Hedge Funds 01 (Aug 08 - Nov 15)

[winston]

Taking the (Investing) Road Less Traveled By Steve Cordasco

NEW YORK (TheStreet) -- I believe the portfolios of retirees and near-retirees can benefit from alternative investments. But I'm not sure that hedge funds really reprsent the alternative investment asset class.

Hedge funds seem like a way for Wall Street's brightest stars to make obscene amounts of money by doing what they have always done, but with a lot less transparency.

http://www.thestreet.com/story/11725472 ... L_atb_html

[winston]

INTERVIEW-Ex-Credit Suisse trader says Asia hedge fund returns 60 pct

* Trader Charlie Chan says Asia macro fund delivers big returns
* Happy to stay small, not actively seeking investors
* Taken some money off table ahead of year-end

By Nishant Kumar SINGAPORE, Oct 23 (Reuters) - Charlie Chan's Splendid Asia macro hedge fund is living up to its name, with the former Credit Suisse trader putting his returns at 60 percent this year, as bets on real estate investment trusts (REIT), bonds and currencies pay off.

It's on a different scale to his previous role at the Swiss bank, where Chan's 25-year-plus career culminated in him heading a team running portfolios of over $10 billion. For Splendid Asia, 53-year-old Chan is managing a relatively small $80 million, about half of which is his own money.

The Singaporean is one of many traders leaving investment banks to set up hedge funds, as U.S. regulators seek to ban banks from trading their own money and weak markets have banks looking to trim operations.

He is also among the few who are doing particularly well.

His Asia-focused fund, launched in August 2011, has already more than doubled from $37 million at launch.

"We took risk when nobody else wanted to," Chan told Reuters in Singapore last week. "REIT was a big major long and then regional equities. We have not sold anything at a loss."

One major winner was Cambridge Industrial Trust , a Singapore-listed REIT that has surged about 40 percent this year. He has also gained from trades in Singapore Airlines and Capitaland .

Chan favoured industrial REITs as they were easier to value and when he started buying them last year, some traded at 30-40 percent discount to book value. At one point, REITs made up more than half his portfolio. While he has booked some profits, REITs are still about a third of his portfolio.

Chan's success contrasts with the broader hedge fund industry. The Eurekahedge Asia index up 4 percent through September, and Asian macro hedge funds, which focus on major economic trends and events, have gained just 0.7 percent.

"He is what I think should be a true hedgie in Asia. He has seen the Asian markets in currencies evolve, has worked through different market cycles, and most importantly, is diligent with his on-the-ground research," said Aradhna Dayal, head of Asia for industry tracker HedgeFund Intelligence in Hong Kong.

"It is commendable to have such outlying returns. If you speak to global investors today, that is the kind of niche manager they are looking for," said Dayal, who said Chan had a strong track record as a proprietary trader at Credit Suisse.

Over an Indian lunch where topics ranged from noodle soup to internet speeds and politics but always returned to his trades, Chan told Reuters he made money every year but two during his time at Credit Suisse, averaging double-digit returns.

Chan said bets on Singapore government bonds, Indian and Indonesian stocks have paid off, without disclosing details of individual trades. He also made money going long on currencies such as Singapore dollar and trading the Indonesian rupiah .

His winning trades were boosted by two-times leverage, enhancing the overall returns for the hedge fund to 60 percent.

He has taken some money off the table expecting markets to quieten down ahead into the end of 2012, but he still likes government bonds, with Singapore his favourite due to the fiscal surplus and large foreign exchange reserves.

"So if they have to spend to get out of trouble, they will spend," he said.

Chan runs his firm with former Credit Suisse colleagues Lam Hoi Leong and Albert Neo. He is not looking to raise billions of dollars to manage and has not actively marketed the fund.

"Do I really want to have that higher profile? If people want to come in and invest that's fine," Chan, said.

"They know where to find me. I think money will come." He expects about another $20 million of investment over the next two months, and said his experienced team could manage $400-500 million without losing too much upside.

"I equate it to the Mexican runners going to the Olympics at sea level. They were used to running at 14,000 feet so when you go down to sea level you should have no problem, without the need for performance-enhancing drugs."


Source: Reuters

[winston]

Mission Accomplished by Joshua M Brown

Once again the global conspiracy to trick retail investors so that professionals could trample all over them has done its job, this time it was the Fiscal Cliff hype-a-palooza.

Bank of America Merrill's strategist Savita Subramanian shows that in the last couple of weeks, individual investors have been fleeing stocks at a record rate.

I guarantee you that this has been happening in no small part thanks to the fears over the Fiscal Cliff and the havoc it's been said to mean for America's retirement portfolios.

But guess who's been buying up all the stocks you've been selling?

From Matt Boesler at the Business Insider:

Josh here - according to the report, last week Merrill's private clients (read: rich retail investors) sold a net $1.4 billion worth of stock. Hedge funds came in and bought a net $169 million.

Institutional investors have bought an average of $315 million worth of stocks over the last four weeks while mom & pop have dumped an average of $920 million worth.

It never fails. Cue the Santa Claus Rally.

Mission Accomplished.

http://www.thereformedbroker.com/2012/1 ... omplished/

[winston]

U.S. Hedge fund places $500 million bet on Singapore F&N takeover war
By Saeed Azhar and Nishant Kumar

Multi-strategy hedge funds like Davidson Kempner invest money in several different ways, including betting on the success or failure of an acquisition offer for a public company - a tactic known as merger arbitrage, or "arb" trading.

http://www.reuters.com/article/2013/01/ ... SM20130107

[winston]

Why Top Hedge Funds Can't Outperform the Market By Ben Gersten

Hedge funds are known as the "smart money" on Wall Street, and in the past, that distinction was justified.

For years, hedge funds successfully managed risk and made well-placed bets, leaving their investors with a return they were happy to pay for.

But recently, hedge funds have underperformed the market, earning a return of just 7.32% in 2012, according to research firm eVestment, compared with last year's S&P 500 return of 13.41%.

http://moneymorning.com/2013/01/28/why- ... he-market/

[winston]

Hedge Funds’ Dirty Secret… Exposed! By Louis Basenese

Who Needs Hedge Funds, Anyway?

For years, we’ve been told that the best investment strategies, the ones commandeered by hedge fund gurus, were off limits to us lowly retail investors.

We’re simply not rich enough to deserve a spot in their funds.

Well, consider it a blessing! Turns out, the average hedge fund is nothing more than a high-priced index fund.

http://www.thetradingreport.com/2013/02 ... t-exposed/

[winston]

It's Not Too Late to Get in on the $30 Trillion Mega-Jackpot By Frank Curzio

If you are paying close attention to the "smart money," you may want to take profits here.

"Smart money" is a term used to describe hedge-fund activity. And it's an important indicator… Hedge-fund managers get paid based on performance. So knowing if the smart money is overinvested or underinvested in stocks can help us gauge where the market is headed.

Investment firm Goldman Sachs does a great job tracking this data. It monitors 725 hedge funds. And these funds have $1.3 trillion of gross equity positions…

Last August, the net long exposure for smart money was 43% ("B," in the chart below). That's a low number, considering this indicator usually floats between 40% and 50%. When net long exposure is close to 40%, the smart money is underinvested in stocks. When it's close to 50%, the smart money is overinvested.

In August, hedge funds were underinvested… which is why I predicted stocks would head higher. It was the right call… Since then, the S&P 500 is up about 11%. Small-cap stocks have fared even better – up about 18% in the same time frame.

Goldman just released its latest net long exposure data for hedge funds. At the end of last quarter, the figure had surged to 52% ("C"). That's the most bullish level on record. In fact, the last time net long exposure was near these levels was in the first quarter of 2007 ("A"). A few months later, stocks began to fall – which ultimately led to a 45% collapse in the S&P 500.

To be clear, I don't expect another massive market collapse. Companies are in much better shape today compared to 2008. Plus, the Federal Reserve will do everything in its power to prevent a huge market collapse.

However, the S&P 500 is up 35% over the past 18 months. With most of the smart money as bullish as ever, now may be a good time to trim some of your winning positions.


Source: www.growthstockwire.com

[winston]

Distressed Debt Investing Now a Favorite Move for Hedge Funds By Greg Madison

http://moneymorning.com/2013/05/10/dist ... dge-funds/

[winston]

Former BlackRock employees plan Hong Kong-based fund

Computer models to spot trading opportunities in 13 Asian stock markets

BlackRock, Macquarie Group and Millennium Capital Management former employees are planning a Hong Kong-based hedge fund which will use computer models to spot trading opportunities in 13 Asian stock markets.

Zentific Investment Management, led by chief investment officer Christopher Lee, will start the market-neutral fund early next year, said a statement from HS Group, a Hong Kong-based provider of long-term capital to newer hedge funds, which will be one of its first investors.

The other investors are Zentific partners and unidentified institutions, according to the statement. Mr Lee, who headed BlackRock’s scientific active equity department in Hong Kong, will be joined by head of research Burke Lau, who led Asia and Japan quantitative research at Macquarie Securities.

Michael Friedlander, Zentific’s chief operating officer, used to work for billionaire investor Israel Englander’s hedge-fund firm Millennium, according to the statement. Asia’s hedge fund industry was until recently dominated by long-biased funds, which rely on market rallies for their returns and can’t generate profits in downturns.

Funds that use computer models to process large volumes of information are rare in Asia. “The reason investors like this strategy is because Asia’s markets are so diverse, it’s hard to cover them all comprehensively,” said Michael Garrow, HS Group’s chief investment officer.

There are nearly 8,000 stocks with an individual market value of more than $200 million listed on Asia-Pacific region exchanges, according to data compiled by Bloomberg.

Source: Bloomberg

[winston]

Buzzkill Profs: Hedge Funds Do Half as Well as You Think

Source: Bloomberg

http://finance.yahoo.com/news/buzzkill- ... 47680.html