17/02/2010 Author: Tony Griffiths

HFMWeek Daily Snapshot - 17 February 

NEWSPAPERS & WIRES
Firms run by John Paulson, Eric Mindich and George Soros purchased almost half a billion shares in Citigroup last quarter as more than 120 hedge funds said they bought stock in the bank, reports Bloomberg. Paulson & Co reported a stake equal to 506.7 million shares in New York-based Citigroup, up from about 300 million at the end of the third quarter, according to a government filing yesterday. Mindich’s Eton Park Capital Management acquired 138 million shares, making the company its largest holding. Soros Fund Management reported 94.7 million shares worth $313.4m.
 
Billionaire investor George Soros' hedge fund more than doubled its bet on the price of gold during the fourth quarter, a portion of the firm's total US-listed equity holdings of $8.8bn at the end of 2009, says Reuters. The New York-based firm also disclosed in a filing on Tuesday with the US Securities and Exchange Commission that it bought almost 95 million shares of Citigroup during the quarter, worth $313m by the end of the year. Soros reported no holdings of the troubled bank's shares at the end of the third quarter.
 
Shares in Man Group rose 5.1% on Wednesday, with traders citing talk of takeover interest from US fund group BlackRock, says Reuters. BlackRock declined to comment, while Man Group was not immediately available for comment. Traders also said positive weekly performance numbers from flagship fund AHL supported Man Group shares. Citing rumours in the US markets, the Daily Mail's market column said BlackRock was looking for another large deal after acquiring the funds business of Barclays last year.
 
EU president Spain tightened proposed rules to regulate hedge funds and private equity groups, prompting accusations of protectionism from within the industry but potentially speeding up moves towards a deal, Reuters reports. Spain recommended non-EU funds should only be marketed in a member state if "appropriate cooperation agreements" are in place between regulators of the countries involved. The presidency's previous proposal had maintained the status quo by saying EU states should be allowed to have third country funds on their turf unhindered.
 
A hedge fund launched by Renaissance Technologies with grand ambitions to be an industry colossus suffered further declines last year, compounding a lacklustre record, reports the FT. Renaissance, one of the world’s highest-rated hedge fund groups, had hoped its Institutional Equities Fund could grow to up to $100bn in assets – unheard of for a single fund. But the fund closed 2009 down 6%, according to investors, and fell a further 1.5% in January before recouping that loss.
 
Prominent hedge fund managers voted with their wallets in the fourth quarter to declare the long financial crisis over, and made big bets on banks and other lenders to back that view, says Reuters.
John Paulson, Edward Lampert and Carl Icahn were among those who raised their bets on financial stocks during the last three months of 2009, regulatory filings released on Tuesday and last week show. Large investors are required to report holdings of US-listed equities at the end of each quarter, but not short positions or holdings of other securities like bonds and OTC derivatives.
 
Activist hedge fund manager William Ackman raised hundreds of millions of dollars in cash when he liquidated positions in fast food chain McDonald's and network storage company EMC during the fourth quarter, Reuters reports. Ackman's New York-based Pershing Square Capital Management had owned 58.7 million shares of EMC and 8.2 million shares of McDonald's at the end of the third quarter, regulatory filings showed. Pershing Square is known for taking concentrated positions in a few stocks, building them quickly after carefully working out an investment strategy.
 
Hedge funds investing in emerging markets reversed sharp 2008 losses with strong gains in 2009, as the HFRI Emerging Markets (Total) Index gained 40.4% for the year, according to data released today by Hedge Fund Research, the leading provider of data and analysis of the hedge fund industry. This rate of return doubled the overall industry gains as represented by the HFRI Fund Weighted Composite Index, and was led by funds investing in Russia, Latin America, and Asia.
 
US prosecutors argued on Tuesday that Galleon hedge fund founder Raj Rajaratnam, indicted on fraud charges in a sprawling insider trading probe, would have an unfair advantage if a civil trial by market regulators went ahead before a criminal trial, says Reuters. They said in papers filed in Manhattan federal court that Rajaratnam and co-defendant Danielle Chiesi sought a delay in the criminal case "because they want the parallel civil case to proceed to trial before this criminal case in order to gain an unfair strategic advantage."

PEOPLE MOVES
Former BlackRock hedge fund manager Graham Birch is keeping busy in retirement, says FIN Alternatives. Birch, who left the money management giant last month to run his 3,600-acre dairy farm in southwest England, has joined gold producer Petropavlovsk as an adviser. Birch was named a non-executive director at the firm, which was founded by Peter Hambro. Peter  is the father of Evy Hambro, who served as co-manager of Birch’s BGF World Gold Fund at BlackRock and now runs Birch’s former natural-resources equity team with Robin Batchelor.
 
LAUNCHES
Spanish hedge fund group Intelectia Capital is set to begin its first fund venture with the forthcoming launch of a long/short Ucits III catastrophe bond fund which will be set up through the Sicav umbrella of Adepa AM, Citywire reports. The new and innovative Luxembourg-based Newcits fund, named Intelectia Blue, will target returns of 15-20% with a predicted volatility of 5-8%. One of the defining aspects of Intelectia Blue, says Marco Aza, fund manager at Intelectia Capital, is that, unlike similar funds on the market, it will look look for short opportunities in CAT bonds, as well as long.