Funds Hub
Money managers under the microscope
Morning Line-up
Hedge fund stories from the past 24 hours from Reuters and elsewhere:
Galleon 90 percent liquidated - Reuters
US House panel approves hedge fund bill – Reuters
Bear Stearns hedge fund manager told investors only ‘couple million’ redemptions on call- Bllomberg
Traders go short on Lloyds - Telegraph
You can’t win ‘em all
Ah well, even superstar hedge fund managers can’t always get their timing spot on.
U.S. hedge fund boss John Paulson had been sitting on a 300 million pound profit on his bet against British bank Barclays just three months ago, but by holding on for too long has seen most of that gain wiped out.
Paulson held a 1.2 percent short position in Barclays last September when new disclosure rules came in, but on Tuesday he cut it to less than 0.25 percent. His entry price is not known, but the shares were at 350p in September and crashed to 55p in March, before soaring to 316p by Monday’s close.
New York-based Paulson, who has made billions betting against U.S. banks and some European lenders including RBS, looks to have still made at least 50 million pounds on the Barclays bet. But he may be further aggrieved after the stock fell sharply after he closed out, following a massive share placing.
(See also Odey’s Barclays boost)
from Global Investing:
Permabears are coming out of hibernation
After a 40-percent gain, the rally in world stocks might be losing momentum.
For permabears who live on doom and gloom to make money this is just a blip which is going to end in tears.
David Tice, a 20-year veteran short seller who manages Federated Investors' $1 billion short fund, says we are in for a secular bear market which is going to last for 10 years.
"I've never more been convinced than anything in my life that this is a suckers rally," Tice says.
He says short funds -- which borrow stocks to sell to buy at a lower price -- are negatively correlated to stocks and risky assets, allowing investors to diversify their portfolio.
"An individual really has three legs to his financial stool -- pay check/bonus, stocks, real estate. In 2008 all these legs to his financial stool declined," he says.
"A short fund is negatively correlated. Therefore in a bad economic environment, when people run the risk of all three of those legs declining and are lucky enough to have a pot of liquidity, they should consider putting that to work to a negatively correlated vehicle like a short fund."
Short and Curlies
The Longpigs were one of the lesser lights of Britpop, best known for a number 16 hit with She Said and for launching the career of Richard Hawley. Now though, apparently, short pigs are all the rage.
News reaches us of exciting developments in the world of ETFs where the market is seeking out ways to play swine flu. ETF Securities has seen a surge in volumes and returns of its Short Lean Hogs ETC after the World Health Organisation (WHO) raised its pandemic alert for swine flu to the second highest level last Wednesday.
No word on Short Fat Hogs, but we are reliably informed that the surge in short interest in their slimline cousins has put them in the top 5 of short ETC’s by returns in the year to date. The porkers must be feeling particularly perky at outperforming the MSCI World by some 74 percent since September last year.
ETF Securities reckons the interest shows investors are using Short ETCs to benefit from an anticipated fall in demand for lean hogs on the swine flu outbreak. It notes that U.S. pork import bans have been enacted by Russia, China, the Philippines, Serbia, Kazakhstan and South Korea since the end of last week — while lean hog prices have seen sustained pressure as farmers have culled pigs, increasing supply as high feed costs and falling returns have pressured margins.
Any Hedgies out there making this play, then get in touch.
More political point-scoring than full blown protectionism I reckon. Mind you, these scares are often used to wield trade muscle.
The lingering bans on British beef were perhaps understandable considering the ravaging effects of vCJD, but the embargos you mention look like a convenient over-reaction.
Reuters Fund Summit: Will hedge fund regulation open the door to retail investors?
By Huw Jones
Hedge funds are nothing if not optimistic – they have to be in the current climate.
While holed up in an English country resort last weekend, finance ministers and central bankers from the G20 group of countries agreed that the $1.4 trillion hedge funds sector should be made to register, be directly supervised and provide information about their holdings to regulators who track risk in markets.
Mid to small cap funds are becoming increasingly reliant on funding coming from non-institutional investors. What are some of the most effective unconventional capital introduction strategies employed by managers today?
