Hedge fund stories from the past 24 hours from Reuters and elsewhere:

Galleon charges shine harsh light on hedge fund industry- Market Watch

US hedgie Cadogan inks spin off from Fortis - Reuters

Pellegrini says shorting U.S. debt ‘attractive bet’ - Bloomberg

Templeton’s Mobius sees more insider trading cases - Reuters

Hedge fund stories from the past 24 hours from Reuters and elsewhere:

Madoff friend Picower dead, found in pool - Reuters

Probe widening in Galleon case - WSJ

Hedge funds edge closer to recouping crisis losses - WSJ

UK hedgie loses out in sale of Irish Continental stake - Irish Independent

Hedge fund prices decline for fourth month, Hedgebay data show - Bloomberg

Hedge fund stories from the past 24 hours from Reuters and elsewhere:

SAC invests in star trader’s fund - FT Alphavile

Massachusetts court rules against hedge fund manager - Reuters

3A launches Ucits III fund of hedge funds - Opalesque

SilkInvest launches fixed income frontier fund - HedgeCo.Net

Bearish funds set for redemptions, Cramer predicts - NYT DealBook

BBVA and Newedge form Altura joint venture - Hedgefund Journal

This year’s stock market rebound has turned into a bubble, or at least that’s the view of closely-followed hedge fund manager Crispin Odey.

Odey, who called a bull market back in April, reckons quantitative easing has fuelled investors’ desire to get out of cash and government bonds and into real assets, leading to a stampede.

However, there is little sign this bubble is going to burst in the immediate future and Odey reckons these conditions could continue until the end of the year.

For now at least, “everyone should enjoy it”, says Odey, whose European fund rose 6.5 percent in August, taking year-to-date gains to just under 47 percent.

Hedge fund stories from the past 24 hours from Reuters and elsewhere:

 
Hedge fund boss accuses PM of ignoring crunch alarm bell - London Evening Standard

Citadel to oversee Lehman assets - FT Alphaville

Hedgie Paulson mad about Citi - New York Post

Hedge funds hiring again after downturn - Reuters

Blackstone gem - buyout leader excels in hedge sector - New York Post

Derivatives expert Jason Russell back with his own firm - Globe and Mail

Hedge fund stories from the past 24 hours from Reuters and elsewhere:

Hedge funds soar in ‘09, most still in the red - Reuters

Madoff brought to book - Daily Telegraph

Hedge funds enjoy third straight month of inflows - Finalternatives

Greed can backfire on hedge fund seeders: Man - Reuters

Terminator producers sue hedge fund backer - NY Times

Man Investments has invested another $50 mln into a start-up hedge fund, showing that, for those prepared to take the perceived risks, there may be good opportunities to back talented managers at the moment.

The firm’s RMF Global Emerging Managers seeding fund has backed Hong Kong-based Minerva Macro fund, run by ex-Fortress manager Stanley Ku, having last month put $50 mln with 5:15 Capital Management’s flagship fund.

Some hedge fund seeders believe that tougher fundraising conditions for boutiques, coupled with reduced competition as some banks have cut back their seeding, means those with the cash can get great deals with talented managers starting their own firms now.

However, seeding isn’t what it was in the ‘old days’ of the hedge fund industry (i.e. 10 years ago).

Now, according to Hans Hurschler, head of Man Investments’ Hedge Fund Ventures, it’s more like loaning money to a start-up than making a private equity-style investment.

“The seeding world has developed a lot over the last two-to-three years. There must be quite a bit of partnership,” he told me.

“You give larger chunks of money. A manager doesn’t want people who in 15 or 20 years are taking money from you. Today’s deals are limited in time. They’re not like private equity deals, they’re like a loan.”

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.

SWIP investment director James Clunie – who is setting up a fund that can short and whose book on short-selling entitled “Predatory Trading and Crowded Exits” is published next month — sees dilemmas for short-sellers, even in stocks that fall.   

“In general, heavily shorted stocks do tend to underperform but the distribution is skewed. Every now and then there are big losses,” he tells me, adding this makes the practice harder to stomach for funds unwilling to take losses.

Clunie warns that crowded exits — where many hedge funds are shorting the same stock and then suddenly want to leave at the same time — can be particularly painful.

“The losses are not on a Volkswagen scale (when many funds tried to close the trade at the same time after Porsche said it had effective control of 74.1 percent of VW) but they are quite painful.

“You can lose 20 or 30 percent in 10 or 20 days. These are average figures.”

Hedge Hub readers shouldn’t have been too surprised by yesterday’s 15 percent slump in Yell’s share price.

The directories firm — the one behind the UK’s Yellow Pages — faces months of talks with banks and shareholders after yesterday saying it plans to restructure its roughly 4 billion-pound debt burden for the second time in nine months.

Yell has had to battle a slump in classified advertising spending and a shift to online from print publications, and analysts have been predicting it could breach its covenants as soon as the start of next year.

Our blog on June 23, citing research from Dataexplorers, showed that Yell Group is among the top ten non-financial firms with the biggest net debt to equity ratios out of the 300 largest listed companies in the UK.

We also showed that Yell ranked 1st in Dataexplorers’ Negative Sentiment indicator, which highlights where stock out on loan — usually used for shorting — has been highest and is rising.

Some fund managers have been buying, and making money out of, companies whose share prices were trashed last year because refinancing looked difficult, but where access to funds have recently become easier.

However, firms treading too close to the edge — carrying massive debt burdens while trading is rocky — could find it a different story.

The research also highlighted Debenhams as being in the top ten for net debt to equity and 4th on the negative sentiment score, as well as several companies in the U.S., Japan and Europe.

Which company is next in line for its share price to take a kicking because of its debt?