20/08/2010 Author: Ben Haidari

HFMWeek Daily Snapshot - 20 August

NEWSPAPERS AND WIRES
A variety of hedge fund giants, including John Paulson and George Soros, are using a $50bn exchange-traded fund to buy gold, according to the Wall Street Journal, despite the demand for commodity ETFs being very independent. Eton Park Capital Management showed it had joined a list of hedge funds that own SPDR Gold Shares, an ETF backed by about 1,300 metric tons of the precious metal earlier this week. Eton revealed an $800m estimate stake in the ETF. Paulson & Co kept its stake in the gold ETF steady at 31.5 million shares, with its position close to $4bn at the end of the second quarter. Soros Fund Management has approximately $600m in the gold fund, filings show.

Hedge fund Elliott Management sought an emergency court order to allow an investigation of who leaked its latest investor report to industry magazine Absolute Return + Alpha, and says publication of its results would hurt its competitive edge, reports Reuters. In court papers, filed in the Supreme Court of the State of New York in Manhattan, Elliott Management said its June letter to investors had been leaked to the magazine, and that it wanted the court to give it emergency authority to investigate the magazine and find out who had violated Elliott's confidentiality agreement and leaked the letter. Elliott said it was contacted by the magazine and learned it could publish the full letter as soon as Friday. Michelle Celarier, editor of Absolute Return + Alpha, declined to comment.

The latest South African Hedge Fund Index to June is down 0.45% on the month, but has gained 6.81% over the last 12 months, reports BusinessReport. Last June, the index had returned a negative -0.83% over one year and the performance was even worse in May at a negative -1.39%. The one-year JSE performance was -24.88% to June last year, indicating that hedge funds had performed a little better than plain vanilla stocks. The worst month on the notional hedge fund index, collated by investment management firm Clade, has been -2.71%, but the calendar year to date has seen a return of 7.79%. 

Banking giant HSBC Holdings should be ruled to turn over internal reviews of potential fraud and other operational risks at Bernard Madoff’s business from 2006 and 2008, a New York judge has ruled, reports Bloomberg. US Bankruptcy Judge Burton Lifland agreed on to seek an order from the High Court in London forcing HSBC to hand over reports, contracts, audio recordings and documents related to examinations of Madoff’s firm conducted by an affiliate of KPMG International. HSBC acted as custodian bank for several funds that invested with the conman. The last review was commissioned by HSBC in September 2008, about three months before Madoff’s arrest, according to the ruling. London-based HSBC and trustee Irving Picard in New York reached an agreement on which documents should be turned over if the UK order is issued, Manhattan court filings show. 

Billionaire financier George Soros has bought a 4% holding in India's Bombay Stock Exchange for approximately $35m, according to Reuters, valuing the bourse at around $875m. Soros' Quantum hedge fund acquired the stake in Asia's oldest exchange from Dubai Financial, part of sovereign fund Dubai Holding. The Economic Times, which also reported the deal on Friday, said Soros bought the stake at around 375-380 rupees a share. Citing unidentified brokers, the newspaper said the growing interest in the exchange was due its reasonable valuations even though the exchange's earnings were under pressure. In May, Canadian fund manager Urbana Corp had bought 331,000 shares in the exchange at 370 rupees a share, raising its holding to 2.6%. 

Hedge fund billionaire Phil Falcone and broadband company LightSquared yesterday executed their cooperative agreement with Inmarsat, which will allow both companies to share satellite space across North America, FINalternatives reports. Inmarsat's stock went up 5.5% off the news. However, while reports state that Inmarsat is set to receive $340m from the agreement over the next 18 months, sources involved in the deal say that figure is much higher. LightSquared believes that this deal should bring in a billion dollars of revenue over the life of the perpetual lease for Inmarsat.