Sat, Aug 23, 2014
A A A
Welcome Guest
Free Trial RSS
Get FREE trial access to our award winning publications
Industry Updates

Hedgebay Trading Corporation’s February index reveals first trade above NAV on hedge fund secondary market in almost 2 years

Friday, March 26, 2010
Opalesque Industry Update - Hedgebay Trading Corporation’s February index has revealed the first trade above NAV on the hedge fund secondary market in almost 2 years. The premium trade, which took place at 102% of the hedge fund share’s value, is the clearest indication yet that high quality hedge fund assets are once again becoming “must-have” commodities among investors.

The Hedgebay Secondary Market Index has also shown that the average trade price rose in February to 91.4%, a level more commonly seen before the financial crisis struck. This is the second consecutive month that the average price has risen, which Hedgebay feels is further encouragement for the hedge fund industry:

Elias Tueta, co-Founder of Hedgebay, said: “February’s data is very good news for the hedge fund market, or at least for the part of the market that trades in liquid assets. The first premium trade in quite some time is a highly significant event for the industry. It shows that investors are not just confident about buying hedge fund assets; they are now willing to pay over NAV to secure the most sought after funds. The prices being paid for liquid assets are rising across the secondary market, and the average price of 91% is not far off the sort of average we were seeing before the downturn.

However, Tueta warned that no matter how encouraging the SMI results, they only tell half the story. The dispersion between the highest and lowest trades widened to 70 points, with the lowest trade occurring at 32% of NAV. This has made the two-tiered market more pronounced, as investors continue to struggle to remove illiquid assets from their portfolios.

The February edition of the Illiquid Asset Index (IAI) has shown a small rise in the average price for assets that have no contractual redemption rights to investors (such as “side-pockets” or for hedge funds that have suspended redemptions). The average price stands at 46.3% of NAV, but substantial trading at this end of the market has moved Tueta to warn that the two tiered market will continue for the foreseeable future:

“The two-tiered phenomenon is here to stay for the time being, as a substantial number of funds still have illiquid assets in their portfolios. The two tiered market is being driven partly by the nature of the funds, but also by the type of investors. There is an essential difference between the outlook of investors trading in liquid assets and the outlook of those trading in illiquid ones, and what we are seeing at the moment is, in essence, two different markets – a liquid one and an illiquid one.”

“The SMI is showing the confidence of investors who favour the short term strength of liquid assets, while the IAI is displaying the investors who have done large amounts of analysis on underlying holdings and have a long term plan for the more illiquid assets. The two different investor types rarely cross over from one type to the other as that would require a fundamental change in philosophy, which leads us to believe that the two tiered market will be around for quite some time to come.” - KM - Corporate website: Source

What do you think?

   Use "anonymous" as my name    |   Alert me via email on new comments   |   
Today's Exclusives Today's Other Voices More Exclusives
Previous Opalesque Exclusives                                  
More Other Voices
Previous Other Voices                                               
Access Alternative Market Briefing
  • Top Forwarded
  • Top Tracked
  • Top Searched
  1. Institutions – Texas Employees sets 2015 tactical plan for alternatives, CalPERS' real estate consultant cautions the pension fund's investment committee, Why Sunsuper likes hedge funds[more]

    Texas Employees sets 2015 tactical plan for alternatives From PIOnline.com: Texas Employees Retirement System will invest in up to four new hedge funds in the next fiscal year, which begins Sept. 1. Trustees approved 2015 tactical investment plans for the hedge fund, private equity and in

  2. Private equity follows hedge funds into reinsurance for long-term capital[more]

    From Artemis.bm: It’s not just hedge funds that are entering the insurance and reinsurance market in search of so-called long-term capital to put to work in their strategies, private equity firms targeting the space are also seeking opportunities to add assets under management. The entry of large pr

  3. North America – New York City’s next hot neighborhoods targeted with property funds[more]

    From Bloomberg.com: New York’s real estate world is filled with tales of ordinary people who bought property decades ago and saw values skyrocket to the millions. Seth Weissman is seeking investors to get in early on the next hot neighborhoods. The veteran of Goldman Sachs Group Inc. and hedge

  4. Investing – George Soros bets $2bn on stock market collapse, Warren Buffett's Berkshire reveals Charter stake, cuts DirecTV, Hedge funds lusting to cash out of MGM, Top hedge fund managers are buying Ally Financial, Hedge funds dumped 5m Herbalife shares in Q2, Paulson & Co hedge fund ups Puerto Rico real estate bet, Netflix Inc., Citigroup Inc, Google Inc are top new picks in Tiger Management’s 13F[more]

    George Soros bets $2bn on stock market collapse From Newsmax.com: Billionaire investor George Soros has increased his financial bet that U.S. stocks will collapse to more than $2 billion. The legendary hedge fund manager has been raising his negative bet on the Standard & Poor's 500 Inde

  5. Investors now net short S&P500 and increased Russell shorts, technicals suggest further selling[more]

    Komfie Manalo, Opalesque Asia: Market Neutral funds increased their market exposure to -1% net short from -6% net short last week, according to Bank of America Merrill Lynch’s Hedge Fund Monitor. The report also added