14/06/2010 Author: Shannon Hawthorne

HFMWeek Daily Snapshot - 14 June

NEWSPAPERS AND WIRES
Hedge funds cut their bets on higher oil-futures prices to a 10-month low as US economic reports signalled fuel demand is diminishing, reports Bloomberg. Speculative net-long positions, or wagers that prices will increase, in crude futures declined 30% to 17,457 contracts on the New York Mercantile Exchange in the week ended June 8, the lowest level since July, according to the Commodity Futures Trading Commission’s Commitments of Traders Report released on June 11. Bets on gains have dropped 87% since reaching a record 135,669 in January. “Unwinding long positions makes a lot of sense given the uncertainty about global economic growth, the end of the uptrend in prices and the relatively weak euro,” said Kyle Cooper, a managing director at energy consultant IAF Advisors. “We saw the same factors at work in reverse at the beginning of the year.”

London-based hedge fund GLG Partners’ macro hedge fund, which specialises in making money from shifts in the global economy, gained 8% in May, a month in which many of its peers lost ground, the FT reports. At $160m, the fund is considerably smaller than its competitors. It was launched a little more than a year ago as part of an expansion of GLG’s range. The value of the average hedge fund’s investments fell 2.26% in May, according to Hedge Fund Research, making it the worst month for the industry since the collapse of Lehman Brothers in 2008. Other funds that performed well in May include Ikos, the Cyprus-based fund run by Elena Ambrosiadou, and Capula, the $4bn London-based relative value specialist.

The European arm of New York-listed Och-Ziff Capital Management Group, one of the world’s largest hedge fund managers, almost doubled its average staff compensation last year to more than $1m a head, reports Financial News. The company paid £53.5m (€64.3m) in total compensation and benefits to its 58 employees last year, on average £920,000 ($1.35m) a head, according to the accounts of Och-Ziff Management Europe , published last week at Companies. Wages and salaries alone amounted to £47m ($69m), or £830,000 ($1.22m) per employee, with pension costs and other benefits on top of this. In 2008, the company paid £34m ($50m) in total compensation and benefits to its then 64 employees.

Three FTSE-100 companies and a hedge fund are said to be considering a move to Switzerland in order to pay less tax, according to a consultant who has teamed up with a Swiss canton and an accountancy firm to draw UK companies and rich citizens to the Alpine country, reports the Guardian. "It's all about the tax," said Ian Williams, a consultant working alongside the Swiss canton of Lucerne and accountancy firm BDO. His company, Relocate to Switzerland, has been engaged to advise a hedge fund, and, he claims, three FTSE-100 companies, to explore a possible move and has lined up about 55 individuals, representing hedge funds, rich people and corporate representatives, to attend a Lucerne presentation in central London at the end of the month.

Veteran hedge fund manager Michael Sofaer has vowed to concentrate on running money after selling the European division of Sofaer Capital to Martin Currie, says Financial News. “I want to get back to my roots by exclusively managing my global opportunities fund for my family and other investors,” said Sofaer. The fund currently manages $65m (€54m) and is on target to hit $200m in a year, he said. Sofaer, 53, is a pioneer of the Asian hedge fund movement, quitting Schroders to establish his own operation, backed by George Soros in 1983. Over the 20 years to the end of 2008, Sofaer’s global fund achieved an annualised 11.2%, net of fees, against 3.85% from the MSCI World Index.

LAUNCHES
Cavenagh Capital, set up last year by former Morgan Stanley and DBS Holdings managers in Singapore, will start a new macro hedge fund in July after getting money from the biggest Dutch pension fund, according to Bloomberg. Andrew Gale and Lee Ka Shao moved to Amsterdam this month after getting a three-year seeding commitment from APG, which manages the assets of Netherlands-based Stichting Pensioenfonds ABP, said Gale.The Luxembourg-domiciled Cavenagh Asia Fund, which seeks to profit from broad economic trends, will start with about $40m, according to Gale, who worked with Morgan Stanley in fixed- income sales in London and Singapore for more than 15 years.