The evolution of due diligence, Part 6 – MountJoy: institutionalization of hedge funds will allow for even stronger DD

Kirsten Bischoff, Opalesque New York: Some funds of hedge funds (FoHFs) and due diligence (DD) providers have had to review their methodology since the beginning of the credit crunch and the subsequent uncovering of frauds such as Madoff’s. Opalesque spoke to several industry players about their approach. Our conversations are presented in a Q&A format – as are DD forms.

The events of 2008 and 2009 served to bolster the risks that many due diligence firms have warned about in the past. Many of the due diligence managers we spoke with cited investor concern over fraud as one of the drivers behind new business. However, they also cautioned investors not to lose sight of many other......................

For full article : http://www.opalesque.com/56049/The_evolution_of_due_diligence_Part_6049.html

The reshaping of the prime brokerage industry

Last summer, Global Custodian published its annual survey of the prime brokerage industry which provides interesting insight on the impact of the crisis on their business and the perspective of the industry going forward, says Gabriel Kurland from Geneva-based firm Hedge Fund Appraisal in his current newsletter. Global Custodian estimates that the revenue generated by the prime brokerage has ranged from $25 billion a year to more than twice that figure.
Following last year events, one fund in three had experienced the termination of a relationship with a prime broker during the 12 month preceding the publication of the survey. This number rose to more than one in two among the larger hedge funds.
As explained by respondents of the survey, the main reasons why prime broker relationships were terminated were as follows: counterparty credit risk concern, reduced need for service and those contractual terms were modified by prime brokers. Another reason is directly linked to the run to the gate in the last two quarters of last year by investors in hedge funds was induced, in part, by the fall of Lehman Brother, one of the six leading providers of prime brokerage services.
Hedge Funds had learned in August 2007 and again during the Bear Stearns rescue that even contractually guaranteed margin terms were not sacred to prime brokers. However, in fall 2008, the leading prime brokers abandoned any pretense that anything mattered but the survival of their firm. Prime brokers effectively assumed powers of life and death over hedge funds, determining which they would support and which they would not.
For full article go here: http://www.opalesque.com/54675/The_reshaping_of_the_prime_brokerage_industry675.html

Review of hedge fund launches, closures, trends, regulatory, and legal events - week 35

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By Benedicte Gravrand, Opalesque London: A roundup of last week’s hedge fund launches, closures, index performance, trends, regulatory, legal and financial events pertaining to the alternative investments world.
Last week, we heard of fund launches or possible launches from Desert Shores (momentum trading); Allianz (European Ucits III); 613 Capital (global L/S); Aviva (UK Absolute Return); Noctua (global macro); and Spruce Point Capital (L/S value).
The HFN Hedge Fund Aggregate Average Index was up 2.56% in July, +12.03%YTD; and HFR reported that emerging markets hedge funds had gained 19% for the quarter, and that assets were up by $10bln, to $77bn.
It is not the smoothest time for funds of hedge funds; it was found that investors had pulled $200bn from Europe’s largest FoHFs since Sept-08; UBP confirmed it would reduce its staff by 10%; and Gottex cut fees for investors in its listed products.
Some ranking lists from Alpha had Sparx, Value Partners, Artradis, ADM on top of the Asia list and Brevan Howard, Man, BGI, BlueBay on top of the Europe list.
Some of the fund managers who hit the headlines last week were: Einhorn, who said that Greenlight had “no net long exposure to equities;” short-seller Jim Chanos, who was said to be looking at pharmaceuticals, accused the UK prime minister of ignoring the credit crunch alarm bell; and John Paulson, who is pushing into gold, bought a stake in Citigroup.
TCI's Chris Hohn is to let investors withdraw cash from its fund and introduce a more liquid share class; clients of Cerberus Capital Management's core hedge funds opted to withdraw the majority of money from the funds; and Goldman Sachs Asset Management became the latest manager to announce a levy on investors coming and going from its funds.

2009 African landscape (3) - The continent has been negatively impacted by the global crisis but is well equipped for recovery

By Benedicte Gravrand, Opalesque London:

Image by Getty Images via Daylife

The chief economist and the currency strategist at South Africa's Rand Merchant Bank (RMB) gave Opalesque their views and outlook on the region's economics.
South Africa
South Africa (S.A.), an emerging country with a business cycle closely tied to the global cycle, has been negatively affected by the financial crisis, according to RMB's chief economist Ettienne le Roux.
The channels of contagion can be seen through its exports. S.A.'s exports of commodities and manufactured goods, which account for about 30% of GDP, are mainly to the developed world, which is has been buying less. So exports have come down significantly, impacting the economy at large.
"We've already seen this in typical industries, mining in particular," he said. "The mining output has contracted significantly as has manufacturing output. Here we are talking about gradual decline in the case of mining in the order -5% y-o-y and in the case of manufacturing, it is as much as -15% y-o-y."
Being labour-intensive, the mining and manufacturing sectors are shedding jobs and that will affect consumer expenditure.

Full story: http://www.opalesque.com/54218/2009_African_landscape_The_continent218.html

Man Investments: Hedge funds back on track as risk appetite comes back strongly, funds retain assets even after removing gates

From Matthias Knab, Opalesque Europe: Man Investment's Research and Analysis Group has published its Q2 Quarterly Review, which can be downloaded at the Source link below. We highlight some of relevant findings from report:
Hedge funds had their best quarter in nine years as risk appetite came back strongly. All styles except for managed futures made profits. Last year's laggards such as convertible bond arbitrage have been this year's biggest gainers and vice versa.
Overall, hedge funds are back on track. The liquidity situation has improved considerably and many gated or suspended funds could liquidate their holdings in an orderly fashion and, in some cases, lift redemption restrictions earlier than expected.
For a variety of reasons, many hedge funds are now less constrained by the de-leveraging process and are able to redeploy risk. When gating was in full swing the consensus was that gated money would melt away quickly when the gates were removed. In fact, this seems not to have happened.Hedge funds are back on track. Broad hedge fund indices enjoyed its best quarterly returns since Q1 2000 in the wake of much improved liquidity, higher risk appetite and tailwinds from credit, equity and commodity markets.
In Q2, the HFRX Global Hedge Fund Index gained 4.85% (YTD 5.56%). Strong performance was recorded across all styles and strategies except for managed futures. Convertible bond arbitrage was the best performing strategy again, benefiting from further credit spread tightening and more normal liquidity. CTAs lagged due to frequent trend reversals in currencies and fixed income markets. Interestingly, the gains were led by strategies that have struggled in the recent past and vice versa.

For full story go here: http://www.opalesque.com/53896/Man_Investments_Hedge_funds_back_on896.html

Bank of China (Suisse)-managed Heritage Fund up +3.45% in June, +39.19% YTD, seeks to focus on China related securities

Image by thewamphyri via Flickr

From Komfie Manalo, Opalesque Asia:
The Heritage Fund-China Absolute Return was up 3.45% in June, and returned +39.19% YTD. In the fund’s June monthly report, the managers of HF China said they wanted to focus on long-term capital appreciation by investing primarily in China related securities (Hong Kong, H-shares, A-shares, B-shares, Taiwan, U.S., Singapore, and other listings) and in securities with significant exposure to economic developments in China.
The fund is managed by Bank of China (Suisse) Fund Management SA located in Geneva, Switzerland.
According to HF China’s managers, the fund fared well in June compared with the MSCI Golden Dragon Index which was down 1.1% for the month, and was up 34.5% YTD. By maintaining a high cash exposure in recent months (around 30% on average) to reduce volatility, HF China managed to keep its performance in line with the HSCEI Index and MSCI Golden Dragon Index. This shows that HF China’s stock-picking has been able to generate enough alpha to compensate for the 30% cash drag. As a stand alone equity portion, the fund’s stock-pick has substantially outperformed those indices.
China’s market reviewChinese economic fundamentals continue to steadily improve, as strong domestic demand offsets weak external demand. Industrial-output growth accelerated to 8.9% YoY in the first five months of the year compared with a collapse in output growth at 3.8% in January and February combined. Urban fixed-asset investment climbed +32.9% YoY in May, the highest surge in five years.

For full story: http://www.opalesque.com/53842/Bank_of_China_Heritage_Fund_up842.html

Volatile markets redefine trade component of hedge fund strategies, "position calibration" becomes source of alpha

From Kirsten Bischoff, Opalesque New York:

The markets have changed. Levels of volatility have greatly increased, and the uncertainty that the financial crisis has unleashed on investors is likely to remain for the foreseeable future. These factors make it much more likely that the markets will continue to move from one extreme to the next and strengthen the need for investors to understand and analyze the trade methods of hedge fund managers during the due diligence process.
Specific to the hedge fund industry, it has been determined that investors reallocating to hedge funds are favoring the simplest and the most liquid strategies, which can include strategies that utilize frequent trading.
"The one issue that hedge fund investors must realize is that hedge fund strategies are much more about 'trading' than 'investment'", points out Rene Levesque, Founder of hedge fund due diligence and research firm Mountjoy Capital (www.MountJoyCapital.com).
Levesque, who's background includes overseeing research for a $2bln Canadian based FoHF, positions in back and middle offices, and time as an equity derivatives prop trader, concentrates on the analysis of 14 different factors when providing his clients with fund evaluations

Full story: http://www.opalesque.com/53821/Volatile_markets_redefine_trade_component_of821.html

Volatile markets redefine trade component of hedge fund strategies, "position calibration" becomes source of alpha

From Kirsten Bischoff, Opalesque New York:

The markets have changed. Levels of volatility have greatly increased, and the uncertainty that the financial crisis has unleashed on investors is likely to remain for the foreseeable future. These factors make it much more likely that the markets will continue to move from one extreme to the next and strengthen the need for investors to understand and analyze the trade methods of hedge fund managers during the due diligence process.
Specific to the hedge fund industry, it has been determined that investors reallocating to hedge funds are favoring the simplest and the most liquid strategies, which can include strategies that utilize frequent trading.
"The one issue that hedge fund investors must realize is that hedge fund strategies are much more about 'trading' than 'investment'", points out Rene Levesque, Founder of hedge fund due diligence and research firm Mountjoy Capital (www.MountJoyCapital.com).
Levesque, who's background includes overseeing research for a $2bln Canadian based FoHF, positions in back and middle offices, and time as an equity derivatives prop trader, concentrates on the analysis of 14 different factors when providing his clients with fund evaluations

Full story: http://www.opalesque.com/53821/Volatile_markets_redefine_trade_component_of821.html

Hong Kong Securities and Futures Commission’s half yearly review of the securities market shows economic recovery is emerging

Image by JMRosenfeld via Flickr

From Komfie Manalo, Opalesque Asia:
The Hong Kong Securities and Futures Commissioner has just released its latest research paper entitled: “Half Yearly review of the Hong Kong Securities Market” which shows that despite the recent strong rebound of the global stock markets, fundamental support to the surge in the stock markets has not been broad-based. Signs of economic recovery are emerging at best. The recent rally in the stock market seems to be underpinned by a strong capital inflow, but it should be noted that capital movements are known to be volatile and subject to sudden reversals.
According to the paper, since the trough in early March this year, major stock markets have rebounded some 30% – 60% until the end of June. However, it is worth noting that such strong rebound might not be uncommon following a crisis.
The report says that Hong Kong stocks fell at the start of the year on uncertainties over the global economic performance and concerns about financial institutions in the U.S. The Hang Seng Index (HSI) and Hang Seng China Enterprise Index (HSCEI) dropped to this year’s trough in early March. Later, markets rebounded strongly on optimism over global economic recovery amid signs of stabilization in economies. In addition, strong capital inflow to the Hong Kong banking system and stock market also lifted the markets. During the first half of 2009, the HSI and the HSCEI rose 27.7% and 38.9% respectively from their end-2008 levels.
Full story: http://www.opalesque.com/53590/Hong_Kong_Securities_and_Futures_half590.html

JD Capital Management and FRM Capital Advisors announce strategic relationship

Opalesque Industry Updates - JD Capital Management (“JD Capital”) and FRM Capital Advisors (“FCA”), a division of Financial Risk Management (“FRM”), are pleased to announce their strategic relationship that will provide JD Capital with an inflow of new, stable assets under management and support to drive its refocused business forward.
JD Capital is a Greenwich, Connecticut based alternative investment management firm led by J. David Rogers. The company is returning to its founders’ roots and will focus on volatility trading going forward. Following FCA’s investment JD Capital will manage approximately $160 million in the volatility strategy.
J. David Rogers, CEO of JD Capital, said, “This new investment and relationship with FCA will allow JD Capital to build a strong, long-term business based on our successful eight year track record in volatility trading. FCA’s involvement provides the assets required to manage the strategy effectively and the investment is a sign of institutional interest in volatility strategies. We believe this relationship will enable us to attract further assets from institutional investors.”
Neil Mason, CIO of FCA, said, “JD Capital’s tremendous expertise and impressive track record in volatility trading make it one of the strongest players in this space. It is a great opportunity for FCA to partner with the company and help drive the growth of its revitalised business. Volatility trading is a core strength of the JD team so it is logical for them to focus on this strategy.”


Full story: http://www.opalesque.com/IndustryUpdates/300/JD_Capital_Management_and_FRM_Capital_Advisors_announce300.html

London firms IKOS and Alpha Strategic announce collaboration on revenue sharing agreement

Opalesque Industry Updates - IKOS Asset Management Limited (‘IKOS’), one of the leading European quantitative hedge fund managers, and Alpha Strategic plc (‘Alpha’, ‘Alpha Strategic’), the AIM listed hedge fund investment group, announced a business collaboration augmenting Alpha’s strategy of building a blended income stream from high quality, low-correlated funds, benefiting investors through instant diversification at low cost, and aiming for capital growth through a transparent listed structure.
IKOS and Alpha Strategic announce that they have signed an agreement whereby Alpha Strategic has acquired Acme Advisors Limited (‘Acme’), a wholly owned subsidiary in the IKOS advisory group. Acme has been incorporated to provide sales and distribution advisory services to IKOS in respect of the IKOS G10 Currency Fund Class (the ‘Fund’), one of IKOS’ flagship funds. For the provision of these services, ACME has an agreement with IKOS to receive 7.2% of IKOS’ aggregate management and performance fees relating to the Fund.
The IKOS agreement follows an earlier transaction with Winton Capital Management Limited in 2006. Alpha Strategic will now enjoy a second, non-correlated revenue stream, which serves to expand and diversify the company’s income base.

Full story: http://www.opalesque.com/IndustryUpdates/286/London_firms_IKOS_and_Alpha_Strategic_announce_collaboration286.html

Byron Wien’s Farewell Commentary as Pequot shuts

Byron R. Wien, who joined Pequot in December 2005 as chief investment strategist after two decades as Morgan Stanley’s chief strategist, writes in an investor communication obtained by Opalesque that "What has happened to Art and the firm is sad. I have been in the investment business for close to half a century and I have never worked with a group of finer professionals. We will all go on to other challenges...."
Here is the full text: "Back in the 1970s, Art Samberg, the founder of Pequot, and I were partners at a small Wall Street money management firm. We were both analysts and portfolio managers, but Art had a special talent for technology stocks and special situations. He also managed something called “The ‘57’ Account”, named after Heinz’ 57 varieties because its holdings leant new meaning to the concept of diversification. I left the firm in the mid-1980s to go on to two decades as a strategist at Morgan Stanley and Art left a year later to become an investment management entrepreneur.
When Art started his hedge fund in 1986 I was a charter investor because I wanted to benefit from what I knew by then was his special talent for stock picking. Over the years I referred many friends to Pequot because I believed that Art not only had the ability to manage money well, but also could attract other able investment professionals and guide them as the firm grew.

For full story : http://www.opalesque.com/53374/Byron_Farewell_Commentary_as_Pequot_shuts374.html

Of the major current regulatory developments, the EC Directive is attracting the most controversy

In the last couple of months, the two major developments on the regulatory front were the European Commission’s Directive draft, and the Obama administration’s general overhaul of regulations for the financial system. While the later was generally welcomed, the former has raised much controversy.
The controversial Directive The EC Directive, which first draft was announced on 29th April, and which will have to be approved by the European Parliament and the European Council later this year and be implemented in two years, is thought to be a political response to the credit crisis, heavily influenced by the EU's socialist group, in particular Danish ex-prime minister Rasmussen. As the draft was issued soon after the G20 summit, the European Commission might have tried to get in first (the G20 directive has not been finalised yet.)
The Directive proposes to regulate Alternative Investment Fund Managers (AIFM) established in the European Union who manage more than Eur100m, by authorising and regulating them, demanding more transparency and appropriate governance standards, allowing them to market their funds in the EU, and grant access to the European market to foreign funds after a transitional period of three years.
Infuriated reactions in the UK Seeing more oversight, signs of protectionism and incompatibility with the existing rules, the draft angered the UK fund management population in general. Some of the largest hedge funds warned the Treasury that they would leave Britain unless the draft Directive was drastically modified. The industry association AIMA gathered around a number of luminaries (such as BlackRock, Brevan Howard, CQS, DE Shaw, Fauchier Partners, Lansdowne Partners, Man Group, Marshall Wace) to fight and lobby against it.

Full story: http://www.opalesque.com/53231/Of_the_major_current_regulatory_developments_the231.html

Ernst and Young survey: Reputation the biggest risk for asset management risk managers

Opalesque Industry Updates - Major flaws identifying counter party risk exposures, finds Ernst & Young
Reputational risk is the biggest concern for UK asset management chief risk officers (CROs) followed by the hostile regulatory environment and greater client scrutiny, according to new research published today by Ernst & Young. But CROs are finding that they are not being given the information they need to adequately advise and protect their business nor are they being included in business processes, according to the poll of 23 CROs from some of the largest asset management firms in the UK.
Over a third of respondents can launch a new product from idea in up to eight weeks, while it takes 22% between three to six months. However, only 30% of the CROs thought that the process for pricing new risks into the product was adequate, compared to 48% who didn’t.
Dr Anthony Kirby, director in the Ernst & Young regulatory and risk management practice, comments: “Asset management firms are facing increasingly severe risks as the recession continues. Failing to get CROs involved in new product development or the strategic direction process could result further down the line in disgruntled clients and investors or worse. CROs play a hugely important element in ‘fine-tuning’ products. Their role is really business critical in the current environment.”
Model variations but drive to improve reporting
With market, liquidity and valuation at the top of the agenda for most firms, the report finds a wide variation in ex-ante risk modeling. While the vast majority of those polled undertake such modeling, 26% said they didn’t and 9% didn’t know.
Full story: http://www.opalesque.com/IndustryUpdates/251/Ernst_Young_survey_Reputation_the_biggest_risk251.html

Opalesque Exclusive: While investment banks look to change pay structure, hedge funds are expected to maintain the bonus culture

The anticipated 50% salary raise for a number of Citi employees has generated almost 600 news articles dissecting, debating and many denouncing the bank’s decision. Under the proposed plan, first reported by the NY Times, Citi will raise base salaries for investment bankers and traders whose compensation is typically skewed towards bonuses rather than yearly salary. Employees in risk management, consumer banking and credit card areas will see much smaller increases.
This increase in base pay likely marks a shift within the banking industry as firms such as Bank of America and Morgan Stanley plan to follow suit, but it is not one that is likely to be echoed within the hedge fund industry.
“Citi needs to [increase pay] to retain their talent and due to the uncertainty regarding the firm’s future,” Deborah Markus, Founding Partner at New York-based executive recruitment firm Columbus Advisors told Opalesque.
Meanwhile, the hedge fund industry appears to be cycling out of a period of loss and the general consensus is that firms that survived 2008 are well positioned to move forward.
“What is driving compensation in hedge funds right now is the historical performance of the fund, the size of the fund, marketability, and funds future plans.”
Trends for the currently employedWhile there is less job hopping in general due to the decrease in opportunity across the hedge fund industry, people still have their ear to the ground for more appealing situations.
Individuals considering moving from a current position are doing much more in terms of due diligence on a firm’s background. “They want to make sure that they are going to a fund that has not only performed well in the past, but is also positioned to perform well in the future,” says Markus. “Candidates ideally want to move to a fund that has strong infrastructure and relationships, smaller less institutional focused funds are less appealing than they have once been.”
Full Story: http://www.opalesque.com/53086/While_investment_banks_look_to_change086.html

Rallying commodities drove Morningstar Emerging Market Hedge Fund Index 13.5% gains in May,but some indecision has returned in the first half of June

The Morningstar 1000 Hedge Fund Index posted its largest monthly increase in May since its January 2003 inception, rising 6.7 per cent for the month and 9.7 per cent for the first five months of the year.
May was a strong month for the asset-weighted, currency-hedged Morningstar MSCI Hedge Fund Index, which also posted its largest one-month increase since January 2003, rising 3.7 per cent in May and 5.5 per cent for the first five months of the year.
European and developed Asian equity markets outpaced the US in May, but the real surge came from the rebound of emerging market equities. The unhedged Morningstar Emerging Market Hedge Fund Index increased 13.5 per cent, while the currency-hedged Morningstar MSCI Emerging Markets Hedge Fund Index rose 9.8 per cent. These indexes rose 25.2 per cent and 17.6 per cent, respectively, over the last five months.
The US dollar declined against many currencies in May, including those of emerging market countries, triggered by fears of a US government debt downgrade. Potential International Monetary Fund funding also whetted investors' appetite for risk in emerging market countries. The strongest performance was in India, Russia, Eastern Europe, and Brazil, driven largely by their financial and energy sectors.
"Emerging markets saw a large run-up in May, fuelled by US inflation expectations and commodity supply concerns. Hedge fund managers trading in these markets remained cautious, though, believing that the emerging world is still very risky, and sharp corrections are possible," says Nadia Papagiannis, Morningstar hedge fund analyst.

Full Story: http://www.opalesque.com/52946/Rallying_commodities_drove_Morningstar_Emerging_Market_Hedge946.html

Opalesque Exclusive: Review of hedge fund launches, closures, trends, regulatory and legal events - week 23

Monday, June 08, 2009

By Benedicte Gravrand, Opalesque London: A roundup of last week's hedge fund launches, closures, index performance, trends, regulatory, legal and financial events pertaining to the alternative investments world.

Last week, we heard of fund launches from Saba Capital; Brummer; Universa (hyperinflation); Commoditrade (energy); Ecofin (China Power & Infrastructure); Helios (India); 36 South (high-risk inflation); RWC Partners (L/S); Pia Capital (macro); Och-Ziff (energy); Brevan Howard (Ucits); Aladdin (managed accounts); J.Chahine Capital (L/S equity); Julius Baer (Russia); Epic (Japan); Jericho (L/S telecom/media/tech); and GLG (event driven).

Full story: http://www.opalesque.com/52592/Review_of_hedge_fund_launches_closures_trends592.html

Opalesque Exclusive: Small cap stocks may be indicator of economic recovery notes long/short manager Midwood Capital (fund +29% YTD)

From Kirsten Bischoff, Opalesque New York:
While ways to verify the much discussed “green shoots” are debated, one indicator may be the performance of small caps, which Chuck Royce CIO and Portfolio manager at Legg Mason recently said “should lead in the early phase of a prolonged recovery in stocks…”
In fact, while small caps leading recovery may be a historic rule of thumb, the Midwood team led by portfolio managers David Cohen and Ross DeMont has seen few industries where meaningful signs of economic recovery are evident. In its frequent discussions with public companies the team has been hearing comments such as, “Things are somewhat less bad,” or “We think we are near the bottom”.

Full Story: http://www.opalesque.com/52543/Small_cap_stocks_may_be_indicator543.html

The State of Real Estate Around the World: No Signs of Stabilization?

Slowing economic activity and a credit crunch contributed to a decline in housing activity, prices and construction in most major economies. Eastern Europe and the Baltics, as well as the U.S. and UK, have endured some of the sharpest declines. In many countries, not only in the U.S., the bottom of the property markets still seems far off, with sales, prices and starts forecast to continue declining, albeit at a slower pace, through much of 2009.
In fact, many European economies (and Canada) tend to have housing cycles that lag behind the U.S. by about 2-3 years, suggesting that their declines could also persist beyond a U.S. housing stabilization. Sounder lending standards and lower incentives to invest in residential property in some countries may allow them to avoid the depths of the U.S. property correction but others may suffer more severely. The liquidity resulting from quantitative easing has contributed to a slower deterioration of the housing markets. Yet with high inventories in many markets, it may take some time to absorb the excess. This will continue to erode the value of asset-backed securities and banks' balance sheets and defer the revival of construction activity, a major driver of growth.
The decline in retail trade and contraction of the financial sector has worsened the commercial property outlook. Commercial vacancy rates are on the rise in almost all major centres in Europe and North America and net effective rates have declined by 25-30% in major cities in Asia, suggesting that new investment is unlikely as these cities try to absorb overcapacity in retail and hotel trade. Meanwhile, still tight corporate debt markets pose obstacles for corporate finance. Despite the weak fundamentals, REITs and other property investments have benefited from the renewed risk appetite and have been climbing off late. These property investments might well be vulnerable to any reversal of risk appetite.

Full Story: http://www.opalesque.com/Realestate_Briefing/?p=10501

From Kirsten Bischoff, Opalesque New York

Financial market turmoil sees activist investors holding positions longer, as proxy regulations change in their favor will investors have the required stamina?

From Kirsten Bischoff, Opalesque New York
It seems the point has been reached when the feeling of helplessness against market forces has shifted to a feeling of anger, sparking a new wave of investor activism. However, this trend (seen this past weekend with CalPERS/Bank of America, US Government/Auto Industry) does not indicate investors are specifically looking for opportunities in which to invest as activists, but reacting to the poor performance of companies they have already invested in.
The question then for activist hedge funds is, do investors have the interest, the patience and the stamina required to allocate to a strategy with a much longer view than has been required before?
The strategy overall has not fared as well as others during this crisis, and fell more than 30% in 2008 (according to Hedge Fund Research).
» Full Story http://www.opalesque.com/51897/Financial_market_turmoil_sees_activist_investors937.html
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Asia experiences wave of hedge fund startups, "Which is exactly what we saw post the Asian crisis?"

Singapore, May 5th 2009 --Participants at the recent Opalesque Roundtable in Singapore agreed that Asia is seeing a new wave of hedge fund startups. This new breed of managers has well-thought and good business plans, as well as backers in terms of incubator monies or committed seed capital between $25m and $50m.

Peter Douglas, principal of GFIA, a Singapore-based consulting firm, said that the rebound of Asian hedge funds as seen by these startups, is similar to the developments post the last Asian crisis: “A lot of the great names of the Asian hedge fund industry were actually set up around the end of the Asian crisis. They were very small for a number of years, before they finally attracted attention and started to gain critical mass. Look at funds like Artradis in Singapore, or LIM or ADM in Hong Kong - a lot of what are now the biggest established managers actually started as small boutiques post the Asian crisis, running very small amounts of money for quite long periods.”

The 2009 Singapore Roundtable took place at the local office of Customhouse Group, who also sponsored the event. The following hedge fund managers, experts and hedge fund investors participated:

1. Zack Kembar, COO, Capstone Investment Advisors (Singapore)

2. Christian Stauffer, Portfolio Manager, LH Asian Trade Finance Fund

3. Daren Riley, Co-Founder, Riley Paterson Investment Management

4. Daryl Ee, Director for Alternative Investments, BNP Paribas Asset Management Singapore

5. Peter Douglas, Principal, GFIA

6. Han Seng Low, Investment Management Division, United Overseas Bank Limited

7. Dermot Butler, Chairman of Custom House Global Fund Services

8. Han Ming Ho, Partner, Clifford Chance

9. Prof. Melvyn Teo, Centre Director for BNP Paribas HF Centre at Singapore Management University

The Opalesque Singapore Roundtable can be downloaded here:

http://www.opalesque.com/Roundtable/RoundtableSING09.html

All other previously published Opalesque Roundtable Scripts can be accessed here:

http://www.opalesque.com/index.php?act=archiveRT

This 30 page Opalesque Roundtable also discusses other important aspects on the make-up and developments of the Asian hedge fund industry like:

l What is the opportunity set the new Asian start-up managers are targeting? What is their typical profile?

l How has Singapore as an investment management center evolved over the last year? Did you know that the most recent regulatory initiatives aim to establish Singapore as a fund domicile?

l Why should you "hire your risk manager from Singapore, and your trader from Hong Kong", as the saying goes? What are the underlying reasons for such cultural differences?

l Read how hedge fund managers explain the dynamics of the natural healing process which occurs in Asia when the marginal investor, the foreigner, has gone - and how to profit from it.

l The consensus is that the Asian hedge fund industry is going to produce good performance numbers mid-term - who are the investors who participate in the upswing?

l What is the margin by which Asian focused hedge funds with head or research offices in their investment regions have outperformed their U.S. or U.K. counterparts - and why?

About Opalesque:

Matthias Knab, Director of Opalesque Ltd, moderates the Opalesque Roundtables. Matthias Knab is an internationally recognized expert on hedge funds and alternatives.

In 2003, with the publication of its daily Alternative Market Briefing, Opalesque successfully launched an information revolution in the hedge fund media space: "Opalesque changed the world by bringing transparency where there was opacity and by delivering an accurate professional reporting service." - Nigel Blanchard, Culross. This hybrid financial news service, which combines proprietary industry news stories and filtered third party reports, has been credited by many industry insiders with delivering precise, accurate, and vital information to a notoriously guarded audience.

Each week, Opalesque publications are read by more than 600,000 industry professionals in over 130 countries. Opalesque is the only daily hedge fund publisher which is actually read by the elite managers themselves (http://www.opalesque.com/op_testimonials.html).

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CAN WE REDISTRIBUTE THIS?

"Can we redistribute this to our hedge fund managers and institutional investors ?"
Emails like these are coming on from people who read the Opalesque Zurich Roundtable:
"Excellent information piece. Are you happy if we distribute this via email to our hedge fund managers and institutional investors?"
"This is an excellent piece, thank you very much for sending it. Please include me in any future Roundtable articles."
In this 31 page script of the Opalesque Zurich Roundtable, you will learn from:
Alexander Ineichen, Managing Director and Senior Investment Officer, Alternative Investment Solutions, UBS Global Asset Management
Jaime Castán, Head of Hedge Fund Research, RMF
Uwe Eberle, Head of Institutional Relationship Management, Member of the Management Committee, Man Investments
Prof. Dr. Peter Meier, Zurich University
Dr. Christian Raubach, Managing Partner of Wegelin & Co. Private Bankers
and other experts...how:
hedge funds can rebuild trust - three suggestions
Sharpe ratios can fool investors
that RMF will be handling close to 80% of US and Europe L/S hedge fund investments via managed accounts
where the Swiss regulators failed during the 2008 crisis
the story how one hedge fund manager changed the way a mainstream newspaper writes about hedge funds
...and much more!

http://www.opalesque.com/Roundtable/RoundtableZH.html

Opalesque

Industry veteran Janet Tavakoli’s 2Q07 questioning of AIG`s financial reporting rang an early alarm
From Kirsten Bischoff, Opalesque New York: In testimony before the House Oversight and Government Reform Committee on Thursday, former AIG Chairman Maurice Greenberg expressed his disagreement with the way the AIG bailout has been managed by the US government, and offered his opinion on how the firm went downhill so quickly.
While the US Government's focus on AIG bounces between exorbitant bonus payments and the sequence of events that led to the downfall of the firm, we may find ourselves rediscovering some of the industry voices which questioned AIG's portfolio well before its problems came to light to the larger public.
full story:http://www.opalesque.com/

Opalesque

• Opalesque Exclusive
  
• Opalesque Exclusive: Industry veteran Janet Tavakoli’s 2Q07 questioning of AIG`s financial reporting rang an early alarm From Kirsten Bischoff, Opalesque New York: In testimony before the House Oversight and Government Reform Committee on Thursday, former AIG Chairman Maurice Greenberg expressed his disagreement with the way the AIG bailout has been managed by the US governme
  
• Fund Launches - GSO starts $3bln rescue fund, 17 China hedge funds launched in March. GSO starts $3bln rescue fund From Reuters.com: Billionaire Steve Schwarzman's Blackstone Group (BX.N) is trying to roll out a new fund geared toward providing financing for struggling companies, the New York Post said, citing sources. Schwarzman is hoping to raise as much as $3 bil
  
• Closures - Blue Lake Capital closes Blue Star hybrid FoHF. From HFMweek.com: Blue Lake Capital, a Bermuda-based investment manager, has liquidated its Blue Star Fund, according to a regulatory filing. The Blue Star Fund, which launched in December 2005, was a hybrid fund of hedge funds (FoHF) that leveraged two negatively correlated and equally weight
  
• M&A - Zwirn preparing to cede control of hedge fund over next few days, Stark completes Deephaven fund acquisition, Mergermarket`s Q1 2009 league tables of legal advisers to Global M&A Zwirn preparing to cede control of hedge fund over next few days From NYTimes.com: After suffering enormous losses, the hedge fund manager Daniel Zwirn is preparing to cede control of his firm, D.B. Zwirn & Company, to another fund manager who will liquidate its holdings.
  
• From AMEinfo.com: Rasmala Investments, a leading regional investment bank, announced the listing of its award winning Rasmala Mena Equity Opportunity Fund 'The Fund' on the Irish Stock Exchange. It will be the first publicly-listed Fund of Funds to offer international investors access to the
• Research - New paper examines the effects of market conditions and hedge fund performance on correlation of hedge fund returns From AllAboutAlpha.com: ...a new paper on this topic explores whether the correlation between hedge fund returns changes depending on market conditions and the overall performance of hedge funds.
• Hedge Funds in Crisis - Bridgewater Associates rejects Geithner`s toxic recycling proposal, BH Global discount to NAV narrows from 30% to 10%, Fortress claims $125.7m loss in Dreier fraud, seven HFs filed claims in past 2 days Bridgewater Associates reject Geithner`s toxic recycling proposal From NYPost.com: Bridgewater Associates, the $71bn money-management firm, has come out against participating in Treasury Secretary Tim Geithner's plan to get private investors to buy banks' toxic assets -- a week
  
• Institutions - New Jersey Investment Division makes 4th hedge fund redemption in 2 months From Finalternatives.com: The New Jersey Division of Investment is making its fourth hedge fund redemption in two months. This time, the $56.3 billion plan is purging its portfolio of Intrepid Capital Management, a long/short vehicle that specializes in technology, media and telecommunications.
  
• Investing - Investors favoured mutual funds over hedge funds for commodity investments in Q1, China hedge funds: the A-share market had bottomed, Convertible bonds: Opportunity knocks Investors favored mutual funds over hedge funds for commodity investments in Q1 From Bloomberg.com: Investors favored mutual funds over hedge funds for commodity investments in the first quarter, seeking the protection of regulated money managers, data from EPFR Global and Gardner Finance
  
• G20 Update - Hedge funds say G-20 crackdown makes industry a `scapegoat`, AIMA statement on G20 decisions, Darling predicts agreement on hedge funds, IMF at G-20 summit G-20 backs regulation crackdown, $1.1tln aid, Cost of staging G20 meeting could hit $117m, Clamp down on tax havens close to being approved, Lobby groups for sustainable and social investment call on G20 leaders to implement sustainable policies .Hedge funds say G-20 crackdown makes industry a `scapegoat` From Bloomberg.com: World leaders' plans to step up regulation of hedge funds will make the $1.4 trillion industry a "scapegoat" for the near-collapse of the financial system, the funds' lobby group said.
  

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