09/02/2010 Author: Tony Griffiths

HFMWeek Daily Snapshot - 9 February

NEWSPAPERS & WIRES
Traders and hedge funds have bet nearly $8bn against the euro, amassing the biggest ever short position in the single currency on fears of a eurozone debt crisis, the FT reports. Figures from the Chicago Mercantile Exchange showed that investors increased their positions against the euro to record levels in the week to 2 February. The build-up represents more than 40,000 contracts traded against the euro, equivalent to $7.6bn, and suggests a loss of confidence in the euro’s ability to withstand contagion from Greece’s budget problems.
 
DE Shaw, the world’s third-largest hedge fund with about $28bn under management, has established a special in-house team to buy up portfolios of distressed assets – particularly side-pocketed assets from rival hedge fund firms. The DE Shaw Portfolio Acquisitions Unit, launched late last year, aims to capitalise on the steep discounts at which many illiquid assets are still trading, reports the FT. The hedge fund has about $28bn in investments and committed capital as of 1 October last year, according to the fund's website.

Pension funds will fight to force down fees paid to hedge funds following 2008’s $5bn exodus after the financial crisis left hedge funds struggling to win investors back, The Telegraph reports. Last year, thanks to its best performance in a decade, the hedge fund industry grew to $1.6trn from $1.4trn at the end of 2008. But almost half European and Canadian pension funds that negotiated lower fees in 2009 expect charges to drop further in 2010, a survey from industry consultant bFinance shows.

International Asset Management Limited (IAM), one of the oldest fund of hedge funds managers, today announces the opening of a branch office in Spain to reinforce its commitment to expanding its client base and enhancing the service it offers to clients based in Iberia. Marivi Lorente has been appointed general manager for the office. She will be responsible for developing IAM's client base in southern Europe and its relationships with clients across the region. Lorente has long-standing experience in the alternative and traditional asset management spaces.
 
Danish pension fund ATP, which manages Dkr609bn ($112bn), is set to invest Dkr1bn ($184.1m) a year in hedge funds as part of a plan to create an "all weather" portfolio, the fund's chief executive said. Lars Rohde told Reuters on Monday the Danish labour market pension scheme also planned to double its exposure to private equity. From 2012, the scheme, which returned 8.5% in 2009, will increase its hedge fund and private equity allocation as it implements a long-term strategy aimed at achieving returns independent of market conditions – what Rohde described as an "all weather portfolio."
 
EU plans for regulating the hedge fund industry still carry "significant risks," warned Britain's Financial Services Authority (FSA), even though many of the stricter rules have been toned down. "I would not underestimate the significant risks that still exist in this draft directive. It could still go badly wrong in some important areas," Dan Waters, sector leader for asset management at the FSA, said at the EDHEC-Risk Summit yesterday. The draft Directive for Alterative Investment Fund Managers (AIFM), which is highly unpopular in Britain, was first proposed last April, Reuters explains.
 
In a report to the US SEC, the $300bn China Investment Corp (CIC) said it owned equity valued at a combined $9.63bn in more US-listed companies, including small stakes in a number of companies CIC wasn't previously known to have bought into, such as AIG, Apple and News Corp. The CIC report, filed Friday, marks the first time the fund has listed its holdings in such detail, the WSJ reports. The SEC filing doesn't include indirect stakes CIC owns in US-listed companies through the billions of dollars it has farmed out to outside hedge fund managers and funds of hedge funds.
 
A former Intel executive pleaded guilty on Monday to criminal charges alleging that he passed sensitive information about his company to Galleon Group founder Raj Rajaratnam and profited from Galleon’s trading on his tips, reports the FT. The employee, Rajiv Goel, worked for Intel’s treasury group and assisted Intel Capital, its investment arm, in strategic investment decisions. According to court papers, Goel – a Wharton classmate of Rajaratnam’s – gave Galleon inside information from 2007 to 2009.
 
State Street Corporation, provider of financial services to institutional investors, and a prominent hedge fund custodian, announced today that the median return of its universe of total plans rose 3.1% in Q4 and 19.4% for the year ended December 2009, rebounding from the 24.6% loss in 2008. The State Street Universe consists of a diverse range of North American funds custodied at State Street and funds provided by the Independent Consultants Cooperative. It includes both the total plans of a wide range of plan sponsors and the individual funds that comprise each plan.
 
Kristin Davis, the hedge fund veteran and 'Manhattan Madam', who claims former New York Gov. Eliot Spitzer was a client, wants Spitzer’s old job, says FIN Alternatives. Davis launched what promises to be a quixotic bid to lead the Empire State last week at a Libertarian Party convention in Manhattan. “I worked 10 years in finance,” she told the Libertarians. “I was vice president of a hedge fund.” No word on which hedge fund, though.
 
The auction for the rights to the Terminator film franchise took place yesterday and neither of the front-runners Sony Pictures or Lionsgate came out victorious. In the end, it was Santa Barbara-based hedge fund Pacificor, the debtholder who is reported to have pushed previous owners Halcyon into bankruptcy, says Obsessed with Film. The final bid was said to be $29.95m.

PEOPLE MOVES
The FSA today announced that Hector Sants will leave the organisation in the summer of 2010, after three years as CEO.  Sants said: “When I was appointed I told the board that I planned to serve as CEO for three years, and I intend to stick to that timetable. Of course, those three years have encompassed the most extraordinary circumstances for a financial regulator, and I am very proud of the manner in which the FSA rose to the challenge of dealing with such unprecedented turbulence.”
 
FQS, the London-based fund of hedge funds manager founded by former Renaissance Technologies MD Robert Frey, has recruited Richard Hallos as senior investment analyst. Richard will be based in FQS's London office, reporting to investment manager Penny Aitken. He joins from Ermitage Group, the global multi-billion fund of funds group headquartered in Jersey, where he was a senior research analyst.