29/07/2010 Author: Ben Haidari

HFMWeek Daily Snapshot - 29 July

NEWSPAPERS AND WIRES 
Hedge funds are using more borrowed money and otherwise are taking on more risk in their investment strategies than they did late last year, the UK Financial Services Authority said Wednesday, highlighting how risk appetite has bounced back since the financial crisis, reports the Dow Jones Newswire. The regulator in its six-monthly surveys of the UK's 50 biggest hedge funds and their lenders found that funds' "gross footprint," or the total value of all their positions as a multiple of net capital reached 399% in April, compared with 328% in October 2009. The gross footprint of fixed-income arbitrage funds, which seek to make money from price differences on bonds and other fixed-income instruments, soared to just under 1,400%, from around 800% in October, as banks and other counterparties became more willing to provide financing to funds. 

RAB Capital has posted its second consecutive half-year loss after market volatility hit its performance during the first six months of the year, reports the Telegraph. The London-listed hedge fund saw its pre-tax loss widen to $5.1m (£3.3m) during the period ending 30 June, compared to a loss of $4.2m (£2.7m) last year. The group also saw assets under management fall to $1.3bn (£80m) from $1.35bn (approximately £898,000), as financial turmoil made it difficult for its long and short managers to "generate value opportunities". The company managed $7bn (£4.5m) in assets before the financial crisis. 

LinkedIn, the social network for professionals, is believed to have received investment from a hedge fund that values the site at more than $2bn (£1.3bn), the Independent reports. Tiger Global Management paid $20m to buy a 1% share from existing holders in the private company, according to Bloomberg. This has almost doubled the site's value in just two years, after the private equity group Bain Capital took a 5% stake in 2008 that valued the company closer to $1bn. LinkedIn, which turned profitable in 2007, hit four million members in the UK last month, after adding a million in less than eight months. 

Former hedge fund manager Paul Greenwood has admitted to defrauding investors of as much as $900m, reports FINalternatives. The principal of hedge fund Westridge Capital Management and general partner of WG Trading Co. also pointed the finger at his co-principal and co-defendant, Stephen Walsh, with whom he was indicted in February. The two men set up WG and began skimming hundreds of millions of dollars from investors for their own personal use, according to prosecutors. The scheme began as early as 1996, with the two using the money to buy, among other things, collectible teddy bears (worth $80,000) and an apartment for Walsh’s ex-wife, prosecutors said. Greenwood, who also served as town supervisor of North Salem, New York, pleaded guilty to six counts of conspiracy and securities fraud. 

Singapore hedge fund start-ups are on the rise after the central bank approved new rules that didn’t impose a licensing requirement on most funds, reports Bloomberg. Seven new hedge funds set up in May and June, according to Eurekahedge, after the Monetary Authority of Singapore said in April that small funds - managers with less than S$250m ($183m) and serving not more than 30 qualified investors – can keep operating without a license as part of its review. The number of new funds last year fell 13% to 26%, the lowest since 2003, as uncertainty over pending rule changes kept managers away, according to data from the Singapore-based industry researcher. Singapore is vying with Hong Kong for a slice of the global $1.7trn hedge-fund industry as the region’s growth leads the world. 

Moore Capital has opened an office in Zurich and become the latest hedge fund to establish a presence in Switzerland, where it will join rivals Brevan Howard Asset Management and BlueCrest Capital Management, states Financial News.The firm has registered a new company, Moore Cap Switzerland GmbH (the German term for a limited liability company), and moved a portfolio manager from London to the new office, according to sources familiar with the situation. Kornelius Klobucar, who has worked at Moore as a portfolio manager since 2007, has moved to Zurich, a city which recently came second in Mercer's 2010 Quality of Living Survey. Moore may hire or move additional staff there further down the line said a person familiar with the situation. 

CLOSURES
Osmium Capital Management is planning to close its main hedge fund to new investors by the end of this year, according to the Wall Street Journal. The firm also hired a new chief financial officer recently. The Osmium Special Situations Fund, run by former ABN Amro trader Chris Kuchanny, currently oversees $330m. But it's set to reach $500m by the end of 2010, based on existing commitments from investors and "strong" interest from other investors, the firm said, adding that once it reaches the $500m mark, the fund will close to new investors. Osmium also said it hired Craig Hippern as CFO. Hippern used to be head of financial reporting at Northwater Capital Management in Toronto. The Osmium Special Situations fund focuses on arbitrage trading and events like initial public offerings, spin-offs, and mergers and acquisitions.