30/11/2011 Author: Will Wainewright

HFMWeek Daily Snapshot - 30 November

NEWSPAPERS AND WIRES
After getting burned by investments in its own hedge funds during the financial crisis, Goldman Sachs is turning to the less risky, but potentially less lucrative, business of providing start-up money to hedge-fund managers, writes the Wall Street Journal. The New York securities firm has raised $600m from clients such as pension funds, wealthy families and large institutions for a new fund. It plans investments in eight to 10 new hedge funds, each of which can expect to receive between $75m and $150m to get them up and running, according to people familiar with the matter.

Hedge fund manager John Paulson apologized to his investors, saying performance at his funds this year is "the worst in the firm's 17-year history," reports the Wall Street Journal. In his third-quarter letter dated 28 October to investors, Paulson, who won fame for reaping billions of dollars by betting against the US housing market, said "we are disappointed and apologise." Two of Paulson & Co's largest funds - Advantage Fund and Advantage Plus Fund - posted declines of 29% and 44% this year through October, according to a person familiar with the funds.

John Taylor, founder of the world’s largest currency hedge fund FX Concepts, said the euro is in a “death struggle” as European policy makers seek to salvage the shared currency amid the region’s sovereign debt crisis, writes Bloomberg. Even with a “bleak” outlook for the currency union surviving in its present form, the 17-nation euro is trading above its life-time average of $1.2044 because of debt purchases by the European Central Bank and European financial institutions repatriating funds, according to Taylor.

The Hedge Fund Association today announced that it was launching a new chapter to advocate for hedge funds domiciled in Switzerland, Italy, Spain and Portugal and has named José Castellano, managing director of Pioneer Investments, an asset manager with $230bn assets under management, as the Southern European Union (EU) Chapter Director.

Saudi businessman Ghazi Abbar, who claims in an affidavit he lost $383m of his family’s fortune on investments with Citigroup, was sold one of the transactions even though the bank questioned his ability to properly manage them, according to an internal memo, according to Bloomberg. The memo, an exhibit in arbitration proceedings with the Financial Industry Regulatory Authority, warned that Abbar didn’t have the risk-management capability of the large hedge funds that were typical clients of the bank’s “hybrid” desk, which in 2006 was trying to persuade him to move his family’s money into complex derivative securities.

AND FINALLY…
A trio of Connecticut hedge fund managers have won the biggest lottery jackpot in the history of the state, writes FINAlternatives. The winnings – $254m – are actually almost three times as much as the winners' firm, Belpointe Capital, boasts in assets under management. Even the after-tax payout of $104m exceeds Greenwich-based Belpointe's assets, which stand at $82m. The winners claimed their Powerball jackpot yesterday, arriving at Connecticut lottery headquarters in a limousine.