05/02/2010 Author: Tony Griffiths

HFMWeek Daily Snaphot - 5 February

NEWSPAPERS & WIRES
Hermes Fund Managers will allow all its investors to claw back performance fees, the group told Reuters, in a move that could herald fundamental change in an industry battling client anger over excessive charges. The UK firm – owned by British Telecom's pension fund – will roll out to its entire range the fee structure recently brought in at its hedge fund business as it aims to attract third-party mandates."We are not going to receive the performance fee in one lump sum. We receive a third only. Only if we meet or beat benchmark the following year, do we receive the next third and again for the following year," CIO Saker Nusseibeh said in an interview this week.
 
President Barack Obama’s 'Volcker Rule' to ban proprietary trading at US banks may not survive in Congress, hampered by criticism that the administration waited too long and offered too few details, Bloomberg reports. The proposal’s timing is viewed by some as “transparently political and not substantive,” senate banking committee chairman Christopher Dodd said on 2 February It was “airdropped” into the Senate debate on legislation to overhaul US financial rules, said senator Richard Shelby, the panel’s top Republican.
 
Eric Sprott, whose Sprott Hedge Fund increased more than fivefold in nine years, said gold may rise to $1,500 an ounce this year and $2,000 within two years as the US government takes measures to counter the credit crunch, Bloomberg reports. “With quantitative easing and the financial problems we have, I suspect that the gold price goes up from here,” Sprott said today in a Bloomberg interview in Toronto, where he announced financial support for Canadian athletes.
 
Fitch Ratings says that the hedge fund industry performed well in Q4 2009 (the broad HFRI composite index was up 2.7% in the quarter and +20.0% over 2009), and experienced a return of net new money inflows. Overall, 2009 saw the best hedge fund performance for a decade, according to Fitch's Fund of Hedge Funds Quarterly - Q1 2010 newsletter, published today. "The development in 2009 of Ucits-compliant hedge funds has been interesting in that regard," says Aymeric Poizot, Head of Fitch's EMEA Fund and Asset Manager Rating group.

Hedge funds will defend their coveted secrecy against bankruptcy judges who want more information about their economic interests before granting them an active role in Chapter 11 reorganisations, says Reuters. The two sides will make their case on Friday before a regularly scheduled federal rule-making panel that will try to bring consistency to an increasingly unsettled issue that has divided normally like-minded judges.
 
The co-operation of two former hedge fund managers in a 2007 insider trading case led to the arrest of seven traders and lawyers last November in the wide-ranging Galleon prosecutions, a US prosecutor said on Thursday, Reuters reports. During a sentencing proceeding for former Chelsey Capital hedge fund manager Mark Lenowitz in the 2007 case, Assistant US Attorney Andrew Fish told the judge that Lenowitz's co-operation led to the prosecution and co-operation of his onetime colleague at Chelsey Capital, David Slaine.
 
Dutch reality TV producer Endemol has agreed to stop adding gains from debt buybacks to its operating profit in a bid to settle a dispute with hedge fund lenders, Reuters reports, citing a person familiar with the matter. "Endemol has voted in favour of the hedge funds' proposals," he added.
The hedge fund proposal put forward by GoldenTree, Sankaty and Centerbridge asked Endemol, maker of the popular Big Brother reality TV show, to stop adding buyback gains to operating earnings or face court action.
 
LAUNCHES
J-Flag Investment Co, a Japanese hedge fund advisory firm, plans to start a new long/short fund that will target Japan’s smaller companies this year, after its first fund outperformed the benchmark since inception in 2009, says Bloomberg. The Tokyo-based firm is talking to potential investors including Japanese financial institutions that may become an anchor investor of the planned new offshore fund, according to Hisashi Osezawa, chief executive officer of the company, declining to name the companies. The firm aims to start the fund in April or May with initial capital of ¥1bn ($11m),
 
South Korea's Woori Investment & Securities Co is set to launch a $30m fund of hedge funds with Temasek's Fullerton Fund Management, as part of a restructuring of its hedge funds business, Reuters says. The plan comes after Woori shut down a $60m offshore hedge fund under its Singapore-based Woori Absolute Partners. A part of that money will be deployed to the new fund-of-hedge-funds.
 
PEOPLE MOVES
Bank of America Merrill Lynch has hired a Goldman Sachs banker to lead its hedge fund sales effort for rates and currencies, FIN Alternatives reports. The addition of Vinit Sahni last month is part of a slew of hires for the bank’s Asia-Pacific derivatives sales and trading team. BofA recently nabbed UBS’ Rajesh Melwani as head of derivatives sales for the region and Goldman’s Romanos Daniels as head of exotics trading in Asia-Pacific.