| 40 | Concept Capital Markets |
| Each year Global Custodian surveys the perceptions of prime brokers by their hedge fund clients. The PB business is dominated by nine investment banks, and they dominate partly because they receive the best overall scores from their clients across the 50 prime brokers in the survey. In the 20th annual survey of last year only one firm outside the bulge-bracket firms received as high a rating from their clients as these top 9 firms. That quality outlier was Concept Capital Markets. A month ago Concept Capital Markets was also named BestNorth American Prime Broker in the Hedgeweek Global Awards in its fifth annual reader nominated survey. | |
| 39 | Myriad Asset Management |
| Hong Kong-based Myriad Asset Management runs a $2.3bn multi-strategy hedge fund that had a good 2013, with reported gains returns of 20%. Carl Huttenlocher, former manager of the Highbridge Asian Opportunities Fund, has maintained his approach at Myriad by being opportunistic and willing to invest globally. Last year Japanese equities were the largest contributor to returns, and filings show that Myriad had been adding to holdings in American stocks towards the end of 2013. | |
| 38 | Big Managers Leveraging Their Research |
| The large financial commitment of major hedge fund groups to research has led them to look to ways to leverage that spending. Long-only funds are one means. For example Basswood Capital launched the Basswood Financial Long Only Fund last August with hedge fund-like fees. The big brand managers like Viking and Lone Pine are launching new funds, taking long-oriented mandates and putting together best ideas funds. | |
| 37 | Valuation Focus By SEC |
| In January the SEC issued guidance expressing concern about risk management in fixed income asset management businesses. There is a hot button in this: since January credit managers in the United States have been getting attention from the SEC – particularly on the issue of valuation of (complex/OTC) instruments. | |
| 36 | Horseman Global Fund |
| Russell Clark was net short by an average of 40% last year. Over 2013 the Horseman Global Fund was up 19.15%. Given G7 equity markets up so much, that means there must have been some great sector selection taking place. Indeed there was, plus Clark was putting his macro view to work in taking currency positions. This anomalous way of generating returns has been picked up by investors. Three years ago there was $67m in the Class A US$ Shares of Horseman Global Fund; at the end of 2103 there was $217m in the same share class. At the end of February 2014 there was $308m in the fund. The fund is up 11.3% in the first two months of this year. | |
| 35 | Persistent Asset Management |
| Persistent Asset Management is one of only two Asian based fund of hedge funds managers that manage over a billion dollars. The flagship Persistent Edge Asia Partners Master Fund invests in hedge funds in the region across the strategies. It was up 22.19% over the 12 months to the end of January. During last year AUM at the firm went from $1.73 bn to $2.78bn, a rise of 60%. At the last InvestHedge Awards Persistent Edge Asia Partners won the 10 Year Award for fund of funds. | |
| 34 | Stakes In Hedge Fund Firms |
| BlackRock has raised an initial $1.4 billion (and looking for $3bn in total) to buy stakes in hedge-fund firms. A Neuberger Berman private equity fund, Dyal Capital Partners LP, has $1.28bn of firepower to buy minority stakes in hedge fund managers whose assets range between $2 billion and $6 billion. Dyal has made eight transactions so far. | |
| 33 | MNJ Asia-Pacific Absolute Return Fund |
| Singapore-based MNJ Capital Management runs equity market neutral strategies that apply systematic fundamental and system risk control measures. Michael Henderson and Joseph Oyaski are serial award winners for the MNJ Asia-Pacific Absolute Return Fund for quant funds based in Asia. The fund is up 11.17% over the last 12 months, in-line with the 10.44% annualised return since inception, as one would hope from a quant-driven MN product. | |
| 32 | Going Direct & Fee Savings |
| Hartford HealthCare, recently launched a $350 million program to make direct investments in hedge funds. The plan is to hire 14 managers over the next two years to manage $25 million each. Funding comes in part from terminating a $100 million hedge fund-of-funds strategy and potentially redeeming assets from other hedge fund-of-funds managers. According to David Holmgren, chief investment officer, HHC expects to save $1.4 million in manager fees by switching to direct investments from hedge funds of funds. Orange County Employees Retirement System is near the end of the same switching process – Joel Greenblatt’s Gotham Asset Management became the plan’s 14th hedge fund hire on a fee structure of 1 and 10% for a $64m mandate. | |
| 31 | Swiss Capital Alternative Investments |
| AUM at the Zurich based fund of hedge funds Swiss Capital Alternative Investments doubled last year to $4.96bn, according to InvestHedge. Given the asset size and returns on the publicly visible funds of hedge funds (SC Modus Classic Defender and SC Modus Agility) it is likely that the firm’s growth has come through Irish domiciled funds of managed accounts, consistent with the increasing emphasis on customisation in the industry. | |
| 30 | Ernst & Young |
| Ernst & Young produces a very good annual hedge fund survey, read avidly at HFI (see entry #7). But E&Y are in the HOT 100 for their day job. In the HFM Week European Hedge Fund Services Awards 2014 Ernst & Young was the Best Overall Advisory Firm. In the 2014 Alpha Awards E&Y were the Top Accounting Firm, but also headed the ranking on all of the aspects of service on which hedge fund professionals were asked to rate the accounting firms: Audit, Client Service, Hedge Fund Expertise, Regulatory & Compliance and Tax. Hash tag “comprehensive”. | |
| 29 | 40 Act Funds |
| Use of the brand plus the opportunity to broaden the client types of hedge fund firms has led them to increasingly embrace 40 Act Funds. These onshore, wider market (mass affluent) products are highly intermediated (see entries 6 and 10). Large private banks are asking for 40 Act Fund-versions of existing hedge fund product. After the first wave of equity replacement products, the current wave is fixed income biased partly prompted by Registered Investment Advisors reacting to the SEC’s stated concerns on the impact of rate changes. | |
| 28 | Liongate Capital Management |
| A year ago Principal Global Investors, a US-based firm that also owns Finisterre Capital (see entry #2), bought 55% of Liongate Capital. The deal saw the firm’s assets jump from $1.9 billion in January 2013 to $7.3 billion at the end of the year largely due to a significant advisory portfolio routed via the parent. | |
| 27 | Circle Partners |
| The fastest growing hedge fund administrator over the second half of 2013 was Circle Partners with a six month growth rate of 50%. This was more readily achievable for the firm, as it was the second smallest in the survey (AUA of $2.33bn across 88 clients). (See Notes) | |
| 26 | Highland Capital Management |
| Highland is one of the largest and most experienced global alternative credit managers, and also one of the first firms to make institutional products available to retail investors. It has named a Director of Marketing specifically to support growth in the retail area. Ondina Purcell, as Director of Marketing, will be responsible for supporting the sales and distribution efforts and managing all aspects of marketing for the Highland mutual fund arm. In 2012 Highland created a “Fund Advisors” arm with 25 sales staff nationwide. This is one version of the marketing future of alternative investment firms. | |
| 25 | Panning Capital Management |
| Kieran Goodwin’s Panning Capital Management just about doubled in size from the middle to the end of 2013 to reach $2bn AUM (having launched with $640m in November 2012). The former head trader at King Street has looked for value at the distressed end of the spectrum. The portfolios include airline stocks, General Motors, technology exposure, and particularly value financials. | |
| 24 | Dechert LLP |
| Global law firm Dechert is known for having a focus on sectors with the greatest complexities and highest regulatory demands – hence the sizeable funds practice and long history of working with hedge funds. Although it has had a Dublin funds practice for some time it is still experiencing growth, and recently added to its capabilities by bringing in Mark Browne as a partner. Browne has experience advising on all areas of investment funds in both Ireland and the Cayman Islands, and in both the UCITS and alternative space. As HF managers look to sell at the retail level and expand onshore this addition is of the moment. | |
| 23 | Hedgeworld Website |
| Amongst hedge fund media only EuroHedge and AlbourneVillage have been around longer than the website Hedgeworld (started in 1999). So it is a surprise that the site, now owned by Reuters through Lipper, has shot up the Alexa rankings of websites more than any other hedge fund industry media property. A year ago it was ranked at 850,777 and this year it is at 219,331 in the global ranking. It is also up 43k places in the last 3 months. | |
| 22 | Sector Long/Short Funds |
| The Polar Capital Healthcare Opportunities Fund was up 68.81% over the last 12 months. Tech specialist Ginga Service Sector Fund (winner of the 2013 HFMWeek Asia Performance Awards for the Long/short equity (Japan) sector) was up 57.93% in 2013 and is up 2.14% this year. With returns like these no wonder there are signs that investors are warming to sector funds. TMT-focused Contour Asset Management joined the Billion Dollar Club recently (over $1bn in AUM). Sector specific strategies have seen a rise in interest levels among investors compared to previous years. There is expressed 20% net demand for TMT hedge funds (compared to 9% net demand in 2013) in the Credit Suisse Survey of Investors*, and a net 13% demand expressed for Financials funds (compared with 9% in 2013). | |
| 21 | US Hedge Funds Expanding Into Europe |
| Distressed specialists, large credit-focused funds and multi-manager hedge funds have been looking to expand into Europe. Ellington Management Group (MBS), MKP Capital Management (Macro), Monarch Alternative Capital (distressed debt), and credit specialists GoldenTree Asset Management and Highland Capital Management have each recently geared up to a degree for change in Europe credit conditions. The purchase of bank loans from Lloyds Bank by Cerberus towards the end of last year might signal the start of the trend these newcomers have been looking for. One firm that has already expanded its presence in London is Millennium Capital, the US hedge fund with the largest staff in the English capital. Millennium added 36 Approved Persons to its London office in the last year. | |