08/09/2010 Author: Shannon Hawthorne

HFMWeek Daily Snapshot - 8 September

NEWSPAPERS AND WIRES
Hedge funds and other speculative investors turned bullish on the benchmark 10-year Treasury notes for the first time in 20 months, as many participants caved in to a rallying bond market, reports the Wall Street Journal. The difference in bets on gains in bond prices over those on the opposite trade was 63,000 for the period ended 31 August, according to the latest weekly data from Commodity Futures Trading Commission. It was the first time the differential turned positive since January 2009. Worries about the economy have fueled investors of all strips to seek safety in low-risk US government debt over the past few months. 

US regulators accused Colorado investment adviser Neal Greenberg of misleading clients including retirees while marketing hedge funds that later had losses linked to Bernard Madoff’s record Ponzi scheme, reports Bloomberg. Greenberg, falsely portrayed three of his Agile Group hedge funds as “immensely” diversified and low-risk, even as they concentrated positions and used leverage, the Securities and Exchange Commission said in a civil complaint today. The funds held $174m in investor capital when they suspended redemptions in September of 2008 following losses linked to an outside investment fraud, the agency said. 

Assets in Europe's top 50 hedge fund managers rose by 11% to $300bn between January 2009 and June 2010, helped by a surge of inflows into EU-regulated funds, data from a fund service provider showed, reports Reuters. Data published Tuesday by Newedge showed EU-regulated Ucits funds have gained traction since the financial crisis, as investors have sought safe ways to invest in hedge funds. During the crisis, some managers limited investor access to their money or blocked withdrawals altogether to avoid being forced to sell assets at low prices. 

The global hedge fund industry shrivelled a little more in July when investors pulled out nearly $3bn after the loosely regulated portfolios posted losses in May and June, researchers reported on Tuesday, Reuters reports. Assets stood at $1.53trn, their lowest level since November 2009, according to data released jointly by TrimTabs and BarclayHedge, firms that track performance and flow data." Hedge funds posted a positive return in July, but they did not regain the ground they lost in May and June," said Sol Waksman, founder and president of BarclayHedge. "They also underperformed the S&P 500 by five percentage points," he added. 

MCP Asset Management Co., a Hong Kong-based fund of hedge funds firm with $5bn in assets, will seek mergers and acquisitions abroad after it bought the local unit of Sparx Group Co, according to Bloomberg. MCP is in discussions with several asset-management firms in the U.S. and Europe, such as those that have retreated from Asia amid the global financial crisis, said Tetsuo Ochi, the chief executive officer of the firm. He declined to elaborate, saying the talks are private. 

Boutique hedge funds are suffering as investors’ cash flows into larger investment houses in a trend dubbed the “flight to size”, a survey published last night revealed, reports City AM. The top five European hedge funds by size grew their assets under management by 18% to $112bn (£73bn) in the year to mid-2010, according to research compiled by NewEdge Prime Brokerage Group. In contrast, the 10 smallest funds saw their capital shrink by 7% to $14bn. 

Hedge fund manager John Paulson's flagship Advantage Plus fund fell more than 4% in August amid rocky equity markets, but the billionaire's bet on gold is providing strong returns, according to people familiar with the matter, Reuters reports. Paulson, who bet correctly that housing prices would fall three years ago and manages about $35bn , told his investors on Tuesday that his Advantage Plus fund fell 4.27% in August, according to people familiar with the funds' returns. Paulson, whose firm Paulson & Co has bet heavily on financial stocks and a strong US economic recovery, suffered along with rocky equity markets last month. 

Artemis UK Growth fund manager Tim Steer says his short on stricken social housing and environmental services contractor Connaught has been the single biggest contributor to the outperformance on his Artemis UK hedge fund, reports Citywire. Steer told Citywire he had first started shorting the stock nearly a year ago in the top performing hedge fund, and had 'made a lot of money' from the short. He said it had been trading at around £4 when he first put the short in place, and had opened the position because of a 'lack of accounting transparency' at the firm. 

PEOPLE MOVES
Bruce Amlicke has returned to UBS AG to oversee its primary hedge-fund-of-funds unit after five years with Blackstone Group, UBS said Tuesday, the Wall Street Journal reports. Amlicke is the unit's first senior hire since longtime alternative-investments chief Joseph Scoby left UBS in June after 23 years with the Swiss bank and its subsidiary O'Connor & Associates. Amlicke is based in Connecticut, and reports to William Ferri, who was promoted as global head of UBS's alternative investments when Scoby left. Amlicke first started in finance as a currency-options trader at O'Connor & Associates, and stayed when that firm became part of UBS. 

The board of one of Gartmore’s top investment trusts has taken steps towards severing ties with the group after one of its leading fund managers quit, says FT. The board of Gartmore Growth Opportunities served Gartmore notice of termination for the management of the fund on Monday after Gervais Williams announced his resignation last week. Williams’ departure has prompted speculation among shareholders and analysts that the boards of two investment trusts he managed at Gartmore could take the unusual step of breaking their management contract with the group. 

UBS AG, the largest Swiss bank, hired Stephen Pak from Credit Suisse to head a team that introduces Asian hedge funds to potential investors after losing staff to rivals and new entrants, Bloomberg reports. Pak started his job as Hong Kong-based head of regional capital introduction in UBS’s prime brokerage division on 6 September. He reports to Ashley Jarvis, global head of business and capital consultancy of the same unit, said Chris Cockerill, a Hong Kong-based UBS spokesman yesterday. UBS and peers lost prime brokerage employees earlier this year as Barclays Plc, Mizuho Securities Co., and Societe Generale SA went on a hiring spree in anticipation of a market recovery.