from Funds Hub:

…Or maybe not

Yesterday I optimistically predicted hedge funds would learn a lot more about their regulatory fate as the G20 drew to a close.

rtxdj6oThat wasn't exactly incorrect -- the industry did find out for example that regulation and oversight will be extended to "systemically important hedge funds".

But, as with many political statements, the devil is in the detail -- or in this case, the lack of it.

"The G20 communiqué is unclear as to whether their aim is to have further regulation and oversight of the funds themselves or of the managers who manage the funds," says Robert Mellor, UK hedge fund leader at PricewaterhouseCoopers.

"The communiqué also does not make it clear what regulation means in this context. If indeed they are pointing to more regulatory capital, who would be required to have the additional capital? The hedge fund manager or the offshore fund?"

from Funds Hub:

Hedge funds sniff out bond exchange bargains

Hedge funds may be sniffing around the growing mountain of troubled European companies, picking out those they see as most likely candidates to undertake bond exchanges as a way to make money, according to market talk.

rtr1vt6iDebt-laden Dutch NXP Semiconductors NXP this week managed to cut its debt by about $465 million in an example of a debt-swap restructuring deal that has been more common in the United States up until now.

This type of deal is expected to become more prevalent in Europe now, however, as a way to salvage firms with good business models but which have been saddled with too much debt.

from Funds Hub:

Best of British

There has been no shortage of calls from continental European leaders such as Angela Merkel and Nicolas Sarkozy for regulation of the hedge fund industry to limit potential systemic risks to the global financial system.

rtxd6kuBut it's little surprise that some executives in London, where the vast majority of European hedge funds are actually based, have privately suggested the calls stem from motives rather more mixed than simply wanting better regulation.

These, they say, can be anything from these leaders wanting to hide their own political problems, to them feeling some ownership because many hedge fund investors are based in continental Europe, to a simple feeling jealousy of an industry that in Europe at least is mostly British.

Cayman Islands’ beauty tips for offshore funds

MISS-UNIVERSE-2008/ The sunny, secretive Cayman Islands have an image to protect. Bracing for a crush of reporters looking for comments a few weeks before a G20 meeting that may target tax havens like the Caymans, the island’s financial officials have a message for hedge funds and others who might get grumpy with a flood of nosy scribblers: don’t muss us.

Among the presentation tips for dealing with “surprise” or uncomfortable encounters, the island’s Portfolio of Finance & Economics sent around this week:

–Remain calm and pleasant.

–Keep eye contact with the reporter.  Do not look directly into the camera, especially when speaking.

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.

The total number, however, marks a sharp decline from the $22.5 billion that the industry’s best performers took home in 2007. Analysts had expected the overall decline after the average hedge fund lost 19 percent and its size shriveled because investors pulled out roughly $150 billion in assets.

from Funds Hub:

An unpleasant prospect

rtxd578There's no shortage of ill will towards bankers at the moment.

But some executives in the private equity and hedge funds industries feel they are getting beaten with the same stick by politicians and the public, despite feeling relatively blameless in this crisis.

BC Partners managing partner Andrew Newington, speaking at the Reuters Hedge Fund & Private Equity Summit in London today, explained.

"There is clearly no political goodwill towards financial services in general and everyone within financial services is being lumped into the same bucket," he said.

from Funds Hub:

$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.

kfd05However, 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.

He told today's Reuters Hedge Fund and Private Equity Summit in London that while hedge funds had become a "fashion item" in the good times, when it comes down to it there simply isn't enough talent to support an industry of $3 trillion.

from Funds Hub:

Turn! Turn! Turn!

For all the political noise about hedge fund regulation, today's Turner review looks like a relatively easy set of rules for the industry to stomach.

rtrixobIn his 126-page document, mostly about the banking sector, FSA chairman Adair Turner says the watchdog will demand more information from hedge funds and says regulators should be able make rules in areas such as capital and liquidity if hedge funds start to pose systemic risks or become "bank-like" in their activities.

And while Turner points out hedge funds can pose systemic risks, he notes the FSA's already-extensive regulation of hedge fund managers.

from Funds Hub:

Finding a buyer

Another day and another report of a company looking to exit its hedge fund operation.

rtr237ljAccording to a report in today's FT, Germany's Commerzbank has put its $900 million fund of hedge fund manager Comas up for sale, although it may close it down if no buyer is found.

Only last week Spanish bank BBVA said it would close down its alternative investment businesses, including hedge funds, and give investors their money back.

from Funds Hub:

The new wrong

Most hedge funds agree that the credit crisis has thrown up some interesting assets at bargain-basement prices, particularly in credit markets.

rtr23v8sThe problem? When you have to report net asset value performance to jittery investors and prices of these cheap assets are getting even cheaper, when do you buy?

That's the dilemma facing many fund managers, some of whom have got burned by snapping up asset-backed securities and other assets too quickly.