23/11/2011 Author: Tony Griffiths

HFMWeek Daily Snapshot - 23 November 

NEWSPAPERS AND WIRES
The trustee seeking money for victims of imprisoned swindler Bernard Madoff has reached an agreement with the US Internal Revenue Service (IRS) to recover $326m that was earlier transferred to the agency by Madoff's firm purportedly on behalf of foreign account holders, court documents showed, Reuters reports. The settlement money will eventually be distributed to Madoff's customers who have valid claims, according to the court filing. The trustee, Irving Picard, in the course of his investigation, identified certain payments made by Madoff and his firm supposedly on behalf of foreign account holders. Picard said in the court filing that payments were made on behalf of 145 foreign accountholders totalling about $330m.

Hedge fund performance ticked up in October though the funds failed to fully participate in the equity market's massive rebound, according to the investment-research company Morningstar, says the WSJ. The Morningstar MSCI Composite Hedge Fund Index, an asset-weighted composite of nearly 1,000 hedge funds, rose 1.1% in October, significantly lower than the MSCI World NR Stock Index's surge of 10.3%. "Though most strategies posted positive figures in October, hedge funds overall failed to fully participate in the equity market's massive rebound in October," said Josh Charney, alternative investments analyst at Morningstar.

For Diamondback Capital Management this week marks an auspicious anniversary: a high-profile raid by federal authorities looking into allegations of insider trading by hedge funds, Reuters says. But after a tough year full of heavy investor redemptions and a sudden drop in performance in August, top managers at Diamondback have reason to celebrate. The Stamford, Connecticut-based fund is the only one of four firms raided by federal authorities last year to still be open for business. Yet with federal prosecutors continuing to investigate incidents of insider trading, pension funds continuing to redeem money and top employees leaving the firm, some in the $2trn hedge fund industry wonder how long Diamondback can last.

Italian police investigating ex-fund manager Alberto Micalizzi after the collapse of a $500m (£320m) hedge fund have also begun probes into five other people with links to the fund, a source close to the investigation told Reuters. Last week police raided the home and offices of Micalizzi, CEO of London-based Dynamic Decisions Capital Management (DDCM), whose hedge fund DD Growth Premium lost hundreds of millions of dollars around the time of the collapse of Lehman Brothers. The source said Milan finance police had also raided the Italian homes of commodities trader Daniele Palla and Marta Renzetti. Renzetti is a former director of DDCM.

Wells Fargo & Company has announced the launch of the Wells Fargo Hedge Fund Manager Holdings Index. The Index measures the real-time performance of the 100 largest positions in equities and equity-related securities as reported quarterly to the Securities and Exchange Commission (SEC) by hedge funds or managed accounts. The Index represents modified market capitalisation weighted to provide diversified exposure in the market. The securities are required to be listed on the NYSE or NASDAQ and to satisfy specific market capitalization and other eligibility requirements.

PEOPLE MOVES
Jean Bourlot, the global head of commodities at UBS, is to leave at the end of December, less than a year and a half in his role in the latest departure to hit the commodities business at a leading investment bank, reports the FT. Bourlot is understood to be looking to start his own hedge fund but his move comes as UBS is reorganising its commodities business, placing it alongside foreign exchange and rates businesses within its “macro” operations. The Swiss bank said the number of staff in its commodities business, which recently has fluctuated between 30 to 40, and its product offering would remain unchanged. The bank said it was “fully committed to this franchise”.