Publications & News 

Our Research Partners and Analysts are some of the most respected voices in the financial research industry. We are fortunate to be able to present a searchable archive of some of their publications, case studies and articles.

 

  • Woman-led True Wealth Ventures has $19.1 million to invest in woman-led Texas startups

    Women-led Texas venture firm True Wealth Ventures announced today that it has raised $19.1 million to invest in women-led startups — with more than 80 percent of those funds coming from women. The Austin-based venture firm wants to help close the venture capital gender gap by investing in promising startups across the state, including in Dallas. Its general partners, Sara Brand and Kerry Rupp, plan to invest in 12 companies in the consumer and consumer health technology industries, according to a news release. True Wealth Ventures is led by Brand, a former semiconductor researcher and founder of (512) Brewing Co. and Rupp, former CEO of DreamIt, a startup accelerator and early-stage fund for digital health and education technology companies. In an interview with The Dallas Morning News in December 2015, Brand and Rupp said the male-dominated world of venture capital misses a prime business opportunity when it overlooks women-led companies. Research by consulting firm McKinsey & Co. shows women-led companies tend to have higher returns and higher revenue despite tending to have less capital and fewer resources. And they said women make the majority of purchasing decisions when it comes to consumer and health care products. Women founders received just 2.2 percent of total venture capital in 2017, according to data from PitchBook, private equity and venture capital database. At venture firms, women......

  • Renaissance Hedge Fund Tumbles 5.4% After Correction Warning

    Renaissance Technologies, the hedge fund that in January warned clients of a “significant risk” of a correction, lost 5.4 percent this month through Feb. 9 as stock markets slumped. Since Jan. 1, the Renaissance Institutional Equities Fund is down 3.4 percent, according to an investor document seen by Bloomberg News. Known as RIEF, the strategy trades only U.S.-listed equities and is biased toward stocks that Renaissance’s models expect to rise. It’s designed to outperform the S&P 500 Index by 4 to 6 percentage points and managed about $22 billion as of the end of last year. The stock plunge of the last two weeks spurred a spike in volatility, hurting those who were betting on market calm and raising suspicions that quants had caused or exacerbated the sell-off. Renaissance’s head of risk control, Ed Hubner, wrote in a December letter sent to clients last month that while accelerating global growth and U.S. corporate tax reform have helped contribute to market gains, it’s not clear these factors justify current valuations. Jonathan Gasthalter, a spokesman for East Setauket, New York-based Renaissance, declined to comment. Renaissance uses complex algorithms for trading. The quant firm was founded in the 1980s by former military code-breaker Jim Simons, who ceded control of Renaissance......

  • Warren Buffett: Why Index Funds Trump Hedge Funds

    You’re probably tired of hearing this, but long horizons and low fees are two of an investor’s best friends. Sure, everyone wants to get rich quick, but the best route for most of us is to diversify our holdings, control costs and be patient – which is exactly why index funds are becoming more popular by the year. Just ask Warren Buffett. The world’s greatest value investor and chief of Berkshire Hathaway (BRK.B) once again proved the superiority of keeping things simple and cheap vs. complicated and costly when he won a 10-year bet with some folks in the hedge-fund industry at 2017’s end. To recap: In 2007, Buffett made a $1 million wager that a Standard & Poor’s 500-stock index fund would outperform a group of hedge funds over the next decade. If he won, the payout would go to charity. So how did the Oracle of Omaha do against Wall Street’s Masters of the Universe? He smoked them.   Index Funds Were Better, Cheaper A basket of hedge funds selected by Protégé Partners – the hedge-fund managers with whom Buffett made the bet – returned 2.2% compounded annually over the 10 years ended 2017. Buffett’s S&P 500 index fund,......

  • The biggest misconceptions about bitcoin

    The price of bitcoin rose 1,221% in 2017. Everyone was talking about the cryptocurrency in December, and will continue to talk about it into 2018, even though the frenzy and general conversation has expanded to cryptocurrencies like litecoin, ether, ripple and beyond. But as the general public takes a much larger interest in bitcoin, a number of popular misconceptions still linger. You see people shouting these things on Twitter, or hear friends or colleagues saying them, or even sometimes read them in an incorrect news article. Here are three of the most common misconceptions about bitcoin.   1. It’s unregulated People say bitcoin is unregulated, usually in order to make the argument that it’s dangerous and unstable. But bitcoin is, in fact, regulated in a number of ways. Bitcoin brokerages that are above-board are all licensed in some manner: Coinbaseregistered as a “money services business” with FinCEN, the Financial Crimes Enforcement Network, while Gemini registered as a “trust” with NYDFS, the New York Department of Financial Services. Both forms of license mean complying with KYC (know your customer) and AML (anti-money laundering) requirements. In 2015, NYDFS introduced the “BitLicense,” a set of regulations governing any digital currency companies based in New York that hold customer funds. Some companies applied......

  • 2018 Will See Many More Cryptocurrencies Double In Value

    A week before Christmas, this headline about a random cryptocurrency no one has ever heard of was read more than most best sellers: Asians ‘Going Mad’ For Ripple Coin.  At the time, Ripple (XRP) was worth around a dollar. Today it is worth $2.45. This will be the year that more unknown cryptocurrencies double in value.  How many will quadruple in value is anybody’s guess. Sure, many of these new coins will disappear from the market. At their heart, the cryptocurrency craze is like the start-up craze, on steroids. Newly minted companies are going around the venture capital world, issuing their own digital currency, and having almost no problem at all finding willing investors. Got snake oil? No problem! Someone in Asia will take two bottles worth. While setting up an initial coin offering is not cheap and needs upfront angel investing to foot the bill, the ICO market has turned what was once a half dozen cryptocurrencies led by bitcoin, into a $650 billion market overrun by over a thousand cryptocurrencies. These currencies are tied to new, unknown companies selling products and services no one has ever heard of, understands, and may have no real use for. As an investment vehicle,......

  • Machine learning set to shake up equity hedge funds

    Machine learning poses a threat to equity hedge funds within the next decade as the technique becomes powerful enough to forecast market moves better than humans, one of the earliest investors in the industry is forecasting. Jeff Tarrant, the founder of Protégé Partners, says that the model of hedge funds charging “2 and 20” — a 2 per cent management fee and 20 per cent performance fee — for investing in large-cap stocks rising and falling “doesn’t work any more” and is ripe for disruption. He pointed to the overhaul of other industries in the past decade at the hands of engineers and scientists. “Jeff Bezos picked off the bookstore business. Apple totally picked off the music business and Netflix totally changed television. Now [machine learning] is going to pick off the hedge funds.” To back up that theory, he is launching a business that will invest solely in start-up investment funds that employ artificial intelligence. Protégé’s new business, dubbed Mov37, will invest in as many as 10 managers through either seeding them or investing directly, and is targeting total investments of up to $1bn. While many of the biggest systematic hedge funds, which use computer algorithms to make trading......

  • Once considered the titans of Wall Street, hedge fund managers are in trouble

    NEW YORK — Long considered the titans of Wall Street, hedge fund managers have long thrived under a simple premise: They are smarter than the average investor and can produce bigger profits. That image of the slick, well-connected trader, making bold bets with hundreds of millions of dollars, has attracted trillions from wealthy investors, pension funds and endowments who were willing to pay high fees and hand over 20 percent of any profits to the elite class of traders. Now, though, many investors are reconsidering. Hedge funds produced returns of about 5 percent last year, according to Hedge Fund Research, compared with the 10 percent rise of the Standard & Poor’s 500-stock index, a broad collection of stocks that is trading near record highs. Investors have responded accordingly, pulling $111 billion out of the industry in 2016, according to eVestment, an institutional investor data firm. More than 1,000 funds closed their doors last year, the largest number since the 2008 financial crisis. Many of the advantages the industry relied on for decades have started to disappear, industry experts say. There are more hedge funds placing the same type of bets. And finding a unique idea, an undervalued company or one with flaws that......

  • One of the most anticipated hedge fund launches of 2017 keeps raising money

    One of the most anticipated hedge fund launches of the year continues to rake in fresh money, despite a rough start in terms of performance. Ben Melkman’s Light Sky Macro dropped about 3.5% from March through the end of April, according to an investor document reviewed by Business Insider. May performance numbers weren’t immediately clear. The fund is continuing to raise assets, however, and is set to manage $1.5 billion on June 1, according to a person familiar with the matter. That makes Light Sky one of the biggest launches of the year, and marks a quick step up in raising fresh money; the fund managed around $880 million at the end of April, according to the investor document. The fund is also soft-closing, which means that it will not accept money from new investors but may arrange for existing investors to add capital, the person said. The fund is down at a time when other macro funds are struggling. Brevan Howard’s master fund is down 3.1% this year through the end of April, according to an investor document reviewed by Business Insider. Caxton Global dropped 6.6% through April 4, according to performance reported by HSBC. Discovery Capital Management was down about 12% through......

  • Are Silicon Valley’s Tech Startups Overvalued?

    For any who aren’t familiar with the term, Silicon Valley refers to the the high-tech startup-dominated southern region of the San Francisco Bay Area. ‘The Valley’ accounts for more than 33% of all venture capital investment in the US, and houses over 1000 seed funded startups and a lot more still trying to raise money. VC (venture capital) and private equity firms invest in startups at various stages, with the aim of finding a future ‘unicorn’ ($1bn+ valued firm) and then profiting from its revenue, sale, or equity financing. Snapchat, Cloudera, and other unicorns recently saw their valuations slashed, and had investors wondering if a wider trend is building up or if the valuations were simply a sporadic correction by the public markets. There are multiple sides to every argument. Here are a few reasons why the average startup valuation is arguably overvalued, and why a bubble might already exist:   Loss-making Business Models Investors are starting to ignore traditional metrics such as price-EBITDA and price-sales ratios and are instead opting for non-financial metrics such as user base and reach. This is a major issue. Uber is currently valued at around $70bn, despite making  a $2.3bn loss last year. Snapchat is......

  • Opinion: Nearly all-male venture capital ranks missing a big opportunity for profit

    By MEGAN BENT Today’s venture capitalists are ignoring an easy way to boost profits. They’re sitting on heaps of data that say gender diversity leads to greater financial returns. Yet they remain resistant to investing in women. Research shows that venture capitalists who bet on female talent enjoy higher returns — and that female partners are the best at recognizing talent. Consider women-led startups backed by venture capital. According to a 2014 report, these firms earn 12 percent more. A report from researchers from Duke, Stanford, and the Kaufman Foundation found that women-led tech companies boast a return on investment that’s 35 percent greater than male-led companies. It’s not just startups. According to a recent study of top-ranked equities, those of gender-diverse companies had “much better risk adjusted stock returns” than their peers. Among stocks with similar returns, the gender-diverse companies had a lower likelihood of dipping. Yet female entrepreneurs under-index on access to capital. Only 9 percent of entrepreneurs at venture-backed, high-growth tech startups are women. And last year, only about 17 percent of global VC deals included a female founder. Why? Implicit bias unfortunately leads investors to favor men. Three groundbreaking studies found that brains and beauty are......

  • The Case For Avoiding Venture Capital

    By David Williams: For entrepreneurs, the siren call of venture capital is everywhere. In the U.S., VCs raised a total of $40.6B in 2016 (according to Pitchbook data), the largest sum since the jaw-dropping $101.4B in the midst of the dotcom land rush in 2000. As the CEO of a growing venture, I get 20-30 calls and emails per week from VCs wanting to give us money. And every time, my answer is “no.” Don’t get me wrong—this is not because our company has hit the jackpot and our pockets are flowing with money. Some of our seasons are hard. Banks are tight. Meanwhile, the development of new products and features takes money. And every rising company knows the pain of perpetually adding infrastructure and staff to run their growing business with the income they earned and collected as a smaller organization 2-3 months before. Growth capital is the continuing anthem for every organization I know. But I have no desire for VC investment, and I am far from alone. Here are my five biggest reasons to suggest that every company should avoid or at least postpone the need for VCs.   VCs are looking for companies that fit their......

  • Hedge funds manage risk: Opposing view

    Even in times of pressure, research shows that investors — particularly institutional investors such as pensions, foundations and endowments — continue to use hedge funds as tools to help meet their unique financial and risk management needs. This is especially true in the U.S. According to independent data from Preqin, total industry assets are at record levels. Almost two-thirds of investors plan to maintain or increase their hedge fund allocations over the near term; over the longer term, nearly 70% of investors report the same. So, why do these sophisticated investors continue to use hedge funds in the face of recent headwinds? There are a variety of answers, but many institutional chief investment officers will tell you they rely on hedge funds to help dampen market volatility and provide returns that are risk-adjusted and uncorrelated to equity markets. What that means in practice is that many hedge funds are designed to protect against losses when markets crash. An example would be the global financial crisis when hedge funds on average outperformed the U.S. stock market, which lost about 40% in 2008. In other words, the goal is often more about managing risk than “beating the markets,” as some critics suggest.......

  • Warren Buffett vs. hedge funds: Our view

    Rich people tend to get investment opportunities unavailable to the rest of us. One of those is the chance to put their money into hedge funds, many of which require multimillion dollar minimums. Sounds unfair to the little guy, but guess what? Mounting evidence shows that hedge funds are a bad bet. Don’t just take our word for it. Ask billionaire superinvestor Warren Buffett. A decade ago, the Berkshire Hathaway CEO proposed a friendly wager that a simple stock index fund could beat a handpicked portfolio of hedge funds over 10 years. What surprised Buffett was how few people would sign up to take him on. Out of thousands of headstrong hedge fund managers who’ve made fortunes touting their investment acumen, only one — a man named Ted Seides — was willing to put his money where his mouth was. Given this lack of interest in the bet, the results should come as no surprise. Buffett’s entry, Vanguard’s 500 index fund, which merely buys stocks in the Standard & Poor’s 500, has increased by 85% while the Seides hedge funds are up just 22%. Hedge funds manage risk: Opposing view The truth is, the track record of hedge funds has been dismal, and for multiple reasons. In their......

  • Maybe Hedge Funds Don’t Stink After All?

    The “hedge” in hedge fund finally seems to be working again. “After several challenging years following the financial crisis, the risk-adjusted performance of hedge funds, measured by sharpe ratio, is improving,” writes Bank of America Merrill Lynch technical analysts Jue Xiong. “As of the end of February 2017, hedge funds delivered sharpe ratio of 3.8 over the trailing 12 months, compared to 1.3 by the S&P 500.” The BofA note highlighted the fact that distressed credit funds returned 19.5%, event-driven, 13.2%, and convertible arbitrage funds, 10.7%, beating the S&P 500‘s 10.6% from March 31, 2016 to February 1, 2017. Meanwhile stock market neutral funds, long/short funds, macro funds, managed futures, merger arbitrage funds, and dedicated short biased funds fell short.  Examining the data more closely, it appears that the BofA note compared the total returns of the hedge funds to the price change of the S&P 500. That’s not an apples-to-apples comparison. Over the same time period, the S&P returned 12.6%, which knocks out convertible arbitrage funds’ 10.7% return. It’s also probable that the S&P 500 returns beat event-driven funds’ returns after fees. Lyxor’s Philippe Ferreira likes event-driven funds and finds them “highly attractive.” He explains: Exposures are balanced between cyclical and defensive sectors......

  • Private Equity Is Raising Its Bets on Distressed Positions

    In a casino, doubling down can be dangerous. But in private equity, it’s increasingly becoming the best way to eke out a profit on a bet turned bad. From Apollo Global Management LP to Bain Capital to Thomas H. Lee Partners, investors have bought hundreds of millions of dollars of debt in struggling businesses they took private, giving them positions as both stockholders and creditors. The benefits of the strategy are baked into distressed investing, where Apollo’s considered the most shrewd player in the arena. When companies falter and the equity becomes drained of value, holding the right bonds can allow private equity sponsors to control the restructuring and potentially regain ownership after converting debt into new equity. Now, more investment firms have taken notice and are starting to use the strategy as they desperately seek to salvage investments that are at risk of turning sour amid rising interest rates. “We are seeing growing interest among more and more investors to pursue the tactic this year,” said Lewis Grimm, a lawyer at Jones Day, who specializes in risky companies. “People have been looking opportunistically for creative moves when they saw how relatively aggressive approaches have proven to be successful in recent......

  • Study finds female run start-ups perform better, but receive only 2.19% of total venture capital dollars

    In 2016, 6,000 male-run companies received venture capital funding, compared to 359 women-run companies, according to Tracy Chadwell, a venture capitalist and founder of the 1843 Fund, who recently stopped by Salon’s studio with her protégé, Margaret Hartigan of Marspace, Inc. “It’s really unbelievable given the quality of the companies that are out there and things that are happening in the founder space,” Chadwell said. “We’re seeing a few more companies on a per-number basis being funded, but on a dollar amount it’s where it’s the most egregious. [In 2016] women received only 2.19 percent of total venture capital dollars. They are over 19 percent of [all] the companies, so for them to receive such a small amount of VC funding — there’s really a disconnect there.” Asked what the glass ceiling looks like now, and if it still indeed exists, Chadwell said, “In venture capital, it’s still there. Only 3 percent of venture capitalists are women.” “It’s still something women are frustrated [about] and breaking against,” she added. Women receive so little funding, Chadwell claims, because they aren’t sought out like male-driven companies, even though in study after study, women-founded and -run companies in portfolios outperform their male counterparts. “This is a really inefficient market......

  • Hedge Fund Titan’s Surefire Bet Turns Into a $4 Billion Loss

    A little over two years ago, William A. Ackman, one of Wall Street’s brashest and most self-assured hedge fund managers, was on top of the world. A billionaire before he hit 50, he was generating double-digit gains for his investors and raking in hundreds of millions in fees for his firm and himself. Hailed as a master investor, he clinched his highflier status in the fall of 2014 by paying $90 million with some friends to buy the penthouse at One57, a 13,500-square-foot aerie in Midtown Manhattan overlooking Central Park. He didn’t plan to live there — it was an investment property — but until he sold it, the apartment would make a good party space, he told The New York Times. If Mr. Ackman were a stock, that might have been his peak. Today, things are very different for him. His company’s performance is way down, he is in the midst of an expensive divorce, and on March 13, he and investors in funds run by Pershing Square Capital Management swallowed a $4 billion loss on Valeant Pharmaceuticals International, a beleaguered drug company. As bad bets go, it was one for the record books. Valeant was a big Pershing......

  • Hedge funds’ ‘obscene’ fees make people rich — just not investors, says Buffett

    The “2 and 20” fee system that hedge funds use to charge their clients is overpriced and “borders on obscene,” billionaire investor Warren Buffett, chairman and CEO of Berkshire Hathaway, said Monday. “Two and 20 is going to make a lot of people rich, and it’s going to make very few investors rich,” Buffett told CNBC, calling the charges “ridiculous.” Buffett made the statement in reference to the fee structure normally charged by hedge fund managers, whereby they take 2 percent of a client’s assets and 20 percent of the client’s total returns. “You don’t get better because you charge a lot. That does not make you a better judge of securities or anything like that,” the legendary investor said. Buffett spoke to CNBC’s “Squawk Box” at length Monday morning....

  • Hedge fund hate: More cash likely to flow out again this year

    Hedge fund managers had a rough year in 2016, and pretty much none of their customers were happy about it. At a time when legendary investor Warren Buffett has almost nothing nice to say about big money managers, investors say they plan on allocating less money than they did in 2016. During that year, hedge funds surpassed $3 trillion in total assets but also saw some $110 billion walk out the door as investors grew unhappy with sub par returns. In all, just 3 percent said returns for the year topped expectations, according to a survey of managers and investors conducted by industry tracker Preqin. Only 31 percent said returns met expectations, while 66 percent said returns fell short. Of course, hedge fund investors are a fickle crowd. Back in 2013, when the industry rode a red-hot stock market to a 9 percent gain, a mere 21 percent said returns beat their hopes. Yet coming on the heels of a big year for outflows, another weak performance could siphon even more cash out. Meanwhile, Buffetttook aim at hedge funds in his annual letter released on Saturday, excoriating them for charging big money for advice that has largely under-performed low-cost index......

  • Gotham Hedge Fund Explores Shifting Fees to Tie Pay to Returns

    By Hema Parmar Gotham Asset Management, the $6 billion money manager run by Joel Greenblatt and Robert Goldstein, is exploring a new fee structure that ties more of the fund’s pay to performance. The firm is in talks with some investors for its Gotham Neutral Strategies hedge fund about charging one fee: the greater of a 1 percent management fee or 30 percent of returns that exceed the fund’s benchmark, according to two people familiar with the matter. The equity fund currently charges 1.5 percent of assets in management fees and 20 percent of profits, one of the people said. Hedge funds have been trimming and altering their fees amid a backlash over lackluster returns and criticism that the standard model of charging a 2 percent management fee and a 20 percent incentive fee is too expensive. Most hedge funds charge investors too much for the performance they deliver, Greenblatt, who is Gotham’s co-chief investment officer, told Bloomberg Television in a May 2014 interview. The Gotham Neutral Strategies fund gained 7.5 percent last year, according to another person familiar with the matter. The HFRI Market Neutral Index was up about 2 percent in that time. Since inception in July 2009,......

  • This Is The World’s First Cryptocurrency Issued By A Hedge Fund

    By Laura Shin   With performance falling, investors fleeing and offices closing, hedge funds had a rough 2016. But San Francisco-based Numerai was just getting started. Instead of relying on the genius of a single person or small team, the firm uses encrypted data sets to crowdsource stock market prediction models built with artificial intelligence from 12,000 anonymous data scientists worldwide who compete to win bitcoin. And if that flew over your head, the main takeaways are that this hedge fund has orders of magnitude more data scientists trying to improve its investing strategy than the biggest name hedge funds today, and what makes the firm possible is a confluence of technologies that didn’t even exist a few years ago — primarily in cryptography and artificial intelligence. Now the one-year-old company, founded by 29-year-old South African Richard Craib (a Forbes 30 Under 30 designee) and funded by the likes of Union Square Ventures, is launching its own cryptocurrency, the Numeraire. It is the first virtual currency issued by a hedge fund and one of the first released by a company (rather than a group of developers or a non-profit). Craib says the Numeraire helps solve a fundamental problem in finance. “Finance is totally competitive......

  • A $14 billion hedge fund is venturing where others fear to tread

    Canyon Capital Advisors, a $14 billion Los Angeles-based investment firm set up Joshua Friedman and Mitchell Julis, sees a fresh money-making opportunity betting on corporate takeovers. In a January letter to investors, the hedge fund firm said there has been a “significant increase in supply” of potential deals “as companies having difficulty growing organically have instead sought to buy growth.” At the same time, fewer investors are able to invest in these kinds of deals, which generally involves buying the stock of a company being acquired during a sale while selling off stock in the acquiring company. Canyon cites the gutting of Wall Street banks’ proprietary desks, which used to trade the banks’ own money, and the travails of many event-driven hedge funds which have suffered and can’t take big positions any more. Event-driven hedge funds, a strategy which encompasses betting on mergers, lost $38.3 billion in net assets last year, according to data tracker HFR. Hedge funds focusing on merger arbitrage returned 3.6% last year, as per HFR. SEE ALSO: Canyon Capital is sounding the alarm on distress in the retail sector The strategy – in hedge fund jargon called risk or merger arbitrage – is risky since deals......

  • Bitcoin and AI: The Future of Hedge Funds?

    By Nathan Reiff Hedge funds were born and raised on the premise that certain brilliant investment minds could make educated judgments based on market trends and business practices in order to invest in such a way as to deliver consistent, extraordinary returns. Early titans of investment, such as billionaires George Soros and Warren Buffett, still retain a mystique associated with their savviness when it comes to investment decisions. In recent years, quant funds have risen to prominence thanks to computer algorithms and new methodologies designed to beat human investment decisionmaking in terms of time and accuracy, and with regard to bias as well. Now, there seems to be another trend that is primed to overtake the hedge fund industry: computer learning and artificial intelligence funds.   Bitcoin and AI in a Fund How could a hedge fund utilize technology and strategies representative of Bitcoin or artificial intelligence in an effort to achieve an edge over its peers? According to a recent article by Wired, many funds have already found a way of utilizing these approaches. Numerai, for instance, a hedge fund based in San Francisco utilizing machine learning models, has developed its innovative programs by hiring an army of data......

  • Goldman hedge fund folding London operations, shifting staff to U.S.

    By Maiya Keidan and Olivia Oran Goldman Sachs Investment Partners (GSIP), which opened in 2008 with one of the biggest launches in hedge fund history, is folding its London operations into the United States and shifting staff members to New York, four sources told Reuters. About eight staff members who made up the London team were recently told to move to the Battery Park City headquarters of Goldman Sach Group Inc (GS.N) in lower Manhattan or find a new job internally, the sources said. A Goldman spokesman confirmed the move but not the details, adding that the reasons for the staff shift were not related to Brexit. “This is a discrete decision for reasons specific to GSIP, one investment team within Goldman Sachs, and shouldn’t be construed as anything but that,” he said. The move was triggered by managing director Nick Advani, who led the hedge fund’s London operations, the sources said. He said in June he would be stepping down from his role, they said, requesting anonymity because they are not authorized to speak to the media. Advani, now an advisory director at Goldman, did not respond to requests for comment. Advani is expected to leave the firm later this year, the......

  • Private Equity Pros Are Confident in Themselves. The U.S. Government? Not So Much

    By Erin Griffith Earlier this year, more than than 500 Term Sheet readers took a survey from Semaphore, a business consulting firm, about confidence in 2017. (Around 30% of survey-takers were from the private equity, 26% from venture capital, with the rest coming from bankers, LPs, operating execs and third party vendors). The results are in  and here is the short version: PE and VC pros are confident in themselves, their businesses, their bosses, and their money, and they have little confidence in most aspects of our government. Here’s the breakdown of how much confidence the respondents had on…. …Their own business: Very. 83% of readers are confident. …Their industry: Mostly. 64% are confient. …Their competitors: Mostly. 59% are confident. …The U.S. economy: Mostly. 64% are confident. …The international economy: Not so much. Just 21% are confident. …Themselves: Healthy self-esteems here. 93% report self-confidence. …Their earning power: Very. 76% expect to earn more than they did last year. (Meanwhile 80% got a raise in 2016.) …Their boss: Mostly. 64% are confident. …Their CEO or Managing Partner: Mostly. 69% are confident (The grass is always greener, though. 76% report confidence in their competitors’ CEOs and Managing Partners.) …The former president: Very. 78% expressed confidence in President Obama and 59% expressed confidence in......

  • Hedge fund allegedly scammed 9/11 first responders, NFL concussion victims

    Rob Copeland A hedge fund deceived police officers and firefighters who responded to the Sept. 11 terrorist attacks and cost them millions earmarked for their health, New York’s attorney general and a federal regulator alleged in a lawsuit Tuesday. The hedge fund, RD Legal Capital, in some instances allegedly charged the first responders interest rates above 250% to advance federal cash due for the medical care of sick workers, according to the suit. RD Legal similarly defrauded former National Football League players in line for a $1 billion settlement over head injuries suffered in their careers, authorities alleged. In the lawsuit filed Tuesday in a Manhattan federal court, New York Attorney General Eric Schneiderman and the Consumer Financial Protection Bureau said RD Legal lied to first responders and NFL players about the deals they were being offered, including when they would be paid up front and how much they would owe in the end. “It is unconscionable that RD Legal scammed 9/11 heroes and NFL concussion victims out of millions of dollars,” said CFPB Director Richard Cordray. An attorney for RD Legal described the charges as “outrageous and without merit.”...

  • The Swiss National Bank Is Acting Like A Hedge Fund

    We discuss the fact that Central Banks have basically morphed into Hedge Funds with similar risky investing strategies, except they buy without any regard to the underlying fundamentals of the assets they are buying. When did the Swiss Citizens say it was the proper role for the Swiss National Bank to be buying US Stocks? How is this stimulating the Swiss Economy? Central Banks have really gone off the rails with regards to their Monetary Policy Tools. This is clearly exemplified in what the Swiss National Bank is currently doing in financial markets, these bizarre overstretch of policies put the entire financial system at risk, and have resulted in massive stock market bubbles around the world. These Central Banks are not even investing based upon company fundamentals, just trying to square account imbalances in what has become the race to the bottom in the Currency Wars! We need to start having hearings on these matters because Central Banks have morphed into Risky Hedge Funds, well beyond their intended purpose of managing interest rates in the course of normal business cycles. Mario Draghi has put a lot of pressure on the Swiss National Bank to employ extreme measures to keep their......

  • Many Smaller Hedge Funds Are Raising Assets From Wealthy Investors And Single-Family Offices

    From the subpar performance of many hedge funds to pension funds redeeming monies, there is the perspective that the hedge fund industry is in something of a tailspin. This perspective has a strong ring of truth to it. At the same time, there are corners of the hedge fund industry that is doing quite well. Some smaller hedge funds are bucking the overall trend by putting up solid numbers and raising significant assets. Smaller hedge funds are those with U.S. $500 million or less under management. Quite possibly because of their size, they can be more nimble and able positive returns because of their relatively smaller base. What is also quite telling is that these smaller hedge funds are bringing in new assets to manage from high-net-worth investors, especially single-family offices. According to Angelo Robles, founder and CEO of the Family Office Association, “We see that many family offices have not given up on hedge funds and other alternative investment funds. On the contrary, they’re researching more alternative investment funds and committing substantial dollars to the ones that stand out. Many of these alternative investment funds are not the big names in the industry. They tend to be extremely motivated......

  • Meet the world’s 7 most successful hedge fund managers

    London-based fund of funds LCH Investments, a subsidiary of Edmond de Rothschild Capital Holdings Limited, just released its annual top 20 “most successful money managers” list for 2016.  The list measures net gains, after fees, of hedge fund managers since their respective funds’ inception.  We’ve included the top seven fund managers below.  As a group, they manage more than $275 billion in assets, and have generated more than $200 billion in gains since inception.  They generated $10.6 billion in returns in 2016, with one of the seven, George Soros’ Soros Fund Management, losing money over the year.   7. Och Ziff – Daniel Och Net gains in 2016: $1.1 billion Net gains since inception: $23.1 billion (1994) Fund’s assets under management: $33.5 billion Highlights: Och-Ziff Capital Management agreed to settle charges of bribery, paying nearly $200 million to the Securities and Exchange Commission, in September. The hedge fund’s CEO, Dan Och, agreed to pay nearly $2.2 million to settle the charges with the SEC, as did the firm’s CFO, Joel Frank. The firm was accused of bribery in its financial dealings in Africa, which the SEC says included run-ins with Muammar Gaddafi’s relatives.  The fund also found itself the recipient......

  • Top Japan Hedge Fund Says Trump Rally Will Fade

    By Kathleen Chu and  Komaki Ito Tsukasa Shimoda, whose UMJ Galleyla Fund beat all other Japan-focused hedge funds last year, says the Donald Trump rally will soon fade as the U.S. president’s protectionist policies start to hurt the global economy. “The U.S. economy perhaps may improve because of him,” said Shimoda, whose $42 million UMJ fund returned 19 percent last year. “But as he makes a mess of things, that would affect the global economy negatively.” Hedge fund managers are diverging on whether Trump will introduce growth-friendly policies that drive equities higher, or pursue a protectionist agenda that hurts global trade. Ray Dalio, who runs the world’s largest hedge fund and in November was bullish on Trump’s ability to stimulate the economy, now says he’s more concerned that the damaging effects of populist policies may overwhelm the benefits of a pro-business agenda. Billionaire George Soros, who has been especially harsh in his denouncement, last month called Trump a “con-man” and said the equity rally will come to a halt. In his first weeks in the White House, Trump has withdrawn from the Trans-Pacific Partnership pledging an “America First” trade policy, and thrown U.S. relations with Mexico into turmoil by demanding America’s southern neighbor pay......

  • Seattle City Council committee moves to pull $3 billion from Wells Fargo over DAPL funding

    As President Donald Trump’s administration moves to resume construction of the widely contested Dakota Access Pipeline, Seattle is pushing back. The Seattle Times reported that the city’s Affordable Housing, Neighborhoods and Finance Committee voted Wednesday to pull $3 billion in city funds from Wells Fargo Bank, one of the companies subsidizing the pipeline’s construction. The decision came in the form of a bill that will continue from the committee to the City Council on Monday. If passed, the legislation will also obligate the city to weigh social justice issues in considering future contracts. “We all agree: Divestment is our goal,” councilwoman Debra Juarez said in the meeting, according to the Seattle Times. The committee hopes that Seattle’s demonstration of support for DAPL protesters will encourage other cities to revoke funding as well. On Tuesday, North Dakota Sen. John Hoeven announced the United States Army Corps of Engineers had been given the go-ahead to move forward with construction along DAPL’s previously planned route. In December, protesters gathered in solidarity with the Standing Rock Sioux Tribe scored a victory when the Army Corps halted construction. It turned out to be short-lived, though: On Jan. 24, Trump signed two executive orders potentially enabling DAPL......

  • Hedge fund titan Dalio fears Trump policies will hurt world economy

    By William Watts Ray Dalio, the founder of the world’s largest hedge fund, is warning clients that he’s grown increasingly worried that the Trump administration’s policies could damage global growth, news reports said Wednesday. That marks a shift from November, when the billionaire investor who runs Bridgewater Associates wrote that his “very preliminary” assessment was that the developments on the economic front following Donald Trump’s presidential election victory were “broadly positive.” In a Tuesday note to clients, Dalio and his co-chief investment officer, Bob Prince, cautioned that the downside effects of Trump’s policies could outweigh the benefits, according to news reports. “We are now in a period of time when how this balance tilts will be more important to the economy, markets and our well-beings than normally dominant divers such as central bank policies,” they said, according to Reuters. While there is potential for the administration to “improve fiscal policies and make beneficial structural reforms, there is also a significant risk that his populist policies could hurt the world economy (and worse),” they wrote. The S&P 500 SPX, -0.12%  remains up around 6.5% since Trump’s Nov. 8 election victory. Stocks extended a rally after the election, fueled by expectations Trump’s pledges to cut taxes,......

  • Black Edge,’ an Account of a Hedge Fund Magnate and Insider Trading

    By Jennifer Senior Two men pass out in Sheelah Kolhatkar’s book about Wall Street skulduggery. I must confess that I was not expecting this. Hedge funders are supposed to be yodeling Tarzans, not fragile consumptives in a Verdi opera. One fellow faints in his driveway in Boca Raton, Fla., as a pair of F.B.I. agents ask him about insider trading. The other, a defendant in a courtroom, is sitting at a table when the jury walks in with its guilty verdict. He loses consciousness before it is read aloud. Only one of those men goes to jail, which is hardly surprising if you have even a passing familiarity with the story of the company they worked for, SAC Capital Advisors, and its founder, Steven A. Cohen. Kolhatkar’s “Black Edge: Inside Information, Dirty Money, and the Quest to Bring Down the Most Wanted Man on Wall Street” tells it depressingly well. Justice is not served. The little guy does not triumph. In the words of Lemony Snicket: “If you are interested in stories with happy endings, you would be better off reading some other book.” If “Black Edge” weren’t about real life, it would be an uncomplicated pleasure to read. The......

  • Goldman Sachs CEO says bank does not support Trump travel ban

    By Olivia Oran Goldman Sachs Group Inc Chief Executive Lloyd Blankfein became the first major Wall Street leader to speak out against President Donald Trump’s order to halt arrivals from several Muslim-majority countries. In a voicemail to employees on Sunday, Blankfein said diversity was a hallmark of Goldman’s success, and if the temporary freeze became permanent, it could create “disruption” for the bank and its staff. “This is not a policy we support, and I would note that it has already been challenged in federal court, and some of the order has been enjoined at least temporarily,” Blankfein said, according to a transcript seen by Reuters. Most U.S. corporate bosses have stayed silent on Trump’s immigration curbs, underscoring the sensitivities around opposing policies that could provoke a backlash from the White House. While Apple Inc, Alphabet Inc’s Google and Facebook Inc emailed their staff to denounce the order, many of their counterparts in other industries either declined to comment or responded with company statements reiterating their commitment to diversity. JPMorgan Chase & Co’s operating committee, which includes CEO Jamie Dimon, avoided directly denouncing the policy. In a note to staff over the weekend, the firm said it was reaching out all......

  • Harvard Goes Back to Hedge Fund Basics

    By Nir Kaissar Not everyone is down on hedge funds. While institutional investors nationwide are trimming them from their portfolios, the world’s biggest academic endowment will soon allocate billions of dollars to the beleaguered sector. A new era is underway at Harvard University’s endowment. Nirmal P. Narvekar — formerly the chief executive of Columbia University’s endowment — recently took the helm at Harvard, and big changes are afoot. Harvard, like many of its peers, is widely associated with the so-called endowment model of investing, which calls for a sizable allocation to hedge funds. According to the Harvard Management Company, which oversees the $35.7 billion endowment, 14 percent of Harvard’s portfolio was allocated to hedge fund strategies last year. Except Harvard added its own twist to the endowment model. While peers like Yale and Columbia scoured the country for the best hedge funds, Harvard managed its hedge fund strategies internally. It’s easy to see why. Harvard has roughly $5 billion invested in hedge fund strategies. A typical management fee of 2 percent translates into $100 million in fees every year. Not to mention that hedge funds also keep a portion of the profits. Surely, Harvard must have reasoned,  it could do better by running its own......

  • Startup LendingRobot launches automated hedge fund investing in loans

    By Anna Irrera Seattle-based financial technology startup LendingRobot is launching an automated hedge fund that will invest exclusively in loans originated on peer-to-peer (P2P) lending platforms, the company said on Thursday. Similarly to online investment startups known as “robo-advisors,” the new fund will use algorithms to automatically buy and sell assets on behalf of its clients without the need for human investment advisors. While many robo-advisors have emerged over the past few years, the vast majority focus on investing in equities through low-cost exchange traded funds, rather than illiquid alternative assets such as P2P loans. LendingRobot said the new service, which will invest in loans on platforms such as LendingClub Corp, Prosper Marketplace and Funding Circle, will enable investors to more easily and cheaply diversify their investments across different platforms and loans. Investors who currently lend on P2P platforms have to open an account with each provider. P2P lending platforms, which first emerged following the financial crisis, connect small businesses and consumers looking for a loans with individual or institutional investors. The sector has expanded significantly since its inception, but has recently faced some growing pains, with some investors concerned about the quality of loans. “Alternative lending proved to return excellent......

  • Hedge Fund Execs Charged in Multi-Million Dollar Bribery Scheme

    U.S. securities regulators on Thursday accused two former executives at hedge fund Och-Ziff Capital Management of masterminding a far-reaching scheme to pay tens of millions of dollars in bribes to African officials. In a lawsuit filed in federal court in Brooklyn, the U.S. Securities and Exchange Commission accused Michael Cohen, who headed Och-Ziff’s European office, and Vanja Baros, a former analyst, of violating the Foreign Corrupt Practices Act. The lawsuit came after Och-Ziff agreed in September to pay $412 million to resolve U.S. investigations relating to the hedge fund’s role in bribing officials in several African countries. That settlement led to a subsidiary of Och-Ziff pleading guilty to participating in a scheme to bribe officials in the Democratic Republic of Congo, in what prosecutors said marked the first U.S. foreign bribery case against a hedge fund. In its lawsuit, the SEC said Cohen, 45, and Baros, 44, from 2007 to 2012 caused bribes to be paid to officials in Libya, Chad, Niger, Guinea, and the Democratic Republic of the Congo through agents, intermediaries, and business partners. Those bribes were paid to secure a $300 million investment from the Libyan Investment Authority sovereign wealth fund; an investment in a Libyan real estate......

  • 2 former Och-Ziff employees charged by SEC in alleged bribery scheme

    By Christine Williamson Two former Och-Ziff Capital Management employees were charged Thursday by the SEC with violations of the anti-bribery provisions of the Foreign Corrupt Practices Act in connection with an alleged bribery scheme they conducted while working for the alternative asset manager. London-based Michael L. Cohen, executive managing director and head of European investing, and Vanja Baros, a private equity analyst, “directed, caused and arranged for Och-Ziff Capital to pay tens of millions of dollars in bribes to government officials on the continent of Africa through agents, intermediaries and business partners of Och-Ziff. The bribes were paid to secure and attempt to secure special access, special opportunities and preferential treatment for Och-Ziff in its pursuit of profitable business in Africa,” according to the SEC’s suit filed in U.S. District Court in New York. The Securities and Exchange Commission’s suit also alleges that Messrs. Cohen and Baros violated the Advisers Act on their own behalf, as well as “aiding and abetting” Och-Ziff Capital to do the same, by making “material misrepresentations and omissions” to the firm’s investors regarding bribery transactions to government officials in several African countries; not disclosing conflicts of interest to investors; and using money from Och-Ziff’s investment......

  • How to Beat Hedge Funds with ETFs

    Sweta Killa The rally in the U.S. stock market has been accompanied by the hedge fund industry. This is because hedge funds (as depicted by HFRI Fund Weighted Composite Index) gained 5.5% in 2016, representing the best return since 2013. As a result, hedge fund assets increased by $121 billion, the largest annual increase since 2014, surpassing the $3 trillion milestone for the first time. Fixed income-based Relative Value Arbitrage (RVA) strategies funds led the way higher with asset growth of $43.9 billion. This was followed by asset growth of $32.4 billion for event-driven strategy funds, $25.4 billion in macros strategies, and $20 billion for equity hedge strategies. The impressive gains came despite large investors’ redemptions of $70.1 billion in 2016, marking the largest annual outflow since 2009. Given the solid performance, the appeal of investments like hedge funds returned. Though hedge funds use unique methods or offer exposure with lower risk strategies to produce some level of outperformance, these come with high cost and are illiquid. Additionally, hedge funds are accessible only to wealthy investors or institutions as these generally require minimum investments of $250,000 and have limits on cash withdrawals. To overcome these drawbacks, investors can easily tap......

  • Finally, some good news for hedge funds

    By Jeff Cox Hedge fund performance suffered over most of the bull market, burdened by poor decisions, a bad reputation and the rise of passive investing. Hope, however, may be on the way.A factor often overlooked in how hedge funds have managed during the market and economic recovery is that interest rates have been at historic lows.The Federal Reserve dropped the rate it sets for banks to borrow from each other to near zero amid the financial crisis, and left it there for seven years. Even now, the U.S. central bank has enacted just two quarter-point hikes since December 2015. Looking out over time, there has been a direct correlation between monetary easing and poor hedge fund performance. Analysts at the Wells Fargo Investment Institute mapped it out in a note sent to clients.Source: Wells Fargo Investment InstituteBefore the easy money that central banks began delivering after the financial crisis, the correlation was almost exact. During the era of zero-interest policy, hedge funds’ performance, as measured by the HFRI Fund Weighted Composite Index, consistently underperformed the S&P 500 market benchmark.That could change this year.The Fed is expected in 2017 to make significant strides toward normalizing policy. According to the most......

  • Single-Family Offices Are Hiring Hedge Fund And Private Equity Investment Talent

    By Russ Alan Prince A driving trend in the world of single-family offices is that they are becoming increasingly professional. This takes a number of forms from incorporating behavioral best practices to creating highly motivational compensation arrangements for senior management. Another aspect of this drive to upgrading single-family offices is hiring experiences, proven investment talent. This is even more the case when it comes to investment professionals with hedge fund and private equity backgrounds. According to Angelo Robles, founder and CEO of the Family Office Association, “We’re seeing family offices really raising the bar when it comes to the quality of investment professionals they’re hiring. What’s even more telling is that some really experienced and exceptional hedge funds managers and private equity fund managers are joining family offices.” There are many attraction of single-family offices to these proven investment professionals. One appeal of single-family offices is that the super-rich family is usually willing to adopt a long-term investment horizon. It is often not about how the portfolio performs on a quarterly basis. Another reason for high-caliber investment professionals making the move to single-family offices is that they are increasingly adopting participatory compensation arrangements. A growing number of single-family offices are willing to pay talented investors a “piece of......

  • American Apparel Files Lawsuit Against Charney for Alleged Breach of ‘Standstill Agreement’

    By Alison A. Nieder The fight between American Apparel and its founder, Dov Charney, continued with a lawsuit the manufacturer filed on May 15 in the Delaware Court Of Chancery against the ousted chief executive officer, alleging Charney violated a “standstill agreement” he had with American Apparel. According to the suit, American Apparel is charging that Charney “refuses to abide by the obligations to which he agreed in a July 9, 2014, nomination, standstill and support agreement entered into by him, the company and hedge fund Standard General L.P.” One of the provisions of the Standstill Agreement prohibits Charney from “instigating, encouraging, joining, acting in concert with or assisting any third party in seeking to remove directors of the company,” according to the suit. Recently, several shareholder complaints have been filed against the company charging violation of federal securities law and breach of fiduciary duties. In a suit filed on April 21, former employees and shareholders Jan Hubner and Eric Ribner said proxy statements sent last April to re-elect American Apparel board members were deceptive because their statements to voters said they supported keeping Charney in his job when in fact they were plotting his ouster. Charney was suspended by the board after the......

  • Hedge Funds Risk Treasuries Wipeout After Bearish Bets Soar

    By Brian Chappatta and Liz McCormick There’s a big showdown looming in the U.S. Treasury market. The “fast money,” made up of hedge funds and other speculators, upped its bearish bets like never before this month, based on futures data for five-year notes. At the same time, “real-money” accounts, composed of institutional buyers like mutual funds and insurers, did the opposite and built up their bullish positions in much the same way. What will happen, especially in the era of Donald Trump, is anyone’s guess. But for JPMorgan Chase & Co.’s Jay Barry, the speculators are sowing their own demise. While Treasuries have suffered five straight months of losses, fast-money investors tend to be reliable contrarian indicators whenever they crowd together. More than 75 percent of the time, the market moves the other way over the following month, his figures show. The recent backup in yields is already starting to lure long-term investors back into Treasuries.“I’m surprised the speculative data remains as short as it does,” said Barry, a U.S. fixed-income strategist at JPMorgan. The disparity isn’t just a difference of opinion. In important ways, it reflects deeper questions about the direction of the U.S. economy. Some investors see President Trump as a game-changer,......

  • How Hedge Fund Strategies Are Shifting: ‘Lower Correlations And Increased Volatility’

    By Javier Hasse Taking into account the elevated valuation of equity markets and the fact that interest rates are going to rise, a lot of people want to diversify their portfolio, Steinbrugge went on. So, what Agecroft has been seeing is much higher demand for strategies with low correlations to long only benchmarks, which also tend to benefit from increased volatility. “Some of the strategies that will see a continued increase in demand include: relative value fixed income, market neutral long/short equity, commodity trading advisors (CTAs), direct lending, volatility arbitrage and reinsurance due to their perceived ability to generate alpha regardless of market direction and as a hedge against a potential market selloff,” a recent report out of Agecroft explained....

  • Secretive Hedge Fund Renaissance Picks Winner in Hot Japanese Tech Stock

    V Technology Co., a small Japanese supplier to display makers, added a surprising new shareholder last June: Renaissance Technologies. For the secretive U.S. hedge fund started by Jim Simons, it turned out to be an especially savvy bet. Shares of V Tech, as it’s known, surged almost threefold in 2016, with much of the gain coming after Renaissance first reported a stake. V Tech, whose market value has jumped to $690 million, posted the second-best stock performance in a broad index of Tokyo-listed companies last year. While Renaissance is staying silent on why it built a $27.8 million position in the stock, V Tech President Shigeto Sugimoto says he’s never been more confident about his company’s outlook. He’s betting V Tech will soon sign a revenue-doubling deal with one of the Chinese screen makers seeking to break Samsung Group’s dominance of the latest big thing in mobile phones: organic light-emitting diode displays. “The OLED market will have to grow,” Sugimoto, 58, said in an interview in Yokohama. “Our products can help make that happen.” Display makers in China, the world’s largest smartphone market, are stepping up investments in OLEDs as an increasing number of handsets come with OLED displays, which......

  • Top 4 Hedge Fund Fails

    The financial sector has taken several beatings over the past few decades. As a result of this economic instability, a lot of consumers and investors have put some money into hedge fund offerings. Unfortunately, not all of these schemes end on a positive note, and quite a few of them have come to an end prematurely. Any investment is risky, and hedge funds are no different in that regard.   #4 BAYOU GROUP PONZI SCHEME One of the main concerns regarding hedge fund operations is whether or not they are legitimate. Israel’s Bayou Group has gotten a lot of attention in 2003, which attracted an influx of fresh capital. However, the company turned out to be a Ponzi Scheme due to a 2005 SEC investigation. As one would expect, a lot of people lost hard-earned money in the collapse, and it is estimated the losses added up to US$500m.   #3 PELOTON CAPITAL The Peloton Capital is quite an intriguing hedge fund, all things considered. It was founded in 2005, yet managed US$3bn in assets the next year. Interestingly enough, the company provided an 87% return to its investors during 2006. That is rather unheard of in the hedge fund......

  • Top Nordic Hedge Fund Delivers 30% Return With Activist Agenda

      By Jonas Cho Walsgard Telling top management what to do is paying off for this Nordic hedge fund. “If you’re just a shareholder you can express your views but the company forgets about it when you leave the room,” Henri Osterlund, founding partner of Luxembourg-based Accendo Capital, said by phone on Tuesday. “If you sit on the board you can make sure that your ideas are taken into consideration.” Activist Accendo Capital, founded in 2008, generated a 30 percent return in 2016, making it the top ranked hedge fund in the Nordic region, according to website HedgeNordic. That follows a 49 percent return in 2015. The 54 million-euro ($58 million) event-driven fund, which invests in small and mid-sized listed companies in northern Europe, prefers companies in the “broader technology space” that have niche competence and position in their markets, according to Osterlund, 45, who previously worked at private equity firms Triton Partners and Doughty Hanson. “The Nordics are generally relatively innovative,” he said. “They come up with ideas that sell quite well in the global arena.” Accendo’s has stakes in a handful of companies, including Hexatronic Group AB, Xvivo Perfusion AB, and Doro AB, in which it’s the biggest shareholder. The Lund, Sweden-based company provides mobile telecommunications solutions......

  • HEC Paris and DowJones Rank Top Performing Private Equity Firms for 2016

    Waterland Private Equity Investments along with Vista Equity Partners and Dubilier & Rice have secured the top three spots respectively in the 2016 HEC-DowJones Private Equity Performance Ranking. HEC Paris Business School and DowJones joined forces in 2009 to publish an annual ranking of PE firms based on their historic performance and expected future competitiveness respectively, aiming to answer the question “which firms have performed the best for their investors?”. This year’s ranking lists the world’s top PE firms in terms of aggregate performance, based on all buyout funds raised between 2003 and 2012.  Rank Firm Performance: Score 1. Waterland Private Equity Investments 1.92 2. Vista Equity Partners 1.32 3. Clayton, Dubilier & Rice 1.27 4. Altor 1.00 5. Platinum Equity 0.91 6. Apollo Global Management 0.90 7. Onex Corporation 0.78 8. Advent International 0.72 9. Hellman & Friedman 0.68 10. Astorg 0.67 In total, data from 446 PE firms and the 791 funds collectively raised over the ten-year period with an aggregate equity volume of $1115bn was analysed by Olivier Gottschalg, Professor of Strategy and Business Policy at HEC Paris Business School. The ranking draws on a comprehensive set of data on PE fund performance provided by Preqin and sourced directly from......

  • Hedge fund legend David Einhorn is making a big bet on GM

    By Matt Turner and Rachael Levy The Greenlight Capital founder said his hedge fund had “dramatically increased” its GM position, according to the firm’s latest quarterly investor letter, which was viewed by Business Insider. Here’s Einhorn’s logic: “While the bears have been screaming ‘peak auto’ for the last couple of years, we think a strengthening job market will sustain the current upcycle and lead to better than expected credit performance at GM’s finance subsidiary. While the bears also cite long-term concerns over self-driving cars, we see a huge intermediate-term opportunity in assisted-driving cars. In any other industry, investors would be enthused by the developing upgrade cycle, which could last for a number of years as incremental improvements in each model year attract consumers. “GM’s valuation is extreme: at its year-end price of $34.84 per share, GM trades at less than 6x earnings. It is rare for a company to pay out only a quarter of its profits in dividends and still yield 4.4%. GM has substantial foreign operations that (other than China) barely contribute to profits and could improve over time. Finally, we believe that GM can unlock substantial value through modest changes to its capital structure.” The stock has rallied 27%......

  • This Hedge Fund Says China’s Next Big Short Is Stocks

    When Kevin Smith realized late last year that China was getting serious about defending its currency, his first move was to dial back bearish bets on the yuan. His second move: double down on wagers against Chinese stocks. Smith, whose global macro hedge fund has returned about 350 percent over the past decade, says China’s attempts to prop up the yuan are tightening domestic monetary conditions and making a credit crisis increasingly likely. To him, that means shares of banks and other “zombie” companies may be the first dominoes to fall as China faces a reckoning after years of debt-fueled growth. “These recent monetary tightening measures point to the increased risk that Chinese officials will trigger the credit crisis first,” said Smith, the Denver-based founder and chief executive officer of Crescat Capital, whose China bets in the global macro fund returned about 3.4 percent last quarter. “It really only increases our conviction that there are opportunities on the equity-side short, particularly if they continue to defend the currency.” While Smith’s pessimism clashes with consensus calls for a soft landing in Asia’s largest economy this year, his bearish view on stocks appears to be gaining traction. Speculators in the U.S. have boosted......

  • Expect Hedge-Fund Returns to Be More Honda Than Rolls Royce, Point72 Says

    By Nishant Kumar Hedge funds will have to adapt to a more challenging market as investors respond to disappointing returns by demanding their fees back or pulling out altogether, according to Matthew Granade, chief market intelligence officer of Point72 Asset Management. No matter how you “slice-and-dice the data,” hedge funds are struggling to meet their promise to clients to consistently produce high returns with low correlation to markets, Granade said at the London School of Economics’ alternative-investment conference on Monday. “It’s kind of: ‘I promise you a Rolls Royce and I give you a Honda’,” he said. Investors “ultimately come back for a refund, and we are seeing a lot more of that in our industry,” he said. The $3 trillion industry is facing an investor backlash because of years of poor performance and high fees charged by hedge funds. Clients pulled $106 billion from the industry in 2016, the first net withdrawals since 2009, according to data from eVestment. Point72, Cohen’s family office, manages about $12 billion and returnedabout 1 percent in 2016, the second-worst annual performance ever for the billionaire investor, people said last week. On average, hedge funds returned 4.5 percent last year, according to data from Hedge Fund Research......

  • Use Private Equity to Fix Infrastructure

    By Jacob Gichan        American infrastructure needs significant improvements, and President-elect Trump plans to encourage the private sector to ramp up investments. The American Society of Civil Engineers has given U.S. infrastructure a D+ rating, estimating that between 2016 and 2025 the US will need approximately $3 trillion in infrastructure spending, two-thirds of which are needed for transportation.  The society further expects that there will be nearly a $1.5 trillion funding gap.  Private equity can step in. The problem with infrastructure is not necessarily a lack of funding but more importantly a lack of using funds efficiently. Private equity can succeed where public funding has failed. Private equity firms (fund managers and institutional investors) invest either by making an investment in a company itself or by simply providing the equity financing for a specific project. In each case, when a firm invests it must put its own fund and reputation at stake, which creates an incentive to allocate money efficiently. Most private contracts involve construction, operation, and maintenance, all costs which need to be minimized. Private investment is also able to minimize financial risk in a way public funding cannot. When a private equity firm invests in an infrastructure company it will......

  • Scotiabank’s Waterous Leaving to Start Private Equity Fund

    By Scott Deveau and Doug Alexander Bank of Nova Scotia’s global head of energy, Adam Waterous, is leaving to start a private equity fund focused on the oil and gas industry. Waterous Energy has raised C$400 million ($305 million) from investors including Gordon Flatt to capitalize on emerging opportunities in the Canadian and U.S. energy industry, Waterous said in a phone interview Friday. The fund will target controlling positions in private, unconventional oil and gas companies in regions like the Montney and Permian basins. Technology in unconventional oil and gas has produced returns that are becoming increasingly attractive, Waterous, 55, said. “The returns have gotten better because the reserves each well is producing has gotten larger and larger,” he said. “Now what you’re having for the first time — and you see it most obviously in Western Canada in the Montney — are companies recording astounding production gains on a year-over-year basis,” He said that has been demonstrated by companies like Seven Generations Energy Ltd., Tourmaline Oil Corp. and others in Western Canada. “As an investor, this has gone from an industry of fairly mediocre returns for a long period of time to one where the returns are quite spectacular,” he said. “Now......

  • Hintze’s Hedge Fund Said to Surge 30% in Best Year Since 2012

      By Nishant Kumar CQS Investment Management’s main hedge fund gained 30.4 percent in 2016, its best annual return since 2012, according to two people with knowledge of the matter. The $2.8 billion CQS Directional Opportunities Fund, managed by billionaire Michael Hintze, was boosted when its credit bets turned profitable in March, one of the people said, asking not to be identified as the information was private. The London-based fund’s currency bets gained in November due to volatility sparked by Donald Trump’s surprise U.S. presidential election victory. Hintze, 63, rebounded from a decline of almost 8 percent in 2015 amid a wider recovery by hedge funds. The industry rose about 4.5 percent in 2016, according to preliminary data compiled by Eurekahedge. The CQS fund had its best ever monthly performance in March with a 16.3 percent gain, as it made money from structured and corporate credit bets as the energy and resources industries soared. Energy credit gained 38 percent last year, according to Bloomberg Barclays data.The fund gained 6.1 percent in November as its long U.S. dollar bets against the Japanese yen benefited from the outcome of the U.S. election, the investment firm said in its investor letter for the month. CQS, started......

  • Private Equity Jobs of the Week: JPMorgan, Blackstone, Webster Capital are hiring

    JPMorgan Chase & Co. is looking to hire an assistant general counsel, corporate M&A and private investments. The hire will provide legal support for the firm’s proprietary M&A transactions and strategic investments, including venture capital transactions and heritage private equity divestitures. Candidates need five to 10 years of experience with a major law firm. The position is located in New York. The Blackstone Group is seeking an analyst, global public affairs. The successful candidate will compile media reports; draft briefing notes, talking points and speeches for senior executives; research, outline, edit and proofread materials; create internal and external communications content; and develop relationships with key media contacts. Qualifications include one to five years of experience and strong Microsoft Office skills. The position is located in New York. Webster Capital is in the market for a pre-MBA private equity associate. A strong understanding of modeling and business are required, but all industry/coverage backgrounds are welcome to apply. Responsibilities include evaluating new investments, preparing models and memos, due diligence and portfolio management. The ideal candidate will have at least two years of investment banking or consulting experience. The position is located in Waltham, Massachusetts. Fort Washington Investment Advisors has an opening for a manager, private equity operations. The hire will be responsible for......

  • Family Office Networks Expands Hedge Fund Platform to Meet Growing Demands of Family Offices

    Family Office Networks is expanding its Hedge Fund Division to help a select group of emerging and established investment managers raise assets from the fast-growing family office sector. “New managers typically rely on ‘friends and family’ money or perhaps a key investor to launch their fund. Once they’ve launched, however, they want allocations from family offices but find them to be hard to identify and get in front of to tell their story. That’s where we come in. Our group has a global network of 7000 family offices and we understand the investment preferences of every one of them,” said Andrew Schneider, Founder and President of Family Office Networks. According to Family Office Networks, family offices’ appetite for various hedge fund strategies is dynamic and strategies fall in and out of favor on an on-going basis. At present, popular strategies include equity-based strategies such as Long-Short, Global Macro and Market Neutral, among others.  With family offices controlling $4 trillion in investment capital and hedge funds managing nearly $3 trillion, the opportunity is clear. Yet even hedge fund managers with strong performance numbers may still find it challenging to arrange meetings with family office allocators. “The goal of Family Office Networks’ expanding Hedge Fund Division......

  • Why 2017 to 2018 Could Be Boom Time for Private Equity

    By Jon C. Ogg With the bull market nearing eight years old, it has been impossible to ignore the stock market rally since the election in November. Investors are cheering that the Dow Jones Industrial Average has been challenging 20,000. They are also cheering pro-business and pro-growth initiatives coming down the pipe in 2017. Private equity shops have seen their shares (units) perform rather well since the end of the election, but 2017 might end up being a perfect pro-growth climate needed to let private equity shops thrive. Oppenheimer has raised its expectations on major private firms. The call from January 9 is really an underlying forecast for solid growth ahead in 2017 and perhaps beyond. Chris Kotowski of Oppenheimer previously said that the private equity–based asset managers have the best business model in the financial services sector. He expects that the climate fostering the mega-rally in banks and financial services will be great for private equity. One word of warning should be expected before these companies get into earnings season. The fourth-quarter earnings results from 2016 are not expected to be meaningfully affected by the election, even if they show another fairly steady quarter of good cash earnings. Kotowski’s view......

  • Hedge fund Verde sees aggressive Brazil rate cut this month

    By Bruno Federowski and Guillermo Parra-Bernal Jan 6 Verde Asset Management SA, which runs Brazil’s largest hedge fund, sees “good chances” that the country’s central bank will cut the benchmark overnight lending rate by a bigger-than-expected 75 basis points this month in a bid to revive a weak economy. In a monthly letter to investors, money managers led by Luiz Stuhlberger said Verde stepped up holdings of fixed-rate debt on hopes of a bigger rate cut. Verde had already built a sizeable position in inflation-linked debt ahead of the recent start of the country’s first rate-cut cycle in four years. The central bank has twice cut the benchmark Selic rate by 25 basis points since October, sticking to a moderate pace even as the deepest recession in decades drags on. A Reuters poll on Friday showed that most economists expect policymakers to cut the Selic by half a percentage point on Jan. 11. The letter underscores investor concern that Brazil’s economic rout, once forecast to be over late last year, could drag on through this year and derail President Michel Temer’s efforts to rebalance fiscal accounts. “Without some improvement in economic growth, Brazil’s fiscal issues have no solution,” the letter......

  • A 29-year-old hedge fund manager reveals why he loves hiring liberal arts majors

    By Frank Chaparro Most people will tell you that you need to major in accounting, economics, or finance to land a job on Wall Street. Daniel Rasmussen is the founder of Verdad Fund Advisors, and he’s calling BS on needing a BS. Rasmussen, who was recently named to Forbes’ “30 Under 30” finance list, majored in history and literature at Harvard University. He is also the author of “American Uprising,” a New York Times best-seller that chronicles a little-known slave rebellion in pre-Civil War Louisiana. He told Business Insider that he found a home in finance after he joined Bridgewater Associates as an intern. He went on to work for the private-equity company Bain Capital, after which he founded his own hedge fund, where he aims “to replicate private-equity returns in the public markets by using research and quantitative methods to build a portfolio of leveraged companies.” Though he has spent nearly a decade in finance, he is still a historian at heart. And Rasmussen said he believes humanities majors have something special to offer financial firms. “Students of history and literature are more trained to understand the existence of multiple perspectives and to engage with them, and so can often more accurately understand the human......

  • HFRX Global Hedge Fund Index Gains 0.86% In December; Up 2.5% for 2016

    Hedge funds gained in December as global financial markets posted gains across global equities, the dollar and energy commodities while credit yields continued a broad move up, according to new data from Hedge Fund Research. The company’s widely-followed HFRX Global Hedge Fund Index rose +0.86% during the month. For the full year, the measure gained +2.5%. The HFRX Market Directional Index, meanwhile, rose +1.73% for the month and +9.9% for the year. HFR attributed the strong performance to gains in global equities and a continuation of November’s rise in bond yields, although the data firm noted a flattening in the U.S. yield curve during the month. Elsewhere, hedge funds benefited from further gains in the U.S. dollar, especially against the euro, Japanese yen and British pound. Performance highlights from HFR’s December report: The HFRX Event Driven Index posted a gain of +1.92% for December and +11.1% for the year, its best yearly performance in three years, from gains in Distressed/Restructuring, Special Situations equity and Merger Arbitrage managers. The HFRX Distressed Index gained +1.87% for the month ending the year with a +19.7% gain, the best yearly performance since 2003 and the 3rd best year since the index inception, from exposure......

  • Are the Capital Markets Headed for a Major Correction and Will Hedge Funds Help or Hurt?

    Don A. Steinbrugge, CFA Major corrections in the capital markets are a risk that investors must always consider. Experience shows the question is not if a major correction will happen, but when. The challenge for investors is to determine and prepare for the timing, magnitude and longevity of an inevitable correction. Responsible risk management requires investors to consider whether they are properly positioned and prepared to ride out the storm when the correction happens. Events of the past couple of decades have led investors to expect markets to rebound quickly from a major correction. Seemingly forgotten is the worst sell-off of the US stock market, which began in 1929 and resulted in a decline of almost 90%. It took 23 years to recover. For those tempted to dismiss this as outdated data, take note that the Nikkei index hit an all-time high of approximately 39,000 in 1989. More than 26 years later it is still below half its peak. Has the probability of a major sell-off increased? We have recently heard some of the top investors in the world share very negative comments on their outlook for the capital markets. Jeffrey Gundlach speaking with Business Insider stated, “The artist Christopher Wool has......

  • Should Public Pension Funds Reduce Their Hedge Fund Allocations?

    Don A. Steinbrugge, CFA CalPERS was the first high profile public pension to pull out of hedge funds, and was followed a year and a half later by one of the New York City retirement plans. Recently, the number of public pension funds exiting or reducing their hedge fund exposure has accelerated. We believe this trend will increase over the next 12 months due to growing political pressure on investment staffs of public pension funds from the media, union employees, and politicians. The pressure is being driven by unrelenting negative articles about the industry focused on the recent poor performance of various hedge fund indices and high fees. This trend comes at a time when the average public pension fund is only approximately 74% funded based on an average actuarial rate of return of 7.5% according to a research report from Wilshire Consulting’s Investment Research Group. Many professionals believe that this expected return is unachievable in today’s low interest rate environment. If the actuarial rate of return was lowered to approximately 4.5%, which is what corporate pension funds are required to use, the unfunded liabilities of public pensions would skyrocket. Many critics cite the underperformance of hedge fund indices, as......

  • Meet the hedge fund stars in their 20s who just made Forbes’ ’30 Under 30′

    By Prashanth Perumal Hedge funders dominated Forbes’ most recent “30 Under 30” list for finance. Twelve of them are on the 2017 list, including Michael Buckley, who works at Stanley Druckenmiller’s Duquesne Capital, and Anthony Massaro, who works at Bill Ackman’s Pershing Square Capital Management. The list for finance was chosen by a pool of judges comprising Sonia Gardner, the cofounder of Avenue Capital Group; Thomas H. Lee, the founder of Lee Equity Partners; and Jennifer Fan, a portfolio manager at Millennium Management. The acceptance rate to the list is under 4%, according to Forbes. The twelve hedge fund staffers who made it to the list were: Anish Abuwala (29), Raja Bobbili (29), Michael Buckley (29), Ben Friedman (29), Dhruv Maheshwari (28), Anthony Massaro (29), Alex Nomitch (29), Daniel Rasmussen (29), Ben Solarz (29), Andy Stafman (29), Colter Van Domelen (29), and Franklin Zhao (29). Abuwala, a portfolio manager at Caxton Associates, works with Joshua Berkowitz, who made his name as a trader working with George Soros. Abuwala started in the hedge fund business at Berkowitz’s Woodbine Capital, and he moved to Caxton with Berkowitz and other former Woodbine colleagues. He graduated with a degree in finance and international business from New......

  • Private Equity Jobs of the Week: Fortress, Eureka, Goodman Masson are hiring

    By Eamon Murphy A weekly roundup of jobs in the private equity industry – from buyout shops to venture capital funds to investment banks. Eureka Growth Capital is recruiting an analyst, to be responsible for analyzing new investment opportunities, assisting in due diligence, performing industry research, writing investment and financing memoranda and assisting in strategic projects for portfolio companies. Qualifications include high proficiency in financial modeling and data analysis and a minimum of two years of experience at an investment bank, private equity firm or corporate finance division. To apply, submit a resume to Crystal Tomlinson at ctomlinson@eurekagrowth.com. The position is located in Philadelphia. Emigrant Capital Corporation is looking for a private equity MBA intern. The successful candidate will serve as a key member of the deal team, which invests primarily in growth and buyout transactions in the lower-middle market. Duties include writing investment memos, financial modeling, industry research, company due diligence and portfolio management. Applicants must be current MBA students (bachelors degree required). The position is located in the greater New York City area. Susquehanna Private Equity Investments is seeking a private equity analyst. This is a newly-formed fund focused on middle-market opportunities in the United States. The hire will be a full member of the......

  • FinTechs In Canada Getting Lots Of VC Love

    Canadian financial technology companies backed by venture capitalists reached a level not seen in nearly two decades, despite a slowdown of investment dollars flowing into FinTechs in the U.S. According to a report by Reuters, while FinTechs may not be red hot in the U.S., in Canada, they are breathing new life into the startup market and have drawn in a new crop of venture capital funds in Canada that are looking for young FinTech companies. Citing data from PitchBook, Reuters reported venture capital financing of Canadian FinTechs was $137.7 million in 2016. That’s up around 35 percent from the year earlier. Rewind five years, and the investment dollars hovered around $21 million. In 2000, it was $7.3 million, according to the report. Thomson Reuters data showed a close to 74 percent increase from 2015 to 2016 in terms of investments in Canadian FinTech startups. While the investment dollars are tiny compared to the $4.27 billion invested in the U.S. during 2016, investments are increasing in Canada at a time they are declining both in the U.S. and the U.K. Reuters reported investments in FinTech in the U.S. dropped by 30 percent or more in 2016. In the U.K., it fell 25......

  • Billionaire Hedge-Fund Manager Ties W.S.J. to “Fake” News Epidemic

    By Bess Levin If you’ve opened up a newspaper, turned on the TV, or logged onto the Internet over the past few months, you’ve likely encountered a discussion about the scourge of “fake news.” Web sites like InfoWars, which published countless false storiessuggesting Hillary Clinton was running a child-sex-slave ring out of a D.C.-area pizzeria—leading one North Carolina man to show up to Comet Ping Pong with a gun to “self-investigate” the situation—would be a good example of the epidemic, and its effects on society. According to hedge-fund manager Ray Dalio, an article by The Wall Street Journal about his company, Bridgewater Associates, is another. The story, written by Rob Copeland and Bradley Hope, reports that software engineers at the hedge fund are working on a project, referred to by Dalio as “The Book of the Future,” that will use technology to “automate most of the firm’s management,” including decisions like when to hire people, when to fire people, and even “whether an employee should make a particular phone call.” Within the piece, Copeland and Hope discussed Bridgewater’s unorthodox office culture, the principles of which are outlined in a series of maxims contained in Dalio’s company handbook cum cult text, Principles: “Firing people is not a big deal” “Ask yourself whether you‘ve earned the......

  • Hedge Fund Sues GOP-Hated Regulator for Exceeding Its Authority

    By Matt Robinson and Elizabeth Dexheimer A financial regulator long vilified by Republican lawmakers is facing new allegations that it’s exceeding its authority, this time by a hedge fund under investigation in part for legal settlements tied to a 1983 terrorist attack. RD Legal Funding sued the Consumer Financial Protection Bureau in federal court Tuesday, arguing that the regulator sought to justify a probe into the firm by mischaracterizing its business as issuing loans. RD Legal occupies a niche in the hedge fund industry, offering law firms and plaintiffs money in return for future payouts tied to legal disputes. One of its biggest wagers has been investing in claims against the Iranian government over attacks on a U.S. Marine barracks in Beirut more than three decades ago. The bet has drawn scrutiny from the CFPB, RD Legal’s lawsuit shows. “The lawsuit is calling out the CFPB for a massive overreach of their jurisdiction and a failure to have a reasonable discussions as to the merits of their legal position,” David Willingham, an attorney for RD Legal, said in an interview. The RD Legal suit is the latest challenge to the CFPB, a regulator created under the 2010 Dodd-Frank Act that faces......

  • Robots that hire and fire staff could soon be employed by the world’s largest hedge fund in bid to improve efficiency

        By James Burton Robots could soon be hiring and firing staff at the world’s largest hedge fund under secret plans drawn up to improve efficiency. A team of engineers at US-based Bridgewater Associates is reportedly developing artificial intelligence which can run the firm without emotions getting in the way. Billionaire founder Ray Dalio is seeking to create a new business model where most employees are programmers and decisions are made by a computer. US-based Bridgewater Associates is reportedly developing artificial intelligence He appointed a clandestine team, called the Systemised Intelligence Lab, to work on the project early in 2015. It is overseen by David Ferruci, a renowned developer who created IBM’s Watson supercomputer. That machine was made famous when it beat humans at a game of Jeopardy! in 2011. Staff at Bridgewater are already asked to rank each other using an electronic system called Dots, and these scores are amalgamated into ‘baseball cards’ which show each worker’s strengths and weaknesses. Employees also use a program called The Contract to set goals and track how well they achieve them. It is the beginning of Dalio’s robotic vision for the future of his company, which has around £120 billion in......

  • US stocks ring in 2017 with gains as health care stocks rise

    By Marley Jay NEW YORK (AP) — U.S. stocks are moving higher on the first trading day of 2017. Health care companies, which fell last year as the rest of the market moved higher, are making some of the biggest gains. While stock indexes are broadly higher, they’ve surrendered most of an earlier gain. KEEPING SCORE: The Dow Jones industrial average added 36 points, or 0.2 percent, to 19,798 as of 12:20 p.m. Eastern time. The Standard & Poor’s 500 index rose 10 points, or 0.4 percent, to 2,248. The Nasdaq composite picked up 24 points, or 0.5 percent, to 5,407. The Russell 2000 index, which tracks small-company stocks, lagged the market as it edged up 2 points, or 0.2 percent, to 1,359. The Russell rose almost 20 percent last year and did far better than indexes focused on larger companies. U.S. stocks are coming off a three-day losing streak. ON THE MEND: Health care stocks made some of the biggest gains at midday Tuesday. Merck & Co. rose $1.27, or 2.2 percent, to $60.14 and biotech giant Amgen picked up $4.23, or 2.9 percent, to $150.44. Prescription drug distributor McKesson gained $5.86, or 4.2 percent, to $146.31. The S&P 500’s......

  • Examining Hedge Fund Performance Holistically

    By James LaDue When do hedge funds deliver significant excess returns? When do young funds deliver higher alpha with respect to their peers? Dimitrios Stafylas of Aston University Business School broke down hedge fund performance when approached holistically. Stafylas’ considered fund specific characteristics, fund strategies, business cycles, and market conditions with a long U.S. dataset from 1990 to 2014, irrespective of the underlying fundamental factors. This approach showed hedge funds delivered excess returns during “good” times and attempted to minimize their systematic risk during “bad” times. Moreover, small funds delivered higher alpha during “good” times but suffered more than large funds during “bad” times. “There is a classification and ranking (of) four different states of economic activity beginning from the most desirable state to the least desirable state,” the report says. “The focus is on North American due to the use of three full U.S. business cycles and the importance of this market, counting for $1.9 trillion of assets under management corresponding to almost 72% of the worldwide total of hedge funds.” The report ultimately showed the relationship between funds’ performance and fund strategies within different business cycles and market conditions for a 360-degree view against the longest dataset of its kind. There......

  • Private Equity firms told to splash the cash

    KPMG’s head of corporate finance in the region, Christian Mayo, anticipates “a market largely driven by private equity’s raison d’être” as he looked ahead to what Yorkshire can expect to see in 2017 in terms of M&A activity. He added that growing SMEs whose operations are largely insulated from any negative impacts of Brexit will be highly sought after as a result. In particular Mr Mayo said he anticipating sectors such as tech, financial services and infrastructure to prove attractive, with more customer-centric businesses exposed to an expected slowdown of consumer spending as higher inflation and depressed wages cool demand. “The key to our regional market is the need for PE to spend its money,” he said. “PE will surely keep calm and carry on dealmaking because it must invest. “As a result good businesses, especially those insulated from the impact of Brexit and with growth potential, are highly sought after meaning prices remain high. “The owners of private businesses with strong performance may therefore see the next 12 months as a potential window for exit.” Mr Mayo said that Britian’s vote to leave the European Union would continue to influence the appetite for mergers and acquisitions throughout the year......

  • New Year, new high for euro zone stock markets

    By Jemima Kelly Euro zone stocks opened 2017 by climbing to their highest in more than a year on Monday after data showed manufacturers in the currency bloc ramped up activity at the fastest pace in more than five years. With all of Asia’s major markets closed for the New Year holiday – along with Britain and Switzerland in Europe – trade was thin, which could cause some volatility. The United States and Canada will also be closed. The euro zone’s blue-chip Euro STOXX 50 index rose half a percent to its highest since December 2015 after the purchasing managers’ index (PMI) for factories in the currency bloc came in at 54.9 – well above the 50 mark that separates growth from contraction. The euro, though, took no comfort from the figures, slipping 0.4 percent back below $1.05 after climbing to as high as $1.07 during a flash surge in low trading volumes in Asia on Friday. Analysts said the fall was mainly due to a resumption of an up-trend in the greenback that saw it surge to 14-year highs in December on the view the U.S. Federal Reserve will hike rates as many as three times this year, and that......

  • At $15.2 billion, 2016 second-biggest year for PE investments

    Private equity investments in 2016 hit $15.2 billion, making it the second-most successful one after 2015 that saw deals worth $17.3 billion materialising, says a report. According to Venture Intelligence, PE investors bet $15.2 billion across 620 deals in 2016 while in 2015, it was $17.3 billion across 775 transactions. Moreover, 2016 was the biggest in terms of buyouts. “PE investors have bet as much as $4.3 billion to acquire controlling stakes in 27 companies, the highest-ever tally for buyout deals in the country (surpassing the $3.2 billion across 24 companies in 2015),” the report said. In the largest PE deal of the year (and the largest single PE investment in India till date), the publicly-listed Reliance Communications sold a 51 per cent stake in its tower assets unit Reliance Infratel to Canada’s Brookfield Infrastructure Group for $1.65 billion (Rs 11,000 crore). In the largest PE deal of the year, the publicly-listed Reliance Communications sold a 51 per cent stake in its tower assets unit Reliance Infratel to Canada’s Brookfield Infrastructure Group for $ 1.65 billion (Rs 11,000 crore). Among other major deals, Blackstone bought out Hewlett Packard from its majority holding in listed IT Services and BPO firm Mphasis......

  • Private Equity Jobs of the Week: Allstate, Macquarie, Grand Mere Capital are hiring

    By Eamon Murphy Grand Mere Capital has an opening for a private equity associate. Duties include sourcing, diligencing and executing investments; developing and overseeing brand and market research; helping to generate business development plans and materials; and participating in investor meetings and calls. Candidates should have at least two to four years of experience in equity research, investment banking, private equity or management consulting, ideally with a focus on restaurants, consumer, or other relevant industries. Interest and/or experience in the franchise or restaurant sector is a plus. The position is located in New York. Macquarie Capital is looking to add an analyst to its infrastructure, utilities and renewables team. The role includes working on infrastructure transactions as an advisor and principal investor across the United States. The successful candidate will have one to two years of relevant experience: developing and interpreting models, conducting company and sector research, producing written reports and furthering business development opportunities. The position is located in Los Angeles. True Investments is seeking a private equity associate, real estate. The hire will work within the corporate development team, which oversees the management, acquisitions, turnover, partnership and strategic planning activity within the single-family residence market. Duties include helping to track trends and competitors, conducting financial valuation......

  • These Are the 7 Biggest Hedge Fund Disasters of 2016

    By Jen Wieczner          As far as financial returns go, 2016 was actually pretty good for hedge funds—at least compared to the last couple of years. But several of the industry’s bigwigs still took it on the chin this year. After losing money last year, hedge funds are on track to register their best year since 2013, returning 4.5% as a group in 2016, according to Hedge Fund Research’s fund-weighted composite index. That’s still not nearly as good as the S&P 500, which has returned 11%. Indeed, hedge funds overall have underperformed the broader market index every year since the 2008 financial crisis, when their high-fee managers lost only 19%, half as much as the S&P 500, which was down more than 38%. Yet although hedge funds’ middling performance this year was somewhat of an improvement, many of their managers undoubtedly can’t wait for the year to end. Some are in deep trouble with the law or their shareholders or both—and some are out of business entirely. Read on for the biggest hedge fund meltdowns of 2016. 1. Platinum Partners Early this year, a growing chorus began to question whether Platinum Partners’ market-beating performance was too good to......

  • A 27-year-old raised $10 million from venture capitalists for an unusual hedge fund

    By Rachael Levy A 27-year-old has raised $10 million for an unusual hedge fund — with the support of venture capitalists like Andreessen Horowitz and Union Square Ventures. The 27-year-old in question is Olaf Carlson-Wee, and he’s launching a strategy that invests in cryptocurrencies. To be clear, the $10 million managed by Carlson-Wee’s Polychain Capital is peanuts in the hedge fund world. But Polychain’s strategy is rare, with few other funds trading in cryptocurrencies. Most hedge funds trade stocks, bonds, and currencies, with variations of different strategies.   So what is a cryptocurrency? A cryptocurrency is basically a digital, encrypted currency that is decentralized, so no one power oversees its value. Bitcoin is the most famous of cryptocurrencies — nobody knows who created it — and it’s divorced from any government. It’s considered a secure, private currency, drawing the attention of antigovernment and privacy-minded folks. But it’s not the only one — several other cryptocurrencies exist and are being developed. Transactions for these currencies are recorded in blockchain, a private and encrypted ledger. Carlson-Wee is betting that he can choose the cryptocurrencies that will increase in value — and he expects hundreds of them to enter the market. “The challenge for someone running a......

  • The World’s Largest Hedge Fund Is Building an Algorithmic Model From its Employees’ Brains

    By Rob Copeland and Bradley Hope Deep inside Bridgewater Associates LP, the world’s largest hedge-fund firm, software engineers are at work on a secret project that founder Ray Dalio has sometimes called “The Book of the Future.” The goal is technology that would automate most of the firm’s management. It would represent a culmination of Mr. Dalio’s life work to build Bridgewater into an altar to radical openness—and a place that can endure without him. At Bridgewater, most meetings are recorded, employees are expected to criticize one another continually, people are subject to frequent probes of their weaknesses, and personal performance is assessed on a host of data points, all under Mr. Dalio’s gaze. Bridgewater’s new technology would enshrine his unorthodox management approach in a software system. It could dole out GPS-style directions for how staff members should spend every aspect of their days, down to whether an employee should make a particular phone call. The system remains under development, and the exact details of its operations are still being debated inside the firm. One employee familiar with the project described it as “like trying to make Ray’s brain into a computer.” Bridgewater manages $160 billion, the most of any hedge-fund firm. It has......

  • Hedge Fund Math: Heads We Win, Tails You Lose

    By Common Sense When do 1.5 and 16 add up to 72? That’s the riddle confronting investors in Pershing Square Holdings Ltd., the closed-end fund run by the prominent activist investor Bill Ackman. In a letter to investors this month, Mr. Ackman disclosed that through the end of November, the fund had declined 13.5 percent this year after accounting for fees. (Pershing Square Holdings shouldn’t be confused with Pershing Square L.P., Mr. Ackman’s hedge fund, although the two vehicles have the same investment strategy.) That’s obviously a big disappointment, considering the Standard & Poor’s 500-stock index was up 7.6 percent over the same period. But that’s not what some big investors were complaining about to me this week. In the same letter, Mr. Ackman reported that during the nearly four years since it began, Pershing Square Holdings had gained a total of 20.5 percent. That would be considered mediocre at best, considering the S.&P. 500 gained over 67 percent during the same period. And that’s a 20.5 percent gain before deducting fees. Pershing Square Holdings charges investors a 1.5 percent management fee and takes 16 percent of any gains. After those fees were deducted, investors gained just 5.7 percent. That means Pershing......

  • Hedge Fund Winners and Losers Emerge as Year Ends on Better Note

    By Katia Porzecanski, Nishant Kumar and Bei Hu This was the year to ridicule hedge funds. Pension funds, politicians, Warren Buffett, even hedge fund managers themselves — they all had something to say about the disappointing performance, high fees and market saturation. Well-known managers from Ray Dalio to John Paulson saw performance on their main funds range from flat to double-digit losses, while some distressed-debt investors like Jason Mudrick benefited from the rally in commodities prices. Strategies focused on macro trends and equity hedges — which have seen returns crimped by swollen stock-market valuations and ultra-low interest rates — produced the worst returns. But as the year draws to an end, the industry’s gotten an unexpected pick-me-up. The ripple across markets from the surprise victory of U.S. President-elect Donald Trump bolstered returns — reversing the fortunes for some — and may prove to be a boon going forward. With his policies expected to increase interest rates, produce a wider dispersion in earnings across industries and trigger more merger activity, hedge funds may soon be put back to work. “The tide has definitely turned,” said Adam Blitz, chief investment officer at Evanston Capital Management, which farms out money to hedge funds. “Since the election I’ve definitely......

  • Exclusive: Blackstone Group winds down Senfina hedge fund

    By Svea Herbst-Bayliss           Blackstone Group (BX.N) is winding down its “big bet” hedge fund Senfina Advisors LLC after it faced mounting double-digit losses on its investments this year, a spokeswoman confirmed on Tuesday. It is a rare setback for the private equity titan, which invests roughly $70 billion in hedge funds, and launched Senfina, which means “everlasting” in Esperanto, to great fanfare in 2014. The fund was one of last year’s top performers, gaining 20 percent, but is down 24 percent this year through November after wrong-way bets in its so-called center book where declines were most pronounced. Other “multi-manager” hedge funds, which make leveraged concentrated bets on a range of securities, have also suffered this year after being wrong-footed by the pace of U.S. interest rate hikes and the post-election rally in the United States. “The market environment in 2016 for long/short hedge funds was unprecedented. We did what was in the best interest of our investors to preserve their capital,” said Paula Chirhart, a Blackstone spokeswoman. A number of Senfina’s nearly one dozen portfolio managers, including Parag Pande, who joined Blackstone in 2014 and now heads Senfina, will be leaving the firm, said a source......

  • Private Equity Jobs of the Week: Bloomberg, Morgan Stanley, NY-Presbyterian hiring

    Bloomberg is looking to hire a private equity analyst. The hire will join the Global Data Private Equity team, responsible for researching and analyzing financial data for the Bloomberg Fundamentals product (including general partners, limited partners, fundraising data and performance data). Duties include developing new analytical functionality, interacting with customers and industry specialists, and networking to promote Bloomberg’s offerings. Candidates need two to three years of experience working in private equity markets. The position is located in New York. Morgan Stanley is seeking an analyst to join its expansion capital unit, the firm’s primary business for investing in later-stage private equity growth transactions. This is a generalist position that includes evaluating new investment opportunities, conducting in-depth sector research, analyzing and modeling financial projections, assisting in managing portfolio companies, and handling relationships with management teams and corporate partners. Qualifications include a minimum of two years’ experience with a leading private equity fund, investment bank or financial services firm. The position is located in San Francisco. NewYork-Presbyterian Hospital is recruiting a director of investments – private markets. Reporting to the chief investment officer, the director will be a member of the senior investment team with responsibility for oversight and management of private markets (primary investments, co-investments, secondary investments, and direct investments). This......

  • Platinum Hedge Fund Executives Charged With $1 Billion Fraud

    By Alexandra Stevenson        For years, the little-known New York hedge fund Platinum Partners stood out for double-digit investment returns that rivaled some of the biggest names in the industry. It turned out that those returns were too good to be true, according to federal prosecutors. Federal agents on Monday arrested Mark Nordlicht, a founder and the chief investment officer of Platinum, and six others on charges related to a $1 billion fraud that led the firm to be operated “like a Ponzi scheme,” prosecutors said. It is one of the largest such fraud cases since Bernard L. Madoff’s investment firm unraveled in 2008. David Levy, the firm’s co-chief investment officer, was also among those arrested in the morning by agents in Texas, Manhattan and New Rochelle, a suburb of New York City. The men were charged with securities fraud and investment adviser fraud, according to an unsealed indictment filed in Federal District Court in Brooklyn. The Securities and Exchange Commission filed a parallel civil case. Platinum tapped prominent families and foundations within the Orthodox Jewish community in New York to fuel high-stake bets on payday lenders, oil companies and even the terminally ill. But prosecutors said these investments and......

  • Ex-Citadel Hedge Fund Manager Launches $200 Million Fund

        By Stephen Gandel        Citadel, the $26 billion Chicago hedge fund run by Ken Griffin, has a new offspring.   Joseph Rotter, a former top Citadel executive, has launched a fund at Neuberger Berman. It is the latest effort by the money management firm, which used to be owned by Lehman Brothers, to expand into alternative investment funds. Rotter’s Principal Strategies Group began trading in late October, and now manages $209 million, according to a letter that Rotter sent to clients on Friday that has been seen by Fortune. It wasn’t clear if all that money was in one hedge fund, or in a number of accounts. In the letter, Rotter says the group’s performance has been positive since it launched, but didn’t quantify how much. The S&P 500 is up 5.5% since Rotter’s group started trading. According to Rotter’s LinkedIn profile, he joined Neuberger in February, and works out of the Chicago office of the New York City-based firm. Rotter did two stints at Citadel, most recently as the firm’s global head of event-driven strategies. Rotter left Citadel in late 2008 after a massive 55% loss at one of the firm’s main hedge funds, as well as fewer......

  • Hedge fund lobby groups outline Brexit wishlist

    By Lindsay Fortado         Having stayed silent during the referendum on the UK leaving the EU, hedge fundlobby groups are laying out what they would like the government to negotiate to protect the industry in the UK, with access to EU investors and workers topping the list. By signing up you confirm that you have read and agree to the terms and conditions, cookie policy and privacy policy. Hedge funds stand to lose the passporting rights granted by the Alternative Investment Fund Managers Directive, which allows them to sell funds to investors across the EU. Losing the ability to hire EU workers would also hit the industry — it is estimated that 20 per cent of its employees in London come from the EU. The Alternative Investment Management Association, Managed Funds Association and the Alternative Credit Council will publish a document this week that calls for those rights to be maintained, as long as this does not affect the UK’s ability to set its own rules governing the industry, according to a draft seen by the Financial Times. Assuming that the UK is unlikely to remain in the single market, the groups argue that the government should try to maximise access to investors in the EU......

  • Hedge Fund Fees, New Launches Down In 2016

    Certain hedge funds have taken it on the chin in 2016. New data from Hedge Fund Research (HFR) shows new launches down year-over-year amid a higher number of closings and steadily falling hedge fund fee revenue. The moves come as industry capital has risen to record levels, but 2017 could offer brighter prospects for active managers, HFR President Kenneth Heinz predicted.   hedge fund Launches Fund of funds managers sees consolidation as hedge fund fee revenue continues to drop Total industry assets increased by +3.4% year-over-year, but the number of single-manager hedge funds declined -2.5%. The most precipitous decline occurred in the consolidating fund of fund space, which saw fund managers drop by -6.6%, according to HFR’s December 15 Hedge Fund Industry report. In the third quarter 2016 there were 170 new launches, down by 30 from the third quarter 2015, mirroring a larger drop year over year.  A total of 576 funds have launched in the first three quarters of 2016, down 200 from the same period last year. The reduction in new hedge fund launches comes as the total number of hedge funds dropped below 10,000, to 9,925, while overall hedge fund management fees, on average, dropped 1 basis point to an......

  • New Hedge Fund Launches Fall As Total Capital Increases To Record

    Hedge fund launches declined in the third quarter, as funds again posted steady gains following the Brexit vote and leading into the surprise US Presidential election results.  New launches totaled 170 in 3Q 2016, down from 200 in the prior quarter and 269 in 3Q15, according to the latest HFR Market Microstructure Report, released today by HFR®, the established global leader in the indexation, analysis and research of the global hedge fund industry. The number of launches in 3Q16 represents lowest since 1Q09 and marks the fourth consecutive quarter of net contraction in the overall number of active funds. A total of 576 funds have launched in the first three quarters of 2016, a decline of over 200 from the 785 launches over the same period last year. Hedge Fund Launches Hedge fund liquidations also increased in 3Q16, rising to 252 from 239 in the prior quarter, though nearly identical to the number of funds closed in 3Q15, when 257 funds liquidated. Through the first three quarters of 2016, liquidations totaled 782, which is on pace for the highest number of liquidations since the Financial Crisis. As previously reported by HFR, total hedge fund industry capital increased to a record......

  • Private Equity’s Latest Differentiator

      By Gillian Tan           Nearly three months after filing for an IPO, Playa Hotels & Resorts BV decided to take a different route to the public markets. The all-inclusive resorts owner and operator agreed on Tuesday to merge with Pace Holdings Corp., a “blank-check” or special purpose acquisition company backed by TPG. Companies like Pace, known as SPACs, are formed with the purpose of striking a deal within a certain time frame — in this case 24 months — after raising funds through initial public offerings of their own. Rising Tide? Roughly $3.2 billion has been raised by U.S. special purpose acquisition companies in the year to date, slightly below the $3.7 billion raised last year. That capital is now being used for its purpose: dealmaking. The deal is noteworthy because it gives Playa access to $500 million (which will be used for acquisitions and to drive its growth) while simultaneously allowing the company to trade as a public entity. That’s a scenario rarely made possible in a traditional investment by a private equity firm because in such instances, companies generally remain private. (Firms tend to prefer making operational changes to companies away from the glare of public markets.)......

  • Hedge fund offers to buy NorthStar Realty Europe

    By Michael Flaherty          A major shareholder of NorthStar Realty Europe Corp (NRE.N) has offered to buy the company for $13 per share and is demanding that the real estate investment trust (REIT) pursue a new asset management contract, according to a letter seen by Reuters.  Bow Street LLC said in the letter dated on Friday that its $728 million offer is fully financed. Bow Street owns a 6.7 percent stake in the company. Blackstone Group (BX.N) provided seed capital to Bow Street when it first launched and no longer has money invested with the hedge fund. Bow Street is also demanding that NorthStar Realty Europe sever its asset management contract with NorthStar Asset Management Group Inc (NSAM.N). Shares of NorthStar Realty Europe jumped 5 percent to $12.39 after the Reuters report on the offer, after earlier trading flat.  NorthStar is a network of inter-connected real estate investment trusts, which have all come under attack from activist investors in the last year. NorthStar Asset Management (NSAM.N), its former parent NorthStar Realty Finance Corp (NRF.N) and Colony Capital agreed to merge into a single REIT in June. NorthStar Asset Management manages the assets of NorthStar Realty Finance and NorthStar Realty......

  • Tough times ahead for public pension, insurance investors

      By Babu Das Augustine       A significant number of institutional investors expect to miss their investment targets under the existing economic and political environment, accorting to Coller Capital’s latest Global Private Equity Barometer, a survey of the world’s leading private equity investors. One third of large institutional investors such as public pension plans and insurance companies believe their organisations will miss their overall investment target returns in the next 3-5 years. This 25th edition of the Global Private Equity Barometer captures the views of 110 private equity investors from around the world. The Barometer’s findings are globally representative of limited partner (LPs) who lead organisations investing in venture capital funds, private equity, family offices, private investors. The survey results showed that 36 per cent of insurance company LPs and 31 per cent of public pension fund LPs believe their organisations will miss their overall (rather than private equity) investment return targets in the next 3-5 years, unless there is significant change in their economic environment and/or operating model. LPs expect their returns from private equity to remain strong, with over three quarters of LPs forecasting net annual returns of 11 per cent or more from the asset......

  • Lawsuit: Texts between Mark Zuckerberg and Marc Andreessen say the Facebook founder may want to go into government

      By Rob Price        Facebook CEO Mark Zuckerberg has considered plans to go into government, according to court documents seen by Bloomberg. The documents were filed as part of a shareholder lawsuit that alleges the board of Facebook failed to represent the best interests or holders of Facebook’s common stock. The lawsuit focuses on a change to Facebook’s stock structure earlier this year. Zuckerberg currently holds a majority share of voting Facebook stock, giving him control of the company. But he wanted to be able to sell this off to fund his new philanthropy efforts — the “Chan-Zuckerberg Initiative” — without losing this control. (The Financial Times reports that the plaintiffs are accusing Zuckerberg of a “self-interested agglomeration of power.”) So Zuckerberg proposed creating a new class of shares for himself that would let that happen, and three board members were placed on a special committee to represent shareholders in the discussions. They were tasked with deciding whether Zuckerberg’s request to sell stock but maintain control was fair to other shareholders. The committee eventually agreed to Zuckerberg’s plan. The suit alleges the plan diluted other shareholders’ votes over the stock. A Facebook spokesperson declined to comment to Business Insider. A......

  • Trump sold stocks, but what about his hedge fund millions?

      He sold all of them in June, he says, because he was worried about conflicts of interest. “I don’t think for me to be owning stocks when I’m making deals for this country that maybe will affect one company positively and one company negatively — I just felt it was a conflict,” Trump said Wednesday on NBC’s “Today” show. But here’s the catch: Trump wasn’t just invested in stocks. He also had his millions invested in hedge funds. The same conflict of interest concerns apply to hedge funds as well. The Trump transition team did not respond to CNNMoney’s repeated requests for clarification on whether Trump also sold his hedge funds. Trump’s potential hedge fund problem If he hasn’t sold, Trump’s decisions as president will almost certainly affect the performance of his hedge fund holdings too. In fact, they already have. Here’s one example: According to his latest financial disclosure in May, Trump is invested in three hedge funds run by John Paulson, a major donor to his campaign and the Republican Party this year. Paulson is famous for making a lot of money during the financial crisis. He was one of the few investors who recognized the U.S. housing market......

  • Inside the Hedge Fund Black Box

    By Yazann Romahi          As the concept of beta has transformed markets, powering the phenomenal rise of passive investing, ongoing research has extended its application. “Alternative beta” can be used to analyze hedge fund returns, shedding light on the formerly obscure and proprietary factors behind hedge fund performance. It turns out that to a great extent hedge fund returns reward risks arising from exposure to known factors. Just as index investing rewards broad market exposure, so alternative beta will reward exposure to factors such as price momentum, simple carry strategies and the relative performance of attractively and unattractively valued securities. The exhibit shows just how much progress we’ve made in decomposing the return factors in the three most common hedge fund styles. It shows the annualized volatility (or variation around the average annual returns) for each style according to its HFRI Index, the most commonly used hedge fund benchmark today. The proportion of variation directly attributable to the static factors—not to the insights of the average hedge fund manager—is substantial. It ranges from somewhat less than half for macro hedge funds to nearly two-thirds for event-driven strategies to four-fifths of the variance in the equity long-short style. A......

  • Brother No.1’ Admits Stock Manipulation

    Former hedge fund manager Xu Xiang pleaded guilty to charges of market manipulation in one of the most high-profile cases to follow last year’s stock market collapse in China. Xu, known as “hedge fund brother No. 1” for his winning bets in the stock market, was charged with colluding to manipulate share prices in an operation that began in 2009 and ran through 2015, a court in the eastern city of Qingdao said on its official Weibo account. Two other defendants — fund manager Wang Wei and Zhu Yong — also pleaded guilty, the statement said. The court will announce sentences at a later date. Caixin previously reported that Zhu was a fund manager. Xu controlled almost 100 trading accounts opened by his relatives, employees and employees’ relatives, the court said. Between 2010 and 2015, Xu — either alone or with Wang or Zhu — colluded with the chairmen or the “actual controlling shareholders” of 13 listed companies to get information on topics such as dividends and earnings. The executives and owners have been charged separately, the court said. Block Trades Xu made trades to manipulate prices and trading volumes after buying low from executives through block trades or ahead of news announcements or......

  • Private Equity Embracing The Return Of The Quick Flip

    By Marlene Givant Star and Harry Brumpton           When private equity giant Blackstone sold luxury hotel group Strategic Hotels & Resorts to Chinese insurance group Anbang for around $6.5 billion earlier this year, many observers took the deal as further evidence of China’s mad scramble for foreign assets, especially US real estate. But the deal was also the start of another scramble that investment bankers across all sectors stateside have begun to notice: the return of the quick flip. In Strategic Hotels’ case, Blackstone took the company private in December 2015 for about $6 billion, and then sold the group again in March – meaning the firm cleared about $500 million in something close to 12 weeks. Private equity has long battled the caricature that they are mere speculators. As the industry has matured there has been ever more talk of more farsighted investment strategies. In February, for instance, The Carlyle Group announced it had raised more than $3.6 billion for a special long-dated fund aimed at holding companies for at least double the length of the rest of its conventional funds. But Mergermarket data show the current market environment is making it hard to resist the option of a speedy......

  • Hedge fund returns mixed for November after market rally

      By Svea Herbst-Bayliss              Some big hedge funds got a bump in November after Donald Trump’s surprise U.S. presidential election victory sent stocks higher, but lagged behind the broader market’s gains, according to some early returns. Barry Rosenstein and David Einhorn, both closely watched for their investment ideas, told clients they made money in November, but not as much as the Standard & Poor’s 500 stock index, which gained 3.6 percent. Investors bet on a business-friendly president after Trump’s victory in the Nov. 8 election. Some sectors, including financial and healthcare stocks, performed even better than the broader index, fueled by hopes for lighter regulation, corporate tax cuts, fiscal stimulus and higher interest rates. Most hedge funds are still compiling their monthly numbers which are generally not made public. Rosenstein’s Jana Partners Fund gained 2.2 percent in November, marking one of its strongest monthly gains this year after starting 2016 with losses. November’s gains helped put the fund back into the black with a year-to-date gain of 1.4 percent, an investor summary seen by Reuters showed. Einhorn’s Greenlight Capital climbed 1.9 percent in November, leaving the fund up 7.7 percent for the year, an......

  • Why A Hedge Fund Manager Thinks Tesla’s Model 3 May Put Elon Musk Out of Business

      By Jen Wieczner        Tesla has to double the Model 3’s advertised price or it will lose tons of money, he says. Tesla Motors customers are lining up to wait as much as two years to own the company’s eagerly anticipated cheaper electric car, the Model 3. But while the new car has created a lot of buzz for Tesla  TSLA -0.23% , one high-performing hedge fund manger says the Model 3 will end up being a total wreck for the company. In fact, he says it will likely put Tesla out of business. Put another way: His price target for Tesla’s stock: $0. Mark Spiegel, founder of hedge fund Stanphyl Capital Partners, says the Model 3—which Tesla CEO Elon Musk has promised to sell for as little as $35,000—may put Tesla on a path to bankruptcy before it even comes out. Speaking at the Robin Hood Investors Conference this week, Spiegel laid out his case in a 152-slide presentation on why he is shorting, i.e. betting against, Tesla stock. Factor in the debt, and he thinks the car company is worth less than zero. “I continue to believe that it’s the market’s biggest single-company stock bubble,” Spiegel elaborated in his November letter to......

  • Here’s Why Bill Ackman’s Hedge Fund May Have to Return Millions in Fees

      Pershing Square Capital Management, the hedge fund firm run by billionaire William Ackman, wants to be exempted from possibly having to return millions of dollars in fees after a former employee donated $500 to a family friend’s political campaign. In an application made public on Tuesday, Pershing Square detailed the 2013 contribution by a former analyst and asked the U.S. Securities Exchange Commission (SEC) not to force it to return fees it earned from managing money for the Massachusetts state pension fund, should it be determined that the fund violated campaign finance rules. The matter represents another possible problem for one of the world’s most closely watched hedge funds, at a time when it is suffering double-digit losses for the second straight year and investors may be looking for reasons to exit. At issue is a contribution Paul Hilal made when he was a Pershing Square analyst to the campaign of Juliette Kayyem, a Harvard lecturer and security expert, who was trying to mount a run for governor in Massachusetts. Hilal was asked by Kayyem’s sister to contribute $500. That is in excess of the $150 people are allowed to give to candidates they cannot vote for. Hilal declined......

  • Trump picks a Treasury Secretary whom Trump voters should oppose

    By Steve Benen         Democrats have all kinds of reasons to oppose Steven Mnuchin, Donald Trump’s choice for Treasury Secretary, but in an interesting twist, Trump supporters shouldn’t be pleased, either. Mnuchin spent 17 years at Goldman Sachs, ultimately rising to partner before leaving to start his own hedge fund and launching a production company that bankrolled Hollywood hits like Avatar and American Sniper. Then a relatively unknown banker, Mnuchin became Trump’s finance chairman in May and helped the real-estate mogul raise millions for his campaign. As Treasury secretary, Mnuchin would oversee the nation’s financial regulations, monetary and tax policy. Trump has pledged on the campaign trail to repeal the Dodd-Frank financial reform act and cut the corporate tax rate, but Mnuchin kept a low profile during the campaign and his own policy views are unclear. During confirmation hearings, however, he could face questions over his role in running a bank that reportedly foreclosed on tens of thousands of homeowners in California following the housing crisis. During the presidential campaign, Trump made great strides by claiming to be a populist who’s eager to fight back against the financial elites who ignore the interests of working-class Americans. The Republican was especially......

  • Private Equity Jobs of the Week: BlackRock, EY, McKinsey are hiring

    BlackRock has an opening for an energy fund vice president. The hire will help implement BlackRock’s energy and power private equity and infrastructure strategy in North America. The successful candidate will be a member of the investment team and provide commercial transaction support, including the evaluation, diligence, structuring, execution and management of investments. Requirements include five to nine years of total experience in the energy and power or natural gas resource group, with most recent experience in a PE fund. The position is located in New York. Ernst & Young is looking to add a private equity analyst to its Core Business Services team. The hire will provide analytical insight and understanding, beyond publicly available information, with responsibility for the execution of initiatives based on detailed knowledge of PE’s dynamics and drivers. Candidates need seven to 10 years of experience in strategy, business analysis, industry research, management consulting or business performance, advising organizations in PE. The position is located in New York. McKinsey & Co is recruiting private equity business analysts. Successful candidates will work on small teams of consultants, participating in all aspects of client engagement: gathering and analyzing information, formulating and testing hypotheses, and developing and communicating recommendations. Qualifications include a master’s degree or one to three years of......

  • Bridgewater Settlement with Labor Board on Worker Rights Stays Secret

    By Matthew Goldstein and  Alexandra Stevenson        The resolution of an action by the National Labor Relations Boardagainst Bridgewater Associates, the world’s biggest hedge fund, regarding the rights of employees will remain a mystery — at least to anyone outside of the firm. Details of the final agreement are being kept confidential at the request of Bridgewater, whose founder, Ray Dalio, promotes its atypical culture and practice of “radical transparency” when it comes to airing grievances internally. The agreement stems from an action brought by the labor board this year challenging some confidentiality provisions in the contracts that Bridgewater requires each of its more than 1,500 full-time employees to sign. The board’s action was being closely watched by Wall Street firms and hedge funds that use similar contracts. The private nonboard agreement between Bridgewater and representatives for a former employee, which was reviewed by the labor board, led the labor relations agency to withdraw its complaint and close the matter just a few months before a scheduled administrative hearing in Hartford. A copy of the eight-page document, whose text was largely blacked out, was provided to The New York Times as part of a Freedom of Information Act request to......