Sat, Mar 7, 2015
A A A
Welcome Guest
Free Trial RSS
Get FREE trial access to our award winning publications
Industry Updates

Hedgebay calls on hedge fund managers to take advantage of secondary market platforms

Wednesday, September 05, 2012
Opalesque Industry Update - Hedgebay, the pioneer of the secondary hedge fund market, has called on hedge fund managers to take advantage of secondary market platforms, claiming that they can provide a permanent source of funding.

The call comes in the wake of a recent survey on the private placement industry by trading and risk solutions provider Simplify LLC. The survey, which polled around 500 private placement users, showed that 100% of respondents had traded hedge fund shares on a secondary basis – proving the popularity of secondary markets among hedge fund investors.

The survey claimed that private placements are set to double in 2013. However Hedgebay, who were shown to be the most popular broker with 42% of those polled having used their platform, claim that this statistic depends on manager uptake of the secondary market.

Since the credit crisis, volume on the hedge fund secondary market has surged, with many investors needing quick access to liquidity. That activity has seen the secondary market become a mainstream tool for the market. However, most managers have yet to use the secondary market on a consistent basis, thus potentially missing out on the best price for their shares as a result.

Jared Herman, Founder of Hedgebay, said:

“The majority of hedge fund managers have yet to embrace the potential of the secondary market, preferring to handle the private placement process themselves. As a result, they don’t have access to the range of price offers they could get from a platform, which means they are limiting the chances of getting maximum value from their shares. Volume on the secondary market has increased hugely since the financial crisis, but until managers start taking advantage of secondary trading it is difficult to see how the market will double within the next year.”

Moreover, Hedgebay believes that greater manager involvement would lead to further maturation of the secondary market. With broader and more liquid pricing options available, managers would be able to take advantage of a consistent source of funding, known as ‘permanent capital’. Permanent capital – the ability to protect against redemptions by having access to a constant source of capital – is much sought after among hedge fund managers.

A number of high profile managers have recently launched publicly listed reinsurance products, providing them with a stable pool of capital that can be invested over long term periods. Hedgebay believes that an evolved secondary market could perform a similar function for all hedge fund managers, giving them instant access to investors in the event of redemptions in their fund.

Jared continued:

“A source of permanent capital has long been the holy grail of hedge fund managers, but most don’t have the option of backing or launching a reinsurance vehicle, and even those that have had limited success so far. The secondary market gives managers access to a permanent source of funding, as well as creating a broader and more liquid for all investors, on the buy and sell sides.”

(press release)

Founded in 1999, the Nassau-based Hedgebay Trading Corporation through its authorised agents helps match sophisticated buyers and sellers of hedge fund interests and other illiquid alternative investment assets. Its international client base includes funds of hedge funds, ultra high net worth family offices, banks, pension funds, insurance companies, endowments, foundations and sovereign wealth funds. www.hedgebay.com

Bg

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. SkyBridge opens office in Palm Beach County[more]

    Where better for a southern location than South Florida? SkyBridge Capital, which is headquartered in New York, has opened an office in Palm Beach Gardens. Palm Beach Gardens is a "Signature City" in northern Palm Beach County, with a population of around 49,000.

  2. Outlook - Philippe Jordan predicts 'alternative beta' to displace hedge funds, Stan Druckenmiller says Europe, Japan stocks will outpace U.S.[more]

    Philippe Jordan predicts 'alternative beta' to displace hedge funds From Investordaily.com.au: The disappointing performance of hedge funds in recent years is a result of "too much money chasing too little alpha", argues Capital Fund Management. Speaking to InvestorDaily, CFM partner Phi

  3. Patrick McCormack to shut down hedge fund Tiger Consumer[more]

    Komfie Manalo, Opalesque Asia: Patrick McCormack is shutting down his hedge fund Tiger Consumer Management after 15 years "to spend more time with his family," reported Reuters. Tiger Consumer ended February up 4.6% (+3.9% YTD) and assets roughly $1.4bn, reported

  4. Investing - As rig count falls, hedge funds pile into long crude futures, Parus tactically shifts long/short exposure ratios, Mario Draghi outflanking Kuroda as bearish euro bets surge, Prime Capital’s 500.com bet derailed after 41% drop[more]

    As rig count falls, hedge funds pile into long crude futures From 247wallst.com: In the week ended February 27, the total number of rigs drilling for oil in the United States came in at 986, compared with 1,019 in the prior week and 1,430 a year ago. Including 281 other rigs mostly drill

  5. Outlook - 5 reasons why 2015 is looking like a breakout year for alternative investments, Hedge fund manager Dan Loeb predicts disappointment for funds seeking energy distress[more]

    5 reasons why 2015 is looking like a breakout year for alternative investments From Forbes.com: …After a strong 2014, the public markets have been off to a choppy start in 2015. This year, savvy investors may be looking for alpha elsewhere. For many institutions and high-net-worth indivi