Archive for March, 2011

Closed Centaurus Fund’s Upside

March 30, 2011

In the middle of the financial meltdown in December 2008, Centaurus Alpha Fund went down like so many other funds. Investors rejected the management’s lockup proposal and so the firm decided to close the fund. Selling the assets in the portfolio and returning the money to investors took years. Meanwhile, of course, markets recovered.  (more…)

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JP Morgan Highbridge Finds Sweet Spot

March 28, 2011

Last year, Highbridge Capital Management acquired a majority stake in Gávea Investimentos, a Brazilian manager. Turns out that Highbridge also bought a large block of shares in another Brazilian business—one of the world’s largest producers of sugar and ethanol, (more…)

Soros Down on Gold?

March 25, 2011

Chidem Kurdas

Nowadays you don’t hear talk of a gold bubble, even though the metal is still at the near-record highs reached this week. The notion that the steep rise of the past year is sign of a bubble was a hot topic just  months ago.

But between political unrest in the Middle East and the earthquake-tsunami-nuclear threat in Japan, gold once more looked like a safe haven. Of course, it will likely take a downward correction once the geopolitical events appear less threatening. How good an investment is gold now? (more…)

To Separate or Not to Separate

March 23, 2011

Chidem Kurdas

Separately managed accounts looked like the way to avoid unexpected suspensions of redemption as happened in the 2008 crisis, as well as rip-offs. Separate accounts, unlike shares in a fund, remain in the investor’s control. But there are downsides, both for  managers and their clients. You hear more about the negatives now.

John Phinney Jr., chief operating officer of Apollo Capital Markets, says managed accounts have unintended (more…)

BofA Decides Against External Advisers

March 22, 2011

Hedge funds under the Bank of America umbrella have been affected by a change in company policy. (more…)

Japan, Volatility Clusters and Baklava

March 17, 2011

Chidem Kurdas

I got the term “volatility clustering” from George Tzanetatos, with whom I recently discussed global risks for an article in Opalesque Futures Intelligence, a publication I edit.   That was before the earthquake and related disasters in Japan. (more…)

Investors Examine Each Other

March 16, 2011

Chidem Kurdas

Fund clients are showing greater concern about fellow clients. This is a consequence  of the redemption frenzy of 2008-2009, when some investors withdrew from funds in a bad market because they had an urgent need for money, often to meet margin calls. This forced funds to sell at losses that could have been avoided by waiting. Other investors were harmed. Many managers suspended redemptions.

“The investor base is very important to us,” says Lorrie Landis managing director of credit investments at Tulane University. “We want funds to be very stable, don’t want to be hurt by whatever is going on with another investor.”

Fund managers also are paying more attention to the kinds of clients they get.  Suzanne Murphy, head of strategic development at credit fund manager Claren Road Asset Management, said Claren Road’s investors used to be almost all a single type—95% were funds of funds. (more…)

Administrators Explain What They Do

March 15, 2011

Chidem Kurdas

Transparency is a term that’s been used a lot for fund managers. But increasingly you hear it applied to fund administrators as well.

Administrators lacked process transparency, says Mike Greenstein, a PricewaterhouseCoopers partner who leads the alternative investments practice. If people understand what administrators do, they will have more trust, so there is a move toward process transparency for administrators, he said, speaking at a conference.

What does process transparency involve? Vernon Barback, president and chief operating officer at GlobeOp Financial Services, an administrator listed on the London Stock Exchange, suggested basic questions from a fund’s investors to its administrator.  (more…)

Question for Bill Gross

March 10, 2011

Chidem Kurdas

If PIMCO Total Return Fund, in which I’m an investor, were a hedge fund, I would call the manager to ask about a topic that’s on my mind. But Total Return is a mutual fund and as a little denizen of the mutual fund world, I don’t think I’ll get Bill Gross on the phone. Hedge funds cater to clients in a way mutual funds don’t. Of course, hedge fund clients are large investors and there are relatively few of them.

Anyway, my question arose from looking at the most recent data on debt and realizing how drastically Mr. Gross has cut Total Return Fund’s holdings of US government paper, which accounted for nearly one-fourth of the fund only a few months ago.   (more…)

Temasek Double Bet on Brazil Oil

March 9, 2011

Temasek Holdings, the investment company owned by the government of Singapore, bought a stake in Brazil’s (more…)