Posts tagged “hedge fund”

Ex-Goldman Prop. Trader’s Hedge Fund Picks Three Prime Brokers

March 1st, 2011

Azentus Capital, expected to be among the largest hedge fund launches of the year, has recruited a trio of brand-name prime brokers to handle its trades.

The Hong Kong-based hedge fund, founded by former Goldman Sachs proprietary-trading chief Morgan Sze, will use the services of his old firm, as well as those of Morgan Stanley and UBS, Reuters reports. The new fund is expected to debut in the second quarter with more than US$1 billion in initial assets.

Sze, who has been planning the fund since last year after Goldman decided to pull the plug on its prop. trading operations, officially left the firm earlier this month and registered Azentus with Hong Kong regulators a week ago. He is thought to be building a team of about 30 for the firm, including Roger Denby-Jones, former Boyer Allan Investment Management CEO, as chief operating officer, and at least four former members of his team at Goldman.

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New Asian Funds Attract Almost $4B In 2010

February 25th, 2011

Asian fund launches were up 48% year on year in 2010, with 95 new funds attracting $3.84 billion in assets, according to the latest AsiaHedge New Funds Survey.

In 2009, 78 Asian funds were launched with a total of $2.6 billion.

“Despite a slightly lackluster second half, new Asian hedge fund launches continued to see a sustained interest, though rising barriers to entry meant that most of the capital went to either second-generation managers with a strong pedigree or new offerings from established hedge fund shops,” says Aradhna Dayal, editor of AsiaHedge in Hong Kong.

“Anecdotal evidence suggests that U.S. allocators were probably the largest contributors to the start-up capital last year, though a new breed of Asian high net worth individuals and family offices also emerged as silent but serious backers of several new hedge funds.”

Singapore performed well in 2010, reporting the launch of 15 new funds with $673 million, up significantly from 2009. “The new regulatory regime being rolled out there has brought about a renewed confidence in the Lion City funds, and that is being reflected in the start-up space too,” says Dayal. Hong Kong remained the leader in the region, though, with 57 launches that attracted $2.4 billion in assets.

Redistribution of assets, resulting from the outflows from closures to new managers, as well portfolio rebalancing by investors within Asia, contributed significantly to the total new launch asset raising.

In terms of strategy, new China funds led the pack, as they did in 2009, attracted $817 million or 21% of total assets gathered by new funds. Multi-strategy funds, with $365 million; Japan-focused funds, with $317 million; and macro funds, with $208 million, also attracted considerable interest.

Dayal says 2011 holds promise, with several high-profile bank spin-offs and second-generation hedge fund launches in the offing. “Just like the class of 2009, the class of 2011 will be an interesting one to watch, with star prop traders such as Morgan Sze, Ben Fuchs and Charlie Chan expected to make their debuts,” she says.

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Dynegy CEO, CFO Quit After Icahn Deal Fails

February 23rd, 2011

In the wake of their failed deal to be acquired by hedge fund Icahn Enterprises, the top managers of energy company Dynegy have resigned.

Bruce Williamson, the company’s chairman and CEO, and Holli Nichols, its CFO, will resign on March 11, they said yesterday. The departures follow the resounding rejection of Icahn’s $665 million bid for Dynegy, which attracted the support of less than 5% of shares outstanding.

Icahn’s bid for Dynegy has expired, although the hedge fund could have continued extending it until September. The firm, which had previously helped short-circuit a deal for Dynegy by the Blackstone Group alongside hedge fund Seneca Capital, found its own bid sunk by Seneca’s strenuous opposition.

Dynegy said a further shakeup is likely, with some members of its board likely to leave at its annual meeting.

“While all current directors intend to remain fully engaged in their duties through the 2011 Dynegy annual meeting, we expect the new members of the board to take the lead in defining the future composition of the board and in selecting a new chief executive officer,” newly-named interim Chairman Patricia Hammick said.

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Diamondback Redemptions Top $1 Billion

February 16th, 2011

Things aren’t as rosy at Diamondback Capital Management as the hedge fund indicated last week.

Investors have filed redemption notices totaling more than $1 billion with the firm, one of four raided in November by the Federal Bureau of Investigation as part of the Justice Department’s massive insider-trading probe. Diamondback has not been accused of any wrongdoing.

The withdrawal requests, first reported by The New York Times, are about twice the amount the firm reported to investors last week, indicating that its efforts to reassure did not go as well as Greenwich, Conn.-based Diamondback had hoped. Later last week, the firm acknowledged that redemption notices had crested $700 million; the final total is likely to be higher, as the deadline for notices was yesterday at 5 p.m.

Diamondback, which manages about $5.5 billion, had told investors last week that “several large investors” would stick with the firm. That includes that Blackstone Group, the hedge fund’s largest investor, which does not plan to substantially alter its investment with Diamondback.

The hedge fund also warned investors to think long and hard about their decision: Unlike most of its peers, Diamondback said it will not allow investors to revoke their redemption requests. It is unclear if the ballooning level of withdrawal demands will lead it to change that stance.

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Hedge Funds, Banks Drive Up Prices In Madoff Claims Market

February 15th, 2011

Competition in the secondary market for claims against fraudster Bernard Madoff is driving up prices, says one of the UK’s biggest hedge fund market makers.

“We’ve had these positions on our books for two years, and two years ago you couldn’t get a price,” Neil Campbell, head of alternative investments at brokerage Tullett Prebon told Reuters. “Up to six months ago it’s been one or two cents in the dollar, as optionality, but now it’s become more serious because there’s more competition.”

In the past six months, the price of holdings in Madoff feeder funds like Fairfield Sentry and Kingate has risen to 7 or 8 cents on the dollar from 1 or 2 cents, says the news agency. Buying bankruptcy claims from a direct investor with Madoff can cost 30 or 40 cents.

The market has been encouraged by the successor of Irving Picard, trustee for the Madoff bankruptcy, who has recovered about $10 billion for victims of Madoff’s Ponzi scheme.

According to Campbell, distressed hedge funds, distressed desks at banks and funds of funds specializing in the secondary market are all entering the sector. And on the other side, many funds of funds are trying to dump Madoff holdings to limit damage to their reputations.

“There are a lot of vehicles globally looking at this opportunity,” said Campbell. “A variety of buyers are coming in, due to the success of the trustee, who has been fairly ferocious in getting results, and the (small) amount of claims made, especially in Europe, which has created a very interesting window of opportunity.”

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Insparo Unveils Africa-Focused Hedge Fund

February 14th, 2011

U.K.-based Insparo Asset Management has launched a new Africa-focused hedge fund that aims to capitalize on the huge growth potential of African businesses and the rise of the continent’s consumer culture.
The Insparo Africa Equity Fund will invest in market leading companies aimed at the consumer space across North Africa and Sub-Saharan Africa. The strategy will also make investments in South African equities, although listed companies will be limited to 20% of the portfolio.

Fifty percent of the 25 fastest growing economies in the next five years are African, and foreign direct investment into the continent has swelled enormously. China announced recently that its bilateral trade with Africa had increased by nearly 45% in a year to reach a record $115 billion.

“The rise in consumption in Africa in the last decade has been remarkable, but there is still a huge amount of room for growth,” said Jamie Allsopp, who leads Insparo’s investment team. “The penetration of goods and services in Africa is still relatively low, and African consumers are projected to spend $1.8 trillion in 2020, an astonishing increase of over a trillion dollars from 2008. The aim of this fund is to invest in sustainable companies that will benefit from and aid this positive tailwind.

The new fund launched with initial seed capital of $7.5 million, raised through internal and external investors, and will be soft closed at $250 million.

The new vehicle is Insparo’s second fund. The firm’s flagship multi-strategy Africa and Middle East fund has returned 36% since launch in June 2008, placing it among the best performing funds in its sector. The firm expects the new the Africa Equity Fund to make average unlevered annual returns of 15-20%.

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Raided Hedge Fund Barai Liquidating, Cooperating

February 2nd, 2011

Barai Capital Management, the hedge fund whose founder has been identified as an alleged co-conspirator of accused insider-trader Winifred Jiau, is closing its doors.

The New York-based firm is cooperating with the investigation, which has led to at least eight arrests since November, one of its early backers said. Among those charged was Jason Pflaum, an analyst at Barai, who pleaded guilty to conspiracy and securities fraud.

“BCM has informed us that they are cooperating fully with the government’s investigation,” Jeff Tarrant and Ted Seides, co-founders of Protégé Partners, wrote to investors yesterday. “The firm has also informed its investors that it commenced an orderly wind-down of the BCM funds.”

Barai was identified as “Hedge Fund A” in the complaint against Jiau, a former consultant for expert-network firm Primary Global Research. The firm’s Manhattan offices were raided by the Federal Bureau of Investigation in mid-December, about a week before three more highly-publicized raids at other hedge funds. The agents seized some computers and tape recorders from Barai Capital; firm founder Samir Barai has a hearing disorder and frequently recorded conversations, including with Jiau.

Pflaum was identified as a cooperating witness in that complaint, while Barai is the unnamed co-conspirator called “CC-1” in the complaint, The Wall Street Journal reported yesterday.

Barai has not been accused of any wrongdoing, but the Jiau complaint said that Barai “communicated directly” with “some individuals… in order to receive inside information.” The complaint alleges that he earned some $820,000 trading on tips provided by Barai.

Barai Capital managed less than $100 million as of last fall, despite returning 13% since its inception in 2008. Protégé seeded the firm.

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RAB Slashes Hong Kong Staff, Cancels Planned Fund

January 19th, 2011

RAB Capital’s recovery apparently does not extend to Asia. The troubled London-based hedge fund, which enjoyed a strong year from two of its funds, has reduced its Hong Kong office—its only international office—to a rump.

The firm bade farewell to four members of the five-person team it hired from D.B. Zwirn & Co. in 2009 in December, Bloomberg News reports. The cuts leave just four employees in Hong Kong, led by RAB Asia CEO David Seex.

But Seex now oversees a region where RAB has no dedicated funds and no plans to launch one. The firm shuttered its last Asia hedge fund, run by its Pi investment team, late last year, and cancelled plans to have the former Zwirn team launch a distressed fund.

“We have taken action to reduce our cost base in Asia,” the firm said. “We’re now focused on expanding our Asian investor base in our core products, several of which delivered very strong returns in 2010.”

RAB is retrenching in Asia as other funds are returning to the region after cutting back during the financial crisis.

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Harbinger Parts With Top Analysts, Trader

January 14th, 2011

Philip Falcone

Harbinger Capital Partners has laid off a pair of top analysts as it seeks to cope with a vastly reduced asset base.

The New York-based firm let both Clark Baker and Eli Benson go over the past few weeks, Reuters reports. In addition, Kenneth Turano, a young trader at the firm, resigned.

The exits coincide with that of partner and senior analyst Lawrence Clark last week. Clark plans to launch a hedge fund of his own, and his exit from Harbinger was described by firm founder Philip Falcone as amicable.

But Falcone did not disclose the other three departures in a letter to investors telling them of Clark’s exit.

Turano, who is reportedly close to Clark, will likely join Clark’s new event-driven hedge fund. The new firm, which is still nameless, is expected to launch its maiden fund within six months.

It is unclear why Harbinger chose to part with Baker and Benson. The firm has seen its assets under management fall by nearly three-quarters to $7 billion, and some 40% of its assets are tied up in Falcone’s wireless telecommunications initiative. The exits could be the result of Harbinger’s “rightsizing,” or it could be a sign that some staffers are unhappy with a lack of capital to make other investments, Reuters’ sources said.

Benson, who worked on distressed debt, and Turano both joined Harbinger in 2005. Baker was part of the Harbinger team betting against the subprime mortgage market, an investment that produced triple-digit returns and made Falcone’s name and fortune.

There were no similar hits for Harbinger this year. Both the firm’s flagship hedge fund and Special Situations funds were down about 12% last year, when the average hedge fund returned about 10%.

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Hedge Fund Sues CBOE Over ‘Insider Trading’

December 30th, 2010

Hedge fund Platinum Partners has sued the Chicago Board Options Exchange, accusing it of accidentally giving some investor advance notice of a change to the strike price of a listed fund.

The New York-based firm said it lost $10 million when the CBOE and Options Clearing Corp. mistakenly cut the strike price on India Fund options and then improperly gave that information to some market participants. In addition to the CBOE and OCC, Platinum names the sellers of the India Fund options as John Doe defendants.

“We’re not the litigious type of people,” Platinum chief Mark Nordlicht told Crain’s Chicago Business. “It’s just an unfortunate situation. There was clearly some insider trading that went on before the decision was publicly announced.”

Platinum’s suit was filed in Illinois state court in Chicago.

While Nordlicht may not be the litigious type, he’s certainly seen the inside of a courtroom before. In addition to leading Platinum, he is the co-founder and chairman of commodity broker Optionable Inc., which has been sued by the Bank of Montreal for allegedly helping a former trader conceal losses.

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