25/01/2012

HFMWeek Daily Snapshot - 25 January

NEWSPAPERS AND WIRES
Hedge funds are combing through the small print of Greece's planned rescue deal with private creditors, readying a wave of potential litigation to squeeze a better payout from the country, writes Reuters. Most bondholders face an uphill battle in wringing a payment from Athens through the courts, but shrewd funds picking up specific bond issues with investor-friendly smallprint have a much better chance of succeeding.

The Financial Services Authority has launched a consultation on regulations for hedge funds and private equity firms that will form the basis for tough new rules on pay, reports the Telegraph. The 102-page discussion paper marks the City watchdog's attempt to prepare for new rules set by Brussels that aim to shake up regulation across Europe for all alternative investment fund managers. PwC partner Jon Terry said: "Banks, credit institutions and investment firms are already subject to regulation of their remuneration arrangements, and the FSA's discussion paper is the first step for introducing similar rules to so-called alternative businesses."

After a frustrating year, hedge-fund investors are turning their backs on smaller funds specialising in niches like currency markets, writes the Wall Street Journal. In the final months of 2011, hedge fund investors withdrew from smaller hedge funds, which are more likely to be currency specialists, and plowed money into bigger funds that invest across many markets. The net outflow from funds managing between $250m and $500m was $989m in the fourth quarter, while funds that oversee over $5bn saw an inflow of $6.8bn, according to Hedge Fund Research.

Hedge fund manager Eric Sprott has just one word of advice for private investors in 2012: gold, reports Reuters. The Toronto-based money manager, whose $9bn Sprott Asset Management has made a mint for investors due to large and successful bets on metals, told an investor conference on Tuesday that everyone should make room for the shiny metal in their portfolios.

Citigroup may consider further restructuring of its securities and banking unit if the business does not see meaningful revenue recovery over the course of 2012, chief financial officer John Gerspach said on a conference call, according to Reuters. "While we are strategically committed to securities and banking, we are not oblivious to the fact that our cost structure cannot be justified by our current revenues," Gerspach said, according to a transcript of the call which was published by Citi.

PEOPLE MOVES
Fortress Investment Group said Daniel Mudd resigned as chief executive officer and a director of the New York-based hedge fund and private equity firm after a leave of absence to respond to a government lawsuit, reports Bloomberg. “I do not want the uncertainty associated with a leave of absence, on my part, to become a distraction for either Fortress or its investors, and thus, I have decided to resign,” Mudd said yesterday in a statement. Randal Nardone, Fortress principal and co-founder, will continue to serve as interim CEO, according to the statement.