Hedge Funds 01 (Aug 08 - Nov 15)

[millionairemind]

If that's the case, shouldn't Goldman Sachs and Morgan Stanley be hauled to courts?????

Oct 29, 2009
Galleon paid millions for 'edge'

BOSTON - HEDGE fund firm Galleon Group, whose founder has been charged with insider trading, paid US$250 million (S$351 million) to its Wall Street banks last year and in return received market information that other investors did not get, the Financial Times reported.

New York-based Galleon, which invested US$7 billion at its peak last year, became known for pushing its contacts at banks for hints about market developments such as big buy and sell orders, the newspaper wrote.

The newspaper cited unnamed sources who were familiar with Galleon's trading habits at big New York-based banks.

Hedge funds routinely use Wall Street banks to clear trades, help arrange financing and provide research. Most banks bar their employees from divulging details about clients' trading orders to other clients.

Galleon, however, regularly received updates on market developments and pushed executives at the banks that the fund worked with hard for details that other investors did not have, the Financial Times wrote.

Wall Street banks Morgan Stanley and Goldman Sachs were Galleon's top providers of hedge fund services or prime brokerage. -- REUTERS

[winston]

Hedge fund assets climb back above US$2t

[iam802]

Galleon Asia Employees Said to Hold Discussions With Fortress

http://www.bloomberg.com/apps/news?pid= ... _yPM&pos=6

[winston]

UPDATE 1-HK hedge fund DragonBack sees assets cut by 85 pct
By Parvathy Ullatil

HONG KONG, April 30 (Reuters) - Hong Kong-based hedge fund manager DragonBack Capital has seen a dramatic reversal in its fortunes over the last 12 months, with its assets plunging 85 percent to around $45 million amid continued redemptions from fund of hedge funds.

Last year at this time, assets in the fund were at $316 million, falling to $187 million by year end, DragonBack Asia Chief Executive Robert Lance told Reuters on Friday.

"The AUM gods giveth and they taketh away," said Lance referring to assets under management. "You have to stay philosophical and practical about these things."

"We've met all the redemption requests, never put up any gates, no side pockets and remained very transparent throughout this process," he said.

Lance said the redemption cycle for DragonBack started later than it did for the rest of the industry. The hedge fund manager closed its flagship Asia-Pacific Equity Multistrategy Fund to new investments in August 2008 while assets peaked at close to $600 million by October.

The fund's long volatility strategy flourished as global markets went into a tizzy during the financial crisis, helping it gain 3.75 percent in 2008, placing it in an exclusive club of hedge funds that made money in 2008.

Investors began pulling their money out in the first quarter of 2009, said Lance and redemptions have been quite consistent ever since.

"The challenges we face are not unique to DragonBack. It's common to all Asia-based hedge funds that have a fairly large portion of investments coming from fund of funds," said Lance.

Fund of hedge funds, particularly in Europe, took a big beating in 2009 after global hedge funds fell 19 percent in the previous year, forcing them to quit investments in Asia as they grappled with liquidity problems in their home markets.

LONG VOLATILITY

DragonBack's multi-strategy fund lost 5.84 percent in 2009 as volatility came off and fell a further 3.52 percent as of last week.

DragonBack's other fund, VolAsia, gained 4.92 percent in 2009 and is up 0.5 percent as of 23 April 2010. The multi-strategy fund has $36 million in assets under management, according to recent industry data, while the VolAsia fund manages $9 million.

"The assets decline has been detrimental to the portfolio build out, which is why in recent times our returns have been conservative," said Lance.

2009 was a challenging year for long volatility funds that bet on price swings in financial assets, as global markets surged on hopes of an early economic recovery. Other Asian volatility fund managers such as Singapore-based Artradis Fund Management were also pummeled as volatility crashed.

Hedge funds in Asia, excluding Japan, had a stellar year in 2009, returning close to 40 percent, far outstripping growth in their U.S.-based and European counterparts.

DragonBack had cut its investment team to six members from eight, to bring it in line with its reduced assets base, said Lance.

Lance also said efforts were underway to bolster the fund's assets with capital from the firm's partners, friends and family.

DragonBack was set up in 2007 by Lance, a former Hong Kong-based co-head of equities at Lehman Brothers, Matt Barnett and Philip Tye.

The hedge fund manager is also planning to open up its fund platform, the DragonBack Management Platform, to other funds looking for the infrastructure and support new launches.

http://www.reuters.com/article/idUSTOE63T08S20100430

[winston]

Deadline for June 30 redemption is May 15.

Any news on the level of redemptions this time ?

Any news on the redemptions at John Paulson ?

[millionairemind]

Hedge funds bet big on the falling euro
Hedge funds that made millions from the implosion of America's subprime market are betting on a similarly dramatic collapse of the euro.

By Louise Armitstead
Published: 11:09PM BST 22 May 2010

Hedge funds, including Hayman Advisers and Matrix Group, have told investors that they expect the sovereign debt crisis to worsen despite the €110bn (£79bn) bail-out by the International Monetary Fund, the European Union and the European Central Bank.

Anxiety about the financial health of Europe increased yesterday after Spain’s national bank was forced to take control of CajaSur, a savings bank ridden with distressed property debt, after a rescue merger with a rival collapsed.

Traders and brokers told The Sunday Telegraph that hedge funds are using a range of financial instruments to bet that the value of the euro will fall. One trader said: “Shorting the euro is the biggest bet in town.

“We’re seeing big volumes in credit default swaps and short selling in equities that are exposed to the euro.”

Gennaro Pucci, manager at Matrix, which manages £3bn, generated 19pc returns last month in its €110m Global Credit Fund on bearish euro bets. Mr Pucci told Bloomberg: “The ECB is buying debt at artificial levels, but that won’t solve structural problems.”

Nick Swenson, manager of US-based Groveland, who made millions of pounds during the credit crisis, said he started buying credit-default swaps on Spanish, Italian and Irish government bonds in March.

Kyle Bass at Hayman, who made $500m in 2007 betting on the implosion of subprime mortgages, told investors: “The EU and the IMF went all-in with a bad hand in the highest stakes game of financial poker ever played with the world.”

There is evidence that bets against the euro are being placed by important investors around the world, which last week took the euro to four-year lows on fears Greece, Spain and Portugal may be forced to leave the single currency.

In Tokyo, the powerful Kokusai Asset Management has reportedly sold down euro assets in its $60bn (£41bn) Global Sovereign Open fund in favour of safer investments. The fund, which had been the biggest investor in Greek bonds in 2009, sold its entire holding in the troubled asset class in December.

According to the latest data from America’s Commodity Futures Trading Commission, there were over 100,000 more contracts from traders betting that the euro would fall rather than it would rise.

Two weeks ago, the number of contracts placed by speculators expecting the euro to fall in value hit a record high of 113,890.

Last week, Angela Merkel, the German Chancellor, tried to ward off speculators by banning so-called “naked” short selling of some bonds and derivatives. But traders warned the move had only served to panic the markets and the euro was likely to be a target for bearish bets again this week.

On Friday, European finance ministers agreed a strategy to overhaul the EU’s single currency rules, committing themselves to implement greater budgetary discipline by strengthening the euro’s Stability and Growth Pact.

Meeting with Mrs Merkel, David Cameron reiterated that Britain had no plans to join the euro and had the right to veto any treaty.

[winston]

Asia hedge funds 2010 gains wiped out after poor May-Eurekahedge

SINGAPORE, June 9 (Reuters) - Asia-focused hedge funds slipped into the red for 2010 after a poor performance in May, according to preliminary data from Eurekahedge.

The Singapore-based fund tracker said late on Tuesday its indices showed hedge funds focusing on Asia excluding Japan lost an average of 4.86 percent during the month of May, pushing total returns for 2010 to minus 3.15 percent.

Hedge funds around the world lost an average of 1.88 percent in May but are still up 1.3 percent from the end of last year.

Eurekahedge had estimated earlier that hedge funds with Asia ex-Japan mandates had assets of $105 billion at end 2009, or about 7 percent of global hedge fund assets of around $1.5 trillion.


Source: Reuters

[winston]

Stanley Druckenmiller is hanging it up.

Facing the first down year in a 30-year career as a hedge-fund manager (his main fund is down about 5% this year), Druckenmiller has decided to return his clients' capital and retire.

We think you'll see more of this – that is, more hedge funds going out of business – as the global credit bubble deflates.

Druckenmiller's career happens to correlate perfectly with the largest inflation in history. As credit multiplied between 1980 and 2010, folks like Druckenmiller were paid unbelievable sums for managing the resulting capital flows. But... the credit spigot has been tightening up, at least for private capital.

Now, the only bubble left is the one getting blown up by Washington in the form of Treasury obligations.


www.growthstockwire.com

[winston]

Hedge funds shrink on outflow in July

(BOSTON) The global hedge fund industry shrivelled a little more in July when investors pulled out nearly US$3 billion after the loosely regulated portfolios posted losses in May and June, researchers reported on Tuesday.

Assets stood at US$1.53 trillion, their lowest level since November 2009, according to data released jointly by TrimTabs and BarclayHedge, firms that track performance and flow data.

'Hedge funds posted a positive return in July, but they did not regain the ground they lost in May and June,' said Sol Waksman, founder and president of BarclayHedge. 'They also underperformed the S&P 500 by five percentage points,' he added.

Worried about a slower than hoped-for economic rebound, investors were quick to cut risk in their investment portfolios by pulling US$1.9 billion from funds specialising in emerging markets, the report found.

Meanwhile funds specialising in fixed income strategies - often favoured during uncertain economic times - pulled in US$1.2 billion.

Commodity trading advisers, who generally let computer models drive their trading moves, saw inflows of US$3.8 billion.

The researchers had predicted in July that investors would react to May's tumult for weeks to come and that redemptions would pile up later this year because many hedge funds allow investors to get out only periodically.

Source; Reuters

[winston]

Hedge Fund Closure Rate May Rise to 20% on Lack of Capital, Merrill Says
By Bei Hu

As much as 20 percent of hedge funds globally may be liquidated by the first quarter because smaller managers are starved for fees and new capital, according to Bank of America Corp.’s Merrill Lynch & Co. unit.

Hedge fund managers overseeing less than $100 million may be the worst hit, said Justin Fredericks, New York-based head of U.S. capital introductions, a prime brokerage team that brings together hedge funds and potential investors.

Hedge funds globally returned on average 1.65 percent this year, according to Hedge Fund Research Inc., headed for the third-worst annual return since the Chicago-based company started to track data in 1990 on concern that the recovery in economic growth may falter.

About 93 percent of the $9.5 billion net inflows into the industry in the second quarter went to managers overseeing $5 billion or more, said HFR.

“Going into the year-end, there will be significant closures and we estimate it could be as high as 20 percent,” Fredericks said in an interview Sept. 17 in Hong Kong. “A large portion of managers are still below high-water marks. Performance is flat and money hasn’t been flowing to smaller managers.” High-water mark refers to the historical peak net asset value of a hedge fund.

Hedge fund liquidations as a percentage of the total number of funds will rise from about 15 percent in each of the last two years because most of the new money coming into the industry is going to the largest managers, said Fredericks.

Industry Assets

The closures are not expected to have a significant impact on overall industry assets under management because managers overseeing $100 million or less control a small percentage of the total, said Fredericks, who was attending a hedge fund capital introduction conference organized by Merrill Lynch. Closures will be offset by new fund starts, with the total number of managers to remain stable, he said.

About 53 percent of all hedge fund firms manage less than $100 million, controlling between them 1.7 percent of industry assets as of June, according to HFR data.

There were almost 7,000 hedge funds, excluding funds of hedge funds, in the $1.65 trillion global industry at the end of June, according HFR. The industry attracted $23.3 billion of new money from investors in the first half, HFR said.

Twelve of the 15 largest U.S.-based hedge fund managers grew their assets significantly over the past year, said Fredericks.

About 40 percent of hedge funds are still under their high- water marks, making them unable to charge incentive fees for possibly the third consecutive year, he said.

Pension Funds

Small funds run by managers who oversee multiple funds also are more likely to be liquidated, Mairead Kenny, Merrill Lynch’s London-based head of Europe, Middle-East and Africa capital introduction, said in the same interview.

The largest managers have been favored by a new crop of investors, most notably public and corporate retirement funds, because they’re perceived to be safer investments, Fredericks said.

Ohio Public Employees Retirement System and National Pension Reserve Fund, the Irish national pension fund, are inviting investment consultants to bid for mandates to advise them on hedge fund allocations, according to Fredericks and Kenny. Swedish pension funds including AP1 and AP4, and ATP, the largest Danish pension, recently started to allocate money to hedge funds, said Kenny.

Mid-Sized Funds

Merrill Lynch recently observed more inflows into mid-sized managers overseeing $1 billion to $3 billion as some of the largest funds stopped taking money from new investors, Fredericks said.

Some of the most established institutional investors in Europe, such as those in Scandinavia and the Netherlands, are starting to move away from the biggest managers in favor of their smaller rivals, Kenny said.

“They’re feeling a little less comfortable at this point with the book of the business these guys are able to run,” said Kenny. “They feel the guys a little smaller are more nimble, possibly they could have a better partnership with them as well.”

Still, it will take a few more quarters for the inflows to trickle down to even smaller managers, said Fredericks.

Providing Capital

Some of the largest institutional funds of funds have indicated they intend to restart allocating money to early-stage hedge funds through dedicated units, which may drive inflows to smaller managers, Joanne Bryant-Rubio, Merrill Lynch’s Hong Kong-based head of capital introductions in Asia-Pacific, said in the interview.

Merrill Lynch is seeing more investor interest in macro funds which seek to benefit from broad economic trends by trading equities, bonds, commodities and currencies. Investor interest in equity long-short funds that involve macro-economic analyses or focus on energy has also increased, Fredericks said.

Investors also favor event-driven funds, particularly those seeking to profit from companies going through mergers and acquisitions, he added.



http://www.bloomberg.com/news/2010-09-2 ... -says.html