Hedge Funds 01 (Aug 08 - Nov 15)

[millionairemind]

Published October 14, 2009

Hedge fund industry faces big shake-out
With values running 25% below peak, they can't charge full fees


(NEW YORK) Hedge funds have rallied from last year's stunning losses, yet hundreds of managers face some tough decisions in the coming weeks.

The fund industry suffered one of its worst years ever last year, when the average hedge fund fell by 19 per cent amid tumbling markets, exacerbated by record withdrawals.

Yet even as managers quickly mounted a comeback - the average fund rose 17 per cent over nine months - roughly 10 per cent of the industry's 8,000 hedge funds may remain deep in the hole by year-end.

'The high water mark outlook will be a lead story going into the last six weeks of the year,' Credit Suisse global head of prime services Philip Vasan said in an interview.

Before markets began rallying in March, a number of Wall Street executives warned that a large chunk of the industry may face pressure to shut down or suffer staff departures.

The reason: funds cannot charge full fees, usually 20 per cent of profits, until they exceed their 'high water mark' or peak value.

Without these performance fees, fund managers may be hard pressed to pay annual bonuses or even meet overhead costs. In some cases, firms will close funds. Star traders may defect to rivals or, increasingly, strike out on their own.

'A number of high quality people who would never have left their firms are deciding that if they have to work for free, they might as well build a business for themselves,' said Deutsche Bank global prime finance co-head Barry Bausano.

Credit Suisse research determined that about 45 per cent of the funds were at or above their high water marks going into last month. Another 20 per cent were down by 10 per cent, or within striking distance in a reasonable period.

But a quarter of all funds were 20-30 per cent down. At the low end of that range, managers needed to rally 43 per cent just to break even.

With so much at stake, Wall Street is poring over hedge fund performance data. And so far this year, strong returns have quieted dire predictions, especially among the largest and best known funds.

It is difficult to generalise in an industry with dozens of different strategies and where individual fund performance varies so widely.

Even within the ranks of the hardest hit funds, there are many circumstances that could convince managers and their clients to stay the course. For one thing, funds will consider if they are close and can surpass peak levels early next year.

Some firms are attracting new capital, which pay performance fees at lower fund values. Others have renegotiated terms with investors, agreeing to lower fees for an extended period rather than receive no fees this year.

The big shake-out also will not be felt equally across the board. Among funds with less than US$500 million: 12 per cent were down 30 per cent or more, compared with 6 per cent of big funds.

'Most of the consolidation will be outside the top 5 per cent of funds,' Mr Bausano said. 'So will a couple of thousand funds close? Absolutely; but the majority will be three guys in a garage . . . rather than more established managers.' - Reuters

[kennynah]

no wonder..i get calls from such people who now have moved to taiwan and china..to try swindle folks...

[winston]

Hong Kong Hedge Funds Now Manage $55.3 Billion

The government's first survey in three years finds the number of funds operating in the city has grown over the past year, but the amount they manage has shrunk

By Jame DiBiasio

As of March 2009, Hong Kong hosts 209 active hedge-fund management firms that run a total of 542 funds and $55.3 billion in assets, according to Hong Kong's Securities and Futures Commission (SFC).

Leverage is also low, with 68.8% of hedge funds reporting leverage of 100% or less, and only 8% reporting leverage of over 200%.

http://www.businessweek.com/globalbiz/c ... 629770.htm

[kennynah]

Talking about leverage.. Supposing yor brokerage allows you to trade an underlying position that has a face value $100 by posting a margin of a mere $1, we say the leverage is 100:1 or 100 times or 10,000%, right?
What kind of leverage do you think our wise MAS is giving retail stock punters here?

Infinite % is the answer !!! ( bcos 100 / 0 )

Really cockup !!!

[winston]

For every one that is caught, how many is still at large ? And how many S-Chips con-men are still free ?

Insider Trading Arrests Rock Wall Street

NEW YORK (TheStreet) -- Even as Oliver Stone shoots scenes from his Wall Street sequel in Manhattan's financial district, hedge-fund manager Raj Rajaratnam, one of the nation's wealthiest people, was arrested Friday on charges of insider trading.

Rajaratnam, founder of the Galleon hedge fund, is alleged to have conspired with six other people to make illegal trades -- some of which involved shares of Google(GOOG Quote) and IBM(IBM Quote) -- that brought in $20 million in profits, according to prosecutors in the U.S. attorney's office for the Southern District of New York

Among the other alleged conspirators were a manager at the investment arm of chip maker Intel(INTC Quote), a director at the influential consulting firm McKinsey, and an executive at IBM's Systems and Technology group.

Two criminal complaints filed in U.S. District Court in Manhattan indicated that an unidentified person had worn a wiretap as the case unfolded, recording conversations between the defendants.

Cinematic dialogue peppered the criminal filing. "I'm dead if this leaks," one of the defendants is quoted as having said. "I really am ... and my career is over. I'll be like Martha (expletive) Stewart."

According to Forbes' ranking of the richest people in the U.S., Rajaratnam, a former asset manager at Bear Stearns' hedge fund, has a net worth of some $1.3 billion.

The six defendants are also accused of making illicit trades in stock of Polycom(PLCM Quote), Hilton Hotels, which was taken private by Blackstone(BX Quote) in a leveraged buyout in 2007, and Advanced Micro Devices(AMD Quote).

http://www.thestreet.com/story/10612856 ... L_wal_html

[kennynah]

so raja became a quitter and left singapore ah ? cannot tahan his woman boss? same rajaratnam ?

[millionairemind]

When you already have $1B, what is $25MM?? Chump change.... Y do this?? Greed knows no bounds.

Oct 17, 2009
Billionaire's insider trade

NEW YORK - ONE of America's wealthiest men was among six hedge fund managers and corporate executives arrested on Friday in a hedge fund insider trading case that authorities say generated more than US$25 million (S$34.7 million) in illegal profits and was a wake-up call for Wall Street.

ACCORDING to a criminal complaint filed in US District Court in Manhattan, Rajaratnam obtained insider information and then caused the Galleon Technology Funds to execute trades that earned a profit of more than US$12.7 million between January 2006 and July 2007.

Raj Rajaratnam, a portfolio manager for Galleon Group, a hedge fund with up to US$7 billion in assets under management, was accused of conspiring with others to use insider information to trade securities in several publicly traded companies, including Google Inc.

US Magistrate Judge Douglas F. Eaton set bail at US$100 million to be secured by US$20 million in collateral despite a request by prosecutors to deny bail. He also ordered Rajaratnam, who has both US and Sri Lankan citizenship, to stay within 110 miles (177 kilometres) of New York City.

Rajaratnam, 52, was ranked No. 559 by Forbes magazine this year among the world's wealthiest billionaires, with a US$1.3 billion net worth.

Rajaratnam - born in Sri Lanka and a graduate of University of Pennsylvania's Wharton School of Business - has been described as a savvy manager of billions of dollars in technology and health care hedge funds at Galleon, which he started in 1996.

The firm is based in New York City with offices in California, China, Taiwan and India. He lives in New York. -- AP

[iam802]

List of positions under Gelleon.

http://www.sec.gov/Archives/edgar/data/ ... gt0209.txt

Note:
- date 2-3 months back
- so, positions may have changed

[winston]

Very quick thiinking 802. I was just wondering whom did they invest in Asia ..

========================================================

INTERVIEW-UPDATE 2-Galleon Asia stays liquid as eyes redemptions

* Asia fund has reduced leverage in past few days
* Asia fund not subject to SEC probe
* Asia's multi-strategy fund manages around $500 mln
* U.S. Galleon's founder charged with insider trading
* Lanka stocks drop 4 pct on redemption concerns; recover (Adds analyst quotes, Lanka shares, background)

By Saeed Azhar SINGAPORE, Oct 21 (Reuters) - Galleon Asia is keeping its $500 million Asia hedge fund highly liquid ahead of likely calls from investors to withdraw money, after the founder of its U.S.-based parent was charged with insider trading.

The comments underscore the uphill task faced by funds under the Galleon group, as managers struggle to convince investors about keeping their money with them after Galleon's tangle with the law.

"It is reasonable to expect there will be requests for redemptions," said David Lau, CEO of Galleon Asia, adding so far there had been no such requests.

"We are highly liquid. All the prime brokers are reaffirming their support for us (the Asia fund)," Lau told Reuters in an interview on Wednesday.

The U.S. Securities and Exchange Commission has charged Galleon's founder Raj Rajaratnam, the 52-year-old Sri Lanka-born billionaire, and executives from other U.S. companies with the largest hedge fund insider-trading scheme in the United States.

[ID:nN16545101] "There will be pressure from institutions and endowment fund investors as well as regulators for more insights into the way hedge funds are managed and operated," said Justin Ong, head of wealth management practice for PricewaterhouseCoopers in Asia, about the fallout from the Galleon case.

Galleon Asia's comments added to concerns in Sri Lanka, where investors dumped stocks on fears there could be more selling from Rajaratnam, who is one of the biggest single investors on the Colombo bourse. [ID:COL513568] The Sri Lankan stock market <.CSE> fell 4.2 percent as of 0518 GMT, before erasing the losses on bargain-hunting.

"Nobody knows what's happening with stakes that belong to Raj and Galleon Fund," said Harsha Fernando, CEO at SC Securities in Colombo.

LEVERAGE REDUCED The Asia fund has reduced leverage in the past few days and is prepared for any requests from investors, said Lau, a former joint head of financial markets at DBS Group who was hired by Galleon in mid-2008 to run its Asia unit.

He said most of the investors in the Asia fund are international institutions.

The Asia fund, which runs a long/short equity and macro strategy, is up over 15 percent since the start of the year, he said. Galleon Asia has a staff of 16 people including analysts and traders.

Lau said the Asia fund is not subject to any investigations by the SEC. "The centre of the tsunami is not here," he said.

"Where we have clear evidence that a financial institution has breached our laws and regulations, we will hold the financial institution to account," a spokeswoman of the Monetary Authority of Singapore, the country's financial regulator, said in response to queries.

Lau said Galleon has not put restrictions on investors in the past who want to withdraw money.

"We have never gated anyone... we do not intend to," he said.

The Galleon probe comes as the hedge fund industry is recovering from a tough period following last year's collapse of Lehman Brothers and the uncovering of the fraud by epic swindler Bernard Madoff.

Investors withdrew $250 billion from hedge funds between October and March, and many funds that had invested in hard-to-sell assets put up gates or suspended redemptions entirely.

In the United States, dozens of employees at Galleon Group are hunting for new jobs as investors debate how to react after the hedge fund's founder was charged.

[winston]

Hedge-Fund Assets Rose $34 Billion in September on Market Gains By Tomoko Yamazaki

Oct. 22 (Bloomberg) -- Hedge-fund assets increased by about $34 billion in September, a fifth straight monthly gain, helped by improved investor confidence and global stock market gains, Eurekahedge Pte said.

Net inflows into hedge funds totaled $15.1 billion in September, while performance-based gains made up $18.7 billion, bringing total assets under management to $1.43 trillion, the Singapore-based research firm said in a report posted on its Web site today. The Eurekahedge Hedge Fund Index, tracking more than 2,000 funds globally, gained 2.6 percent in September, bringing its year-to-date advance to 16 percent.

End of Redemptions

Hedge funds, which suffered their worst year on record in 2008, completed their best first nine-month performance in a decade in September.

The five consecutive months of increased asset flow into the industry indicates the period of net redemption seen through the second quarter from the end of 2008 is over, Eurekahedge said. The firm forecasts the overall assets of the industry will surpass $1.5 trillion-mark by the end of the year.

Assets of funds investing in North America and Europe were the leading regions in terms of absolute capital increase as all five regions reported positive net flows for the month, the report showed.

Latin America rose 3.5 percent from August to $51 billion, the biggest increase among the five geographical mandates. Manager allocations to Japan had the smallest percentage increase in assets, gaining 0.6 percent.

Funds that trade futures, known as commodity trading advisers, attracted the most capital among strategy categories in percentage terms, the report said.

Funds employing so-called long-short equities, which bet on rising and falling stock prices, had net asset flows of $7.1 billion helped by investors’ appetites for risk, the report said.

http://www.bloomberg.com/apps/news?pid= ... 5ZdeFStWCs