Funds Hub
Money managers under the microscope
Morning line-up: Banks find love in the hedgies, and heroes in our midst
News and views on the hedge fund industry from Reuters and elsewhere:
Big league hedgies buy banks – Reuters
Saving the world, one trade at a time – Economist
The quant fund in need of a renaissance – FT
Message to FoHFs: Work harder; cut fees – Reuters
Gulf cash set to flow? – Bloomberg
(Another) Paulson payday
A large (and not entirely unexpected) payday for John Paulson’s European arm.
Four members of Paulson Europe LLP shared 50.8 mln stg for the year to March ’09, up from 37.1 mln stg the previous year, company accounts show.
Morning line-up
News and views on the hedge fund industry from Reuters and elsewhere:
Paulson Europe directors coin it in – Telegraph
Hedgie investors need clearer picture – Reuters
How much are your frozen assets worth? – Seeking Alpha
The Ken Griffin emergency room – Chicago Tribune
Short-sellers back in the money for now
For better or worse, hedge fund returns have a tendency to follow markets, in part because most long-short funds are net long most of the time.
So after a huge rebound in the stockmarket this year, which has helped hedge funds make up some much-needed ground, October proved a difficult month when the market fell in the second half of the month.
Morning line-up
Hedge fund stories from the past 24 hours from Reuters and elsewhere:
Hedge funds slash costs to win back investors – Daily Mail
Ex-GLG fund head to set up in Paris – FT
John Paulson tops list of most admired hedge fund managers – Absolute Return
FRM Capital invests in Asia hedge fund – WSJ
Hedge funds threatened by redemption requests – Hedge Funds Review
Hedge fund assets seen rebounding – Reuters
Caught short
Short-sellers have taken a lot of flak during the credit crisis, particularly last year when the slump in banks’ share prices eventually prompted the FSA and other regulators to temporarily halt the practice among financial stocks.
However, it is worth remembering that for all the headlines of huge profits made by John Paulson and others, the practice is not a guaranteed winner and can result in painful losses.
Nickels and black swans
Some investors may not be fully aware of the risks they face as career-conscious hedge fund managers plump for strategies that build a convincing-looking track record but occasionally backfire badly.
According to a paper by Yale academic Hongjun Yan, hedge fund managers are far more likely to choose so-called ‘nickel’ strategies than ‘black swan’ strategies, even if returns are ultimately lower and they risk the occasional huge loss.
from DealZone:
Breaking down hedge fund billions
Four of the world's top hedge fund managers took home 10-figure paychecks last year, even as the loosely regulated industry delivered its worst returns and hundreds of firms were forced out of business.
The industry's 25 best-paid managers collected a total of $11.6 billion, which marked the third-best year on record, according to an annual survey released by Institutional Investor's Alpha magazine. Top on the list was James Simons, a former mathematics professor who runs hedge fund group Renaissance Technologies, with estimated earnings of 2.5 billion.
$3 trillion of hedge fund talent? “Absolute nonsense!”
The once-booming hedge fund industry has shrunk rapidly over the past 9 months to roughly $1-$1.4 trillion, as investors have pulled out their cash following some pretty lacklustre returns.
However, according to Mark Kary, chief executive of Polar Capital, the industry never really deserved to have grown to the best part of $3 trillion in the first place.
Subprime master Paulson’s Midas touch
Hedge fund managers may get a lot of stick in these troubled times, but there are some that more traditional investors may want to listen to.
John Paulson, for example.
The 53 year-old American, no relation of Hank, is having a good financial crisis. In 2007 he pulled off one of the most lucrative gambles in investment history — amassing a personal fortune of nearly $4 billion betting against the sub-prime mortgage sector.
