Funds Hub

Service providers flag hedge fund health

Fund service providers were back in force at the GAIM hedge funds conference in Monaco this year, a small sign that the industry, while not exactly brimming with confidence, has at least crawled out of the doldrums of 2009.

The service providers including fund auditors, custodians and prime brokers, have drawn in their horns since the early years of the millennium when they were often the main sponsors of cocktails and dinners at large hedge fund events.

They were conspicuous by their near absence at GAIM 2009, as were the free-for-all champagne receptions, gala dinners and so on, as money drained from the industry after hedge funds suffered their worst ever losses in the crisis year of 2008.

One of the big four auditors, for example, brought 22 staff in 2008, but just four in 2009.

But service providers were back in force this year, although they kept a far lower profile than before the crisis. For example, this year they preferred to sponsor low key dinners and talk business with clients real and prospective, rather than lavishing expensive freebies on all and sundry as in years past.

And at the cocktail receptions that were on offer, drinks tended to run out after an hour or two (this was not the fault of the correspondent).

It was a far cry form the fondly-remembered Bear Stearns Monaco beachfront party of 2007, a Lucullan bash worthy of the last days of Pompeii.

Know your hedgie – Pix from Monaco

Reuters snappers have been grabbing some headshots of hedge fund managers at GAIM this year. Thought we’d showcase a few here:

Bears stalk hedgie jamboree

After 20 percent gains in 2009 and a year of inflows, you might expect the mood in Monaco at the annual GAIM hedge fund conference to be jubilant. Indeed, Martin de Sa’Pinto has identified some crucial developments in delegates’ late-night carousing which point to some renewed confidence.

Managers are certainly in a better mood than last year, when the industry had been through a battering from markets and disillusioned investors.

But there is still a lot of nervousness, with regulation and tax concerns very much on investors’ minds.

And a volatile May, including the industry’s biggest losses in 18 months, has taken its toll. The talk is of how not to lose money, while a session entitled “Understanding the recent strength of global macro strategies” –presumably thought up several months ago — looks like an anachronism.

Even the weather isn’t brilliant. The usual brilliant sunshine has given way to heavy rain yesterday and overcast skies today.

At least the choice of speakers seems right. “Black Swan” author Nassim Nicholas Taleb and perma-bear Hugh Hendry seem to sum up the air of caution very well.

Monaco nightspots hint at hedge fund comeback

It may seem tenuous, but the small number of delegates present in Monaco’s Grimaldi forum on Wednesday at the start of the second day of the GAIM hedge fund conference is a clear indication that the industry is feeling renewed confidence after the gloom of last year.

The reason for the poor morning turnout is quite simple. A good proportion of the attendees didn’t make it to bed until at least 3.30 a.m. on the first full conference day.

Sass, Monaco’s favourite drinking hole was so packed the previous evening that it was impossible to get anywhere near the bar.

The crowd was still thick enough to force the few passers by off the pavement if they didn’t want to get held up by the heaving human traffic jam. A stark contrast to 2009 when access to the bar area was relatively clear and even the hard core drinkers began making their way back to their hotels by 1 a.m.

Some attendees protested it was last night’s unseasonal torrent of rain that kept them hemmed in at the bar, but it didn’t prevent them from hopping into taxis to make their way to Jimmyz, the most famous of the principality’s nightspots.

At Jimmyz back in 2009, the atmosphere and the numbers were more what one might expect in an obscure exhibition at a remote museum or at the funeral of someone with few friends.

This year, the club was buzzing.

Latest from GAIM

Our reporters have been scouting round the halls at the GAIM hedge fund conference in Monaco today. Here’s a taste of what we’ve seen so far:

Man Group CEO rules out big deals after GLG buy

Hedge funds to manage $3 trln by 2013-consultant

FACTBOX-The European hedge fund industry

PREVIEW-May losses cloud hedge fund summit in sunny Monaco

And some links from Reuters Insider coverage:

FRM’s de Gentile-Williams

Sowing seeds for a healthy hedge fund investment

Further signs that, for those with cash to invest, there could be some great opportunities to invest in hedge funds.

Man Group’s RMF Global Emerging Managers portfolio has invested $50 million in 5:15 Capital Management’s* flagship fund and says the opportunity set has never been better.

The reason, according to Hans Hurschler, head of hedge fund ventures at Man, is twofold.

Firstly, many speculators such as hedge funds and bank prop trading desks have simply been wiped out or seen their firepower curtailed as a result of the credit crisis. This means less competition for those remaining funds.

Secondly, there are still few investors willing to commit capital, so hedge funds are often fighting over seed capital.

At last month’s GAIM conference in Monaco, FRM Capital Advisors chief operating officer Patric de Gentile-Williams told me a whole new opportunity set was opening up — funds that previously had seed capital but had seen it withdrawn.

There are still plenty of pitfalls in hedge fund investing, but there seem plenty of opportunities for those who can pick the right managers.

GAIM 2009: Hendry’s investment outlook

Watch maverick fund manager Hugh Hendry, partner and CIO at Eclectica Asset Management, talk about his investment outlook at this week’s GAIM 2009 hedge fund conference in Monaco.

GAIM 2009: Managers, investors cheer new austerity

This year’s GAIM conference was far smaller than the three previous summer events, with fewer organized events, no sponsored gala dinner and restricted cocktail sessions where two or three bar staff struggled to satisfy hundreds of thirsty conference-goers

The fact was duly noted, initially with some concern, by many of the investors and asset managers, several of them grumbling about the limited amount of liquid refreshment available to slake a healthy thirst worked up in the searing Monaco sun.

In the end, however, investors were left impressed by the quality of their numerous meetings with asset managers over the three-day event. Managers too said they were impressed by the incisiveness of investor questions.

GAIM 2009: Hendry goes long

Maverick hedge fund manager Hugh Hendry is rarely far from controversy and his appearance at the GAIM conference in Monaco this week was no exception.

Having been scheduled to give a short talk on the future of capitalism before getting into a longer discussion with Lombard Street Research chief international economist Charles Dumas, Hendry proceeded to overrun his slot, giving his views on pretty much anything to do with the world of investment.

Perhaps sensing he might not get the chance to give all his views on capitalism’s plight, Dumas twice attempted to interrupt Hendry’s monologue mid-flow, protesting that “this is meant to be a discussion”.

GAIM 2009: Business card largesse signals hedgie sales push

Journalists have not needed to persecute and cajole hedge fund executives into handing over their business cards at GAIM this year, a sharp contrast to conferences in less troubled times.

At past GAIMs, or the Global Alternative Investment Management conferences, certain hedgies went to great lengths to duck journalists, and many even expressed concern or irritation that journalists were allowed in at all.

Regulation is partly to blame for this past modesty, since rules in several countries restrict how hedge funds present themselves to the public. In fact, some rules are so vague that many funds prefer to stay out of the limelight completely rather than risk the wrath of the regulator for being quoted out of turn.

For me at least, this year has been completely different, and in spite of my depleted stock of business cards running out almost immediately (I cunningly forgot to pack the extra box I had intended to bring), I have returned to the hotel every day with my pockets bulging with business cards.