By Benedicte Gravrand, Opalesque London: A roundup of last week’s hedge fund launches, closures, index performance, trends, regulatory, legal and financial events pertaining the alternative investments world.
Last week, we heard of fund launches from PXP Viet Nam, Enhanced Investment Products (with seeding from Triple A), Asia Genesis, PIMCO, Threadneedle, Da Vinci, SEI, ARCH Financial, Palatine, Radcliffe, GAM, Onex Credit Partners, BlueAlpha, EJF Distressed II, and Blackstone
RAB Capital confirmed it had closed 12 underperforming hedge funds; Citi`s Corporate Special Opportunities fund, JO Hambro’s Trident European hedge fund and Go Capital A.M.’s hedge fund were also closed.
RBC Hedge 250 Index returned -5.40% in October, -18.20% YTD Lyxor’s investable hedge fund index was down 3.81%, -10.79% YTD HFRI Fund Weighted Composite Index went down 5.99%, -16.05% YTD Credit Suisse/Tremont Hedge Fund Index returned -6.30%, -15.54% YTD CS/T also reported that convertible arbitrage had been the worst performing sector, as many funds had lost 6 years of gains in 6 months. EDHEC Indices were negative, except for CTA Global +3.92% (12% YTD) and Short Selling +11.68% (28% YTD) Scotia Capital Canadian Hedge Fund Index returned -6.92% / -7.98% (-18.77% / -20.26% YTD) Morningstar Hedge Fund Index returned -9.4% (-21.36% YTD), FoHFs index fell to -9.1% (-21.27% YTD) Ernst and Young New Zealand Absolute Return index gained 2.83%, 15.8% YTD
Citigroup warned that hedge fund assets might fall to $1tln (almost 50%) by mid-2009; Eurekahedge reported that asset flows showed $110bln had left the industry in October 2008 and that larger sized funds had outperformed smaller sized counterparts; it was said that hedge funds had had their worst two months in at least 8 years; HFR reported that investors had withdrawn $40bln from hedge funds (including $22bln from FoHFs) in October, leaving the industry AUM down to $1.56tln (-9%).
CMA Global Hedge said it would reduce leverage; several funds abandoned stocks; Paulson hedge fund started buying into mortgage securities; Thames River said it would lengthen redemption terms; Horizon21 and Duff Capital laid off staff. It was speculated that hedge funds consolidation was likely; that volatile markets might tempt hedge fund fraud; a better breed of hedge funds would emerge out of the crisis; hedge fund launches would blossom in 2009 due to the numerous opportunities at hand. Rupert Murdoch predicted that the global financial crisis will wipe out at least half of the world's hedge funds.
Sandra Manzke, Maxam Capital’s founder, announced she would organize a hedge fund investors group to reform the hedge fund industry, in a public letter. She found ‘tremendous support as people are upset’.
The inaugural Hedge Funds World Africa Awards 2008 announced TriAlpha, Oryx, Investec, KADD, Obsidian as winners. At the 2008 Absolute Return Awards, Paulson, Millennium and Goshen among others won awards.
On the M&A scene, Henderson, Aberdeen, Gartmore were said to be considering a bid for New Star (which New Star later denied); Clive Cowdery’s Resolution started a potential £1bln fundraising as it sought acquisitions in the European financial services industry; Evercore Partners Inc. was said to be making some big investments in money management firms.
The State Street Investor Confidence declined 1.4 in the first half of November; Wall Street sunk to its lowest since 2003: the FTSE went back under 4,000 as global markets retreated, and the S&P 500 hit an 11 and a half-year low. Wall Street rallied at the very end on news that Geithner would lead the US Treasury under Obama. The Basel Committee on Banking Supervision announced its strategy to address fundamental weaknesses revealed by financial crisis. Japan’s largest bank MUFG saw a 64% drop in profits; and its third-largest bank Sumitomo Mitsui will sell securities to raise capital. Macquarie profits plunged 43%.
There was a call for a global outlook on all fronts: SEC’s Cox said that the global financial crisis would require global cooperation; Trichet said that the situation could be solved by joint efforts of central banks and governments; Merrill Lynch reported that worldwide foreign reserves had failed as a financial shock absorber during the crisis; Nomura’s chief said that the liquidity crisis was over and that the global economy recovery would depend on support from governments such as China. The G-20 meeting called for action on growth, an overhaul of financial rules and supported new global accounting standards.
There were signs of deep troubles at Citigroup: its shares slumped to a 13-year low and the group’s chief Vikram Pandit said he would reduce headcount by 52,000. Citigroup also bought back $17.4bln of remaining SIV assets, weighed its options, including a sale of the group, and urged the SEC to bring back the short-selling ban on financials.
Bonuses and job cuts had the limelight last week: NYC attorney Cuomo demanded that AIG di......................
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