02/10/2007

HFMWeek Snapshot 1 October

NEWSPAPERS AND WIRES: Financial Times reports that New York-based boutique investment bank, Perella Weinberg Partners, has acquired Xerion Capital Partners, a hedge fund specialising in distressed debt. The paper cites the move as part of Perella’s “efforts to build an asset management unit to complement its advisory business”, which is “meant to capitalise on the current credit market environment which has reduced the cost of buying leveraged loans and securitised credit products”. Daniel Arbess, Xerion’s founder mentioned it is becoming hard for the smaller hedge funds to keep up with the big players: “The world of hedge fund investing is consolidating at a pretty aggressive pace. More than 90% of capital is now going to the top 25 [funds]. It’s a business of scale.”

“Goldman Sachs could use its income for the year to fund the entire Chinese army - and, if the run-up to Christmas went well, it would have a few billion dollars left over,” says The Guardian. The bank expects to rake in around $45bn (£22bn) this year to November, roughly equivalent to the budget for the world's biggest fighting force, after yesterday revealing a profit of $370m (£181m) in September after an emergency injection of $2bn saved its quant hedge fund Global Equity Opportunities, according to The Times. Goldman was named yesterday as the world’s second-biggest hedge fund manager, with $39.98bn of hedge fund assets, second only to JPMorgan, with $56.2bn, The Times said.

Reuters reports Pentwater Capital Management, a new hedge fund headed by former Deephaven Capital trader Matthew Halbower, which officially opened on Monday with $700m, says it expects to ramp up to as much as $1.5bn by the end of the year. Chicago-based Pentwater is one of the largest hedge fund launches this year which “suggests that investor appetite for new hedge funds hasn't diminished with market volatility that depressed returns for many in late July and August”. The new fund will focus on merger arbitrage and other event driven equity and credit strategies. Halbower left Deephaven last December, where he ran event driven and distressed asset trading strategies.

Surprise surprise, Boaz Manor, the co-founder of collapsed hedge fund Portus Alternative Asset Management, has missed his appointment in Canada to face criminal charges, the country’s GlobeandMail online reports. Manor, who has been in Israel since Portus collapsed in 2005, was expected to fly back to Toronto, but a spokesperson for Portus’ receiver stated: "On Sunday, Mr. Manor made the decision himself to cancel the planned flight that would have had him in Canada [today]." The RCMP and lawyers for the receiver had been working on a deal to fly him back but no agreement had been reached. Negotiations are still under way.