14/08/2008

HFMWeek Snapshot – 14 August

NEWSPAPERS AND WIRES

Tokio Marine Holdings will shift more of its $100bn under management to hedge funds and scour the globe for bargains as the credit squeeze forces down prices. Tokio Marine & Nichido Fire Insurance, a unit of Japan's biggest casualty insurer, may boost its investments in hedge funds by as much as ¥30bn annually, said Fumihiro Nakajima, who runs the firm's hedge fund investment group. The insurer has almost ¥200bn in this asset class, the Financial Times reports.

Yahoo shareholder Paulson, one of the hedge funds that backed billionaire Carl Icahn's unsuccessful bid to unseat the board, has sold 70% of its stake in the internet company. Paulson held 15 million Yahoo shares as of June 30, according to a regulatory filing. The New York firm had owned 50 million shares at the end of March, DowJones Newswires reports. This comes in the wake of T Boone Pickens’ disclosure that he had packed his bags as well, selling his 10 million share stake at a loss.

Hedge fund firm Capula Investment Management, which investment bank Goldman Sachs bought a stake in through its Petershill investment vehicle in February, more than doubled its revenue last year, according to accounts filed last month. Capula generated £38.2m in income for the year to September 30 last year. This was a 115% increase from the £17.8m that it made the previous period, according to documents filed at Companies House in July, eFinancial News reports. On the private equity front, a group of investors led by Goldman Sachs has agreed to pay about $1.5bn for a portfolio of existing private equity investments divested as part of the $101bn carve-up of Dutch bank ABN Amro by Banco Santander, Royal Bank of Scotland and Fortis, DowJones Newswires reports.

UnionBanCal, California's second-largest bank, rejected Mitsubishi UFJ Financial Group's $3bn bid to buy full control of the lender as too low, reports Bloomberg.

A global recession is widely expected by fund managers as the credit crunch marks its anniversary by mutating from a financial crisis into a world economic downturn, Merrill Lynch reckons. Almost one-quarter of the fund managers questioned by Merrill in August for its monthly survey said the global economy was already in recession and almost half expect the world economy to contract during the next 12 months. David Bowers, of Absolute Strategy Research and independent consultant to Merrill, said it was “crystal clear” that fund managers did not believe analysts’ profit forecasts with 83% describing earnings estimates for the coming year as “too high”.

Alan Greenspan, former Federal Reserve chairman, expects that US house prices will begin to stabilise in the first half of next year, the Wall Street Journal reports. "Home prices in the US are likely to start to stabilise or touch bottom sometime in the first half of 2009," he said in an interview with the WSJ. But he cautioned that even at bottom, "prices could continue to drift lower through 2009 and beyond." Greenspan also suggested that an end to the house price slump was vital for the global economy.

US regulators' move to restrict "naked" short selling in 19 financial stocks had little impact on prices according to a study, although trading was down 63% during the period the rule was implemented, Reuters reports. "While the SEC's intentions may have been good, their attempt to protect prices with rule-making was quite flawed and without intended effect," said John Standerfer, Vice President of Financial Services for market data firm S3 Matching Technologies.

Lone Pine Capital, run by Stephen Mandel, and Traxis Partners, is among 56 overseas funds that registered to buy shares in India in July, the most in six months. Helios Capital Management and Stonewater Capital LLC also won approval from the nation's regulator, nine months after authorities forced hedge funds to register, Bloomberg reports.

PEOPLE MOVES

Prudential, the UK insurance giant, has appointed former Man Group boss Harvey McGrath as chairman, replacing Sir David Clementi, who will retire at the end of the year. Prudential said it would pay McGrath £500,000 a year from 1 September when he joins the group as non-executive director, before taking the top seat at the boardroom table on 1 January next year, the Financial Times.

LAUNCHES

The fund of hedge funds division of Pioneer Alternative Investments has launched the Luxembourg-domiciled Momentum AllWeather Feeder Fund, which provides access to its flagship Momentum AllWeather Fund, established in 1995, and the Orbit Global Feeder Fund, which provides access to the fund of long/short equity funds, Orbit Global Strategy Fund. Both the Momentum AllWeather Feeder Fund and Orbit Global Feeder Fund are sub-funds of the Pioneer Alternative Investment Funds umbrella structure, a Sicav or open-ended investment company.

VIRTUAL HEDGE CUTTINGS

Former Vanity Fair editor-turned-restaurant owner Graydon Carter says hedge fund managers and reality TV stars aren’t welcome at his Greenwich Village restaurant the Waverly Inn, the New York Times reports. He was quoted as saying that the restaurant regularly screens out those calling from Connecticut’s 203 area code, known to be the home of many a hedge fund tycoon.