22/12/2011 Author: David Beattie

HFMWeek Daily Snapshot - 22 December

Newspapers and wires

Asian hedge funds have failed to deliver on their promise of absolute performance so far this year with only Asian macro funds managing to turn in a positive performance, up more than 6%, writes the FT. But they have outperformed regional stock markets, with the group down 6.2% for the year to November, according to data from Deutsche Bank, compared with a 17.2% drop in the FTSE Asia Pacific index over the same period. Event-driven hedge funds, which took advantage of reverse takeovers or the taking private of companies such as Harbin Electric also fared relatively well, losing only 1%. But prime brokers said that the big funds often did worse than smaller ones. “Many investors confuse flight to size with flight to quality,” says Sam Tabar, head of capital introductions in Hong Kong for Merrill Lynch. “The big funds are less nimble. You have to be the right size for the opportunity in Asia, which is smaller than in the US.” The worst record was for China long/short funds which dropped more than 17% in the period, while the MSCI China index was down more than 20%. That disappointing performance partly reflects the fact that it is difficult to short individual shares in China itself while shorting the indices can be perilous.

Former Bear Stearns Companies hedge-fund managers Ralph Cioffi and Matthew Tannin, acquitted in 2009 of criminal charges they misled investors who lost $1.6 billion, asked a federal judge to toss out part of a related civil case brought by the US Securities and Exchange Commission, reports the FT. Cioffi and Tannin, in their request to US District Judge Frederic Block in Brooklyn, New York, said they can’t be sued for statements they didn’t make and over so-called scheme liability. The request, made in October, was made public December 20. In November 2009, a federal jury found Cioffi and Tannin not guilty of conspiracy and securities and wire fraud in the first criminal trial stemming from a federal probe of the collapse of the subprime-mortgage market. Cioffi was portfolio manager for the hedge funds. Tannin was their chief operating officer. “Despite the complete acquittal of Mr Cioffi and Mr Tannin, the SEC has persisted in pursuing this action based on the same underlying facts,” lawyers for the men wrote in the filing.

For now, speculators are getting less bullish on corn, the world’s biggest food crop by volume. Hedge funds and other money managers are holding a net-long position, or bets on higher prices, of 127,666 futures and options, data from the Commodity Futures Trading Commission show, according to Reuters. That’s down from as many as 408,854 contracts in January. The most widely held option gives holders the right to sell corn at $5 by the end of February, CBOT data show.

Two hedge funds have filed a lawsuit accusing a Deutsche Bank unit of reneging on a $1 billion deal to buy their claims for losses in Madoff's Ponzi scheme, reports the Wall Street Journal.

Today is the final HFMWeek Daily Snapshot of 2011. They will recommence on January 4. The HFMWeek team would like to wish all of its readers and subscribers a happy and safe holiday period.

David Beattie - HFMWeek editor