Funds Hub
Money managers under the microscope
Reuters HedgeWorld webinar on prime brokerage
By Chris Clair
On Nov 10, Reuters HedgeWorld will present a 90-minute web seminar all about prime brokerage.
It’s been a little more than a year since the prime broking industry changed forever with the demise of Lehman Brothers and Bear Stearns … or did it change forever? Certainly there are more small and mid-size players in the space, but what has that actually meant for the hedge fund industry? Moreover, how can hedge fund managers ensure they’re choosing the right prime broker to suit their needs and get the most out of the relationship?
Joining HedgeWorld will be three experts on the subject: Sameer Shalaby, chief executive of technology company Paladyne Systems; Glen Dailey, managing director at prime brokerage firm Jefferies & Co.; and Craig Stein, partner at the law firm Schulte, Roth & Zabel LLP. Each will share his insight into:
* How many prime brokers are enough?
* What questions managers should ask themselves, and potential prime brokers, as they evaluate their options?
* What are the different roles prime brokers play today, and how much they charge?
Morning Line-up
Hedge fund stories from the past 24 hours from Reuters and elsewhere:
Galleon to liquidate funds, despite good returns- Reuters
Sweden attempts deal to drop EU cap on hedge fund borrowing- Reuters
Hedge funds set for record returns- Money Management
Lehman hedge funds customers can claim interim income- Times
from Summit Notebook:
Time private bankers got professional
It's hard to imagine that a banker who represents multimillionaires would be anything but professional - but a top executive at a leading global bank thinks that's precisely the wealth management industry's problem.
"There is so much mediocrity in the industry we have to raise the bar here," said Gerard Aquilina, vice chairman of Barclays Wealth, at the Reuters Global Wealth Management Summit in Geneva.
To Aquilina's way of thinking, private bankers need the same "institutional rigor" as investment bankers in the way they operate. To this end the bank is looking to pursue only top-quality hires.
"Our strategy is not to be the hoover that comes and hires willy-nilly, we want to be much more selective," said Aquilina -- perhaps an ironic view given Barclays acquired thousands of investment bankers from the ashes of the fallen Lehman Brothers last year.
But he and his colleagues are so sure of their position that he said they are working on developing MBA-level courses with some unnamed top universities on private banking, especially as they see fewer and fewer interns turning up their noses at the prospect of a three-month rotation in the private banking shop.
Who raised the risk budget?
There’s been much debate about recent prop trading profits at banks including Goldman Sachs, JP Morgan and others in the first half of the year, but one important question remains unasked.
How, just over half a year after some market observers pronounced prop trading perpetually and eternally dead, did the prop desk at these banks bounce back to life in a fashion that would have turned Lazarus green with envy?
After all, after taking huge writedowns on subprime securities, many of them directly attributable to their prop desks, throughout the financial crisis, a large number of the chastened banks slashed their prop desk staff and put strict risk limits on trading.
But while the financial crisis was still in full swing, someone raised the risk budget.
Einhorn: Moody’s broadside lacks usual punch
David Einhorn again sent markets scurrying last week when he told investors he was shorting Moody’s Corp, but the Greenlight Capital manager’s latest thumbs down packed a weaker punch than his past, celebrated broadsides.
To be fair, Einhorn had a tough act to follow. A year ago, he boldly said Lehman Brothers was in much worse shape than its management would admit. Four months later — the bank went bankrupt and the shares were wiped out. It took more than six years, but his warnings about business lender Allied Capital also proved accurate and ultimately very profitable.
Last week, the soft-spoken Einhorn turned his sights on the parent of credit rating agency Moody’s Investors Service. Investors dutifully followed Einhorn’s lead and sent Moody’s shares down as much as 8 percent before they closed at $26.89.
Yet in the three trading days since, Moody’s stock has recovered its Einhorn losses and more. The shares traded at $28.66 a share Tuesday.
In a speech titled “The Curse of the AAA,” Einhorn said Moody’s credibility was wrecked after perfection-rated companies like AIG, bond insurer MBIA and Fannie Mae, not to mention the mortgage- backed securities market, all collapsed.
“Investors who bought AAA-rated structured products thought they were buying safety, but they instead bought disaster,” he said. “Investors have figured this out and many deny that they buy bonds based on rating, unless they are forced to by law.”
