10/01/2012 Author: Will Wainewright

HFMWeek Daily Snapshot - 10 January

NEWSPAPERS AND WIRES
Former Goldman Sachs trader Morgan Sze's hedge fund Azentus Capital lost 6.79% in 2011, two sources with direct knowledge of the matter told Reuters on Tuesday. The Hong Kong-based multi-strategy hedge fund, which could invest globally but mainly focuses on companies related to Asia, had a blockbuster start with about $1bn on 1 April last year and now manages $1.9bn.

Legendary hedge fund manager Michael Steinhardt has been sanctioned by a Delaware judge for improper trading in a ruling that says Steinhardt wrongfully traded after receiving non-public information while serving as a plaintiff in a securities lawsuit, writes Forbes. Vice chancellor J Travis Laster of the Delaware Court of Chancery issued an opinion on Friday that directed Steinhardt to self-report his insider trading to the Securities & Exchange Commission and disgorge profits of $534,071 related to his shorting of shares of Calix, a provider of broadband communications access systems, after it had agreed to purchase Occam Networks in 2010.

One hedge fund is on a winning streak when it comes to takeovers of companies developing hepatitis C treatments, reports the Wall Street Journal. QVT Financial, started by ex-Deutsche Bank prop traders, is among the largest shareholders of Inhibitex, which agreed over the weekend to a $2.5bn acquisition by Bristol-Myers Squibb. According to regulatory filings, QVT first bought shares for about $1 each in 2009, and also took warrants to acquire millions more shares at $1.46 each.

Rallying stocks have done little to entice professional money managers back to US equities, according to Bloomberg. A gauge of hedge fund bullishness measuring the proportion of bets that shares will rise climbed to 44.5 last week from 43.9 at the end of 2011, holding close to the lowest level since 2009, according to International Strategy & Investment Group. Compared with the price of the Standard & Poor’s 500 Index, managers’ so-called net exposure is close to the lowest since June 2008, the ISI data shows.

The manager running Henderson Global Investors' equity hedge fund is sticking with his bets on oil and gas and mining shares, despite the fund losing more than 40% in 2011 after a number of mis-timed leveraged punts, reports Reuters. Stephen Peak's European Absolute Return Fund, which wagers money on stock prices rising or falling, fell 42% versus around an 8% drop in the HFRI Equity Hedge (Total) Index.

John Paulson, the billionaire money manager who's pledged to restore his hedge fund to profitability after the worst year of his career, may have to take a cue from rival Ken Griffin, writes Bloomberg. Paulson's $28bn firm, Paulson & Co, will need to generate a 104% return to recoup a 51% drop in one of his largest funds after wagers on a US recovery went awry. Until he hits that mark, Paulson will have to forgo his 20% performance fee, and will collect only his 1.5% management fee. It has taken Griffin, the founder of Citadel, three years to recover most of the 55% he lost for investors in 2008.