seng Composite Index and a 22 percent jump in Korea’s Kospi, according to the letter. The CSI 300 in China dropped 12.5 percent and the Topix in Japan lost 1 percent.

Investigations

The firm has no new developments to report regarding the Hong Kong and U.S. investigations and is cooperating with investigators, Hwang told clients in the Feb. 1 letter. The firm is “unable to predict when the investigations will be concluded or what regulatory or other outcomes might result,” he said in the note.

John Nester, a spokesman for the SEC and Rebekah Carmichael, a spokeswoman for the U.S. Attorney’s office in New Jersey, declined to comment.

The Hong Kong Securities and Futures Commission in August 2009 applied for a High Court injunction to freeze some Tiger Asia assets, saying the firm had engaged in insider dealing and market manipulation involving China Construction Bank Corp. shares. In April, the Hong Kong regulator sought to ban Tiger Asia from trading there, the first time it appealed to a court for such a prohibition.

China Shorts

More than 90 percent of Tiger Asia’s shorts are in China, Hwang said in the letter. Short sellers profit from price declines by selling borrowed securities and replacing them with stock bought at lower levels. In recent months, the firm has “meaningfully added” to its holdings of shorted shares in the telecommunications, media and Internet sector in China and projects initial public offerings to continue in those industries, Hwang said.

The firm recently added a “long position in a consumer durable stock that has been weak due to the regulatory environment in the real estate sector,” which is based in Shenzhen, Hwang said.

Tiger Asia is also focused on the “staggering growth” in the Chinese automobile sector and plans to increase its holdings in the “foreseeable future,” he said in the note.

Gloomy Japan

In Japan, Tiger Asia continues to “focus on opportunities in media, mobile telecom and social networking stocks,” and has limited shorting companies as the firm believes that most prices already reflect the country’s “gloomy economic reality,” Hwang said.

Tiger Asia has fewer holdings in Korea compared with China and Japan because low trading volumes and the continued ban on shorting financial stocks have made the market less attractive, Hwang said. The portfolio has less than 10 percent of its capital in Korea, according to the letter.

Outside Asia, the firm owns some U.S. stocks that have “significant Asia exposure and a high correlation to some of our Asia positions,” making up about 9 percent of capital at the end of last year, Hwang says in the letter.

Tiger Asia is one of the so-called Tiger Cubs, a group of hedge-fund managers that received backing from Julian Robertson. The investor founded Tiger Management LLC in 1990 and built it into one of the world’s largest hedge-fund managers in the late 1990s before returning clients money in 2000.


http://www.bloomberg.com/news/2011-02-0 ... -hurt.html

[winston]

May 15 was the deadline for Hedge Fund redemptions for June 30.

Wonder how's the redemption ? Have not seen any news article yet ...

[winston]

Tiger Asia Fund Said to Fall 16% on China Stock Shorts By Gillian Wee

Tiger Asia Management LLC, the New York-based hedge fund being investigated by U.S. and Hong Kong regulators, fell 16 percent this year, hurt by bets against Chinese stocks, said a person with knowledge of the firm.

The decline through May 15 was softened by a 10 percent gain in the first two weeks of this month, according to the person, who asked not to be identified because the fund is private. Assets dropped to $1.3 billion in April from $2 billion on Dec. 31 and $3 billion at the end of September.

Bill Hwang, who founded Tiger Asia in 2001, had more than 90 percent of his short positions in China in the first quarter, betting that prices for financial, Internet and media companies would fall, the person said. Hedge funds that both buy stocks and sell short fell an average of 6.4 percent through May 13, according Chicago-based Hedge Fund Research Inc.

“It’s extremely difficult for managers to be short,” said Stewart Massey, chief investment officer at Massey, Quick & Co. in Morristown, New Jersey, which manages $3 billion on behalf of endowments, foundations and wealthy clients. “Valuations for companies that look fairly valued or even overvalued keep rising.”

http://www.bloomberg.com/news/2011-05-2 ... rect-.html