Hedge world

STOCK PICKING IN SHORT SELLING

2011-05-05T06:58:00.000-07:00

The fact that a stock is overvalued is not enough on its own to trigger short selling: for example, the market might be rewarding a business reorganization. The company must be going through a down-performing period.

Let’s examine the necessary characteristics for a company to be an ideal short sale target:
• Deteriorating fundamentals and onset of a catalytic event, namely, an event that may have a negative impact on the company in the short term (for example, announcing lower profits than expected by analysts, accounting problems, adverse regulatory changes, funding problems). In particular, before setting up a short position on a stock, it is necessary to identify a catalytic event, because a stock can go on being overvalued for years. This brings to mind a maxim attributed to John Maynard Keynes, who, speaking about market irrationality, said: “Markets can remain irrational longer than you can remain solvent”.
• Companies belonging to distressed industries negatively affected by external changes.
• Changes in the equity structure.
• Companies with inflated share prices characterized by:
– low cash flow
– high price earning
– strong leverage.
• Companies whose management lies to its investors, for example by adopting aggressive accounting practices, through “accounting tricks” with stock options, “accounting tricks” with pension funds, one-off depreciations, reports with pro-forma data instead of actual data. Warren Buffett maintains that EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization) is profit net of bad news, something you would want to take with great caution.
• Companies who are destroying value: i.e., companies with a low return on equity and a high price/earning ratio, who are putting their liquidity in investments whose return is lower than their return on equity, and are therefore bound to erode their profit structure.
• Companies with a high insider selling, i.e., with lots of shares being sold by the company’s managers. (Do not confuse insider selling, which is legal, with insider trading, which is illegal.) Insider selling data are published periodically by the SEC.

A useful exercise to spot short sale target companies is to read public documents, such as the Company Annual Report (10K filing), the Company Quarterly Report (10Q filing) and other reports published by the SEC (SEC filing). Another document is Form 144, which has to be filled out by company executives whenever they place a personal order to sell their company’s shares. Top managers must also fill in Form 4 within ten days of the month end to report on the purchases and sales of their company’s shares. When an investor owns a stake of 5% or more, he must file Form 13-D with the SEC. Every year, during their general

annual meeting, companies must file a proxy statement with the SEC aimed at informing the shareholders on which items they can vote. This document also reports how many shares are held by management, executive remuneration, shareholders with a greater than 5% stake in the company’s equity, pending legal disputes and a lot of other useful information.

It is useful to analyze the executive compensation packages, in particular incentives (stock options, loans extended by the company to top managers, fringe benefits, golden handshakes, insurance policies, private airplanes, apartments), to understand whether the company is managed for the benefit of shareholders or of top managers.

Additional information on a short sale target company can be obtained by interviewing the company management, competitors, suppliers, customers, trade associations, advisors, journalists, independent analysts, etc. This information can then be used to form a personal idea as to the assumptions made in the company’s business plan.

Before getting into a short sale, it is necessary to gain a macro-view: you must identify sector dynamics and deteriorating industries, economic cycles, the state of public finance, capital flows and emerging trends.

Many traders feel it is also necessary to read technical analysis indicators, such as trend indicators, oversold/overbought trends, momentum indicators, Fibonacci’s indicator, money flow indicators. And it is important to monitor the volume of options traded on the company. A further step is the collection of reports issued by brokers to measure analyst consensus of the company and the expectations of the financial community.

Hedge fund managers follow a strict discipline for short selling, fixing target prices that represent a threshold that, once reached, leads to the sale or closing out of the position. Generally, short selling managers do not resort to leverage, in that short selling is an inherently leveraged strategy. One of the greatest risks short selling managers run is that once they have spotted an overvalued company and they have sold it short, a buyer steps in, offering to take the company over and paying a premium to shareholders. Shorting a company with good fundamentals because it is experiencing temporary problems or based on an excessive valuation is risky, because a good management team can rapidly fix problems.

Short sellers try not to be deceived by the apparent story represented by financial statements; they try to scratch the surface and see what lies behind the numbers. To evaluate the health of a company, analysts study the financial reports of the last two years (10Q, 10K and possibly 8K). Great attention must be devoted to footnotes, and in particular it is important to figure out what has not been written in reports that should have been. Analysts look for accounting items whose actual value is lower than their balance-sheet value: securities that have not been marked to the market, real estate with inflated prices, inventory made up of obsolete products, receivables unlikely to be collected, etc.

Most of the recommendations expressed by brokers on shares go from buy to add to hold, and only a few analysts are willing to express a sell, reduce or underperform guidance on a stock. Analysts are constrained by corporate finance relationships or by the need to protect their business relationships with corporate management. This is why brokerage firms tend to be rather biased towards optimism.

To get complete information, you should buy this book!

This review is from: Investment Strategies of Hedge Funds
A great book of explanations on investment strategies. An easy read that explains each strategy a hedge fund might employ. If you want to invest in hedge funds or you are studying to someday run a hedge fund, you need to know what they do. There are so many blogs, articles, news reports out there telling how risky these vehicles are. Make your own mind up. Read this book.

The Risks of Short Selling

2011-04-05T06:49:00.000-07:00

Short-only hedge funds are funds that adopt an investment strategy which is the exact contrary of the one followed by traditional mutual funds, that go for a long-only strategy. Although short selling may theoretically be considered symmetrical to the purchase of a security, in reality short selling entails very specific risks:

The downside of a short sale position is potentially unlimited. When all goes wrong, the worst that happens to a share is that it drops to zero, whereas on the upside it can rise forever. Faced by this statement, short sellers argue that according to their experience there are many more shares tumbling to zero than skyrocketing to heaven! In any case, a risk asymmetry exists between a long and a short position.
The risk of a short squeeze, when a broker demands the immediate delivery of lent securities. The short sale agreement gives the broker the right to call in lent securities at any time. Lent securities can be called in for various reasons: to take part in the company shareholders’ meeting or for extraordinary equity events, such as mergers.
The risk of a dividend payout. If the share pays out a dividend, the dividend amount is charged to the short seller and is paid out to the broker who lent the securities. Changes to existing tax laws can be dangerous for short sellers. For example, in the United States on 28th May 2003, President George W. Bush passed the “Job and Growth Tax Relief Reconciliation Act”, introducing a change in share dividend taxation: whereas before dividends earned by single individuals were taxed at a maximum marginal rate of 38.6 %, once the Act was passed the maximum rate was brought down to 15 %, like long-term capital gains, thus acting as an incentive for companies to increase the distribution of dividends to shareholders.
The impossibility of setting up a short sale as a result of the up-tick rule. Hedge funds, just as any other market participant, must comply with the regulations enacted in 1938 by regulatory authorities (in this case the SEC, but SEC’s regulations apply only to stock listed on NYSE or NASDAQ), allowing short sales only if the latest price change of the security being shorted was an upward movement (SEC rule 3b-3). In practice, short sales are authorized only if there was an “up-tick” (an upward movement between two immediately following prices) in the share price. As a result, it is forbidden to short a stock while its price is falling. In 1994, the SEC approved an experimental regulation, called “bid-test”, to stop short sales on stock listed on the NASDAQ at prices equal to or lower than the bid quote when the price is lower than the previous bid quote.
The liquidity shortage risk. Generally, managers set up short sales only on large cap companies, which have a greater liquidity and therefore their shares are more available to be borrowed from a broker, and where the short squeeze risk is smaller. Often it is not possible to short sell small and medium cap stock, because the market for borrowing the securities has become tight. Short selling should be allowed only on financial instruments that are considered liquid enough to close out the short position by repurchasing the financial instrument. In the case of very severe crises, the financial instruments concerned are generally suspended, which puts the parties involved in a short selling contract under a liquidity risk.

Short selling is more complicated than long-only. Borrowing a stock may be difficult, expensive, and the share can be called in at any time. A successful short position narrows more and more as the share price declines, while an unsuccessful position grows in size.

The emergence of large private equity funds is the most recent risk for the short selling activity. Private equity firms in 2004 raised $85 billion, a huge amount of money if we consider that they can use leverage in addition. Private equity funds can target underperforming small and mid cap companies and can offer a premium on the current market prices for the control of some companies. The activity of private equity funds can be an obstacle to short selling, making it trickier to short companies.

This review is from: Investment Strategies of Hedge Funds (The Wiley Finance Series)
If you want to have an overview of the top hedge fund strategies, this is a good book to read. It is an overview though. It does not go deep into each strategy, and at times, the explanations are superficial, or inaccurate, ex: when talking about merger arbitrage the author mentions the collapse of the tender offer for American Airlines in 1989.... but it was really the inability to finance a going private transaction for United Airlines at $180 plus per share that marked the end of the LBO driven bull market of the 80's.

Goodman & Co announces Dynamic Power Hedge Fund series consolidation

2011-03-20T14:49:00.001-07:00

_*Goodman & Company, Investment Counsel Ltd, manager of Dynamic Funds
has announced a series consolidation for Dynamic Power Hedge Fund
whereby Series A units and Series F units of the fund will be
reclassified into Series C units and Series FC units, respectively.
The reclassification is expected to take place on March 25, 2011.*_

Each Terminating Series (A and F) has the same characteristics as its
replacement Continuing Series (C and FC). Effective, March 21, 2011,
both Continuing Series, which are currently capped, will be opened to
new purchases, while both Terminating Series will be capped to new
purchases and will no longer be offered. The reclassifications will be
automatic and will have no tax consequences to unitholders.

In 2009, in response to a decline in net asset values experienced as a
result of the global financial crisis, the manager added high water
marks to the performance fees of certain Dynamic investment funds,
including the fund, to protect investors from paying twice for the
same performance. At the same time, duplicate series of units of the
affected funds were created for administrative purposes to track the
different high water marks that would apply to purchases prior to and
after January 1, 2009.

The net asset values of the fund's units have since returned to and
surpassed the year end levels they achieved in December 2007 before
the markets began their decline. As a result, all four series of the
Fund have overcome their high water marks, eliminating the need for
the duplicate series.

Source: Hedgeweek.com

Hedge fund firm RAB slumps to "unsatisfactory" loss

2011-03-18T01:17:00.001-07:00

By Laurence Fletcher

LONDON | Wed Mar 16, 2011 7:04am EDT

LONDON (Reuters) - RAB Capital saw losses almost treble last year
after assets fell further, highlighting the hedge fund firm's
struggle to recover from a client exodus during the credit crisis.

The group, which warned in September that full-year results would
miss expectations, posted a pretax loss for the year to end-December
of 20.2 million pounds, compared with a loss of 6.9 million pounds a
year ago.

"Our results for the year are not satisfactory," Chief Executive
Charles Kirwan-Taylor said in the results statement.

Assets under management fell to $1.06 billion in December from $1.35
billion a year before, after the firm closed five funds and one
European bank pulled out money from RAB's fund of funds.

However, RAB saw "modest" inflows into its remaining funds towards
the end of the year.

RAB had managed around $7 billion at the end of 2007.

The firm also faces the prospect of losing more clients as a
three-year lock-up on its troubled Special Situations fund comes to
an end later this year. This fund bought into Northern Rock before
the lender's collapse and also invested heavily in unlisted
securities, many of which proved difficult to sell during the crisis.

RAB's Prime Europe UCITS fund, the first in a range of European-based
portfolios it is launching to try and attract new clients, "had a
quiet launch" a month ago, according to Kirwan-Taylor, who declined
to say how much it had raised.

RAB's difficulties in attracting back clients since the crisis chime
with the experience of Man Group (EMG.L), which in January posted
further net outflows.. The wider industry saw $55 billion of net
inflows last year, according to Hedge Fund Research.

Last year, RAB's Energy fund rose 46.6 percent while its Global
Mining and Resources and Octane funds were also up, helped by surging
commodity prices, although Special Situations fell a further 7.6
percent.

The firm took a 3.5 million pound restructuring charge, which
included cutting staff numbers by more than 30 percent to around 70
after it became "apparent to us that a quick return to organic growth
in our business was unlikely", the firm said in the statement.

Kirwan-Taylor told Reuters the cuts would not affect performance from
its remaining funds.

"We are optimistic about the prospects for the group in its current
form," he added.

In December, RAB said it had taken on two fund managers and a
long-short equity fund from rival Park Place Capital.

Source: Reuters.Com

U.S. Stocks Have Room To Run As Bull Market Turns Two

2011-03-09T23:44:00.001-08:00

Bernanke's Fed remains the largest inquiry mark as stocks aim for
further gains. Image by Getty Images via @daylife

From the depths of March 2009 the S&P 500 has just about doubled,
rising from 666 to 1,322 in two years. And though everything from
escalating oil prices to the anticipated end of the Centralized
Reserve's asset buys threatens the advance, Barclays Capital is
still advising clients to buy on the dips and stick with the surging
equity market.

Part of the firm's case for a continued rally goes back to the
historically accommodative monetary policy from the Fed. The central
bank has kept interest rates near zero and become the largest buyer of
U.S. Treasury debt, scooping up the supply of "risk-free"
securities and approaching investors to equities and other risk
assets.

Larry Kantor, Barclays Capital's head of research, acknowledges
there are factors that could derail that trend, but for the time being
he does not see whatever thing that will kill the two-year surge in
equities. "Nearly every box on the checklist [that makes stocks
attractive] is filled," says Kantor. An economic recovery is
underway, the Fed is holding the line on interest rates and corporate
weigh sheets are flush with cash, far less debt-burdened than they
were pre-crisis and lean enough that any incremental revenue gains are
flowing straight to the bottom line.

_For more on the leaders and laggards in the market's rally see Bull
Market Turns Two: Winners and Bull Market Turns Two: Losers_

The chief risks to further gains – which Barclays Capital expects
with a 1,450 year-end target for the S&P 500 – are the possibility
of further debt flare-ups in Europe, an even steeper spike in oil
prices that takes a bite out of U.S. GDP and, most importantly,
missteps from the Fed when it finally shifts gears on policy.

While the unrest in the Middle East is a concern, Kantor is skeptical
that oil at current levels – West Texas crude traded near $105 a
barrel Tuesday — is vacant to have a prolonged impact on the equity
market. He argues that a chunk of the current price is tied more to
better economic growth prospects, since crude traded through the $90
level before the violent uprisings in countries like Egypt and Libya.

The European debt picture seems to be stabilizing – the ECB is
widely expected to tighten interest rates in an inflation-fighting
measure at its next meeting – and for the time being it appears that
officials will be able to "draw the line at Spain," says Kantor.

A larger risk than oil or Europe, says Kantor, is how the Fed
extricates itself from what is the most accommodative monetary policy
in U.S. description. That can't last forever he says, but it remains
to be seen how timely Ben Bernanke and the central bank will be in
withdrawing its stimulus.

"If the Fed gets in front of it, I don't reckon it's a
killer," says Kantor, who expects a larger correction in
fixed-income than stocks."

The threat, he warns, is if they keep the accelerator pushed to the
floor and the same conversation is on the table a year from now, when
the S&P will presumably be considerably higher. "If [the Fed] get
ahead of it maybe you see a 10-15% correction, if not it could be a
lot larger."

_For more on the leaders and laggards in the market's rally see Bull
Market Turns Two: Winners and Bull Market Turns Two: Losers_

_Follow ?migr? On Wall Street, or Twitter @SchaeferStreet_. _And for
more Forbes coverage check our section pages for Markets, Stocks
andCommodities on the Investing channel._

Source: Forbes.com

HSBC sees macro hedge funds profiting from Libya crisis

2011-03-09T14:14:00.001-08:00

By Laurence Fletcher

LONDON | Wed Mar 9, 2011 9:23am EST

LONDON (Reuters) - Hedge funds that bet on interest rates and
currencies are set to profit from the economic fallout from Libya's
unfolding crisis, says HSBC Alternative Investments, which has
already benefited from rising oil prices.

The uprising in Libya, the bloodiest in a tide of pro-democracy
protests in North Africa and the Middle East, has already helped push
up the price of Brent crude to its highest since 2008 last month.

Certain strategies such as global macro -- made well-known by
managers such as billionaire George Soros -- and computer-driven
trend-following funds have already profited with gains of 1.29
percent and 1.59 percent, respectively, in February, according to
Hedge Fund Research, helped by energy and commodity bets.

HSBC AI, which runs funds of hedge funds, is positive on macro funds
-- which bet on moves in currencies, interest rates, commodities and
stocks -- and thinks they may profit further if the North Africa
crisis hits global economic growth.

Such an consequence could cause central banks to cut or delay raising
interest rates, providing a range of new opportunities for these
funds.

"Macro and trend-followers are making a bunch of money," said Peter
Rigg, global head of the alternative investments group, at a press
interview on Tuesday.

"If the circumstances persists, then the effect on growth and the
response of central banks will be very fascinating. Macro managers
should be very well placed, and fascinating opportunities will come
out of it."

While hedge funds made a range of bets on Europe's sovereign debt
crisis last year, many have shied away from taking positions on the
North Africa turmoil for dread of being 'whipsawed', or betting on a
market go only to see it immediately reverse.

But, HSBC AI said it has already profited from funds that bet on
volatility or market trends.

"Our managers are generally making excellent money from the
circumstances," said Tim Gascoigne, global head of portfolio
management.

"One example is volatility; when you get volatility you can generate
excellent returns. Volatility and trend-followers are making money in
these conditions."

(Twitter: @reutersfletcher. To read the Reuters Funds Blog click on
blogs.reuters.com/fundshub; for the Global Investing Blog click here)
(Editing by Sinead Cruise and Will Waterman)

Source: Reuters.Com

Ayaltis Acantias Offshore fund is launched

2011-03-08T18:38:00.001-08:00

Ayaltis has launched the Ayaltis Acantias Offshore fund, a fund of
hedge funds focused on undervalued assets in the stressed and
distressed credit space.

The fund aims to capture value in all credit markets investing across
all seniority levels following through the current period of strong
technical versus essential dislocations expected to last for the next
few years.

The fund is very concentrated, investing in between six and eight
seasoned distressed credit hedge funds with proven investment skills,
leadership, innovation and management talent.

The fund's target is an annualized return of 18 to 24 per cent per
annum with a volatility of eight per cent per annum over a three to
five years investment horizon. The fund is up 8.35 per cent
year-to-date and since its launch in March 2010.

Ayaltis, the investment adviser of the fund, has also hired Guillermo
Worlicek (pictured) and Massimo Martino to strengthen its team.

Worlicek has joined from Harcourt Investment Consulting where he
worked for five years, most recently as executive director. He will be
a partner and is responsible for implementing a risk and quant
management framework within Ayaltis.

Martino has joined from Banca del Ceresio where he spent more than six
years as fund operations manager of its six fund of hedge funds
managed by the bank. At Ayaltis, he will be responsible for the
complete life cycle of the fund operations service.

Ayaltis is a fund of hedge funds adviser with focus on fixed income
and credit strategies based in Zurich, Switzerland.

Source: Hedgeweek.com

REFILE-DEALTALK-Canada private equity could see banner 2011

2011-03-08T08:49:00.001-08:00

Mon Mar 7, 2011 5:46pm EST

(Refiles to right spelling of Venture in first section)

* Dealmaking seen rising in 2011 from 2010-CVCA president

* Most activity likely in midmarket

* Canadian PE firms seen active in global arena in 2011

By Pav Jordan

TORONTO, March 7 (Reuters) - Canadian private equity is set
for another strong year in 2011, driven by dealmaking in its
midmarket and an improved fundraising climate, the head of the
Canadian Venture Capital and Private Equity Association says.

CVCA President Greg Smith told Reuters that large Canadian
private equity players will again turn in a strong
international performance.

"I reckon we'll have growth in the midmarket arena in
Canada, but we'll see some of the larger transactions happen on
the global arena," Smith said in an interview in Toronto.

About C$4.9 billion ($5 billion) in private equity was
invested in Canada last year, the first rise for the asset
class in three years, with deals like the Canada Pension Plot
Investment Board's C$900 million hold of a 10 percent stake
in the 407 toll highway near Toronto.

The recovery came as confidence returned to the market
after the global economic crisis, when dried-up credit markets
made it nearly impossible to bring to somebody's attention new private
equity funds.

"With a firming economy, people can be much more
comfortable about forecasts than they could have been 18 months
ago, and that generates comfort in doing deals" said Mark
McQueen, chief executive at Wellington Financial.

Already, more private equity capital has been raised in
2011 than in all of 2010.

Birch Hill Equity Partners closed a fourth private equity
fund in February, raising C$1.04 billion to invest in mid-sized
Canadian companies.

And private equity management firm Clairvest Group Inc
(CVG.TO) said in January it had its final closing for its
Clairvest Equity Partners IV Limited Partnership. It raised
C$467 million and overshot its original C$400 million target.

Total funds raised in 2010 were C$1.4 billion.

"My sense is that 2011 is vacant to be a strong year for
private equity...perhaps the strongest since the peak of the
last cycle,"," said Rick Nathan, administration director at
Kensington Capital Partners, a Toronto-based firm with some
C$500 million in capital under management.

Source: Reuters.Com

Citigroup in, Goldman out at top funds

2011-03-08T00:07:00.001-08:00

By Maria Aspan and Ben Berkowitz

NEW YORK | Mon Mar 7, 2011 5:12am EST

NEW YORK (Reuters) - Top hedge funds turned conventional wisdom on
its head in the fourth quarter by swapping out Wall Street powerhouse
Goldman Sachs Group Inc (GS.N) for battered bailout survivor
Citigroup Inc (C.N).

Viking Global Investors manager Andreas Halvorsen sold off all his
shares in Goldman while adding to his stake in its commercial banking
rival.

Halvorsen was part of a broad rush toward Citigroup, which finished
2010 as the most well loved holding of the "Smart Money 30," a group
of some of the largest stock-picking equity hedge funds.

Investors are betting on brightening prospects for the third-largest
U.S. bank -- and insulating themselves from the regulatory risk
lynching over Goldman Sachs and other investment banks. Regulatory
restrictions on proprietary trading have mandatory Goldman to close
down some of its operations, and investors are uncertain about how
the firm can grow long-term revenue when its core businesses are
curtailed.

"To the extent that banks are vacant to be restricted from betting on
market movements with their own capital, that makes headwinds to
Goldman Sachs' business model," said Adrian Cronje, chief investment
officer at Atlanta-based wealth manager Balentine, which indirectly
owns bank stocks.

"People are more interested in dull ancient businesses in the
financial sector that take deposits and start high-quality loans," he
said.

Other hedge funds buying into Citigroup or increasing their stakes in
the fourth quarter included Coatue Capital, Eminence Capital and Lone
Pine Capital.

Chilton Investment Co and Lee Ainslie's Maverick Capital sold out of
Goldman.

Not everyone followed the trend, though. Chilton also sold out of
Citi, and Brookside Capital Investors sold out of Citi even as it
raised its Goldman spot nearly 10 percent.

COMEBACK MOMENT

Source: Reuters.Com

Citi launches technology platform for funds of hedge funds

2011-03-07T07:06:00.001-08:00

_*Citi's global transaction air force unit has launched a global
technology platform specifically calculated for servicing funds of
hedge funds.*_

The new service, which integrates into Citi's global operating
platform for hedge fund air force, enables Citi to provide a suite of
fund of hedge fund solutions through a single front-to-back online
service.

"For the benefit of servicing fund of hedge fund managers around the
world, we have pulled together the entire client experience under one
seamlessly integrated, globally consistent platform," says Neeraj
Sahai, global head of securities and fund air force, Citi. "Managers
have direct, on-line access to our custody air force, our suite of
middle-office solutions and all standard administrative reports,
resulting in greatly improved efficiency, accuracy, transparency and
risk mitigation."

Citi's fund of hedge fund air force product suite offers clients a
modular end-to-end solution, supporting the entire trade lifecycle:
middle office, custody, securities finance, back office, cash and
liquidity.

The new technology platform delivers the following types of customised
tools for portfolio managers:

• Analysis of liquidity terms of underlying hedge fund investments
• Ability to track and analyse underlying fund performance
• "What-if" trade scenario analysis
• Pre and post trade compliance reporting against investment
guidelines
• Real-time dynamic NAV reporting
• Automated FX hedging functionality for share classes denominated
in non-base foreign currency

Citi entered into an agreement with youDevise to ticket the platform.
youDevise is the developer of an online platform used by fund of hedge
funds and administrators for front, middle and back office management
information.

Source: Hedgeweek.com

Headstart Fund of Funds tops rankings

2011-03-06T18:11:00.003-08:00

_*The investable Headstart Fund of Funds, advised by Headstart
Advisers, has claimed its place at the top of the leader board of the
Investhedge rankings for multi-strategy funds of hedge funds over the
last three, six and 12 months.*_

The fund has a year to date return of 13.94 per cent to the end of
November 2010.

Headstart's performance this year compares favourably with fund of
funds indices such as the HFRI Fund of Funds Composite Index (+3.43
per cent year to date), the Barclay Fund of Funds Index (2.85 per
cent) and the EurekaHedge Fund of Funds Index (2.6 per cent).

The fund has been advised by Headstart Advisers' chief investment
officer Najy Nasser since it started in November 1999.

Its 11 year track confirmation has an annualised return of 6.82 per
cent with a volatility of 8.01 per cent per cent. An investment at the
inception of the fund would have approximately doubled by now, whereas
the S&P 500 index is down 13.18 per cent in the same 11 year time
period.

Since January 2009 the Headstart Fund of Funds has had an annualised
rate of return of 16.62 per cent with a volatility of 6.68 per cent.

Nasser says: "Our fund has performed consistently during 2009 and
throughout 2010 after what was a hard 2008 for nearly everyone in our
industry.

"We are particularly pleased with our outperformance against the
indices we are most usually compared. In what has been a hard year for
hedge funds with a wide disparity of returns, all of our underlying
positions are positive for the year to date which is a strong
testament to the quality of the funds within the portfolio."

Source: Hedgeweek.com

PDAC-New investors bring financing bonanza to junior miners

2011-03-06T18:11:00.001-08:00

Sun Mar 6, 2011 4:44pm EST

* Pension funds, sovereign wealth funds dabbling more

* Appetite for investment growing, new companies emerging

* Financing window fully open since late 2009

* Copper favored, gold, uranium, rare earths well loved

By Pav Jordan

TORONTO, March 6 (Reuters) - A whole new class of
conservative investor is piling into the mining sector -- once
the exclusive domain of daring risk-takers -- bringing a
bonanza of funding options to junior miners racing toward
production.

Pension fund managers and sovereign wealth funds are now
hungry to provide financing for projects deemed worthy of
delivering stable, long-term returns.

"That's a very strong signal that this asset class is large
enough now and the returns are steady enough, or expected to be
steady enough," said Mike White, the president of IBK Capital
Corp, a Toronto specialist in equity financing for miners with
projects under development.

"You now have more demand than this world has ever seen for
metals," he said. "So what do we see? We see the investment
bankers of the world and other investors and institutions
reacting."

White comments some ahead of the PDAC prospectors and
developers convention running March 6-9 in Toronto. The show,
sponsored in part by IBK Capital, will bring together hundreds
of tiny-cap miners with financiers looking for new projects.

Newfound interest in mining finance is clearly evident.

Source: Reuters.Com

TransAlta to phase out coal boilers in Wash. state

2011-03-06T04:32:00.001-08:00

SAN FRANCISCO, March 5 | Sat Mar 5, 2011 6:55pm EST

SAN FRANCISCO, March 5 (Reuters) - A bill to close two coal
boilers at a TransAlta Corp (TAC.N) (TA.TO) power plant in
Centralia, Washington, and phase out coal-fired power in the
state will go to lawmakers under a deal on Saturday between the
company and the state's governor.

One coal boiler will be shut no later than the end of
December 2020 and the other by the end of December 2025 under
terms of the agreement, which allows TransAlta to sell
long-term contracts for coal-fired power to help finance a
transition to gas-fueled energy, a proclamation from Governor
Christine Gregoire's office said.

The agreement requires TransAlta to install additional air
pollution control technology to further reduce emissions of
nitrogen oxides at its plant in the Centralia area.

The Calgary, Alberta-headquartered energy provider will
also provide $30 million to a community investment fund for
energy efficiency projects and $25 million for an energy
technology transition fund to support innovative energy
technologies and companies in Washington state.

"This compromise promises cleaner air for our future, while
providing the necessary time to make sure economic stability, job
protection and enough power on the grid to keep our homes and
businesses running," Gregoire said in the proclamation.

The agreement will be incorporated into a proposed bill.

A spokesman for the Sierra Club environmental group
predicted lawmakers would approve the bill, adding, "We were
approaching for a quicker retirement but this agreement allows for a
smooth transition in the community and time to reconfigure the
electrical grid to integrate the region's abundant wind and
solar resources instead of rushing to gas."

The legislation "meets our commitment to a low-carbon
future through transition from coal to gas in Washington,
significantly reduces our environmental risk and allows us to
provide honest shareholder value through favorable long-term
contracts while protecting jobs and the economy of the local
community," TransAlta Chief Executive Stephen Snyder said in
the proclamation. (Reporting by Jim Christie; Editing by Peter Cooney)

Source: Reuters.Com

Volatile trading on hedge fund market likely to extend in 2011

2011-03-06T03:22:00.001-08:00

_*Prices on the hedge fund lesser market remain volatile, according to
the latest data from Hedgebay. *_

A lack of price stability has been the recurring theme of 2010,
evidenced once again when the average trade price dropped to 74 per
cent in November after registering the highest average in six months
during October.

October's high of 81 per cent was the third time in a row the index
had risen, suggesting that consistency might slowly be returning to
the market after a turbulent year. But, the drop shown in November has
cast doubts over that theory, with the volatility now expected to
extend into 2011.

The Hedgebay Index has been inhibited by a distinct absence of funds
trading near par over the last year, suggesting a continued lack of
confidence in the market. A relative lack of pricing transparency has
also bent uncertainty in the market, although Hedgebay believes that
its newly launched Pricing and Valuation Consultancy Service will help
to bring superior insight to this area.

Elias Tueta, co-founder of Hedgebay, says: "In many ways, this
month's results have been typical of 2010. After an unsettled year
of trading on the lesser market, the general sentiment among investors
is one of caution. This has bent an artificial 'cap' on the price
they are keen to pay, and the fluctuations in the index have reflected
that. Every time the price looks as though it is rising consistently,
we saw a fall in the index. There is currently modest to suggest that
that will change in the ahead of schedule part of 2011."

Tueta has also pointed to the recent governmental interventions at
several large hedge funds as a reason for November's drop. The
interventions have made investors nervous that their managers, or
managers on offer on the lesser market, could face the same behavior.

Meanwhile, Hedgebay's Illiquid Asset Index which measures trading in
gated or floating funds rose quite significantly to 44.09 per cent.
Notably, the majority of transactions in November took place in this
part of the market. Hedgebay believes that the surge of trading in
these illiquid assets shows a renewed determination among investors to
clean their portfolios. Two years on from the credit crisis, the
ongoing cost of servicing illiquid assets has proved to be a drain on
investor capital, making the disposal of such assets a necessity.

Tueta says: "There is something approaching fatigue in the illiquid
end of the lesser market, as investors try to start anew in 2011. A
clean portfolio free from illiquid assets will allow investors a clean
bill of health vacant into the first quarter of next year, and free up
capital for some of the funds that have shown excellent performance
this year. This sample of trading will likely continue throughout
December."

Source: Hedgeweek.com

MAM funds raising 50 mln stg for UK fund

2011-03-06T01:20:00.003-08:00

LONDON | Fri Mar 4, 2011 10:43am EST

LONDON (Reuters) - Investment company MAM Funds (MMFD.L) plans to
bring to somebody's attention 50 million pounds , mostly from
institutions, for a fund run by former Gartmore (GRTR.L) older manager
Gervais Williams.

The Diverse Income Trust will close books on its public offer on
April 12, Williams told Reuters on Thursday and will be run as an
equity fund, aiming to pay an income to investors.

Williams added he expected at least two thirds of the shares to go to
institutional investors on account of his long track confirmation
running funds at Gartmore.

Williams, who is a administration director at MAM, left Gartmore last
year after 17 years, adding to a run of older defections from the
company in the year after it listed in December 2009.

After a dismal year, Gartmore eventually received a takeover offer
from rival Henderson (HGGH.L).

Williams was head of smaller companies investments at Gartmore and
ran a number of investment trusts counting the Gartmore Growth
Opportunities GGOR.L and the Gartmore Irish Growth (GIR.I) funds.

The new fund, structured as an investment trust, will target an early
annualised dividend yield of 4 percent, investing in income-bearing
blue-chip, mid and tiny-cap UK stocks.

Shares will be issued at 50 pence each with an early company net
asset value of 48.74 pence per share. (Reporting by Chris Vellacott.
Editing by Cecilia Valente and Will Waterman) (For the Funds Hub
blog: blogs.reuters.com/hedgehub) (For Global Investing: here)

Source: Reuters.Com

Greenwich investable hedge fund indices climb in January

2011-03-06T01:20:00.001-08:00

Source: Hedgeweek.com

Asset Allocation and Its Role in Modern Portofolio Theory

2011-03-05T03:32:00.000-08:00

What does MPT tell an investor about how to choose the components of a portfolio? The first idea is to diversify one’s holdings and to allocate part of the investment capital among several asset classes. Reasonably enough, this strategy is known as asset allocation. Not so many years ago, asset allocation meant owning a variety of stocks and bonds and some cash equivalents.

The prudent man rule reinforced this type of thinking among fiduciaries, or those responsible for investing other people’s money.Today MPT goes further and focuses on the portfolio as a whole, and not on its individual components. But proper diversification remains an essential ingredient of MPT.

When following MPT to build a portfolio, it’s not sufficient to compile a portfolio simply by investing in different asset classes (e.g., stocks, bonds, gold, and real estate). MPT teaches that it’s important to find the optimal allocation of assets satisfying both the investor’s risk tolerance and reward (expected rate of return). It’s important to own a variety of investments that perform differently in the marketplace. In other words, there should be minimal correlation in the performance of each individual investment with each of the other investments. If it sounds difficult to build a portfolio one stock at a time that satisfies these parameters, especially for an individual public investor, be assured that it is indeed difficult. But don’t fret, as there is an easy method to accomplish this goal for the portion of your investment capital that you allocate to the stock market. A well-qualified financial advisor ought to be able to help you achieve the type of portfolio recommended by MPT for any assets you own that are not stock market related.

Again, it’s important to reiterate that our discussion focuses on only that portion of your assets you have allocated to investing in the stock markets of the world. This book makes no recommendation on how you should otherwise allocate your assets. MPT tells us that asset allocation should not be ignored, as it represents the best method of reducing the overall risk of your portfolio. Numerous books offer advice on how to allocate assets in accordance with MPT, and we’ll leave that discussion to them.

The Prudent Investor
The prudent man rule contains guidelines for those responsible for investing other people’s money. The purpose of the rule is to offer protection to investors by providing those fiduciaries with investment guidelines. Over the years, the rule has changed with the times. At one point, it would have been considered lunacy to invest the savings of a public investor in the stock market. After World War II, as inflation became important in making financial decisions, it was considered extremely imprudent for a fiduciary not to invest in the market. Today it is not enough to merely invest in stocks, and the prudent man rule requires that fiduciaries invest at least part of an investor’s funds via passive investing, using index funds. Passive investing is consistent with the teachings of MPT and represents an important part of our overall recommended investment strategy.

At one time, a fiduciary had the difficult responsibility of being certain that each investment was appropriate for an investor. Today, taking MPT into consideration, the prudent investor rule has been revised to “focus on
the portfolio as a whole and the investment strategy on which it is based, rather than viewing a specific investment in isolation.” As a result, it’s acceptable for fiduciaries to recommend shares that would be risky as standalone investments, as long as the entire portfolio is appropriate for the investor.

Diversification
Diversification is an essential element when following MPT. The easiest way for public investors to diversify has been to own shares of traditional mutual funds. Their very existence is one reason why so many Americans are currently stock market investors, as mutual funds make it easy for public investors to own a professionally managed diversified portfolio of stocks. The wisdom of relying on these professional money managers is one of the subjects covered in MPT.

This review is from: Create Your Own Hedge Fund: Increase Profits and Reduce Risks with ETFs and Options (Wiley Trading)

This book covers the basics of this strategy very well; however it contains way too much filler information, and not enough substance. The author treats the reader as a novice to the market; but in reality no stock market novice would even begin to understand this strategy - therefore the author misses his target audience!

In my opinion, it is good entry entry-level reading for the market beginner who wants to understand the basics of a hedge fund; however it is not for the seasoned trader demanding greater insight in to a leading-edge strategy.

Private equity deals up 88 pct so far this year

2011-03-04T21:57:00.001-08:00

Fri Mar 4, 2011 1:09pm EST

* Blackstone-Centro shopping mall deal lifts total

* Deal prices still below 2006-2007 peak

* Real estate, health care, industrials dominate

* UBS, Barclays top private equity advisory rankings

By Megan Davies

LONDON, March 4 (Reuters) - Private equity dealflow is
bouncing back, with the value of deals so far this year up 88
percent from last year, lifted by a $9.4 billion deal by
Blackstone Group LP (BX.N) to buy U.S. shopping malls from
Australia's Centro Properties (CNP.AX).

Figures from Thomson Reuters show that private
equity-backed mergers and acquisitions have totaled $36.3
billion for the year to date.

Private equity executives expect that to continue. At a
conference in Berlin this week, David Bonderman, the co-founder
of TPG Capital [TPG.UL] said a $10 billion to $15 billion
leveraged buyout deal would be possible right now as financing
is again available on attractive terms. [ID:nLDE7221V6]

Private equity deal sizes have been increasing since the
credit crisis cut off access to cheap debt. But deal size,
which has mostly rebounded to the $3 billion to $5 billion,
remains far lower than the double-digit billion figures hit in
2006 and 2007.

Bonderman said while there isn't as much volume as in those
"halcyon days," financing is in fact available on "attractive
terms."

The lion's share of dealflow came from the real estate,
healthcare and industrials sectors, Thomson Reuters data show.

UBS AG (UBSN.VX) and Barclays Plc's (BARC.L) Barclays
Capital top the advisory rankings for private equity-backed M&A
for the year to date, according to the data. (Editing by Gerald E.
McCormick)

Source: Reuters.Com

AIS launches web portal for hedge fund document management

2011-03-04T01:25:00.001-08:00

_*AIS Fund Administration has launched AIS IR Manager, a secure
document management and investor relations web portal calculated
expressly for the firm's hedge fund clients.*_

AIS Fund Administration provides outsourced middle and back office
support and fund administration to the alternative investment
industry.

The AIS IR Manager allows managers to post fund documents, newsletters
and marketing materials.

IR Manager is hosted by both the hedge fund manager and AIS on a
restricted, password protected website.

Financial statements are uploaded directly by AIS to make sure that
all information is secure and confidential. Managers are able to
authorise their investors and prospects with access to their available
information and track how information is being used by activity logs
and a secure tracking encryption.

"We've seen tremendous demand from our clients for such a platform
on two fronts," says Paul Chain, AIS president. "First, compliance
minded CFOs want a way to satisfy regulatory scrutiny, maintain a high
level of confidentiality and demonstrate control over the fund's
marketing efforts. Following, managers want an efficient and secure
way to distribute newsletters, offering documents, marketing materials
and statements to existing and potential investors. IR Manager ensures
that only the intended party views the material they are permitted to
view. Answering both needs on one platform, controlled by AIS as the
third party administrator, provides a valuable solution for our
clients."

Source: Hedgeweek.com

Theta Legends XL Fund is first Dutch FoHFs on Euronext Amsterdam

2011-03-03T18:09:00.001-08:00

_*Theta Legends XL Fund is the first Dutch fund of hedge funds with a
listing on NYSE Euronext Amsterdam (symbol: THXLE). The fund offers
investors the selection to trade shares in Theta Legends XL Fund on a
daily basis and provides simple and fully transparent access to a
portfolio of investment managers, with better liquidity than usual.*_

Theta Legends XL Fund invests globally in a select group of
alternative investment funds with a smallest track confirmation of 15
years and proven skills to generate consistent absolute returns under
varying market conditions. The target return of Theta Legends XL Fund
is around 10% per annum, and with a consistent low correlation to
equities and bonds, Theta Legends XL Fund adds value to any habitual
investment portfolio.

Wouter ten Brinke of Theta Capital Management, says: "After the
financial crisis of 2008, hedge fund investors have significantly
increased their demand for transparency, simplicity, and liquidity.
Theta Legends Fund meets all these demands - and more. With our
extensive industry network and longstanding relationships with the
underlying hedge fund managers, we offer access to legendary managers
often closed to other investors. These managers also have superior
risk management skills and a best-in-class operational infrastructure.
This unique combination of factors clarifies the success of Theta
Legends Fund, in the Netherlands and abroad."

Theta Legends XL Fund is the sister fund of Theta Legends Fund, which
was launched on February 1st 2010. This fund has generated a return of
more than +12% since launch and was recently nominated for the
InvestHedge Awards 2010 in the category "New Fund of the Year".
Besides Theta Legends Fund, Theta also manages Theta Multistar
Standard Volatility Fund and Theta Deep Value Fund.

Source: Hedgeweek.com

ETF Investing: Natural-gas ETFs hit on weather, supply

2011-03-03T08:21:00.001-08:00

By John Spence, MarketWatch

BOSTON (MarketWatch) — Lost in the shuffle of surging oil prices and
Middle East unrest is the pullback in exchange-traded funds that
invest in a different energy source: natural gas.

Exchange-traded products that track natural-gas futures such as U.S.
Natural Gas Fund
/quotes/comstock/13*!ung/quotes/nls/ung
(UNG
*5.14*,
+0.04,
+0.80%)
and iPath Dow Jones-UBS Natural Gas
Subindex Total Return ETN
/quotes/comstock/13*!gaz/quotes/nls/gaz
(GAZ
*6.98*,
+0.03,
+0.47%)
have shed more than 10% so far this
year.

!! Trading an Aging Bull Market !!

The bull market is looking a modest long in the tooth, and Kurt
Brouwer, chairman of Brouwer & Janachowski, says large-cap stocks with
solid dividends, as well as some large tech names, could be safe
places to invest.

Despite a bounce Friday, natural-gas prices have trended steadily
lower since late January on expectations of milder temperatures as
winter winds down.

"Natural gas is the commodity that slept through the commodity
party," said Tom Lydon, editor of ETFtrends.com. "Supply is
through the roof and clean energy just isn't catching on as quick as
many have hoped."

Crude-oil prices, meanwhile, surged above $100 a barrel in New York
last week on fears political unrest in the Middle East and North
Africa could lead to further supply disruptions.

U.S. Oil Fund
/quotes/comstock/13*!uso/quotes/nls/uso
(USO
*41.10*,
-0.29,
-0.70%)
broke free of its recent range and traded
above $40 a share for the first time since May.

"There is a curious disconnect between the spike in oil prices and
the performance of natural gas and other alternative energy plays,"
said Michael Gayed, chief investment strategist at Pension Partners
LLC.

"There is a tug of war vacant on internally," he added. "While
investors in oil are clearly betting that supply disruptions are
likely to occur, investors in alternative energy aren't."

Weak Support

Natural-gas prices have weakened even though data from the Energy
Information Administration shows supply is lower than a year ago, and
near the bottom of its five-year range, said John Hyland, chief
investment officer at United States Commodity Funds LLC. The firm
manages U.S. Natural Gas Fund and other energy-sector ETFs.

"With below-average inventories, the market seems to believe the
weather will warm up and that winter-heating usage will moderate from
here, resulting in rebuilding inventories," Hyland said.

Discoveries of shale gas have also weighed on prices in recent years,
he said.
See Commodities Corner on natural-gas supply surplus.

Natural-gas prices have traded lower "as warm temperatures over the
past week have depressed demand and comfort with inventory levels at
the end of the withdrawal season has damped bullish sentiment,"
Barclays Capital analysts wrote in a Feb. 22 note.

"Since mid-January, prices have been on a slide, giving up gains
made earlier in the winter," Barclays said. "For one, temperatures
have warmed, reducing the risk of a complete market reset. Following,
winter is nearly over, allowing the market to breathe a sigh of
relief."

When using exchange-traded products based on commodity futures,
investors need to dredge up they don't follow the "spot" price.

For example, U.S. Natural Gas Fund invests in the near-month futures
contract.

/quotes/comstock/13*!ung/quotes/nls/ung

UNG
*5.14*,
+0.04,
+0.80%

"Effectively, the fund sells its soon-to-expire spot and buys a
contract further from expiry to avoid physical delivery,"
Morningstar Inc. analyst Abraham Bailin noted in his latest research
report on the ETF.

"When the prices of those back-month contracts exceed the price of
the front-month contract (known as a state of "contango"), the
fund loses money each time it rolls its spot," Bailin wrote. "In
contangoed markets, a fund like U.S. Natural Gas Fund can suffer gray
losses even as natural gas prices rise, warranting investor
caution."

Also, since the fund is structured as a limited partnership, it has
different tax behavior from other types of ETFs, he said.

United States Commodity Funds also oversees U.S. 12 Month Natural Gas
Fund
/quotes/comstock/13*!unl/quotes/nls/unl
(UNL
*31.34*,
+0.18,
+0.57%)
, which attempts to dampen the effect of contango
by investing in longer-dated futures contracts.

First Trust ISE-Admire Natural Gas Index Fund
/quotes/comstock/13*!fcg/quotes/nls/fcg
(FCG
*21.96*,
+0.08,
+0.37%)
is an ETF that invests in natural-gas companies. It has
held up much better than the natural-gas futures products recently
with a year-to-date gain of more than 10%.

John Spence is a reporter for MarketWatch in Boston.

Source: Marketwatch.Com

SEC charges ex-Goldman director in insider case

2011-03-03T00:47:00.001-08:00

By Jonathan Stempel

NEW YORK | Wed Mar 2, 2011 2:24am EST

NEW YORK (Reuters) - A former Goldman Sachs director leaked secret
details to Galleon Group hedge fund manager Raj Rajaratnam about
Warren Buffett's plot to invest $5 billion (3 billion pounds) in the
Wall Street bank at the height of the financial crisis, a U.S.
securities regulator charged.

The U.S. Securities and Exchange Commission said the director, Rajat
Gupta, tipped Rajaratnam by phone just minutes before the public
learned of the investment by Buffett's Berkshire Hathaway Inc
(BRKa.N)(BRKb.N), which helped make sure Goldman's stability.

Gupta, a former worldwide administration director at consulting firm
McKinsey & Co, was also accused of tipping Rajaratnam about quarterly
earnings at Goldman and Procter & Gamble Co (PG.N), where he was a
director before resigning on Tuesday.

The 62-year-ancient Gupta is one of the highest-reputation corporate
executives implicated in the government's wide-ranging insider
trading probe, which has resulted in criminal or civil charges
against dozens of individuals.

Tuesday's charges mark the first time that activity said to have
occurred at Goldman was directly implicated in the probe.

The SEC said Rajaratnam, who faces a March 8 criminal insider trading
trial, used the tips to trade at his firm, Galleon Group, reaping
more than $18 million of illegal gains. It said Gupta invested in at
least some Galleon hedge funds.

"Gupta was honored with the highest trust of leading public
companies, and he betrayed that trust by disclosing their most
sensitive and valuable secrets," SEC enforcement chief Robert Khuzami
said in a proclamation. "Directors who violate the sanctity of board
room confidences for private gain will be held to account for their
illegal actions."

The SEC started administrative and stop-and-desist proceedings
against Gupta. It described Gupta as a "friend and business
associate" of Rajaratnam.

"Based on the allegations in the order instituting the administrative
proceedings, it appears the SEC has a powerful, circumstantial case
against Gupta," said Kathleen Hamm, administration director at
Promontory Financial Group in Washington and a former SEC enforcement
official.

Source: Reuters.Com

Mid-sized Asia hedge funds poised for big boost

2011-03-01T22:20:00.003-08:00

By Nishant Kumar

HONG KONG | Mon Feb 7, 2011 4:04am EST

HONG KONG (Reuters) - Mid-sized Asian hedge funds are poised to
receive major money inflows this year, as some of the region's
largest managers shut doors to new investors on fears that running
bulky portfolios could harm returns.

Industry tracker Eurekahedge estimates that in 2010 nearly 30 Asia
focused funds stopped accepting money from new clients, in what is
also known as a "soft close". This compared with around 15 in 2009.

That means that this year, there is potentially more money sloshing
around for Asia's mid-sized hedge funds, which typically manage $50
million to $250 million (155 million pounds).

These funds are expected to benefit from the overflow, in turn
boosting the size and clout of the $125 billion Asia hedge fund
industry.

"Given the increase in the number of managers that we are seeing soft
close, we expect investors will turn their attention to some of the
newer and smaller managers that have launched in the last 12-18
months," says James Fallon, director, financing sales, at BofA
Merrill Lynch in Hong Kong.

The impact of the so-called "waterfall effect" remains to be seen and
analysts say it is hard to estimate the size of the potential
overflow.

Still, fund managers, analysts and prime brokers say that should the
mid-size funds reap the benefits of such an overflow, the phenomenon
would set the stage for the industry's next phase of growth.

Not only will it lift the size of the funds, but a growth in assets
for the middle players could increase investment options for
institutional investors, and expand fee opportunities for service
providers such as consultants and prime brokers.

Farhan Mumtaz, a older analyst at Eurekahedge, estimates the main
beneficiaries of the asset overflow from the closed huge hedge funds
would be those administration $100 million or more.

Source: Reuters.Com

JGBs climb, investors buy debt as stocks slide

2011-03-01T22:20:00.002-08:00

TOKYO, March 2 | Tue Mar 1, 2011 9:22pm EST

TOKYO, March 2 (Reuters) - Japanese government bonds climbed
on Wednesday, with futures seen snapping a three-day losing
streak, as Tokyo shares dropped on concerns that rising oil
prices will hurt global economic recovery.

* March 10-year futures 2JGBv1 were up 0.29 point at
139.64, after diminishing slightly below a 25-day moving average for
the first time in nearly a week on Tuesday.

* The benchmark 10-year yield JP10YTN=JBTC was down 2.5
basis points at 1.280 percent, pulling away from a 10-month high
of 1.350 percent struck last month.

* The 20-year yield JP20YTN=JBTC was 1.5 basis points lower
at 2.020 percent.

* The five-year yield JP5YTN=JBTC dropped 3 basis points to
0.520 percent, while the two-year yield JP2YTN=JBTC was 0.5
basis point lower at 0.235 percent.

* The five-year/10-year yield spread widened to around 76
basis points, the widest since mid-December as domestic investors
were seen buying standard-term bonds.

* "Markets are factoring in a negative impact from rising oil
prices on economic growth. A sustained rise in yields is unlikely
unless we see a huge change in that trend," said Chotaro Morita,
head of fixed income strategy research at Barclays Capital
Securities in Japan.

* Analysts said moves could be limited ahead of U.S. Jobs
data on Friday.

* U.S. Treasuries were higher on Tuesday after stock market
losses fuelled safety bids. Benchmark 10-year notes US10YT=RR
turned flat, having erased earlier losses on the day. [US/]

* The Nikkei fell 1.7 percent on rising oil prices. [.T] (Reporting
by Akiko Takeda; Editing by Joseph Radford)

Source: Reuters.Com

Cayman Islands Hedge Fund Services 2011

2011-03-01T22:20:00.001-08:00

Source: Hedgeweek.com

Marron's Lightyear out to raise $1.1 bln fund

2011-03-01T15:08:00.001-08:00

Tue Mar 1, 2011 5:31pm EST

* Lightyear has raised $150 mln so far for latest fund

* Marron's investment firm seeks $1.1 bln

* Funds being raised by UBS Securities

By Joseph A. Giannone

NEW YORK, March 1 (Reuters) - Lightyear Capital LLC, a
private-equity firm led by former PaineWebber chief executive
Donald Marron, intends to bring to somebody's attention $1.1 billion
for its latest
investment fund, according to a recent regulatory filing.

Lightyear Fund III LP raised $150 million so far through
UBS Securities, according to a filing with the Securities and
Exchange Commission last week. The smallest investment is $10
million.

Marron, after promotion the fourth-largest U.S. brokerage to
Swiss bank UBS (UBSN.VX) in 2000, has pursued a series of
buyouts in the financial air force and related companies. Marron
was not immediately available for note on the new fund.

A modest more than a year ago, the New York firm bought a
trio of independent broker-dealers from ING Groep (ING.AS),
businesses now doing business as Cetera Financial.

The three units -- Financial Network Investment Corp,
Multi-Financial Securities Corp and PrimeVest Financial
Air force Inc -- served nearly 5,000 independent brokers with
$75 billion under administration when the deal closed.

Last month Lightyear struck another deal with the Dutch
insurance giant, acquiring the real estate investment business
ING Clarion Partners.

The firm's portfolio of 11 holdings includes Collegiate
Funding Air force Inc, Flagstone Reinsurance Holdings Ltd and
NAU Country Insurance Co.

Recent SEC filings show that Lightyear also owns more than
24 percent of Cascade Bancorp (CACB.O), an Oregon community
bank it helped recapitalize, and 25 percent of Higher One
Holdings Inc (ONE.N), a Connecticut firm promotion payment
air force to colleges.

Lightyear's first fund was fully invested, while its following
fund is still being invested, according to the firm's website.
Lightyear has managed $3 billion in committed capital since its
inception. (Reporting by Joseph A. Giannone, editing by Matthew Lewis)

Source: Reuters.Com

Hedge funds wary of punts on North African chaos

2011-03-01T03:01:00.000-08:00

By Sinead Cruise and Laurence Fletcher

LONDON | Fri Feb 25, 2011 1:48am EST

LONDON (Reuters) - Hedge funds are so far shying away from the
political turmoil in North Africa, despite their reputation as
risk-takers on the lookout for a instant gain.

Only a handful are starting to hunt ways to profit with investments,
for example, in oil and credit protection.

"It's a modest like the financial crisis in 2008. Many managers are
adage, 'how am I supposed to figure this one out?'", said Morten
Spenner, who heads hedge fund of fund manager International Asset
Management.

"If (Libya's) Gaddafi said tomorrow, 'Look, we've sorted it all out',
oil prices could fall as much as 5 or 6 dollars a barrel in a day.
And you could be really terribly hurt."

A sudden burst of anti-government gripe in Tunisia last month has
sparked violent uprisings in Egypt and oil-rich Libya, paralysing
economies and threatening asset values across the North African
region and further than.

Macro hedge funds normally like to take bets on which country or
company might suffer most or bounce back fastest from a debt crisis
or a depression, but are wary of trying to following-guess
governments or politically charged situations.

Most are now playing a waiting game until they have a better feel for
how political tension could harm financial markets or the credit
ratings of countries and companies across the region.

After losing 19 percent in 2008's market turmoil, according to Hedge
Fund Research, and suffering again last summer, many hedge funds
dread being caught out again by sharp volatility.

"Everyone's just being super-cautious," said one prime broker who
questioned not to be named.

OIL

Oil surged to its highest level since August 2008 on Thursday, as
skirmishes between Gaddafi's supporters and demonstrators seeking an
end to his 41-year authoritarian rule could encourage leadership
challenges in other oil producing countries like Saudi Arabia

But the potential threat to oil supply -- and the political response
to the crisis -- remains unclear.

"None of the major players reported to be operating in Libya has seen
increased small promotion -- yet," Alex Brog, an analyst at Data
Explorers, one of world's largest providers of data on long and small
interest in listed companies.

Libya is Africa's third-largest oil producer and has the continent's
largest proven reserves, estimated at 2 percent of world supply, but
small interest in several firms exposed to Libya such as Eni
(ENI.MI), Repsol (REP.MC), Statoil Asa (STL.OL) and Total SA
(TOTF.PA) remain low, Data Explorers said.

But, Pedro de Noronha, administration partner at Noster Capital, said
he has raised exposure to oil and oil-related companies to 14 percent
from 9 percent as Libya's crisis erupted, believing OPEC's spare
capacity is well below the estimated 5 million barrels per day.

Source: Reuters.Com

Hermes BPK aiming to triple assets in 5 years

2011-02-23T06:55:00.002-08:00

By Chikafumi Hodo

TOKYO | Tue Feb 8, 2011 5:20am EST

TOKYO (Reuters) - The fund of hedge funds arm of Hermes aims to boost
its assets by three times to $5 billion (3.1 billion pounds) in five
years by beating growing demand for alternative investments in
countries counting Japan, the head of the company said.

Hermes BPK is in suspense that its experience administration British
Telecom's (BT.L) (BT.L) pension scheme will help it win the
confidence of typically risk-adverse investors in Japan, the world's
following largest institutional market.

"Japanese institutional investors are very concerned as they were
scarred a bit by their experiences in 2008 (in the wake of the global
financial crisis) in the alternative industry," Matteo Perruccio,
chief executive and founding partner of Hermes BPK Partners, told
Reuters in an interview.

"Although that being said, they are smart investors and they know the
alternative space is vacant to be very fascinating in the next couple
of years."

The company, which manages more than $1.5 billion in assets in three
product classes, expects to service high amounts of money from a tiny
number of Japanese investors, Perruccio said.

Besides Japan, Hermes BPK is also focusing on drawing investors from
the United Kingdom, the United States, Switzerland and Australia.

Hermes BPK, established in 2008, is a partnership between its
directors and Hermes Fund Managers, an asset management group wholly
owned by the BT pension scheme. Hermes Fund Managers owns 61.5
percent and the partners hold 38.5 percent.

Source: Reuters.Com

BVI Hedge Fund Services 2011

2011-02-23T06:55:00.001-08:00

Source: Hedgeweek.com

Stenham Global Resources ranked in top ten by BarclayHedge

2011-02-23T01:09:00.002-08:00

_*Stenham Asset Management says Stenham Global Resources was ranked
number eight in the Top 10 Performing Fund of Hedge Funds category for
October 2010 by BarclayHedge.*_

Stenham Global Resources, a fund of hedge fund, focuses on commodity
related sectors such as water, agriculture and soft commodities.

The long biased fund of hedge fund is a concentrated portfolio of ten
to 15 managers with a target return of Libor plus six to eight per
cent and volatility of eight to 11 per cent per year.

The fund was launched in 2006.

Jaspal Phull, portfolio manager, says: "Continued global demand for
resources particularly from Plates, India and worldwide globalisation
is likely to be a tailwind for commodity prices. Investing in global
resources is a compelling investment opportunity due to growing energy
demands from an ever-increasing population."

Source: Hedgeweek.com

Hedge fund Elliott rejects DuPont's Danisco bid

2011-02-23T01:09:00.001-08:00

COPENHAGEN | Fri Feb 11, 2011 4:20am EST

COPENHAGEN (Reuters) - U.S. hedge fund group Elliott Associates has
rejected U.S. chemicals giant DuPont's $5.8 billion (3.6 billion
pounds) offer to buy Danish food ingredients and enzymes maker
Danisco, a letter from Elliott showed.

Elliott Advisors, a London-based advisor to the Elliott group, said
that Elliott advises funds with about 1.0 percent of the voting
shares in Danisco (DCO.CO).

DuPont (DD.N) and Danisco announced the $6.3 billion deal, which in
which DuPont would also take over $500 million in Danisco debt, on
January 9 and the offer runs to February 22.

DuPont has said it will involve out the deal only if it gets
acceptance from shareholders with at least 90 percent of Danisco
stock.

Elliott Advisors said the 665 Danish crowns per share bid, which is
supported by Danisco's board, is too low.

"As advisor to shareholders in the company, we are at a loss to know
why the Board of Directors of Danisco ... should have seen fit to
recommend the offer," Elliott portfolio manager Franck Tuil said in
the letter to the Danisco board.

"A sale of Danisco at the price offered would represent a shameful
treachery of shareholders' interests, and we see very modest prospect
of shareholders accepting a price of 665 Danish crowns per share,"
the letter said.

Elliott said the offer price represented a "substantial discount to
the underlying economic value of the company, especially in a
takeover circumstances."

It said the price ignored the strength of Danisco's market spot and
the opportunities for significant margin improvements, took no
account of synergies available to a DuPont/Danisco combination, and
disastrous to attribute any control premium on a successful offer.

"Moreover, contrary to DuPont's claims, the Offer is not in line with
comparable transactions, but is at a material discount," it said.

Danisco has said the bid was the best of several offers and that it
provides the best possible value for shareholders.

Danisco chairman Jorgen Tandrup told Reuters on January 19 that the
deal maximises value for shareholders and that the board is "really
satisfied" that the auction process extracted the best possible value
for shareholders.

DuPont's Chief Executive Ellen Kullman has ruled out raising the
665-crowns bid..

(Reporting by John Acher; Editing by Hans Peters)

Source: Reuters.Com

Hedge funds rediscovering taste for Japan

2011-02-22T16:29:00.002-08:00

By Nishant Kumar and Chikafumi Hodo

HONG KONG/TOKYO | Tue Feb 22, 2011 5:24am EST

HONG KONG/TOKYO (Reuters) - Hedge funds are turning attention to
Japan once again and are set to attract more capital on expectations
a pick-up in corporate activities there like M&A and share buy-backs
would yield strong returns.

The resurgent interest in Japan could mark a turn in the fortunes of
the country's hedge funds industry, which has seen a sharp drop in
assets and the number of funds since 2006 as the market peaked.

Hedge funds are betting the current environment is ideal for
strategies such as event-driven and long/short, given that many
companies are trading at low valuations and funding is cheap --
conditions ideal for M&As.

A stronger yen has prompted domestic firms to buy new production
plants abroad and go in for deals. In a symbolic move, Japan's two
major steel makers, Nippon Steel Corp (5401.T) and Sumitomo Metal
Industries (5405.T) have announced merger plans..

Other factors favouring a relook at Japan are the recent shift in
capital flows in favour of developed markets, strong corporate
profitability -- which has left companies with about a record $2.5
trillion in cash -- a rebound in exports driven by robust demand in
fast-growing Asia and hope that the economy is heading towards a
moderate recovery.

A vast liquid market and return of flows into Japanese stock mutual
funds are also seen as positive.

"The feedback from our Japanese prime brokerage client base as to the
opportunity set and expected returns for 2011 has been more positive
than previous years," said Marlin Naidoo, hedge fund capital group
head in Asia-Pac for Deutsche Bank (DBKGn.DE).

"Additionally we are also seeing pan-Asian managers materially
increasing their exposure to the Japanese market."

INFLOWS

While large inflows are not coming yet, money will start pouring in
the next two to three months as investors were conducting final due
diligence, several prime brokers said.

Many hedge funds have given up on Japan, with collective assets under
strategy plunging more than 50 percent from 2006 to about $20 billion
now, data from fund tracker AsiaHedge shows.

Their number has dropped by about a fourth to nearly 200 during the
period, according to data from Eurekahedge.

Still, there are signs of gradual improvement and many of those who
have survived are increasing assets. Eurekahedge sees assets of hedge
funds it tracks rising by two-thirds in 2011.

Hedge funds such as Instinct Capital and Symphony Financial Partners
earned 33 percent and 20 percent, respectively, in 2010 when the
benchmark Nikkei index .N225 was down about 3 percent, indicating it
was possible to make big returns in Japan.

In the latest vote of confidence, Tiger Management, founded by hedge
fund industry pioneer Julian Robertson, last month seeded Hong
Kong-based Nezu Asia with $50 million, part of which went to Japan
focused equity strategy Nezu Kuma Fund.

Source: Reuters.Com

Global financial markets ended 2010 with a positive tone

2011-02-22T16:29:00.001-08:00

_*Global financial markets ended 2010 with a positive tone, with
strength across global equity, commodity and credit markets throughout
the month of December.*_

Fixed income yields rose despite continued subdued inflationary
pressures, measures of manufacturing and employment improved while the
US dollar declined against most major currencies. The HFRI Fund
Weighted Composite Index gained 3.15% for the month, bringing full
year performance to a gain of 10.42%; all strategies had a positive
contribution for the month, with the most significant gains in Macro
and Equity Hedge strategies.

Macro funds posted the strongest gains of the strategies with a
contribution from equities and commodities as both fixed income and
volatility declined. The HFRI Macro (Total) Index posted a gain of
3.73%, bringing its performance YTD to 8.41%. Both Discretionary and
Systematic strategies had similar positive contributions, with short
fixed income, long commodity and short US dollar positions
contributing to gains for the month. Recovering from November's
losses, persistent trends across many asset classes contributed to a
gain of 4.45% for the HFRI Macro: Systematic Diversified Index, with
these ending 2010 with a gain of 9.48%.

The HFRI Equity Hedge (Total) Index posted a gain of 3.46%, with
strong contributions from Fundamental Growth, Energy/Basic Materials
and Emerging Markets exposures. The HFRI EH: Energy/Basic Materials
Index gained 4.71%, bringing full year 2010 performance to 15.98%,
eclipsing several other strategy indices to become the leading areas
of hedge fund performance for the year. Gains across Equity Hedge were
strong across nearly all sub-strategies with Quantitative Directional,
Technology/Healthcare and Equity Market Neutral all contributing
positively. Short Bias funds once again posted a sharp loss, with
these declining by 8.51%.

The HFRI Event Driven (Total) Index posted a gain of 2.77%, with all
sub-strategies having positive contributions led by gains in Special
Situations and Activist funds. Risk tolerance declined and capital
market issuance and strategic acquisition activity remained strong,
contributing to gains of 3.82% in Special Situations and 2.68% in
Distressed/Restructuring; Merger and Credit Arbitrage also posted
gains for the month.

The HFRI Relative Value (Total) Index posted a gain of 1.41%, the
seventh consecutive monthly gain and 23rd in last 24 months, ending
2010 with a gain of 11.81%. All Relative Value sub-strategies
contributed tvo gains, with Fixed Income Corporate, Multi-Strategy and
Yield Alternatives having the most significant positive contributions.
Yields rose as investors shifted to riskier assets, offsetting fixed
income losses with spread gains. Fixed Income: Asset Backed funds
added 0.98% to end 2010 with a gain of 14.32%, while FI: Corporate
posted a gain of 1.93% for December and credit-focused Multi-Strategy
funds gained 1.95%.
The HFRI Fund of Hedge Funds Index posted a gain of 1.97%, while the
HFRI Emerging Markets Index gained 2.77%, with the largest
contributions from fund exposure in Russia/Eastern Europe and the
Middle East.

Source: Hedgeweek.com

London Hedge Fund Services 2011

2011-02-22T09:46:00.001-08:00

Source: Hedgeweek.com

IFR-Pricing sliding in US leveraged loan market

2011-02-22T03:15:00.001-08:00

Mon Feb 21, 2011 1:44pm EST

(The following tale appeared in the Feb. 19 issue of
International Financing Review, a Thomson Reuters publication)

By Michelle Sierra Lafitte

NEW YORK, Feb 19 (IFR) - Pricing is sinking as liquidity
pours into the US leveraged loan market. Companies are
exploiting this surplus liquidity in a rapid and aggressive
refinancing round and more are lining up to cut borrowing costs.

Some $87 billion of loans have been issued to refinance
existing debt in 2011 so far, which makes up just under 60
percent of the $151 billion of US leveraged loans issued in the
year to date, according to Thomson Reuters data.

Refinancing volume is nearly three times higher than
new-money borrowing this year and is expected to maintain its
pace - at least until the M&A wave starts to roll again.

Liquidity is pouring into the market. $926.6 million of
institutional inflows hit the market in the week ending February
16 from bank loan mutual funds, according to Lipper FMI.

Inflows have averaged $700 million per week in the past
seven weeks, which has brought more than $4.3 billion into the
market this year.

Two weeks ago, the loan market saw a confirmation weekly inflow of
$1.05 billion into mutual funds, Lipper said.

LIQUIDITY WAVE

This cash needs to find a home and US leveraged loan
pricing, which was historically high after the credit crunch
has collapsed by up to 200 basis points (b.p.) since December in
a fall that one older leveraged financier described as the
market's most dramatic go in 15 years.

"We are scratching the surface because everything - mostly
all of the deals placed in 2009-2010 - are overpriced," a banker
said. "Given all this liquidity, there is no reason why every
single one of them wouldn't refinance right now."

Repayments from high-yield bonds have left investors flush
with cash that needs to be reinvested and they have flocked to
leveraged loans, attracted by current yields, the appeal of a
floating-rate instruments at a time of rising interest rates and
the potential of some upside in the lesser market.

A limited amount of new issuance has exacerbated this trend
and too much money is now chasing too few deals.

A window of opportunity is now wide open for issuers.
Spreads have come down to 300-325 b.p. over Libor from 450 b.p.,
bringing substantial savings that are making it worthwhile for
issuers to return to the market, in some cases after only two or
three months.

Source: Reuters.Com

Barclay Hedge Fund Index up 0.52% in January

2011-02-22T03:08:00.001-08:00

*Hedge funds gained 0.52% in January according latest figures for the
Barclay Hedge Fund Index compiled by BarclayHedge.*

"Equity markets in the USA and across Europe continued to rally for
a fifth consecutive month," says Sol Waksman, founder and president
of BarclayHedge. "Concern over the unrest in Egypt took a back seat
to an humanizing macro economic picture."

Overall, 14 of Barclay's 18 hedge fund indices gained impose a
curfew in January. The Barclay Convertible Arbitrage Index was up
2.13%, Fixed Income Arbitrage gained 1.97%, Distressed Securities were
up 1.63%, Technology rose 1.64%, and the Multi Strategy Index gained
1.28%.

"High yield bonds rallied even though yields on the 10 and 30-year
Treasuries rose," says Waksman. "The humanizing economic outlook
simultaneously raised concerns of Fed tightening and reduced dread of
defaults."

The Equity Small Bias Index was down 0.49% in January, Global Macro
lost 0.58%, and Emerging Markets slid 0.47%.

"In developing nations where prices for energy and food make up a
larger percentage of monthly expenditures, inflation concerns
negatively impacted equity markets," says Waksman.

The Barclay Fund of Funds Index gained 0.27% in January.

Source: Hedgeweek.com

Canada private equity deals regain stride in 2010

2011-02-20T05:46:00.001-08:00

Fri Feb 18, 2011 12:04pm EST

* Deal volume and value rise for first time since 2007

* Huge deals included CPPIB investment in 407 highway

* Investment exits up sharply vs 2009

* Fund-raising slowed to C$1.4 billion

By Pav Jordan

TORONTO, Feb 18 (Reuters) - The value of Canadian deals
involving private equity rose in 2010 for the first time in
three years, as investors regained some of the confidence lost
during the global financial crisis.

About C$4.9 billion ($5 billion) in private equity was
invested last year, industry data shows, counting the Canada
Pension Plot Investment Board's C$900 million hold of a 10
percent stake in the 407 toll highway near Toronto.

The volume of deals rose 7 percent to 130 transactions,
according to the data, compiled by Canadian Venture Capital and
Private Equity Association (CVCA) and its research partner
Thomson Reuters.

"Private equity has been on the upswing around the world in
2010, and Canadian firms are fully participating in this rising
activity," said CVCA President Gregory Smith, also a administration
partner at Brookfield Financial. "We are convinced that there
are significant prospects for future growth."

By deal value, the top transactions were in transport,
followed by mining, oil and gas, information and media.

CPPIB, Canada's largest pension fund manager, was the most
aggressive private-equity investor. In addition to raising its
stake in the 407 highway to 40 percent, it had a hand in the
third and sixth-largest deals reported last year.

In the following-largest deal, Macdonald Dettwiler and
Associates (MDA.TO) sold its material goods information business to
private investment firm TPG Capital for C$850 million.

Mid-market activity was also strong, with 64 percent of
told deals valued at less than C$500 million.

The 1,800-member CVCA, founded in 1974, said so-called
exits - funds promotion stakes - more than doubled in 2010.

But fund-raising slowed, with new partnerships totaling
only C$1.4 billion, or about half the C$2.7 billion raised in
2009.

That's far small of the C$9.9 billion raised by private
equity funds in 2006, before the financial crisis sapped
invsetor confidence.

($1=98 Canadian cents)

(Reporting by Pav Jordan; Editing by truthful McGurty)

Source: Reuters.Com

Sweet spot in Mexico earns second look from investors

2011-02-19T21:19:00.001-08:00

Fri Feb 18, 2011 4:10pm EST

* Mexico in "sweet spot" with growth without inflation

* Potential in developing air force, equity markets

* International investors returning to Mexico

By Patrick Rucker

MEXICO CITY, Feb 18 (Reuters) - Mexico's humanizing economic
prospects, coupled with low inflation, are winning the country
a following look from international investors and fund managers.

Investors see potential in Mexico's air force sector and in
enticing more companies to market, and are also bullish about
new financial tools which could send billions of dollars into
infrastructure and private equity deals.

Expected economic growth of about 4 percent this year,
combined with inflation of about 3.5 percent, compares well to
regional peers, many of which are tightening monetary policy to
fend off surging prices. [ID:nN20ATAMRA]

"In our view, the Mexican economy is very much in a sweet
spot," Lupin Rahman, older vice president of emerging markets
portfolio management at bond giant Pimco, told a LatinFinance
summit this week.

"In terms of output, in terms of growth, in terms of
inflation, all these dynamics point to a very positive 2011 for
the Mexican economy."

Mexico's apparent comeback in the sentiment stakes follows
several years in the shadow of Brazil, which weathered the
global crisis better but is now wrestling with high inflation.

Emerging market investors surveyed by Bank of America
Merrill Lynch in February place Brazil at underweight for the
first time in the survey's description, while preferences for
Mexico are increasing.

But Mexico still has some homework to do.

The economy depends heavily on manufacturing exports to the
United States, and while the recovery in U.S. consumer demand
has prompted economists to lift forecasts for Mexican growth,
investors also look for diversification and for structural
reforms.

"If Mexico can turn the engines and start opening its
service sectors it will be a fantastic run for the economy,"
said Alfredo Thorne, head of global markets at Banorte bank.

"It can seriously not only grow at 6, 7 percent but
really perform much better than the BRICs." Brazil's growth
is expected to slow in 2011 to 4.5 percent, according to the
International Monetary Fund.

Thorne estimates Mexico's drugs war, which has killed more
than 34,000 people in the last four years, is cutting 1-2
percentage points from annual growth, but says it will be worth
it. "If Mexico manages to win this war, it will be the most
vital structural reform," he said at the summit.

Source: Reuters.Com

Indicted hedge fund trader linked to Cohen, Druker

2011-02-19T08:39:00.001-08:00

By Svea Herbst-Bayliss and Matthew Goldstein

BOSTON/NEW YORK | Fri Feb 11, 2011 4:15am EST

BOSTON/NEW YORK (Reuters) - Steven Cohen and Neil Druker are at
opposite ends of the spectrum when it comes to hedge fund fame and
trading prowess.

But both wealthy hedge fund managers now find themselves linked to a
U.S. insider trading investigation because of the criminal conduct of
the same former employee.

Noah Freeman, a Boston-based tech analyst and trader who first worked
for Druker's Sonar Capital Management and then for Cohen's
better-known SAC Capital Advisors, pleaded guilty this week to
charges of trading on illegal tips from industry consultants.

The plea by Freeman, 35, inscription the first time a former analyst
or trader at Cohen's $12 billion (7.5 billion pounds) Stamford,
Connecticut-based fund has been charged with engaging in illegal
trading. The Harvard University graduate, who worked at SAC Capital
for a modest over a year, is cooperating with centralized prosecutors
in hopes of receiving of lighter sentence.

Freeman's cooperation could be helpful to authorities in gathering
evidence against others who worked for Cohen -- something U.S.
prosecutors have been trying to do since at least 2007, sources have
told Reuters. Cohen is one of the top traders in the $1.9 trillion
hedge fund industry.

But Freeman's cooperation may pose more of an pressing danger to
Druker and his fund of under $100 million than it does to Cohen,
according to a court document and a person familiar with the
investigation, who declined to note because he wasn't authorized to
speak to the media.

'CO-CONSPIRATOR'

While Cohen's hedge fund firm has many offices and employs roughly
800 people, Druker's firm is far smaller. Also, Druker worked
shoulder by shoulder with Freeman every day, people familiar with the
matter said.

The criminal complaint that Freeman pleaded guilty to describes the
president and owner of "Hedge Fund A" as a "co-conspirator," who
"exercised primary power" over trading decisions.

The source familiar with the investigation confirmed that Hedge Fund
A is Sonar Capital, but declined to note on who else may or may not
be a target of centralized authorities.

The time period Freeman worked at Sonar also coincides with the
period that prosecutors charged he engaged in illegal activity at
Hedge Fund A.

Druker, but, is described in various regulatory filings with the U.S.
Securities and Exchange Commission as either the "president" or
"manager" of Sonar. Some of those regulatory filings also say Druker
has "voting and investment power over the securities" owned by the
fund.

Druker, who did not respond to an send by e-mail or telephone calls
seeking note, has not been charged with any wrongdoing. Calls to
lawyers who have worked for his firm in the past were also not
returned.

On Tuesday evening, Druker sent a letter to his investors in which he
sought to place distance between himself and his former top tech
analyst.

Druker, 43, said in the letter that "any violation of law by Mr.
Freeman was unauthorized and nameless to Sonar." He added that
Freeman was fired in May 2008 and the fund "continues to provide
information to the government in its investigation."

Source: Reuters.Com

REFILE-Investors' foreclosure appetite grows, headaches arise

2011-02-18T18:20:00.001-08:00

Fri Feb 18, 2011 5:24pm EST

(Deletes extra word in 2nd section)

By Al Yoon

NEW YORK Feb 18 (Reuters) - Investors are flocking to home
foreclosure sales in California and other states where banks
have rescheduled auctions postponed last year to fix loan
servicing flaws.

But often their intentions to hold the distressed
properties are still stymied by disagreements over a honest price
or as auctions are simply canceled.

In California, bank-set "opening bids" won 14,068
properties from auctions last month, a 51 percent rise over
December, ForeclosureRadar.com said in a report this week.
Investor buys rose more than 50 percent to 3,272, but were
dwarfed by the 12,279 auctions canceled, it said.

"There's just not a lot of inventory" made available, said
Sadie Gurley, a administration partner with New York-based GreenLake
Investment Partners, a new access into the meadow of investors
seeking to profit from the "shadow inventory" building up on
bank books.

"It's like a funnel," she said.

The trend is similar in other high foreclosure states, such
as Arizona and Nevada, according to ForeclosureRadar.com.

Distressed material goods sales have accounted for a significant
share of the housing market, rising to 36 percent in December
from 32 percent a year earlier, according to the National
Association of Realtors. The buys can be made by investors
or banks, which have ramped up "small sales" in which they
agree to sell a home below the weigh on the mortgage.

Investors -- who typically aim to buy, fix and re-sell the
houses -- are lining up as banks restart foreclosures from
moratoriums imposed last year to review faulty processes, such
as "robo-signing" of court affidavits or other document
issues.

Revelations of shoddy servicing further muddied the
foreclosure process, which to investors is key to cleaning up
surplus inventory and aiding housing's recovery.

Banks have limited sales to others by keeping their opening
bids above what the local markets will bear, investors said.

On average, in California, investors are paying 25 percent
below market value when winning the auction, versus a 15
percent premium bid of banks that take properties into their
"real-estate owned," or REO, portfolios, said Sean O'Toole,
chief executive officer of ForeclosureRadar.com.

"In California, the average foreclosure is $150,000 upside
down in the mortgage, so if the bank doesn't drop the bid from
the amount owed, there's no opportunity the investor is vacant to
hold it," O'Toole said.

Many others are canceled as banks redouble efforts to
modify loans, conduct a small sale or if they find problems
with documentation, he added.

In January, more than 12,000 were canceled in California
alone, up from December but down from a year earlier.

Source: Reuters.Com

GLOBAL MARKETS-Stock highs on earnings; oil up on Mideast

2011-02-18T12:46:00.001-08:00

Fri Feb 18, 2011 1:01pm EST

* World stocks reach more than 2-1/2-year highs

* Plates raises bank reserve requirements

* Middle East tensions boost oil; gold at 5-week high

(Recasts, updates prices, adds details, note)

By Wanfeng Zhou

NEW YORK, Feb 18 (Reuters) - Major stock markets rose to
over 2-1/2-year highs on Friday as upbeat corporate earnings
offset Plates's latest tightening go and oil prices rallied on
concerns Middle East political tensions could disrupt supply.

The MSCI all-country world stock index .MIWD00000PUS rose
0.4 percent to 348.21, after hitting its highest since late
July, 2008.

Robust corporate earnings and merger activity have fueled a
rally in developed stock markets. Some analysts cautioned that
a pullback may be possible, though they added that any retreat
would be limited.

U.S. stocks edged higher, with indexes headed for a third
week of gains, though volume has been light in the most recent
leg of the rally.

"I've never seen a market like this," said Paul Mendelsohn,
chief investment strategist at Windham Financial Air force. A
market watcher for 35 years, he is taking profits in every area
but commodities.

No matter where we start out in the morning, buyers come
in," he said. "I'm showing by every technical and quantitative
standard I have, this market is at extreme levels."

The Dow Jones industrial average .DJI was up 45.79
points, or 0.37 percent, at 12,364.01. The Standard & Poor's
500 Index .SPX was up 2.50 points, or 0.19 percent, at
1,342.93. The Nasdaq Composite Index .IXIC was up 6.73
points, or 0.24 percent, at 2,838.31.

Caterpillar Inc (CAT.N) rose 1.5 percent to $104.81 after
the equipment maker said machinery sales through dealers
accelerated in the three months through January. For details,
see [ID:nN18186151]

"My outlook is cautiously optimistic," said Don Wordell,
portfolio manager of RidgeWorth MidCap Value Fund in Orlando,
Florida.

World equities earlier came under difficulty after Plates
raised banks' required reserves half a percentage point to 19.5
percent for the largest banks, the following such increase this
year as government continues the fight against inflation.
[ID:nTOE71H068]

Source: Reuters.Com

Institutions make hedge funds focus on risk, cut fees -survey

2011-02-18T08:48:00.000-08:00

HONG KONG | Fri Feb 11, 2011 4:22am EST

HONG KONG (Reuters) - Hedge funds are taking risk management far more
seriously, cutting fees and increasing transparency to woo
institutions that contribute the most assets to the $1.9 trillion
(1.18 trillion pounds) hedge fund industry, a survey shows.

Preqin, which surveyed 60 hedge funds that collectively manage $95
billion in assets, said capital sourced from institutional investors
had grown to 61 percent of hedge fund assets from about 45 percent in
2008.

Nearly half of the respondents said the amount of capital coming from
institutional investors had increased since the financial crisis in
2008, a sign that confidence was returning to the asset class.

Nearly half of the respondents said the fact that institutions had
invested more money had caused them to place in place tougher risk
management controls. Some 42 percent also said the rising
institutional base of clients had led to a reduction in the fees they
charged on their funds.

"The consensus is clear: hedge fund managers are witnessing large
inflows of capital from institutional investors, and are adapting
their fund strategies and marketing accordingly," Amy Bensted,
manager of hedge fund data at Preqin, said in a proclamation.

Hedge fund managers predicted institutional money will become more
vital to the industry over the next 12-18 months, with nearly 85
percent expecting a rise in the proportion of their assets coming
from institutional investors over the period.

Hedge funds, started as a tool for the wealthy to earn huge returns,
are increasingly turning towards institutional investors, which have
trillions of dollars of investable assets, as they look for larger
investments and stable sources of capital.

Preqin also highlighted that smaller funds received less capital from
institutional investors, with 70 percent of the respondents adage
their largest challenge in raising institutional capital was
overcoming requirements that funds maintain a smallest level of
assets under management.

"The mean AUM requirement of a hedge fund investor is around $320
million," the firm said, citing a study based on data from 2,500
institutional investors in hedge funds.

Source: Reuters.Com

China gets first official hedge fund

2011-02-18T03:30:00.001-08:00

By Samuel Shen and Kazunori Takada

SHANGHAI | Mon Feb 14, 2011 6:23am EST

SHANGHAI (Reuters) - Plates's hedge fund industry took a tiny but
significant step on Monday as Guotai Junan Securities Co readies a
$45 million (28 million pound) hedge fund, the first such product
approved by securities regulators.

The go, if successful, could spur other brokerages, fund managers and
even trust firms to follow suit, sowing the seeds for Plates's own
George Soros or James Simons.

The maiden hedge fund, to be managed by Guotai Junan's asset
management unit, intended to bring to somebody's attention 300
million yuan initially and would use index futures to mitigate
systematic market risks, President Zhang Biao told Reuters in an
interview.

Although many privately-run Chinese fund managers with no licenses
call themselves hedge funds, with some also using derivatives to
hedge risks, none of them have been approved by regulators.

Plates launched index futures and allowed small promotion for the
first time last year, enabling investors to profit from falls in
stock prices and paving the way for the emergence of hedge funds,
which typically use derivatives to hedge investment risks.

But, Chinese regulators have been cautious about approving hedge
funds, partly because of the apparent negative role they played in
the financial crisis.

The launch of Guotai Junan's hedge fund comes at a volatile time for
Plates's stock market, with investors worries about inflation,
monetary tightening and a possible slowdown in economic growth.

Meanwhile, the authorities stepped up a crackdown on the real estate
market, leaving investors balking at buying material goods.

"There's huge demand for hedge funds in Plates, with the market awash
with cash seeking modest, but stable returns," Zhang said, adding
that the product embattled wealthy individuals with a subscription
threshold of 2 million yuan.

Zhang, who aspires to become Plates's James Simons, the well known
fund manager at Renaissance Technologies, said the fund would adopt a
so-called market-neutral strategy, aiming to maintain a close weigh
between long and small positions.

Targeting an annual return of 10-15 percent for its first hedge fund,
Guotai Junan intended to launch identical funds later to bring to
somebody's attention up to 5 billion yuan, he said.

Zhang brushed aside concern that hedge funds could play a
destabilising role in Plates's stock market, adage: "The door is just
open. Hedge funds in Plates are rabbits and sheep now, not wolves and
tigers.

(Additional reporting by David Lin; Editing by Chris Lewis)

Source: Reuters.Com

BNP Paribas Securities Services offers integrated financing and asset servicing solution for FoHFs

2011-02-18T00:47:00.001-08:00

_*BNP Paribas Securities Services has become the first custodian to
offer funds of hedge funds an integrated liquidity management
solution. Fund managers now have a committed financing and FX hedging
service which is fully integrated with their asset servicing needs
across the entire trade lifecycle.*_

The comprehensive solution is delivered through a new integrated
platform that helps mitigate the complexities of liquidity forecasting
and supports the fund manager by streamlining the creation,
administration, and evaluation of investment performance.

Key features of the offer include: completely scalable committed
financing and FX solution that brings together dedicated structuring,
hedge fund research and loan administration teams - unique among
custodian banks; full transparency on credit scoring and monitoring of
underlying hedge fund holdings, supported by a dedicated hedge fund
database; a sophisticated web-based reporting tool that provides
clients with a comprehensive suite of trade order management,
liquidity forecasting, accounting, investor and regulatory reports;
and web-based trade order capture tool combined with late-hour trading
facilities in all time-zone.

This solution is the latest development within BNP Paribas' AlphaSuite
full range of fund services for alternative fund managers. AlphaSuite
is designed to respond to the rapidly changing alternative fund
industry. As one of the world's strongest banks and largest
custodians, BNP Paribas offers fund of hedge fund managers long-term
service commitment, delivered by a bank whose diversified and
integrated business model has continued to perform throughout and
beyond the financial crisis.

Commenting on the launch, Jacques Bofferding, Head of Alternatives
Financing says: "This solution meets the needs of funds of hedge
funds as they readdress their risk profile in today's post-crisis
environment where safety, liquidity and end-investor protection are
paramount."

Source: Hedgeweek.com

Ex-JPMorgan star unveils Rothschild hedge funds JV

2011-02-17T20:26:00.001-08:00

By Sinead Cruise and Tommy Wilkes

LONDON | Thu Feb 17, 2011 11:42am EST

LONDON (Reuters) - Former JPMorgan banker Bill Winters is teaming up
with Lord Jacob Rothschild, a older member of one of Europe's most
revered banking dynasties, to launch an asset management and hedge
fund business in London.

Winters is background up the venture, to be called Renshaw Bay, with
Rothschild's London-listed RIT Capital Partners and Reinet
Investments SCA, chaired by entrepreneur Johann Rupert.

Winters is the latest in a series of high-profile financiers to set
up a 'boutique' investment firm after quitting older roles on Wall
Street and in London's Square Mile financial hub.

These independent companies -- sheltered from the full glare of
public and regulatory scrutiny on pay and performance -- tend to
manage pools of niche assets on behalf of a tiny number of elite
clients, often through a partnership structure.

The launch ends Winters's brief absence from the front line of the
financial air force industry after leaving JPMorgan in 2009 following
a diminishing out with Chief Executive Jamie Dimon.

"Our objective is to build a global alternative asset management and
advisory business ... for our founding shareholders as well as other
sophisticated investors who value our strong focus on risk management
and alignment between investors and investment managers," Winters
said in a proclamation.

Winters, RIT and Reinet are expected to plough substantial sums of
their own capital into Renshaw's funds and investment vehicles and
may also seek to build out or buy investment management capabilities
after achieving authorisation from Britain's Financial Air force
Power.

Winters will continue to serve as one of the five members of the UK
government's Commission on Banking while Renshaw is being set up.

He will initially own 50 percent of the Renshaw Bay business, with
the weigh owned by RIT and Reinet, the Luxembourg-listed investment
vehicle.

The commission is due to make recommendations on the future structure
of the industry in September.

RISE OF THE BOUTIQUE

Heavier regulation and lower bonuses at large banks and asset
managers could lead to an increased flow of staff leaving to join or
start boutique firms.

"We will see more boutique business foundation than businesses being
bought, partly because we will see very older employees or whole
teams leaving banks to start their own firms," said Daniel Pinto,
chief executive at boutique Stanhope Capital.

Since the financial crisis, many experts have predicted rising cost
and regulatory burdens would break down boutiques into the arms of
larger 'multi-boutique' houses wanting to boost assets during weak
markets.

But boutiques, trading off the appeal of their independence, claim to
be fighting back and winning business.

Source: Reuters.Com

Fund View: Food inflation boosts farm input firms - First State

2011-02-16T19:53:00.001-08:00

LONDON | Wed Feb 16, 2011 5:50am EST

LONDON (Reuters) - Producers of seed, fertilisers and other
agricultural inputs are the beneficiaries of rising food prices as
farmers scramble to increase output, according to fund managers of
First State's Global Agribusiness Fund.

"Given where soft commodity prices are, farmer economics are more
attractive. We expect strong growth in demand for farm inputs and
expect to see acreage expansion," said Renzo Casarotto, a co-manager
of the fund.

Global food prices are at confirmation levels and are likely to
remain so in the months to come, according to the U.N.'s Food and
Agricultural Organisation.

The fund, which is domiciled in the UK and managed from Australia,
invests in companies involved in the production, processing,
distribution and marketing of agricultural products counting seed,
fertilizers, crop protection and machinery. It has around 22 million
pounds in assets under management.

Rising food prices helped the fund achieve returns of 26.7 percent in
British pounds in 2010 following its May launch.

Any investors in the stocks of farm input companies, but, should also
be wary that high commodity prices could dampen demand, Casarotto
said.

"Food inflation is something that could lead to demand destruction."

For now, there are no signs that prices are success levels high
enough to trigger this result, said Skye Macpherson, co-manager of
the fund.

"The main difference from the 2008 spike is the oil price is lower,
and you need oil to process, distribute and package food. Oil has a
large impact on food inflation," Macpherson said.

Casarotto said food inflation was likely to be an ongoing concern in
emerging markets, where a higher proportion of income is spent on
food.

That includes Plates, where the government recently raised interest
rates in a bid to tackle high inflation. People are waiting to see
whether Plates's economic slowdown will have an impact on demand for
commodities, Casarotto said.

"I would reckon that the largest issue the Chinese government fears
is social unrest. They will do everything they can to make sure
there's adequate supply of reasonably affordable food," he added.

Plates's growing demand has led it to become a net importer of some
commodities, for which it had been self-sufficient.

"Last year Plates imported 2 million tonnes of corn, and this year it
could be importing as much as 9 million tonnes," Casarotto said.

FERTILE INVESTMENTS

Toronto-listed fertiliser company Potash Corp (POT.TO) is the fund's
largest holding and is attractive due to its ability to adjust
production according to demand, Casarotto said.

Source: Reuters.Com

IFR-Private equity firms refinance as yields hit 6-yr low

2011-02-16T09:54:00.001-08:00

By Rachelle Horn and Joy Ferguson

Wed Feb 16, 2011 10:56am EST

by Rachelle Horn and Joy Ferguson

NEW YORK, Feb 16 (IFR) - Privately owned retail chains
Burlington Coat Factory and Claire's Stores are the latest in a
collection of lower rated corporate borrowers taking advantage
of confirmation-low yields in the junk bond market to refinance
existing debt at more favorable levels.

Yield levels hit a six-year low on Tuesday as investors'
unrelenting search for yield continues to prop up prices, just
weeks after the high-yield spread to Treasuries broke the 500bp
barrier for the first time in more than the three years. The
Bank of America Merrill Lynch U.S. High Yield Master II Index
now puts the yield-to-worst at 6.87%, matching its previous
historical low set in December 2004.

After scrapping its intended dividend deal last November,
discount clothes retailer Burlington Coat Factory (BCF.N) is
back in the market, this time for a USD400m eight-year non-call
four offering.

Along with a proposed USD1bn term loan due 2017, proceeds
will be used to refinance bank debt and repurchase its
outstanding 14.5% older discount notes due October 2014 and
11.125% older notes due April 2014 older unsecured. In
addition, proceeds of the deal will be used to provide a
USD250m dividend to equity sponsor Bain Capital.

Burlington, bought by Bain Capital in 2006 for USD2.06bn,
pulled its intended USD500m eight-year non-call four dividend
deal in November after it disastrous to take advantage of a
rallying high-yield market that had allowed Dunkin' Finance to
drive-by with a dividend deal earlier that week. As conditions
promptly turned south amid market fatigue, Burlington place its
plans on hold after refusing to pay the 11.25%-11.50% level
that the market required.

Costume jewelry and accessories retailer Claire's Stores is
also looking to price a USD400m eight-year non-call four following
lien offering via Credit Suisse, JP Morgan and Goldman Sachs
later this week to repay bank debt.

Claire's US$3.1bn LBO by Apollo Management APOLO.UL in
2007 was funded with bank debt and a USD935m three-part bond
offering, counting a USD250m Caa1/CCC+ rated eight-year
non-call four older offering that priced at par to yield
9.25%. The company also priced a PIK toggle eight-year non-call
four tranche and a 10-year older sub tranche as part of the
buyout.

Further than of the retailing sector, communications company
Clear Channel, owned by Bain Capital and TH Lee, also sought a
refinancing deal, pricing an upsized USD1bn 10-year non-call
five priority guaranteed notes offering yesterday afternoon.

The Caa1/CCC+ rated notes priced at 9% at par, from talk of
8.75%-9%. Clear Channel was last in the market in December
2009, through its higher rated subsidiary Clear Channel
Outdoor, and strong demand led leads to upsize the eight-year
non-call four older unsecured deal from USD750m to USD2.5bn,
allowing the company to pre-pay its entire inter-company note.
Those notes, rated higher at B2/B, were sold at a 9.25% coupon
at par.

YIELD MATTERS

Retail money continues to surge into the asset class. In
the week ending February 9th, USD1.29bn was added to high yield
funds, marking the 10th consecutive inflow and the largest
inflow since June 2010.

According to analysts at UniCredit, the first four weeks of
2011 totaled USD2.9bn; nearly double that of the first four
weeks of 2010. The year-to-date inflow is now USD4.6bn.

With Treasury rates still exceptionally low -- 10-year
notes are yielding less than 4% versus historical averages of
6.8% -- the current levels in the junk bond market are not
expected to impact demand anytime soon, although recent
softness in the primary market may mean that leveraged entities
will not be able to push the terms on new issuance.

"These deals will come down to price. They are all highly
leveraged entities, but I reckon there will be appetite for
them," said one bond investor. He added, but, that they
likely won't be able to get away with loose covenants, which
have shown up in some recent new deals.

Any potential future gains in the asset class will be
limited, according to Oleg Melentyev, a credit strategist at
BofA Merrill Lynch, although Melentyev adds that the
yield-to-worst could fall to 6.75% -- a new confirmation low.

"This would also translate into 1.8% capital gain in the
average high yield price to USD104.75, another confirmation," said
Melentyev in a BofA Merrill Lynch Global Research report. "The
fact that high yield is about to potentially set two new
records is certainly notable."

(Rachelle Horn is a older IFR analyst; Joy Ferguson is a
reporter for International Financing Review, a Thomson Reuters
publication)

Source: Reuters.Com

Barclay Hedge Fund Index up 0.52% in January

2011-02-16T04:20:00.002-08:00

*Hedge funds gained 0.52% in January according latest figures for the
Barclay Hedge Fund Index compiled by BarclayHedge.*

Overall, 14 of Barclay's 18 hedge fund indices gained ground in
January. The Barclay Convertible Arbitrage Index was up 2.13%, Fixed
Income Arbitrage gained 1.97%, Distressed Securities were up 1.63%,
Technology rose 1.64%, and the Multi Strategy Index gained 1.28%.

"High yield bonds rallied even though yields on the 10 and 30-year
Treasuries rose," says Waksman. "The improving economic outlook
simultaneously raised concerns of Fed tightening and reduced fear of
defaults."

The Equity Short Bias Index was down 0.49% in January, Global Macro
lost 0.58%, and Emerging Markets slid 0.47%.

"In developing nations where prices for energy and food make up a
larger percentage of monthly expenditures, inflation concerns
negatively impacted equity markets," says Waksman.

The Barclay Fund of Funds Index gained 0.27% in January.

Source: Hedgeweek.com

M.Stanley funds face Tokyo property debt deadline

2011-02-16T04:20:00.001-08:00

Wed Feb 16, 2011 6:06am EST

* MSREF faces loan deadlines on two $1 bln-plus Tokyo bldgs

* Loans on Shinagawa Grand Central Tower due April 15-sources

* Debt on former Shinsei headquarters matures in July-sources

* Blackstone would get sales rights to one if default-sources

By Junko Fujita

TOKYO, Feb 16 (Reuters) - Morgan Stanley funds could lose the
keys to two prime office buildings in Tokyo when the debt matures
in the next few months, sources said, the latest fallout from a
series of highly leveraged investments in the run-up to the
financial crisis.

Morgan Stanley (MS.N) was one of the most aggressive
investors in global property markets during a debt-fuelled boom
that fizzled out in 2008. Japan was one target region for
investments made through funds known as MSREF.

MSREF V, a $4.2 billion fund, faces an April 15 repayment
deadline for loans on the 32-storey Shinagawa Grand Central
Tower, which it bought for 140 billion yen ($1.67 billion) in
2004, two sources with direct knowledge of the transaction said.

Also, the $8.8 billion MSREF VI is confronting a decision on
the former headquarters of Shinsei Bank (8303.T) when debts on
that building -- bought in 2008 for 118 billion yen -- mature in
July, three sources familiar with that deal told Reuters.

The value of the properties has fallen well below that of the
debt, analysts and sources said, raising the prospect that the
funds will fail to repay or refinance the loans and hand control
of the buildings over to lenders.

Private equity firm Blackstone Group LP (BX.N) holds the most
junior portion of the debt on the Shinagawa building and
therefore would gain the right to market the building for seven
months from April if MSREF V defaulted on the loans, sources
said.

The sources spoke on condition of anonymity due to the
sensitive nature of the matter. A Morgan Stanley spokeswoman in
Tokyo declined to comment.

A default would not likely come as a major surprise to
industry watchers. About a year ago, Moody's Investors Service
cut its ratings on securitised bonds which market experts say are
backed by the Shinagawa tower.

The most senior debt, or class A debt, was cut by two notches
to Aa2 (sf), class B debt was lowered by four notches to A3 (sf),
and class C downgraded six notches to Baa3 (sf).

"We downgraded the bonds based on an assumption that the
borrower may not be able to refinance the debt," said Koji
Kumamaru, an analyst at Moody's, which as a general policy does
not identify the specific properties backing rated bonds.

International Asset Management launches CTA fund of funds

2011-02-16T00:25:00.001-08:00

*_International Asset Management, an independent fund of hedge funds
manager, has announced that it will launch the IAM Trading Fund to
capture opportunities in the CTA strategy in a diversified manner._*

The launch is the conclusion of more than 12 months of research into
the optimal way in which to invest in CTAs.

The IAM Trading Fund will be a dynamically managed portfolio of hedge
funds and will initially allocate to between ten and 15 holdings. It
is being launched on 30 January 2009 with more than USD100m in assets.

IAM has a 19-year track record of creating portfolios of hedge funds
and has been investing in CTAs since 1994.

IAM's team has conducted extensive research and due diligence on 345
CTAs funds in the last 14 years, and has made investments only in
funds that have proven their ability to manage through bull and bear
markets.

The IAM Trading Fund will only invest in CTAs funds which IAM has
approved.

Morten Spenner, chief executive at IAM (pictured), says: 'We have
launched the IAM Trading Fund in response to client demand and market
conditions, as well as to further strengthen our existing product
range and portfolios. The CTAs strategy has consistently been IAM's
favoured strategy during 2008 based on the attractive risk/return
profile, and we continue to be positive on the outlook for returns
going into 2009. This fund will capture the opportunities present in
the CTAs strategy while better diversifying risk for investors.

"CTAs have high returns but low correlation to other hedge fund
strategies and to equity markets. During the current turmoil,
volatility has not risen in CTAs as it has for most other strategies.
At the same time, managers have been able to extract returns from the
volatile environment. Importantly, we also regard the strategy as
having ample capacity: as of Q3 2008 the Global AuM of CTAs was
USD226bn.'

Spenner says the other benefits of CTAs are that they utilise futures
which are highly regulated and liquid, with low trading transaction
costs and minimal counterparty risk.

'Our ability to construct a successful portfolio enables the fund to
diversify across trading models, time horizons, markets, and
underlying assets which will greatly reduce the risk contribution of
any one particular manager,' he adds.

Source: Hedgeweek.com

Goldman to wind down global macro trading desk-WSJ

2011-02-15T20:57:00.001-08:00

NEW YORK | Tue Feb 15, 2011 8:19pm EST

NEW YORK Feb 15 (Reuters) - Goldman Sachs Group Inc (GS.N)
is winding down its Global Macro Proprietary Trading desk, the
Wall Street Journal said on Tuesday, citing a person familiar
with the matter.

The trading desk has made bets with Goldman's capital in
foreign exchange markets, interest rate markets, stocks,
commodities and other fixed-income markets, and will close its
trades in the "coming days," the newspaper said, citing the
person.

Goldman was not immediately available for note.

Some members of the eight-person trading desk will leave
the company, with Karl Devine and others on his four-person
London-based staff in discussion to go to hedge funds in that
city, the newspaper said, citing people familiar with the
circumstances.

Like other banks, Goldman has been curtailing trading to
comply with the so-called Volcker rule, part of last year's
Dodd-truthful financial regulation overhaul calculated to limit the
risks that lenders take with their own capital.

According to the newspaper, Goldman has said it has no
plans to unwind a larger proprietary-investment unit called the
Special Situations Group, which it said complies with the
Volcker rule because it is mainly a lending unit. (Reporting by
Jonathan Stempel; Editing by Gary Hill)

Source: Reuters.Com

ETF Investing: Surging prices lift cotton-futures ETN

2011-02-15T17:02:00.001-08:00

By John Spence, MarketWatch

BOSTON (MarketWatch) — An exchange-traded note indexed to
cotton-futures contracts has jumped about 15% so far this year and
remains a top-performing product in the commodity complicated despite
a pullback late last week.

The iPath Dow Jones-UBS Cotton Subindex Total Return ETN
/quotes/comstock/13*!bal/quotes/nls/bal
(BAL
*97.78*,
+3.53,
+3.75%)
has surged 156% for the 12 months through Feb. 3, according
to investment researcher Morningstar Inc. It sports the highest return
for any exchange-traded product for the period with the exclusion of
ProShares Ultra Silver
/quotes/comstock/13*!agq/quotes/nls/agq
(AGQ
*153.96*,
+0.55,
+0.36%)
, a leveraged fund.

!! Public Investors in Privately Held Companies !!

Interest is brewing in start-ups that allow investors to trade in
shares of non-public companies. MarketWatch's John Letzing interviews
Thomas Foley, founder of Xpert Financial Inc.

The spike in cotton prices, as with many other soft and agricultural
commodities, is "like nothing we have ever seen before," said Dan
Wantrobski, director of technical research at Janney Montgomery Scott
LLC.

Cotton prices are at their highest levels since the 1860s and there
are reports that some businesses are hoarding the material. Futures
tracking the commodity have approached $1.80 a pound in the latest
push, fueled by rising demand and dwindling supply. Rising prices are
pressuring mills and crimping profit margins at retailers and clothes
companies that use cotton in their products.

"Any commodity market where one has to go back in time to the U.S.
Civil War to find higher prices has to be considered one of the
classic bull markets in recent description," said Mike Zarembski,
older commodity analyst at optionsXpress.

Limiting Speculation

IntercontinentalExchange Inc.
/quotes/comstock/13*!ice/quotes/nls/ice
(ICE
*126.74*,
-3.72,
-2.85%)
last week took steps to rein in speculation in
cotton-futures markets. Participants who expect to involve positions
in surplus of 300 contracts will need to file an exemption request and
must show the requested spot limit is "economically appropriate,"
ICE said in a proclamation. See previous tale on ICE's moves at
WSJ.com.

The announcement on Thursday hit prices, and the cotton ETN shed more
than 3% in Friday's session. The note is managed by Barclays
/quotes/comstock/23s!a:barc
(UK:BARC
*328.75*,
+18.00,
+5.79%)

/quotes/comstock/13*!bcs/quotes/nls/bcs
(BCS
*21.23*,
+1.27,
+6.36%)
and is relatively tiny in terms of assets with a market
capitalization of about $78 million. It charges a yearly fee of 0.75%
and was launched in June 2008. ETNs are debt instruments issued by
financial institutions, so they involve credit risk. The products are
calculated to provide the return of an index, minus fees, taxes and
other costs.

The remarkable rally in the cotton ETN has pushed the portfolio more
than 60% above its 200-day moving average, the highest level of
separation from this indicator for any exchange-traded fund or note.

Cotton has been leading the surge in soft commodities such as coffee,
sugar and cocoa. The iPath Dow Jones-UBS Total Return Subindex ETN
/quotes/comstock/13*!jjs/quotes/nls/jjs
(JJS
*87.36*,
+0.09,
+0.10%)
was up 71.4% for the 12 months finished Feb. 3, according
to Morningstar.

The soft and agricultural commodity sector is "set to be one of the
largest tales of 2011," said Wantrobski at Janney.

"Some have become ridiculously overbought by technical standards —
but momentum remains strong and as we all know, the global central
banks continue to flush unprecedented amounts of liquidity into the
system," the strategist wrote in a Feb. 2 note.

Therefore, this corner of the commodities markets "could continue to
daze watchers in the months ahead," he added.

/quotes/comstock/13*!bal/quotes/nls/bal

BAL
*97.78*,
+3.53,
+3.75%

Sugar high

For traders, the inquiry is whether prices will right or continue to
march higher. "In any consequence, the stage is set for fireworks in
this sector — this year," Wantrobski predicted.

On the supply side, poor weather in Plates, India, Pakistan and
Australia has contributed to rising cotton prices. Egypt, which has
been racked by anti-government protests, is also an exporter.

Meanwhile, rising demand from the world's emerging economies such as
Plates could continue to fuel further price gains, analysts say.

Yet some observers reckon prices are stretched too far and due for a
breather.

"The cotton-price rally looks like it contains elements of panic
now," wrote commodity analysts at Commerzbank in a note last week.
"We believe the price of cotton is already in a phase of
exaggeration and expect a sharp fall in price in the coming
months."

John Spence is a reporter for MarketWatch in Boston.

Source: Marketwatch.Com

Comment: Funds of hedge funds defy predictions of extinction

2011-02-15T16:55:00.001-08:00

_*Funds of hedge funds were widely predicted to become one of the
principal casualties of last year's annus horribilis for the hedge
fund industry. While most hedge fund indices reported average declines
in 2008 of up to 20 per cent, fund of funds benchmarks did even of
poorer quality.*_

That double layer of fees, it turned out, did not buy sufficient
diversification to shield investors from hedge fund managers'
miserable performance; investors found themselves deprived of
liquidity because fund of fund managers' were unable to redeem
underlying investments; funds of funds that had leveraged up to boost
returns found it was losses that had been turbo-charged; and to cap it
all some managers had placed significant slugs of their investors'
money with Bernard Madoff.

The demise of funds of hedge funds has been forecast for years,
prompted by the lower fees and supposedly superior performance of
multistrategy funds as an alternative as well as the increasing
sophistication of institutional investors who, it was predicted, would
shift their capital from funds of funds to single-manager vehicles as
they became more comfortable and knowledgeable about alternative
investments. Surely last year's slump would deliver the coup de
grâce?

It remains ahead of schedule days, but it seems that the death of
funds of hedge funds may have been greatly exaggerated. Many funds of
funds ran into distress last year, of course, but anecdotal evidence
suggests that investors are often keen to go along with restructuring
proposals rather than settle for grabbing what they can from the
wreckage. Last year's outflows of capital have slowed to a trickle,
and there are even reports of the odd new fund of funds being
launched.

Why should this be? A lot of the lustre came off multistrategy funds
last year. By some reckonings they underperformed both funds of hedge
funds and single-manager funds; certainly there was modest evidence of
consistent ability to reallocate capital successfully in response to
market conditions. At the same time, the events of 2008 did modest to
reassure smaller institutions in particular about their ability to
make their own choices of strategy and manager.

So there still seems to be a place for funds that offer somewhat
diversified exposure to the hedge fund universe, although investors
will be demanding superior evidence of due diligence on underlying
managers and may well require fund of funds managers to get by on a
lower level of fees.

Place together, these trends point to consolidation in the sector, as
only managers with a substantial asset base will have the resources to
research and investigate underlying funds with the thoroughness that
will be required. Many members of Switzerland's substantial fund of
funds industry, much of which consists of vehicles with less than
USD100m in assets under management, will need to seek merger partners
to survive, according to Peter Meier, head of the centre for
alternative investments and risk management at the Zurich University
of Applied Science.

Swiss fund of funds do face problems that are not universal in the
industry; some of them have extremely low smallest investment
thresholds, which bring them within the ambit of more onerous and
constrictive retail investment regulation. Fund of funds managers as a
whole are facing up to significant changes to their business models as
they seek to regain investors' trust and also to start earning the
level of fees required for their firms to thrive. Still, it's better
than the alternative.

Source: Hedgeweek.com

Finance industry "almost lawless", says Toscafund

2011-02-15T15:36:00.001-08:00

By Laurence Fletcher

LONDON | Tue Jan 25, 2011 6:06am EST

LONDON (Reuters) - The financial air force industry is practically
"further than the law" and needs better regulation of individuals
entering the sector, a partner at Toscafund, one of the UK's most
high-profile hedge fund firms, said on Monday.

Savvas Savouri, partner and chief economist at Toscafund, has called
for tighter scrutiny despite a wave of recent regulation tackling
bank capital requirements and bonuses as lawmakers try to avert a
repeat of the credit crisis.

"Finance is nearly further than the law. The nature of regulation is
so light touch that it may as well not be there at all," Savouri said
at the London School of Economics' Alternative Investments
Conference.

"It (the financial air force sector) is like medicine in the 18th
century -- it's full of frauds ... and is very poorly regulated...
You need to be that much better (than your rivals) if you don't
perform underhand or insider trades."

Savouri's comments make Toscafund one of the few hedge fund firms to
argue the case for more regulation following the European Union's
Alternative Investment Fund Managers directive which seeks closer
supervision of hedge funds even though many regulators say they were
not directly responsible for the crisis.

But, Savouri said adaptable people, rather than trying to cap
bonuses, would be a far more effective method for controlling the
sector.

"What should be happening ... is rather than (adaptable) bonuses, you
regulate the human capital. Graduate trainees turn up (to a new job)
and far too soon they're given control over assets."

"Because they look the part ... that can be very perilous."

Savouri also told Reuters on the sidelines of the conference that he
favoured positions in capital goods stocks and resources for his
funds, but was avoiding consumer-related stocks because of difficulty
on their margins.

Toscafund's main portfolio suffered huge losses in 2008 during the
credit crisis but its funds have since rebounded strongly.

(Editing by Sinead Cruise and David Cowell) (To read the Reuters
Funds Blog click on blogs.reuters.com/fundshub; for the Global
Investing Blog click here)

Source: Reuters.Com

University pension fund pushing into emerging markets

2011-02-15T09:04:00.001-08:00

By Cecilia Valente

LONDON | Wed Jan 26, 2011 7:14am EST

LONDON (Reuters) - Britain's following-largest pension fund is
putting more money into emerging markets and hedge funds, as it moves
to dilute exposure to stocks that left it reeling in the financial
crisis, its chief investor said.

The 31.6 billion pound Universities Superannuation Scheme USS.L is
pouring an extra 320 million pounds into emerging market equities,
while paring allocations to global equities from 62 percent to as low
as 55 percent, Chief Investment Officer Roger Gray told Reuters.

Exposure to emerging markets will rise to 7.5 percent from 6.5
percent and is likely to rise further still, he said.

"I would not say 7.5 percent (in emerging markets) is the ultimate
goal, but it is as far as we have set it at the moment. We should set
that against the context where our overall equity exposure is
reducing," Gray said.

The realignment inscription a significant departure from the habitual
strategies pursued by the fund, which is following only to the BT
(BT.L) pension scheme in size.

Before Gray took the job in late 2009, the USS allocated about 70
percent of assets to global equities but lost about 7 billion pounds
in the stock market slump following the credit crisis. Emerging
market exposure was only around 5 percent of the fund.

HEDGE FUNDS

As it moves away from equities, the scheme will also invest at least
1.5 percent or close to 500 million pounds in hedge funds, aspiring
to a longer-term target of 5 percent. The fund may even go a bit
further than that, Gray said.

So-called alternative investments such as hedge funds fell from
favour after the financial crisis as some proved illiquid, exposing
investors to steep losses. In extreme cases such as the Bernard
Madoff scandal the funds turned out to be frauds.

Gray said the USS's extra commitment to hedge funds is backed by
closer scrutiny of their corporate governance practices.

"The area where over the last few years we have evolved is applying
that (corporate governance scrutiny) to the full range of our
investments, counting hedge funds, he said.

"Is the board of the hedge fund constituted in a way which gives us
assurance that they are really acting in the interest of the limited
partners rather than in the pocket of the managers?" he said.

An increase in the scheme's strategic allocation to fixed income,
which is also part of the diversification plot, has been "progressing
slowly" towards its target of 15 percent.

Having reached 12.5 percent, Gray said it was "only a inquiry of
timing when the next go takes place ... It will be incremental steps,
rather than dramatic steps." (Editing by Chris Vellacott and David
Holmes)

Source: Reuters.Com

Credit Suisse Issues About $6 Billion in Contingent Bonds

2011-02-15T07:52:00.001-08:00

Credit Suisse said on Monday that it had issued Qatar Holding and the
Olayan Group about six billion Swiss francs' worth of contingent
convertible bonds, a honestly untested debt instrument.

The debt residency with the Qatar sovereign wealth fund and the Saudi
conglomerate will take care of half of the contingent capital it has
to bring to somebody's attention under new Swiss rules meant to
strengthen bank weigh sheets in the consequence of crisis.

In an exchange for bonds the two investors already held, Credit Suisse
is issuing bonds in two currencies — $3.5 billion and 2.5 billion
Swiss francs; they pay a coupon of 9.5 percent and 9 percent,
respectively.

Contingent convertible bonds, known as CoCos, are like normal bonds
but except that they would be converted into equity by a trigger
consequence. In this case, the consequence would be a decline in the
bank's Tier 1 capital ratio to less than 7 percent.

Such bonds are intended to boost a lender's equity in a crunch
through the commitments of private sector investors, rather than have
banks be saved with taxpayer money, as so many were in the recent
crisis. By converting the bonds at a crucial moment, the lender would
at once have less debt and more equity, alleviating the conundrum of
too-huge-to-fail financial institutions.

Announcing the issue, Credit Suisse said the go would partially
satisfy "the proposed Swiss T.B.T.F. regime."

Brady W. Dougan, the bank's chief executive, said it had "worked
in close cooperation with our primary regulator, Finma, to make sure
that the buffer capital notes will qualify under the future Swiss
capital rules as contingent capital."

The new capital requirements are set to take effect in 2019.

Credit Suisse lowered its outlook for the year last week and missed
expectations for the fourth quarter.

Mr. Dougan added that the issue demonstrated CoCo bonds could be "a
material source of capital for the banking industry" as well as an
"attractive investment" for people already holding hybrid
instruments.

Not everyone in Swiss banking is as positive about the bonds.

Oswald Gruebel, the head of Credit Suisse's major rival, UBS, said
in an interview with the Swiss weekly Sonntag that he feared CoCos
would prove dilutive to bank shares, and proposed an alternative.
"I'm thought of bonds that lose half their worth when certain
capital threshholds are crossed," he said.

Source: Forbes.com

Indicted hedge fund trader linked to Cohen, Druker

2011-02-15T02:17:00.001-08:00

By Svea Herbst-Bayliss and Matthew Goldstein

BOSTON/NEW YORK | Fri Feb 11, 2011 4:15am EST

BOSTON/NEW YORK (Reuters) - Steven Cohen and Neil Druker are at
opposite ends of the spectrum when it comes to hedge fund fame and
trading prowess.

But both wealthy hedge fund managers now find themselves linked to a
U.S. insider trading investigation because of the criminal conduct of
the same former employee.

'CO-CONSPIRATOR'

The criminal complaint that Freeman pleaded guilty to describes the
president and owner of "Hedge Fund A" as a "co-conspirator," who
"exercised primary power" over trading decisions.

The source familiar with the investigation confirmed that Hedge Fund
A is Sonar Capital, but declined to note on who else may or may not
be a target of centralized authorities.

The time period Freeman worked at Sonar also coincides with the
period that prosecutors charged he engaged in illegal activity at
Hedge Fund A.

On Tuesday evening, Druker sent a letter to his investors in which he
sought to place distance between himself and his former top tech
analyst.

Source: Reuters.Com

Volatile trading on hedge fund market likely to extend in 2011

2011-02-15T00:06:00.001-08:00

_*Prices on the hedge fund lesser market remain volatile, according to
the latest data from Hedgebay. *_

Source: Hedgeweek.com

Ayaltis Acantias Offshore fund is launched

2011-02-14T19:31:00.001-08:00

Ayaltis has launched the Ayaltis Acantias Offshore fund, a fund of
hedge funds focused on undervalued assets in the stressed and
distressed credit space.

The fund is very concentrated, investing in between six and eight
seasoned distressed credit hedge funds with proven investment skills,
leadership, innovation and management talent.

Ayaltis, the investment adviser of the fund, has also hired Guillermo
Worlicek (pictured) and Massimo Martino to strengthen its team.

Ayaltis is a fund of hedge funds adviser with focus on fixed income
and credit strategies based in Zurich, Switzerland.

Source: Hedgeweek.com

China gets first official hedge fund

2011-02-14T17:10:00.001-08:00

By Samuel Shen and Kazunori Takada

SHANGHAI | Mon Feb 14, 2011 6:23am EST

The go, if successful, could spur other brokerages, fund managers and
even trust firms to follow suit, sowing the seeds for Plates's own
George Soros or James Simons.

Although many privately-run Chinese fund managers with no licenses
call themselves hedge funds, with some also using derivatives to
hedge risks, none of them have been approved by regulators.

But, Chinese regulators have been cautious about approving hedge
funds, partly because of the apparent negative role they played in
the financial crisis.

The launch of Guotai Junan's hedge fund comes at a volatile time for
Plates's stock market, with investors worries about inflation,
monetary tightening and a possible slowdown in economic growth.

Meanwhile, the authorities stepped up a crackdown on the real estate
market, leaving investors balking at buying material goods.

Targeting an annual return of 10-15 percent for its first hedge fund,
Guotai Junan intended to launch identical funds later to bring to
somebody's attention up to 5 billion yuan, he said.

(Additional reporting by David Lin; Editing by Chris Lewis)

Source: Reuters.Com

Citi launches technology platform for funds of hedge funds

2011-02-14T15:15:00.003-08:00

_*Citi's global transaction air force unit has launched a global
technology platform specifically calculated for servicing funds of
hedge funds.*_

The new technology platform delivers the following types of customised
tools for portfolio managers:

Source: Hedgeweek.com

IFR-Investors seek return in stressed loans

2011-02-14T15:15:00.001-08:00

Mon Feb 14, 2011 12:06pm EST

(The following tale appeared in the Feb. 12 issue of
International Financing Review, a Thomson Reuters publication)

By Michelle Sierra Lafitte

NEW YORK, Feb 12 (IFR) - Investor appetite for US leveraged
loans has pushed average bids to a four-year high in the
lesser loan trading market which is encouraging portfolio
managers to consider buying stressed or distressed loans in the
hunt for yield.

Buyers' attention focussed on troubled buyouts struck at the
peak of the market such as Energy Future Holding TXEFHE.UL
(formerly TXU) and Harrah's Entertainment HAMLEO.UL last week
after Clear Channel Communications'

Headstart Fund of Funds tops rankings

2011-02-14T07:53:00.000-08:00

The fund has a year to date return of 13.94 per cent to the end of
November 2010.

The fund has been advised by Headstart Advisers' chief investment
officer Najy Nasser since it began in November 1999.

Its 11 year track record has an annualised return of 6.82 per cent
with a volatility of 8.01 per cent per cent. An investment at the
inception of the fund would have approximately doubled by now, whereas
the S&P 500 index is down 13.18 per cent in the same 11 year time
period.

Since January 2009 the Headstart Fund of Funds has had an annualised
rate of return of 16.62 per cent with a volatility of 6.68 per cent.

Nasser says: "Our fund has performed consistently during 2009 and
throughout 2010 after what was a difficult 2008 for nearly everyone in
our industry.

"We are particularly pleased with our outperformance against the
indices we are most usually compared. In what has been a difficult
year for hedge funds with a wide disparity of returns, all of our
underlying positions are positive for the year to date which is a
strong testament to the quality of the funds within the portfolio."

Source: Hedgeweek.com

AIS launches web portal for hedge fund document management

2011-02-14T03:19:00.001-08:00

_*AIS Fund Administration has launched AIS IR Manager, a secure
document management and investor relations web portal calculated
expressly for the firm's hedge fund clients.*_

AIS Fund Administration provides outsourced middle and back office
support and fund administration to the alternative investment
industry.

The AIS IR Manager allows managers to post fund documents, newsletters
and marketing materials.

IR Manager is hosted by both the hedge fund manager and AIS on a
restricted, password protected website.

Source: Hedgeweek.com

Stenham Global Resources ranked in top ten by BarclayHedge

2011-02-13T18:17:00.001-08:00

_*Stenham Asset Management says Stenham Global Resources was ranked
number eight in the Top 10 Performing Fund of Hedge Funds category for
October 2010 by BarclayHedge.*_

Stenham Global Resources, a fund of hedge fund, focuses on commodity
related sectors such as water, agriculture and soft commodities.

The long biased fund of hedge fund is a concentrated portfolio of ten
to 15 managers with a target return of Libor plus six to eight per
cent and volatility of eight to 11 per cent per year.

The fund was launched in 2006.

Source: Hedgeweek.com

Global financial markets ended 2010 with a positive tone

2011-02-13T07:40:00.003-08:00

_*Global financial markets finished 2010 with a positive tone, with
strength across global equity, commodity and credit markets throughout
the month of December.*_

Macro funds posted the strongest gains of the strategies with a
contribution from equities and commodities as both fixed income and
volatility declined. The HFRI Macro (Total) Index posted a gain of
3.73%, bringing its performance YTD to 8.41%. Both Flexible and
Systematic strategies had similar positive contributions, with small
fixed income, long commodity and small US dollar positions
contributing to gains for the month. Recovering from November's
losses, persistent trends across many asset classes contributed to a
gain of 4.45% for the HFRI Macro: Systematic Diversified Index, with
these ending 2010 with a gain of 9.48%.

The HFRI Equity Hedge (Total) Index posted a gain of 3.46%, with
strong contributions from Essential Growth, Energy/Basic Materials and
Emerging Markets exposures. The HFRI EH: Energy/Basic Materials Index
gained 4.71%, bringing full year 2010 performance to 15.98%, eclipsing
several other strategy indices to become the leading areas of hedge
fund performance for the year. Gains across Equity Hedge were strong
across nearly all sub-strategies with Quantitative Directional,
Technology/Healthcare and Equity Market Neutral all contributing
positively. Small Bias funds once again posted a sharp loss, with
these declining by 8.51%.

The HFRI Consequence Driven (Total) Index posted a gain of 2.77%, with
all sub-strategies having positive contributions led by gains in
Special Situations and Activist funds. Risk tolerance declined and
capital market issuance and strategic acquisition activity remained
strong, contributing to gains of 3.82% in Special Situations and 2.68%
in Distressed/Restructuring; Merger and Credit Arbitrage also posted
gains for the month.

Source: Hedgeweek.com

Hedge fund Elliott rejects DuPont's Danisco bid

2011-02-13T07:40:00.001-08:00