06/08/2010 Author: Edward Dean

HFMWeek Daily Snapshot - 6 August

NEWSPAPERS AND WIRES
Citi Private Bank is preparing to triple the amount of hedge funds it currently offers on its HedgeForum hedge fund platform, reports FINalternatives. The platform, which manages $2.9bn, currently offers clients access to 24 hedge funds, including Brevan Howard Asset Management and GoldenTree Asset Management, but will expand this base to 75 by the end of next year, with access to emerging markets funds. “The refocusing of the business is already being greeted with a lot of success, in terms of both inquiries and new business for Citi Private Bank,” David Bailin, head of managed investments, told Bloomberg. 

Old Mutual, Africa’s biggest insurer, rose to the highest in more than two years in London trading after announcing a return to profit and the sale of its US life-insurance unit, reports Bloomberg. The company reported a first-half profit of £265m ($421m), compared with a loss of $70m ($111.5m) pounds a year earlier, as income from its wealth-management unit rose. The firm announced the $350m sale to Harbinger Capital Partners, the hedge fund run by billionaire Phillip Falcone, in an effort to drive down their current debt of £2bn ($3.2bn). The Anglo-South African insurer is selling the division after guarantees offered to policy holders in conjunction with investment write-downs pushed the group into a loss last year. 

Several of John Paulson’s funds gained in July but the gold-oriented fund suffered, reports Reuters. The Advantage, Recovery and Credit Opportunities funds gained 1.1%, 6.51% and 0.97% in July respectively; in contrast, Paulson's gold-oriented fund, the New York-based fund firm's newest offering which launched this year, tumbled 5.93% in July, but is still up 5.7% of the year. Paulson, who manages $31bn in assets, sent a report to investors this week, who described him as shifting from an ‘exuberant to a bullish outlook’ after having told investors in May that he expected the economy to bounce back strongly. 

Morgan Stanley is close to securing a deal in which it could see the majority of its in-house hedge fund, FrontPoint Partners, sold back to its founders, according to The Telegraph. The investment bank would retain a stake of approximately 20%, The $7bn hedge fund was bought by Morgan Stanley in 2006 for $400m. The founders are believed to have offered $150m to buy it back. The move is said to be a prime example of the way in which Wall Street banks are preparing for radical structural changes demanded by President Obama’s recently-passed finance bill. 

High-performing hedge fund managers anticipate a slowdown in the American and European economies, according to Businessweek. Managers interviewed by PerTrac Financial Solutions indicated they would be betting against industries that perform poorly during an economic slump, although there was still a marked lack of confidence over the future economic outlook. Laurence Benedict, founder of $804m Banyan Capital, reduced the size of his trades by two thirds, commenting: “It's difficult to get conviction in this environment.” Of the 2,799 hedge funds studied by PerTrac, only 321 were agile enough to post gains every year since 2007 and in the first part of this year. 

LAUNCHES 
Luxembourg investment group Reech AIM is to launch a Newcits version of its Iceberg Real Estate Hedge Fund after receiving approval from regulators, reports Citywire. The Glacier fund is to be launched in mid-September and will be co-sponsored by Pictet, with an initial focus on European investors, and will seek to optimise gains by using long and short positions across various markets. It is aimed at institutional and wealth management investors and will seek to optimise gains by using long and short positions across various markets offering indirect exposure to commercial real estate.