03/03/2010 Author: Tony Griffiths

HFMWeek Daily Snapshot - 3 March

NEWSPAPERS & WIRES
The US Justice Department has launched an investigation into whether hedge funds might have acted together betting against the euro, the Wall Street Journal reported on Wednesday, citing people familiar with the matter, Reuters reports. The newspaper said the department has asked hedge funds including SAC Capital Advisors, Greenlight Capital, Soros Fund Management and Paulson & Co to retain trading records and emails relating to the euro.

The Alternative Investment Management Association (Aima), the global hedge fund industry association, has welcomed the recognition by the Committee of European Securities Regulators (CESR) that legitimate short selling plays an important role in financial markets. Commented Aima CEO Andrew Baker: “It contributes to efficient price discovery, increases market liquidity, facilitates hedging and other risk management activities and can possibly help mitigate market bubbles’. We also agree with CESR that consistent rules for short-selling throughout the EU are desirable.

Och-Ziff Capital Management had another positive month in all its main hedge funds, and the New York hedge fund manager's assets under management increased $600m during the month, according to a regulatory filing, reports the WSJ. The assets under management at Och-Ziff are now $24.6bn, a number that reflects performance through the end of February and asset flows as of 1 March, according to a filing made on Securities and Exchange Commission form 8-K. The New York-based public hedge-fund manager has boosted assets in every month since July.

Hedge funds are back to where they were three years ago, at least as far as assets under management are concerned, says FINalternatives. The industry grew by 62% last year, according to the Hennessee Group, bring total assets to $1.96trn, roughly where they were before the economic crisis struck. All told, hedge funds managed $751bn more at the end of 2009 than they did at the beginning. Much of that increase is the result of strong performance last year, but investors began returning to the sector, as well: Net inflows totaled $448bn last year.

Hedge fund firm Pine River, which makes big bets on housing, is bracing for a double dip in that market, its chief executive officer said on Tuesday, Reuters reports."There are still issues in the housing markets and it would not surprise us to see the recovery turn down," Brian Taylor, who founded the $1.6bn hedge fund eight years ago, said at the Reuters Private Equity and Hedge Funds Summit in New York. For Pine River, where Taylor and his seven partners work to identify relative value mispricings ahead of the curve, both a full-fledged recovery or a double-dip recession would provide a chance to make money for clients, Taylor said.

The Hedge Fund Association (HFA) has announced the results of its member election for the 2010/2011 Board of Directors, President and Vice President, and the appointment of Regional Directors and Advisory Board Chairs. David Friedland, of Magnum US Investments, has become president and Ron S Geffner, of Sadis & Goldberg, will be vice president. Serving the entire hedge fund industry, HFA is focused on business and professional development, Capitol Hill lobbying to advocate for managers and investors, and public relations aimed at dispelling common misperceptions and educating the media, investors, lawmakers and the public at large.

Elliott Associates, a hedge fund that holds an 8.5% stake in Novell Inc, offered to buy the rest of the software company for about $1.8bn, reports the WSJ. Novell shares, which were off 1% in 4pm trading, surged 30% in late trading to $6.15, above the $5.75 offer price Elliott disclosed in a letter to Novell's board

Forcing hedge fund advisers to register with US regulators will give Wall Street cops more ways to access information and root out fraud in the secretive $1.5trn industry, a US Securities and Exchange Commission official said on Tuesday, Reuters reports. Blasted for missing Bernard Madoff's $65bn fraud, the SEC has taken dramatic steps to sharpen its enforcement division. But the SEC says it still needs more resources to properly police markets, companies and individuals.

The White House and many lawmakers want hedge fund advisers to register with the regulator. Legislation to shed light on the industry is winding its way through Congress just as more pension funds are investing Americans' nest eggs with the loosely regulated portfolios.

Justin Pollock, a former portfolio manager at Galleon Group, and three others he worked with in Singapore at the US firm that closed, joined CastleBay Capital Management and will start an Asian equity hedge fund, Bloomberg  reports. Pollock joined as a partner and will run the CastleBay Asia Long/Short Equity Fund, which will start on April 1, he said in an interview, declining to comment on its size. Singapore-based CastleBay, set up in 2008 by Julian Reis, former chief executive of Tudor Investment Corp’s unit in the city-state, currently manages an Asian macro fund, which seeks to profit from broad economic trends.

LAUNCH
Hedge fund firm Toscafund, will launch later this month a Ucits III version of its mid-cap fund following demand from private clients, its chief executive said on Tuesday, Reuters reports.

The Ucits version fund will be launched in mid-March on a platform provided by Deutsche Bank and expects to close at $300m, Martin Hughes told Reuters Private Equity and Hedge Fund Summit in London.

An ex-Polygon Investment Partners team led by Anthony Correa and Hani Abuali will start an Asia hedge fund as early as this month to trade securities affected by events such as mergers, said three people with knowledge of the plan, Bloomberg reports. The fund, which will be run by Hong Kong-based Black’s Link Capital, aims to generate annualised after-fee returns in the mid- to high-teens by investing in Asia-Pacific markets including Australia and Japan, said the sources, who declined to be identified as the information is private. It will start with money from both partners and outside investors and hopes to raise $250m by the end of this year, the sources said.

PEOPLE MOVES
Brevan Howard Asset Management hired Morgan Stanley mortgage trader Ahsim Khan, at least the fourth person since September to join Europe’s largest hedge fund firm from the New York bank, said two people with knowledge of the move, Bloomberg reports. Khan will join the London-based hedge fund next month.

International law firm Dechert snnounced today that Hans Stamm has joined the firm as a partner in its financial services and investment management group in Munich. Prior to joining Dechert, Hans was a partner in Clifford Chance’s Munich office for almost ten years and in charge of establishing the finance and capital markets practice there in 2000.

HSBC today announced the appointment of John Crompton as Global Head of Equity Capital Markets. Starting in April, Crompton will be based in London and will report to Kevin Adeson, Head of Global Capital Financing.