08/07/2010 Author: Shannon Hawthorne

HFMWeek Daily Snapshot - 8 July

NEWSPAPERS AND WIRES
Hedge fund giant Man Group Thursday said its assets under management shrank 2.3% in the first fiscal quarter, as investors pulled money from its funds, says Wall Street Journal. Funds under management at 30 June were around $38.5m, the company said, down from $39.4bn at March 31. Man Group in late May said assets were still around that level. "The quarter to June 30 has seen a return to increased volatility and uncertainty in financial markets," chief executive officer Peter Clarke said in an update before the company's annual general meeting. Man Group, which is in the midst of a takeover of rival hedge-fund group GLG Partners that will lift its total assets to around $63bn, said it registered $600m in net private investor outflows in the first quarter, and a $400m net outflow from institutions.

Reeling from the worst second-quarter performance in a decade, hedge funds have scaled back trading as they struggle to figure out where markets are headed amid sometimes vicious crosscurrents in stock, commodities and other markets, according to brokers and managers, says Bloomberg.“There’s a degree of being frozen in the headlights, of not knowing what sectors to emphasize, of what securities to emphasize,” said Tim Ghriskey, chief investment officer of New York-based Solaris Asset Management. Hedge fund managers, are reluctant to put money to work as they are buffeted by a wide range of often conflicting political and economic forces, from fiscal policy in Europe and the US, to what regulations will be imposed on the financial-services and energy industries, to the growth prospects in China.

Carlyle Group is being sued by liquidators of the buyout firm's hedge fund Carlyle Capital Corp., or CCC, which collapsed in March 2008 following ill-timed investments in the mortgage-bond market, a spokesman for the liquidators told Dow Jones Newswires on Wednesday, reports Wall Street Journal.CCC was put into liquidation in March 2008, and Alan Roberts and Neil Mather from Begbies Traynor, were appointed joint liquidators. The buyout firm is being sued alongside former directors of CCC in Guernsey in the Channel Islands; New York; Washington, D.C., and Delaware for various breaches of fiduciary duty, recklessness and negligence. The liquidator hopes to recover more than $1 billion representing capital losses at CCC, the spokesman said.

Twice as many new hedge funds raised three times as much money from investors in the first half of this year as compared to the first half of last year, says FINalternatives. Funds launching between January and June netted a total of $10.9bn, according to AR magazine’s biannual New Funds Survey, compared to the first half of last year, when new hedge funds managed to raise just $3.9bn, an all-time low. Most of the money was raised by a pair of spin-offs and three new funds launched by established funds. Overland Advisors garnered $3.6bn for its spin-off from Wells Fargo, most of the money from Wells Fargo itself, while former Citigroup energy trader Andrew Hall’s Astenback Capital Management—a joint venture with new partners Occidental Petroleum—raised $1.2bn .

Credit Suisse, Switzerland’s biggest bank by market value, plans to spin off two credit hedge funds by the end of September, said two people briefed on the matter, reports Bloomberg. Candlewood Special Situations, a fund overseen by Michael Lau, and Candlewood Credit Value, managed by Don Pollard, specialise in distressed corporate debt. The funds will get investments from Zurich-based Credit Suisse, according to the people, who asked not to be named because the information is private. Banks’ ability to provide capital to hedge funds would be limited under the financial-overhaul bill passed by the US House and pending in the Senate. Credit Suisse started planning the spinoff of the Candlewood funds earlier this year, said one of the people.

John Paulson, the billionaire who has been betting on a US economic recovery, lost 6.9% in June in his Advantage Plus hedge fund to bring his first-half decline to 8.8%, according to investors, reports Reuters. The Standard & Poor’s 500 Index of US stocks tumbled 13% from the end of April through June 30, hurting performance. Paulson’s Advantage and Advantage Plus funds were positioned to profit from a jump in stocks including financial- services companies, said two clients briefed on the returns, who asked not to be named because the fund is private. Paulson, who runs the $33bn New York-based Paulson & Co., hasn’t changed his bullish views after the stock market’s decline and last week’s data showing weaker-than-expected private-sector employment in June, according to the investors.