01/10/2007

HFMWeek Snapshot - 1 October

NEWSPAPERS AND WIRES: The Daily Telegraph reports on the latest research by Hedge Fund Intelligence which reckons that assets under management by the world’s global hedge funds totalled $2.48 trillion (£1.24 trillion) in July.  The Telegraph says the current credit crunch will have eroded that figure significantly – but it quotes HFI managing director, Neil Wilson, as saying he believes the industry is likely to survive and grow. The Financial Times, in its report of the same survey, says there have been record investment levels into hedge funds over the last few years, accelerating as large institutional investors such as pension funds replace the wealthy individuals who had underpinned the industry.  

The Times reports that Goldman Sachs is understood to have made a profit of $370m (£181 million) from the rescue last month of its imploding ‘black box’ hedge fund, Global Equity Opportunities.  The paper says Goldman injected $2bn of new equity into the highly geared quantitive fund after its computer-driven share picking strategy led to huge losses in mid-August.  Yesterday’s Sunday Telegraph reported that the British Treasury has given two US hedge funds permission to start take-over talks with the stricken mortgage lender, Northern Rock. The paper said  JC Flowers and Cerberus met John Kingham, head of the Treasury’s enterprise and growth unit, last week to discuss their separate proposals. The Telegraph has a list of the right’s most influential 100 people – and in at number 55 is a man the paper describes as ‘highly successful hedge fund manager and philanthropist’ Michael Hintze. The Telegraph says his influence relates to the causes which he funds – he was the first to out himself as someone who had loaned money to the Conservative party during the last election.  

 The battle between London and New York to be the world leading financial centre is still going London’s way – according to the latest survey of financial service leaders by Global Financial Centres Index. The Telegraph quotes the survey as finding that  London is also closing on New York’s dominance in the private equity and hedge fund sector – with one in five global hedge funds managed in London.  But it’s not all good news for the UK – as anyone who has to travel to work in the city will recognise, the report says below-par transport infrastructure threatens to diminish London’s status with concerns about overcrowding, high prices and delays.  

The Financial Times reports that investor appetite for hedge funds will be tested by the announcement that up to £300m of new money raising by two listed funds that specialise in investing in the sector. The report says: “The London listed closed-end funds of hedge funds, run by Cazenove Capital Management and Dexion, are aiming to raise new money after strong demand pushed their shares to a premium to net asset values… ‘You are basically finding out whose hedge funds are genuinely set up to hedge,’ said Andrew Ross, head of Cazenove Capital.

Forbes reports that Harvard professor and historian Niall Ferguson, whose prediction of a chaotic, war-torn future, published in the London Telegraph in 2006, has struck a chord with, of all places, British hedge fund GLG Partners. The piece says that the firm has appointed Ferguson as a consultant, in the hopes that he will help them better navigate today's turbulent financial markets. “No doubt GLG believes his deep expertise regarding past eras of strife- like 19th-century imperialism and both world wars will help guide them through today's roiling, if not yet apocalyptic, markets.”