24/11/2011 Author: Kirstie Brewer

HFMWeek Daily Snapshot- 24 November 

NEWSPAPERS AND WIRES
Chinese banks are “extremely fragile” because the lenders don’t have enough capital to offset bad loans, said Jim Chanos, president and founder of the $6bn hedge fund Kynikos Associates Ltd, Bloomberg reports. Chanos, who is shorting the share of Agricultural Bank of China, said that the banking system is “built on quicksand” because of lending binges which began in 2008 and failure to recognise the losses suffered on bad loans. This year, the MSCI China Financials Index has fallen by 32%, in anticipation that an economic slowdown will cause the quality of loans to local governments and the housing market to deteriorate.

Asian hedge funds, starved of capital, are increasingly giving up their treasured secrecy and allowing clients more control of their investments in order to draw money from institutions, says Reuters. Offering managed accounts has come to the aid of small Asian hedge funds, who would otherwise find it difficult to attract the biggest institutional investors, who are demanding greater transparency and liquidity post the 2008 financial crisis and the Madoff scandal. According to hedge fund tracker Eurekahedge, around 65% of Asian funds have $50m or less in assets, making it tough to entice investors to allocate substantial capital.

Hedge-fund titan Steven A. Cohen is planning a bid for the Los Angeles Dodgers, according to three people involved with the bankruptcy sale of the storied baseball team, according to the WSJ. Cohen, founder of SAC Capital, has been in discussions with Steve Greenberg of Allen&Co, a veteran investment banker who has close ties to the leaders of Major League Baseball (MLB), according to people close to the matter.  The Dodger auction, which will be overseen by the US Bankruptcy Court in Delaware, will give the billionaire the chance to bag one of MLB’S top franchises, though whether he will be outbid by some of the country’s wealthiest businessman remains to be seen.

Senator Charles Grassley said the Federal Communications Commission is hiding information about its handling of Philip Falcone’s LightSquared wireless venture, which faces scrutiny over interference with navigation devices, writes Bloomberg. LightSquared, backed by Falcone’s Harbinger Capital Partners hedge fund, is seeking final US approval after promising to address concerns that the proposed wireless internet service could disrupt aircraft navigation, as well as boats, tractors and cars, according to makers and users of satellite navigation devices.  

The Securities and Exchange Commission has filed a civil injunctive action against Patrick G Rooney, a resident of Oakbrook, Illinois, and his company, Solaris Management, LLC, the investment adviser to the Solaris Opportunity Fund, LP, for the fraudulent misuse of the fund’s assets and other illegal conduct, reports HedgeWeek. According to the SEC’s complaint, the Solaris Fund is purportedly a non-directional hedge fund with approximately 30 investors and reported assets of USD16,277,780 as of December 2008.

LAUNCHES
Ali Akay, a former trader at Steven Cohen's SAC Capital Advisors, is set to launch his emerging-markets focused hedge fund next week after raising around $200 million, a source familiar with the situation told Reuters. Carrhae Capital will be a London-based and invest in emerging market equities, according to a person familiar with the matter. Trading will begin on 1 December and the fund will look to soft close in early 2012, when around $500m is raised. Akay goes it alone at a time when raising capital is tough, though other well known traders with a strong track record are managing to attract investment for start-up funds, despite hugely volatile markets, especially those with a specialism in emerging markets.