10/02/2010 Author: Tony Griffiths

HFMWeek Daily Snapshot - 10 February

NEWSPAPERS & WIRES
More than 200 hedge fund offerings now comply with Ucits III guidelines, reflecting the continued evolution of the industry to meet institutional investor standards, according to HFR, provider of data and analysis of the hedge fund industry. The number has grown rapidly in the last 18-24 months, before which time few hedge funds offered Ucits III products to investors. Total hedge fund assets under management in Ucits III-compliant funds now exceed £35bn ($54.8bn), a figure that is likely to continue to grow in the near future.
 
Britain must withhold its consent to European Union rules regulating the hedge fund and private equity industries, a committee of peers has concluded, the FT reports. If the rules are not changed substantially to bring them into line with the global regulatory framework, the UK and EU economies would be “seriously damaged”, said the House of Lords European Union committee in a report published on Wednesday.
 
The HFRX China Index posted a record performance gain of 50.4% in 2009, as Emerging Asian financial markets led the global equity market recovery from losses experienced during the financial crisis of 2008, according to data released today by HFR. Investors allocated new capital cautiously despite strong gains for the year, with total capital in Asian hedge fund industry increasing to $76.3bn, the highest level since the third quarter of 2008. Despite inflows in the second half of 2009, investors withdrew nearly $11bn from Asian hedge funds in 2009, but these withdrawals were offset by a performance-based increase in AuM of $15.7bn.
 
Anthony Bolton, one of the best-known names in fund management, is launching one of the biggest-ever investment trusts for private investors and hopes to raise £630m ($987.5m) to pump into China, reports the FT. Shares in the new fund, to be called Fidelity China Special Situations, after the fund which made Bolton’s name, will start trading on the LSE in April. The Fidelity Special Situations trust run by Bolton averaged annual returns of 19.5% for 28 years from December 1979.
 
Hedge funds and other speculative investors have been blamed by politicians as the perpetrators of this and other recent financial crises. Concerns about the ability of Greece, Spain and Portugal to pay their debts had added to "negative sentiment" on the euro, a foreign exchange trader said. As much as $79bn of contracts betting on the future value of the European currency were traded globally on Friday, almost twice as much as the previous Monday, according to data from the CME Group, reports the Guardian.
 
Forcing investors, including hedge funds, to disclose their short positions publicly would hurt equity markets by ultimately making trading more expensive, a new study released yesterday has found, Reuters reports. The study, conducted by consulting firm Oliver Wyman for US hedge fund industry trade group the Managed Funds Association, found that such public disclosure would cut trading volume and widen price spreads.
 
Roger Carr, the outgoing chairman of Cadbury, called last night for action to curb the influence of hedge funds during hostile takeover bids, The Times reports. He believes that the funds, which amassed a 30% stake in Cadbury as it was fighting a bid from Kraft, effectively handed the company over to the American food group. In a speech to the Saïd Business School, part of the University of Oxford, Carr argued that City takeover rules should be changed to require a minimum of 60% of shareholders to approve a takeover, rather than the present 50.1%. This, he said, would reduce the influence of hedge funds that had bought in merely to force a deal through.
 
Additional criminal charges were filed on Tuesday against Galleon hedge fund founder Raj Rajaratnam as prosecutors alleged he and his co-defendant reaped $49m from illegal insider trading, up from an earlier claim of $40m, Reuters reports. In the parallel civil case against Rajaratnam and co-defendant Danielle Chiesi, a judge ordered the two defendants to turn over wiretaps to the US SEC.
 
A Georgia-based chain of service stations that lost money with a Bear Stearns hedge fund that collapsed in July 2007 has won a $3.4m arbitration award, says Reuters. The award by the securities industry arbitration panel is the first ruling in favour of an investor in one of two now defunct Bear hedge funds since a jury acquitted the funds' former managers of criminal charges in November.
 
LAUNCHES
Singapore state investor Temasek Holdings plans to set up a new multi-billion dollar investment firm that will invest in wide range of assets, sources briefed on the plans said today, Reuters reports. The firm, called Seatown Holdings, which is the English word for Temasek, will be headed by Temasek's senior managing director and chief strategist Charles Ong, the sources, who did not want to named because the matter is not public, said.
 
PEOPLE MOVES
Olivetree Securities, the UK based equities broker, has announced the appointment of Jim Cirenza as CEO of its US subsidiary, Olivetree USA. Cirenza will be responsible for building the group’s US based business. Cirenza is a senior executive with over 25 years of international experience and extensive business contacts across the UK, Europe and the US. Prior to joining Olivetree he was Global Head of Securities (Equity and Fixed Income) at Carnegie Investment Bank for eight years, where he was also Head of the New York office for five of those years.