10/02/2012

HFMWeek Daily Snapshot - 10 February

NEWSPAPERS AND WIRES
Client exits from hedge funds fell to a record low after performance bounced back in January, industry data showed on Thursday, as investors were encouraged to stick with their portfolios despite a disappointing and volatile 2011, reports Reuters.  The GlobeOp Capital Movement Index, which tracks monthly net subscriptions to and redemptions from hedge funds managing around $173bn, advanced to 142.6 points, the highest since October 2008.

The US Securities and Exchange Commission (SEC) is considering a proposed settlement with two former Bear Stearns Cos. (2942331Q) portfolio managers to resolve a case that has been pursued by federal securities regulators for more than three years, three people familiar with the matter told Bloomberg. Ralph Cioffi and Matthew Tannin, who managed the firm’s two largest hedge funds, are scheduled to stand trial on 13 February over SEC civil claims that they deceived their own investors about their funds’ subprime mortgage exposure, causing losses of about $1.6bn when the funds collapsed in July 2007. SEC commissioners are due to vote on a proposed agreement in a closed meeting today, the people said without providing details of the deal.

Hong Kong-based Thaddeus Capital Management has shut its Asia event-driven hedge fund, a source with direct knowledge of the matter said, joining a growing list of shuttered regional managers, according to Bloomberg . Thaddeus Asia Event Driven Fund, which had around $300m in capital, decided to liquidate in October last year, following the withdrawal of some of its European investors. It posted negative returns of -8% last year, according to the source, when event driven funds were up 1.8% on the Eurekahedge Asia index.  

Galena, the fund arm of trading house Trafigura, aims to grow by almost 50% this year to around $3bn (£1.9bn) as opportunities abound in a choppy market for commodities and energy, the fund's head said in an interview with Reuters. The $2.1bn commodities fund, leverages off the know-how of its parent, Trafigura, and had a mixed year in 2011, posting a 11.32% gain in its flagship metals fund, while its Special Situations Fund, which is invested in commodities and equities, was 28.02% in the red.    

Hedge fund manager York Capital Management said most of its funds posted gains in January, though its $470m Asian Opportunities Fund declined by a minor 0.4%, according to an investor letter. Details of how the firm made the gains were not disclosed, but global equities markets rallied last month as investors once again shifted their focus to company fundamentals, taking a breather from concerns over the European sovereign-debt crisis and macroeconomic slowdown. Funds rose by 2.63% last month on average, according to Hedge Fund Research, while the S&p 500’s posted a 4.48% rise.

Och-Ziff Capital Management Group, reported a 94% drop in fourth-quarter profit on lower performance fees as most of the firm’s funds lost money in 2011, says Bloomberg. While Europe’s sovereign debt crisis rumbles on, performance fees saw a 90% reduction and three of the New York-based firm’s funds declined, led by a 4.9% loss for the European fund, though market gains since the start of the year helped offset $300m in redemptions, the firm said.