06/12/2011 Author: Will Wainewright

HFMWeek Daily Snapshot - 6 December

NEWSPAPERS AND WIRES
John Paulson, the billionaire money manager having his worst year, has lost 46% in 2011 through November in one of his largest hedge funds, according to an investor update obtained by Bloomberg News. Paulson’s Advantage Plus Fund, which seeks to profit from corporate events such as takeovers and bankruptcies and uses leverage to amplify returns, declined 3.6% last month. The fund’s gold share class dropped 2.7% in November and 29% this year.

Disgraced hedge fund founder Raj Rajaratnam has arrived at a federal prison to begin serving the longest-ever sentence for insider trading, reports the BBC. Rajaratnam, who was sentenced to 11 years in jail, reported to a facility in Massachusetts. He was fined $92.8m, also a record, and his case has led to more than two dozen related convictions.

The Securities and Exchange Commission has taken action against a pair of hedge funds, accusing them of, among other improprieties, hiding copious conflicts of interests from clients both potential and actual, according to FINAlternatives. The two lawsuits, filed last month, are the product of the aberrational performance inquiry, in which the SEC uses proprietary risk analytics to evaluate hedge fund returns.

Hedge funds fell by almost 1% in November, leaving them a long way from break-even on the year, according to one prominent industry index, reports FINAlternatives. The Dow Jones Credit Suisse Core Hedge Fund Index lost 0.95% last month. The benchmark is now down 7.03% on the year with just a month to go. All but one of the seven strategies tracked by the suite was in the red last month, none more so than convertible arbitrage, which lost 2.35% on the month (down 8.84% year-to-date). Both emerging markets and global macro funds lost an average of 1.43%, the latter now down 10.43% on the year and the former 2.56%.

Hedge fund manager Boaz Weinstein is bullish on Italian sovereign debt and Ameriprise Financial chief market strategist David Joy is optimistic about the prospects of the United States avoiding a recession in 2012, writes Reuters, citing verdicts expressed at their 2012 investment summit. Meanwhile, Jane Buchan, chief executive officer of a firm that specialises in investing in hedge funds, sees tough times ahead for the $2trn industry, as fund managers face more competition for pension fund money from traditional asset management firms.

LAUNCHES
MKP Capital Management, the New York-based global macro and structured-credit hedge fund with $4.5bn in assets, is starting a credit team in London to invest in European debt, writes Bloomberg. Steven Jeraci, a partner at MKP, will relocate to the firm’s London office to hire investment professionals and build the team’s infrastructure, the hedge fund said in a statement scheduled for release today, a copy of which was obtained by Bloomberg News. The team should be in place by the end of next year, the company said.