16/08/2010 Author: Shannon Hawthorne

HFMWeek Daily Snapshot - 16 August

Investors in Marshall Wace’s £200m ($311m) listed investment fund were poised on Monday to vote for the delisting of the vehicle, says the FT. The move follows a proposal from Marshall Wace, one of the City of London’s most prominent hedge funds with about $6bn (£3.8bn) under management, to convert the listed entity – which invests in the manager’s “Tops” hedge fund – into a Ucits fund, to be specially regulated under EU law. Investors were meeting on Monday to discuss the transaction, with the majority favouring the winding up. Marshall Wace, led by chief executive and co-founder Ian Wace, launched the fund in 2006, making it an early pioneer among hedge funds of a trend that saw many top-flight managers offer listed, publicly traded feeder funds for their offshore products.

Galleon Group founder Raj Rajaratnam will get a court hearing on his claim that the government filed a misleading application to wiretap him and that the evidence produced by the taps should be excluded, Bloomberg reports. “Rajaratnam has made a substantial preliminary showing that the government recklessly or knowingly misleadingly omitted several key facts” from an affidavit filed in support of the wiretap application, US District Judge Rich Holwell wrote in an opinion released 13 August. Holwell at the same time denied requests by Rajaratnam and co-defendant Danielle Chiesi to bar evidence tied to transactions involving 23 companies, including Goldman Sachs, Cisco Systems and AT&T, which were identified by prosecutors in letters dated 22 March and 14 April.

Hedge funds have started shorting bank stocks again on concerns last month’s stress tests were too weak and failed to reveal underlying problems, although many are cautious of taking big bets in such choppy markets, according to the Pakistan Observer. A wave of what some commentators have seen as good news, including a bumper earnings season, an easing of capital reforms and relatively few failures of the high-profile stress tests, have lifted banks’ shares, creating an opportunity for short-sellers betting prices will fall. “Some funds have started to put on shorts again after the strong rally,” said Ken Kinsey-Quick, who runs funds of hedge funds at Thames River Capital. “[Managers believe that] until [the banks] come clean they’ll be hugely volatile and remain sick for years to come. They’re still sitting with a lot of loans that are not performing.”

Goldman Sachs bosses including chief executive Lloyd Blankfein crystallised millions of dollars of gains last week by cashing in stock options, according to regulatory filings, reports City AM. Blankfein booked a profit of $6.1m by exercising his right to buy nearly 90,700 shares in Goldman at their 2000 level of $82.86 apiece and selling them at prices of between $149.49 and $152. President Gary Cohn made $4.9m by using more than 73,600 options, chief financial officer David Viniar made $4.5m on more than 67,300 options and general counsel Esta Stecher made $1.6m. Also booking profits were vice chairman John Weinberg at $3.9m, co-counsel Greg Palm at $3.2m and chief accountant Sarah Smith with $243,900.

LAUNCHES AND CLOSURES
Zoe Cruz, the former Morgan Stanley fixed-income banker whose direct style and profit-machine status earned her the nickname ‘Cruz missile’, has finally lifted off with her own hedge fund Voras Capital Management, reports Financial News. Cruz, who has been fundraising for nine months, has raised $200m in total for Voras, according to people close to the firm, and has established two separate funds. One of the funds, a global macro strategy,is run by Cruz herself, and the other, a credit opportunities fund, is managed by Ellen Brunsberg, who previously ran Morgan Stanley’s European securitised products group. Cruz has hired a number of former Morgan Stanley staff, including Philip Newcomb, who was co-head of interest rates and currencies. He is chief operating officer at Voras in New York.

Hedge fund firm Eddington Capital is to shut down and return capital to clients after failing to attract cash inflows, as nervous investors continue to shun all but the best-performing managers, Reuters reports. The firm, set up in 2003 as a joint venture between management and Caledonia Investments will wind down its funds after seeing assets fall to $115m from a peak of $265m in 2008, chief executive Glenn Baggley said. Eddington's demise illustrates the problems facing smaller hedge fund firms, which have struggled to attract assets in recent years as investors have opted for the perceived safety of larger firms."The funds have been losing assets gradually over the last 24 months. They've reached a level that can no longer be sustained," Baggley told Reuters.

PEOPLE MOVES
Isabelle Tykoczinski has been appointed a member at consulting firm Kinetic Partners, and will be joining the London risk team to strengthen and develop the firm's current risk offering. Prior to the move, Tykoczinski was head of Europe for the risk transparency and risk measurement service at risk management firm Measurisk, specialising in hedge funds. She began her career working in commodity and equity derivatives, where she specialised in structured products and worked closely with investors across Europe, including Ucits funds and since early 2000, has worked on varied projects across the investment community, focusing on investment consolidation and risk management.