LONDON (Reuters) – It’s the day after Cambridge physicist Stephen Hawking’s 70th birthday party and David Harding, the head of one of the most successful hedge funds in the world, is bubbling with talk of black holes.

Given the financial crisis of the last few years, some might see that as an unwise topic of conversation for a hedge fund manager. But for Harding, a physicist, the geekier the better.

The 50-year-old runs Winton Capital, one of a secretive but influential band of computer-driven hedge funds that bet tens of billions of dollars on the world’s financial markets using algorithms – mathematical instructions to computers – which consume everything from bond price moves to rainfall statistics.

For Harding, whose business attracts mainstream pension investors from the world over, all of human knowledge is relevant. Rivals are circling, and data is becoming an increasingly strategic weapon.

Winton’s collection of funds is now worth more than $29 billion. It has returned 14.8 percent a year in its main fund over the past decade – one of the best records over that period in the UK – and Harding is now likely to be Britain’s highest-paid person, according to this year’s Sunday Times Rich List. It says his wealth almost doubled last year to 800 million pounds.

Funds like his are known in the industry as trend-followers, managed futures funds or Commodity Trading Advisors (CTAs). Now run almost entirely by scientists, their ‘black box’ trading has entered popular culture: Robert Harris’s latest thriller, “The Fear Index”, features a fictional physics expert like Harding and rogue computer code.

But as algorithmic hedge funds have become better known and sucked in investors’ money, returns have started to falter. Managed futures funds on average have lost money in two of the past three years, gaining just 4 percent in aggregate while the S&P 500 rose 49 percent. An investment in Winton’s main fund would be down 0.75 percent in the first four months of this year.

LONDON (Reuters) – It’s the day after Cambridge physicist Stephen Hawking’s 70th birthday party and David Harding, the head of one of the most successful hedge funds in the world, is bubbling with talk of black holes.

Given the financial crisis of the last few years, some might see that as an unwise topic of conversation for a hedge fund manager. But for Harding, a physicist, the geekier the better.

The 50-year-old runs Winton Capital, one of a secretive but influential band of computer-driven hedge funds that bet tens of billions of dollars on the world’s financial markets using algorithms – mathematical instructions to computers – which consume everything from bond price moves to rainfall statistics.

For Harding, whose business attracts mainstream pension investors from the world over, all of human knowledge is relevant. Rivals are circling, and data is becoming an increasingly strategic weapon.

Winton’s collection of funds is now worth more than $29 billion. It has returned 14.8 percent a year in its main fund over the past decade – one of the best records over that period in the UK – and Harding is now likely to be Britain’s highest-paid person, according to this year’s Sunday Times Rich List. It says his wealth almost doubled last year to 800 million pounds ($1.27 billion).

Funds like his are known in the industry as trend-followers, managed futures funds or Commodity Trading Advisors (CTAs). Now run almost entirely by scientists, their ‘black box’ trading has entered popular culture: Robert Harris’s latest thriller, “The Fear Index”, features a fictional physics expert like Harding and rogue computer code.

But as algorithmic hedge funds have become better known and sucked in investors’ money, returns have started to falter. Managed futures funds on average have lost money in two of the past three years, gaining just 4 percent in aggregate while the S&P 500 rose 49 percent. An investment in Winton’s main fund would be down 0.75 percent in the first four months of this year.

LONDON, May 21 (Reuters) – It’s the day after Cambridge physicist Stephen Hawking’s 70th birthday party and David Harding, the head of one of the most successful hedge funds in the world, is bubbling with talk of black holes.

Given the financial crisis of the last few years, some might see that as an unwise topic of conversation for a hedge fund manager. But for Harding, a physicist, the geekier the better.

The 50-year-old runs Winton Capital, one of a secretive but influential band of computer-driven hedge funds that bet tens of billions of dollars on the world’s financial markets using algorithms – mathematical instructions to computers – which consume everything from bond price moves to rainfall statistics.

For Harding, whose business attracts mainstream pension investors from the world over, all of human knowledge is relevant. Rivals are circling, and data is becoming an increasingly strategic weapon.

Winton’s collection of funds is now worth more than $29 billion. It has returned 14.8 percent a year in its main fund over the past decade – one of the best records over that period in the UK – and Harding is now likely to be Britain’s highest-paid person, according to this year’s Sunday Times Rich List. It says his wealth almost doubled last year to 800 million pounds ($1.27 billion).

Funds like his are known in the industry as trend-followers, managed futures funds or Commodity Trading Advisors (CTAs). Now run almost entirely by scientists, their ‘black box’ trading has entered popular culture: Robert Harris’s latest thriller, “The Fear Index”, features a fictional physics expert like Harding and rogue computer code.

But as algorithmic hedge funds have become better known and sucked in investors’ money, returns have started to falter. Managed futures funds on average have lost money in two of the past three years, gaining just 4 percent in aggregate while the S&P 500 rose 49 percent. An investment in Winton’s main fund would be down 0.75 percent in the first four months of this year.

LONDON, May 18 (Reuters) – The “disastrous” consequences of a return to the drachma mean there is no chance of Greece leaving the euro, said hedge fund firm Toscafund.

The fund’s chief economist Savvas Savouri said in a research note for clients that Greeks will vote for parties that back the euro and Greece’s 130 billion euro ($165 billion) bailout in next month’s elections despite the spending cuts, wage reductions, tax rises and privatisations that go with it.

“We are sure they (Greeks) are sure to see sense and opt for the unpleasant known rather than send Greece into an economic black hole,” he said in the note this week.

“Once Greeks vote to remain euro-ized, with all the challenges attached, the debate over the possibility of any exits will end. Greeks will in effect go from the biggest threat to the euro’s future to ensuring it has one.”

Greek elections, portrayed internationally as a referendum on the single currency, are scheduled for June 17 after talks to form a government collapsed following inconclusive elections earlier this month.

The political crisis has raised the possibility of a Greek exit from the 17-nation euro zone, or “Grexit” as some economists have called the once unthinkable eventuality.

In January, Savouri said that a Greek exit from the euro zone would be worse than catastrophic and could provoke greater social unrest, Zimbabwe-style inflation and a military coup.

LONDON (Reuters) – Hedge funds are holding out for further gains from their bets against JPMorgan’s massive position in U.S. credit derivatives, racking up tidy profits from a lucrative trade that could cost the U.S. bank more than $3 billion.

Managers – some of them ex-employees of the biggest U.S. bank – started betting in credit derivative markets, including on an index of credit default swaps against its constituents, during the first quarter, believing JPMorgan’s huge positions had created dislocations in the market which would disappear over time.

Some of those funds are sticking with their positions just as the bank tries to unwind its trades, industry insiders say.

“It still looks relatively attractive, and (funds) are likely to think the trade can run further,” said one hedge fund investor, who asked not to be named.

“There’s been some booking of profit, which is good risk management. (But) exposure has (largely) been maintained. Once you hit your targets, if there still seems momentum in the trade and the valuation metric remains reasonable, you stick with it.”

JPMorgan’s losses come from bets tied to debt via an index known as CDX.NA.IG.9, which tracks credit default swaps on about 127 investment-grade companies in North America.

The layers of swaps became riskier as more were added, traders say.

LONDON (Reuters) – Hedge funds made small profits in April, according to a new performance index, even as global shares sank amidst the market fears over Spain’s deepening debt crisis and signs that the U.S. economy was slowing.

The GlobeOp Hedge Fund Performance Index, which tracks the performance of the majority of hedge fund services provider GlobeOp’s $187 billion in assets administered, rose 0.51 percent, taking returns so far this year to 3.66 percent, the firm said in a statement.

Returns are shown gross, meaning they do not take account of hedge fund operators’ lucrative fees.

The gains came despite a 1.4 percent drop in the MSCI World Equity index .MIWD00000PUS last month, its first monthly loss this year after a bullish first quarter as economic worries resurfaced on both sides of the Atlantic.

The returns come after heavy criticism by some commentators and investors that the hedge fund industry is too correlated to stock market returns.

Data from rival index provider Hedge Fund Research showed funds declining 0.36 percent last month.

GlobeOp says its index avoids so-called ‘survivorship bias’ as funds cannot choose whether or not they report performance. The index is asset-weighted, meaning the performance of bigger funds counts for more than smaller ones.

NEW YORK/LONDON (Reuters) – Pressure on Chesapeake Energy Inc’s embattled chief executive increased on Monday as a small London hedge fund urged the company’s board to terminate Aubrey McClendon, while a well-known activist investor was reported to be building a position in the company.

London-based Noster Capital sent an open letter to Chesapeake’s board on Monday asking the No. 2 U.S. natural gas producer to remove McClendon as details of his financial dealings emerge.

Chesapeake has been caught in a corporate governance controversy since Reuters reported last month that McClendon had mortgaged his personal stakes in the company’s oil and gas wells to companies that had lent money to the company.

In Noster’s letter the fund, which owns 250,000 Chesapeake shares, asks the board to “immediately terminate” McClendon and keep him on as an unpaid consultant.

Pedro Noronha, managing partner at Noster, said in a telephone interview that he hopes his letter will prompt other shareholders to take a more critical look and speak up as well.

He added that he is keeping his position unchanged for now.

The Wall Street Journal reported on Sunday that billionaire investor Carl Icahn, one of Wall Street’s most powerful activist investors, is buying Chesapeake shares.

LONDON (Reuters) – The chief executive of beleaguered hedge fund manager Man Group sought to defend his position, saying shareholders supported him despite further withdrawals of clients’ money and poor returns from its flagship fund.

Peter Clarke has been under growing pressure as the company’s (EMG.L: Quote, Profile, Research, Stock Buzz) share price has fallen by almost 60 percent since September, sparking market talk of a takeover or a change of management.

Clarke on Tuesday dismissed the need for a bid from a rival, despite recent speculation by analysts at UBS that the company was a “likely take-out candidate,” and said he had shareholders’ support.

“We do not feel we need a big brother in order to achieve our strategic objectives,” said Clarke, who took over as CEO from industry ‘godfather’ Stanley Fink in 2007.

“I do not feel our shareholders do anything other than support existing management, as witnessed by the proxy votes.”

In November, Reuters reported one top 15 shareholder saying the fund manager was “ripe for a management reshuffle”. Last Friday the Financial Times reported that top 10 institutional investors had given Clarke a “window” in which to lift the share price.

Clarke’s comments come as Man said client withdrawals had slowed to a net $1 billion in the three months to March 31. Analysts at Numis had expected a $1.5 billion net outflow. In comparison, the firm saw $2.5 billion of net outflows in the final three months of 2011.

LONDON, May 1 (Reuters) – Man Group said clients pulled out less of their cash in the first three months of this year than in the previous quarter, raising hopes that the beleaguered hedge fund manager may soon stabilise its business after a dire past six months.

The firm, whose share price has fallen by almost 60 percent since September due to investor outflows and poor performance from its flagship fund, said clients withdrew a net $1 billion in the three months to March 31.

Analysts at Numis had expected a $1.5 billion net outflow. In comparison, the firm saw $2.5 billion of net outflows in the final three months of 2011.

“Redemptions reduced but investor sentiment remained fragile and we are yet to see an increase in sales,” CEO Peter Clarke said in a statement.

Assets under management fell to $59 billion from $59.5 billion at the end of February.

Man’s $21 billion black box fund AHL has struggled this year, losing 2.2 percent so far in 2012 after falling 6.4 percent last year. The firm said on Tuesday that AHL was on average 14 percent away from its so-called high-water mark, above which it can earn lucrative performance fees.

However, funds at Man’s manager-driven GLG unit – which it bought for $1.6 billion in 2010 – have made gains this year.

LONDON (Reuters) – A mooted change of chief executive at Man Group (EMG.L: Quote, Profile, Research) will do nothing to revamp its flagship fund and reverse the client withdrawals expected to be in focus again this week.

Peter Clarke, who took over as CEO from industry ‘godfather’ Stanley Fink in 2007, has been under growing pressure after a near 60 percent fall in the share price since September on the back of client withdrawals and poor returns from its main ‘black box’ fund.

In November, Reuters reported one top 15 shareholder saying the fund manager was “ripe for a management reshuffle”.

Last Friday, the Financial Times reported that top 10 institutional investors had given Clarke a “window” in which to lift the share price.

While analysts agree a change of CEO could boost Man’s battered share price temporarily, they question how a new CEO could address the two main issues – the poorly performing quant fund AHL, and GLG, a landmark acquisition widely viewed as expensive.

“I do not think changing the CEO can make too much of a difference other than providing a scalp, and is that what people want? It would be a shame,” said Sarah Ing, analyst at Singer Capital Markets.

“As a management team they have done a lot to provide as much clarity as they can on the issues under their immediate control.”