09/08/2010 Author: Edward Dean

HFMWeek Daily Snapshot - 9 August

NEWSPAPERS AND WIRES
GLG Partners posted a surprising second quarter loss of $74.6m, or $0.32 per share compared to a loss of $24.38m or $0.11 per share in the same period last year, says Bloomberg. Non-GAAP adjusted net loss was $3m or $0.01 per share for the period, the company revealed in a statement, with costs stemming from the recent $1.6bn merger with Man Group resulting for a $12m reduction in earnings. The second quarter loss was largely unexpected, with three analysts polled by Thomson Reuters expecting GLG to report a profit of $0.05 per share. Assets under management also declined approximately 3% from the end of March to $2bn, as the value of investments fell. Clients added a net $1.5bn in new money during the period.

Financier Carl Icahn revealed that his hedge funds invested almost $1bn in energy stocks during the second quarter as they were pummelled by declining crude prices and the worst oil spill in US history, Bloomberg reports. Icahn, who usually invests in energy companies when they trade at a discount to the value of their oil and gas reserves, poured $929m into energy stocks as the explosion of BP’s Deepwater Horizon oil platform pushed prices lower. The investment equates to 18% of the group’s stock investments. The bet helped the funds record an 8% gain in July when the stocks rebounded.

Hedge funds, in their capacity as commodity speculators, slowed their bets on higher prices and increased their net-long positions on wheat futures and options by 5.3% in the week ended 3 August, reports Bloomberg. A lack of rain in Russia, Kazakhstan and the European Union in conjunction with flooding in Canada ruined wheat crops caused speculators to turn bullish in July. However, Diana Klemme, director of the grain division of Grain Service Corp., a consultant and broker in Atlanta, told Bloomberg that the rally in wheat prices may be peaking. “If we haven’t seen the top, we’re probably very close,” Klemme said.

A little-known hedge fund crept in between US funds giants Fidelity and BlackRock last month as the three took almost 50% of Ocado’s initial public offering, reveals Financial News.  Nomad Investment Partners, which took up more than 3% of the online retailer’s shares, is a Cayman Islands-listed fund that was launched by UK asset manager Marathon Asset Management in 2001. The London-based hedge fund is said to have a penchant for internet-based firms: it holds 7% of shares in online retailer Asos, while a filing to the US Securities and Exchange Commission at the end of June showed it held a stake in Amazon worth $216m (€163m), almost half of its invested portfolio of $447m.

Hedge funds last week boosted their holdings of crude oil futures and options to the highest level in 13 weeks in a bet that Tropical Storm Bonnie would delay imports to states along the Gulf of Mexico, reducing supplies, reports Bloomberg. Crude oil imports to the Gulf Coast fell 23% in the week ended 30 July from the previous week. This was followed by a jump in the price of oil by 6.5% in the week ended 3 August as speculators boosted their long positions in New York Mercantile Exchange contracts by 24% to 135,833, the most since 4 May.

LAUNCHES
Asset management firm Natixis Global Associates has announced the launch of a managed futures mutual fund to be managed by AlphaSimplex Group, reports MarketWatch. The fund pursues its absolute return objective using multiple trend-following models across a broadly diversified portfolio of asset classes and markets. “Strategies like managed futures are among the few diversifying investment styles that can be effective even in the midst of a market crisis,” commented Dr Andrew Lo, one of the new fund’s portfolio managers. "This fund answers a growing need for a broader set of diversification tools that are available in a highly liquid, transparent and passive low-cost format." 

PEOPLE MOVES
Goldman Sachs has augmented its proprietary trading desk with the appointment of Asita Anche as managing director, reports Financial News. Anche, who joins from investment manager Millennium Capital Partners, will be designing and implementing algorithms to trade fixed-income products, including futures in her new role at Goldman. Prior to joining Millennium, Anche also worked for hedge fund Citadel Investment Group, where she worked in high-frequency trading for four-and-a-half years. The hire comes as Goldman Sachs weighs up various options for its proprietary trading division, known internally as its principal strategies unit, in light of the US financial bill signed into law last month.