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80 |
Barclays Prime Services |
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Barclays Capital is a double winner for its prime brokerage services. In the Hedgeweek Awards 2014 it was voted Best Asian Prime Broker. In the 2014 Alpha AwardsBarclays Prime Services went one better than the previous year and was rated the top provider of prime brokerage services overall.This rating by clients through a survey is important to Barclays as they have ambition to break into the bulge-bracket of prime brokers. The immediate target is to grow the PB arm by 20% this year.
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79 |
Customised Solutions |
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The last hedge fund survey from Ernst & Young stated that there is a growing demand for customized solutions, and that demand is clearly being met. This may well be another reason why the largest managers appear to be winning — they can offer these solutions at the lowest marginal cost, and they have the risk management capability and systems to control and deliver mandates with specific restrictions. See entry 86 for a specific example.
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78 |
The View From 10,000 Feet |
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Traders like an information edge. It can be expensive and difficult to acquire. But that can be a barrier to entry. The combination of cheap fixed sensors, phone cells, satellite imagery, and the internet has opened up new possibilities for what constitutes raw data for research. It used to be a Summer job for students counting footfall at malls, but that has been superceded by satellites counting cars near JC Penney stores, planes using infra-red sensors to measure the levels in oil storage tanks, and crop yield and mine output estimates from large scale regular mapping by satellite. The sectors to benefit are traders in energy, insurance companies (and ILS), and commodity specialists.
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77 |
The Children’s Investment Fund |
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The Children’s Investment Fund was the best performing large activist fund in 2013 with a return of 39.7%. With over $8bn in the fund the targets have to get bigger, and have operational and/or financial inefficiencies that can be addressed over the medium term.Christopher Hohn can still find targets amongst the large cap – Airbus and Australia’s largest rail freight operator Aurizon have been added in the last year.
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76 |
Activist Managers |
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Lawyers and other service providers say that American activist managers are looking to extend their scope by coming to Europe.The CEO of one London based company said he is dedicating a week to meetings with activists looking to set up shop in his neighbourhood.In any event managers in other strategies are starting operations or expanding in London – see entry #21
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75 |
Mitsubishi UFJ Fund Services |
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Mitsubishi UFJ Fund Services this month acquired Meridian Fund Services Grouphaving last year acquired administrator Butterfield Fulcrum Group. Mitsubishi UFJ is only the latest example of the use of a roll-up strategy. SS&C has also been a consolidator in fund administration – Prime Management Ltd, GlobeOp Gravity Financial, Hedgemetrix LLC were all acquired in the last two years. U.S. Bancorp Fund Services last year acquired Dublin-based hedge fund administrator Quintillion, and only two months ago The Conifer Group agreed to merge with Vastardis Capital Services. The consensus is that the resources that are needed to commit to the on-going systems development that are required to remain cost competitive in fund administration are not available to many independent firms.
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74 |
Carl Icahn Still The Daddy |
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73 |
Gotham Asset Management |
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Joel Greenblatt and Robert Goldstein’s Gotham Asset Management has shown the potential of absolute return funds. The Gotham Absolute Return Fund (up 36.55%) has matched the S&P500’s return since inception at the end of Aug 2012 with a 60% net exposure. The Gotham Enhanced Return Fund is up 23.2% since the May 31 2013 launch v. 15.85 for the S&P on 100% net exposure (170/70). In total the firm manages $2.1bn in absolute return funds, as of 27/03/14, and benefits from institutional sponsorship.
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72 |
Directors of communications |
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One of the first logical steps for a hedge fund considering engaging with the wider world more fully, as allowed under the JOBS Act, is to hire a director of communications. Whilst Balyasny (at #47) has gone further,Davidson Kempner Capital, Two Sigma Investments, Pine River Capital Management, Baupost andBlack River Asset Management have all recently taken that first step of appointing an executive to manage the media presence of their firms.
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71 |
Falcon Edge Capital |
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The cache of having been schooled at Blue Ridge Capital has done Rick Gerson no harm when it comes to capital raising, as hedge fund pedigree and experience are seen as important for allocators to emerging managers. Capital raising has gone well at Falcon Edge over the last year and accelerated over the last six months. At the end of 2013 the firm advised on $2.7bn. |
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70 |
Hedge Funds As Financiers |
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Hedge funds have bought Reg D securities, PIPES and treasury stock for many years. More recently HFs have funded at the pre-IPO stage – CB Insights say that they invested $2.5 billion in 39 deals last year, up 26 percent from 2012. HFs have also engaged in project finance through bonds with warrants attached, and at the other end supported buyouts through a range of security types including unique convertibles and PIKs. Hedge funds are getting further into shadow banking with unitranche debt – debt that combines senior and subordinated debt into one debt instrument. BlueBay, Alcentra and Mariner Investment Group have all been involved this year.
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69 |
SkyBridge Capital |
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SkyBridge Capital not only organises what are thought to be the best hedge fund conferences globally (SALT), but has achieved a high growth rate for a fund of funds over the last year. Assets of $9.5bn at the end of 2013 were up 34% on the previous year.SkyBridge also won two global multi-strategy awards at the latest InvestHedgeAwards in London and four awards in total including the overall (fund of funds) Fund of the Year.
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68 |
Hedgie Help For School Children |
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At the start of this current school year High Water Women, drawn from women working in hedge funds, organised the distribution of 10,000 backpacks to school students in the tri-state area. 350 volunteers from the financial services industry participated in the 9th annual BackPack Drive. Hedge fund firms that joined the effort this year included Bill Ackman’s Pershing Square Capital and David Shaw’s D.E. Shaw, both based in New York.
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67 |
Malta |
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There is always a domicile which is more popular at any one time for a combination of reasons usually focussed on low taxation, a straight forward regulatory framework and which comes with the capability to sell into the EU. AIFMD is driving business to Luxembourg, Dublin and Malta. Malta has a 15% tax rate (with credits effectively 5%) and does not enforce the delegation controls as done elsewhere.Currently there is an application a day for sub-funds going into the MFSA.
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66 |
Michael Farmer |
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The reports of the UK’s ElectoralCommission regularly show hedge fund managers as the biggest contributors to Conservative coffers. Chris Rokos (formerly active at Brevan Howard) and Michael Hintze of CQS are prominent givers. Andrew Law of Caxton, David Harding of Winton and Stanley Fink of ISAM are regular donors. But the latest data released shows Red Kite’s Michael Farmer as the largest hedge fund donor to the Tories in the final quarter of last year.
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65 |
Cumulus Energy Fund |
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Cumulus Energy Fund specialises in near-term power and gas contracts in Europe, profiting from weather impacts on power supply and demand. Its edge is superior interpretation of 15-day+ forecasts, and the edge has been working well recently. The 12 month return has been 45.17%, and the three month return was 21.67%.
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64 |
Whitebox Prize |
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Andy Redleaf’s Whitebox Advisors not just sponsor a $25,000 award for financial research, they select the winners. The winners of the second annual Whitebox Prize are three men with ties to AQR Capital Management. Tobias Moskowitz, Yao Hua Ooi and Lasse Heje Pedersen were chosen for their May 2012 paper “Time Series Momentum” in the Journal of Financial Economics. Moskowitz is a consultant to AQR and the Fama Family Professor of Finance at the University of Chicago Booth School of Business. Ooi is a principal in the global asset allocation team at AQR, focusing on research and portfolio management of macro-related strategies. Pedersen is also a Principal at AQR in the asset allocation unit. He is also the John A. Paulson Professor of Finance and Alternative Investments at the New York University Stern School of Business.
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63 |
Marwyn Value Investors LP |
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Marwyn are activist value investors, and they concentrate on small and mid cap UK and European businesses. They use a private equity-like valuation and investment approach to create investment value.Returns of the Marwyn Value Investors LP over the last 1/3/6 and 12 months have been 7.49%,26.68%, 41.75% and 54.18%. Hot.
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62 |
Orchid China Master Fund |
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With unfortunate timing the Orchid China Master Fund launched in June 2008, so caught a 46% drawdown in its first year. However, even with that performance anchor, it now has some good long term performance numbers – showing a 15.9% compound annual return since inception. Last year this long/short Chinese equity fund that invests in Chinese shares listed anywhere in the world was up 40.29%, and the fund is up 5.88% this year.This is a China hedge fund which shorts individual shares. Orchid China Master Fund was the winner of the single manager long-term performance (5 years) award at the 2013 HFMWeek Asia Performance Awards.
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61 |
Decura |
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London/Dublin based Decura is a recent arrival in asset management/investment banking. Launched towards the end of 2012, it already has over $1bn across 20 investment managers on its hedge fund platform. Decura offers structuring, risk overlays and PB services to its managers. A couple of large multi-managers are using Decura as a host for managed accounts. |
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