Link para página do Financial Times com 5 aulas sobre voltailidade proferidas pelo pro. Robert Engle.
Tuesday, July 31, 2007
Monday, July 30, 2007
China & Backstone
Artigo sobre as perdas sofridas pela China com o investimento de suas reserves em ações do Blackstone Group.
Friday, July 27, 2007
Até no Brasil...
Esta tabela do Wall Street Journal cita até a suspensão do leilão de LTN no Brasil como um dos efeitos da crise de crédito recente.
Filantropia
Generous hedge fund boss tops philanthropist league
Last updated at 17:50pm on 28th June 2006
A young city high-flier has emerged as Britain's most generous philanthropist, giving away more than £50m to children's charities in the developing world last year.
Christopher Hohn, 39, little-known outside the reclusive world of hedge fund traders, set up The Children's Investment Fund (TCI) with his American-born wife Jamie, 40 three years ago.
Accounts just filed show that in the year up to August 31, 2005, TCI gave £50.4m to charity, which while some way short of the extraordinary benevolence of Wall Street billionaire Warren Buffett, who plans to give away his £22bn fortune, does make him Britain's most munificent man.
'Greed is Good' may still be the predominant slogan echoing through Wall Street and the square mile, but 'Giving is Good' is also beginning to be heard.
Uniquely, TCI was specifically set up to funnel a fixed proportion (1 per cent) of assets to its charitable arm, the Children's Investment Fund Foundation.
The fund, one of the most successful in Europe, was set up by Mr Hohn, a 39-year-old graduate of Southampton University and son of a white Jamaican car mechanic who emigrated to Britain in 1960.
Mr Hohn, from Addlestone, Surrey, was a Baker Scholar at Harvard Business School, putting him in the top 5 per cent of his MBA class. He cut his trading teeth on Wall Street, and when he went it alone in 2003, he set up the charity link in order to motivate his own performance, according to City sources.
The charity's main focus is helping children who have been orphaned by AIDS - or are at risk of being - in Kenya, Uganda, Malawi, Ethiopia and India. In Africa, it is also helping with agriculture, training mentors and supporting educational initiatives.
Estimated to be worth around £80m himself, Mr Hohn is not alone in the hedge fund world in donating huge sums to charity, but usually it is done on a more ad hoc basis.
But TCI and Mr Hohn were very reticent to speak about their good works yesterday.
'We just not really interested in putting more information out there,' said a spokeswoman.
'People write about us and that's fine, but Mr Hohn doesn't wish to give any interviews about this.'
His wife, at their £2m townhouse in St John's Wood, was even less keen.
'This is a private property and if you ever come here again we will call the police,' she told a Mail reporter through the intercom of her front door.
Pride
Mr Hohn's 67-year-old father Paul, a retired car mechanic now living in East Sussex, said he was 'very proud' of his son's achievements.
'I don't like to boast about him, but whatever he's done in life, he's given it 110 percent and done well at it, from his paper round to his MBA. 'He's always had a good work ethic and been academically bright. He doesn't get his skills with money from me - I'm just an ordinary Joe and his background was quite humble.
'He got about 13 O-levels and was a top footballer at the same time, but throughout everything he's always been very unselfish and I suppose that's what is behind his wish to give something back to people who are less well off than himself.'
Two years ago, Jamie Cooper-Hohn told the FT that charity was not uppermost in people's minds when they chose to sign up to the fund in a heavily oversuscribed launch.
'Most of the investors from institutions did not feel that their boards would be more positive about the idea because of the charitable component.
'I would say that about 80 per cent of investors are neutral about that part. What they did get was a sense that this is very motivating for Chris. And if he is inspired by what he is doing, his fund will do well and so will they.'
Another hedge fund philanthropist is Arpad 'Arki' Busson, former boyfriend of supermodel Elle Macpherson, who set up his own charity ARK to help orphaned children in Eastern Europe and South Africa.
Yesterday he said of Mr Hohn and his wife: 'They are an inspiration to all of us.' He told the Mail: 'I think Chris is one of the best investors and traders of his generation. He is one of the few hedge fund managers to have mastered both disciplines.
'In addition, he and his wife are very astute philanthropists who have taken charitable giving to a new dimension.'
Mr Hohn may have a kind heart when it comes to giving, but in business he has a hard head and last year he became involved in a showdown with the bosses of Germany's mighty Deutsche Borse, the Frankfurt stock exchange. The Germans to launch a takeover bid for the London Stock Exchange but Hohn, with just 5pc of Deutsche Borse's shares, emphatically opposed the move. He won and chief executive Weiner Seifert was forced to resign.
Thursday, July 26, 2007
Wednesday, July 25, 2007
Gávea poderá abrir o capital
Notícia que saiu na Bloomberg.
Fraga's Gavea Fund Considers Initial Public Offer (Update1)
By Adriana Brasileiro and Laura Cassano
July 24 (Bloomberg) -- The hedge fund managed by Arminio Fraga, former president of Brazil's central bank, may raise capital through an initial public offering.
Fraga said Gavea Investimentos, a hedge fund based in Rio de Janeiro with $4.5 billion under management, is ``well capitalized'' and it's ``just an idea'' to have an IPO.
``There is a possibility but it's not like those plans are consolidated in our minds,'' he told reporters at an event in New York yesterday.
He said global liquidity has allowed Gavea to raise cash for its investments. The fund last month bought a 25 percent stake in Policard, a credit-card company, for an undisclosed amount, as it added to its consumer goods, logistics and agribusiness investments. Gavea earlier this year bought a stake in McDonald's Corp.'s restaurants in Latin America.
``What one cannot go on believing that this environment will last forever,'' Fraga said. ``We have been conservative, not raising too much cash, and doing that with appropriate maturities, always with an eye on market mood swings.''
U.S. Housing Concerns
Fraga said losses related to the U.S. housing and subprime mortgage markets may lead to a correction in world asset prices. There is no doubt the housing market rout is reining in growth in the U.S. economy, he said.
``Markets have been very happy since 2001; It's healthy at this time to ask ourselves if everything is really ok,'' he said.
Fraga also said emerging markets are less vulnerable to slowing world economic growth because governments have taken steps to control spending and make their markets more flexible.
``Brazil is doing very well now because it has a consistent economic policy and financial markets that are healthy and well capitalized,'' Fraga said.
To contact the reporter on this story: Adriana Brasileiro in Rio de Janeiro at abrasileiro@bloomberg.net ; Laura Cassano in New York at lcassano@bloomberg.net
Fraga's Gavea Fund Considers Initial Public Offer (Update1)
By Adriana Brasileiro and Laura Cassano
July 24 (Bloomberg) -- The hedge fund managed by Arminio Fraga, former president of Brazil's central bank, may raise capital through an initial public offering.
Fraga said Gavea Investimentos, a hedge fund based in Rio de Janeiro with $4.5 billion under management, is ``well capitalized'' and it's ``just an idea'' to have an IPO.
``There is a possibility but it's not like those plans are consolidated in our minds,'' he told reporters at an event in New York yesterday.
He said global liquidity has allowed Gavea to raise cash for its investments. The fund last month bought a 25 percent stake in Policard, a credit-card company, for an undisclosed amount, as it added to its consumer goods, logistics and agribusiness investments. Gavea earlier this year bought a stake in McDonald's Corp.'s restaurants in Latin America.
``What one cannot go on believing that this environment will last forever,'' Fraga said. ``We have been conservative, not raising too much cash, and doing that with appropriate maturities, always with an eye on market mood swings.''
U.S. Housing Concerns
Fraga said losses related to the U.S. housing and subprime mortgage markets may lead to a correction in world asset prices. There is no doubt the housing market rout is reining in growth in the U.S. economy, he said.
``Markets have been very happy since 2001; It's healthy at this time to ask ourselves if everything is really ok,'' he said.
Fraga also said emerging markets are less vulnerable to slowing world economic growth because governments have taken steps to control spending and make their markets more flexible.
``Brazil is doing very well now because it has a consistent economic policy and financial markets that are healthy and well capitalized,'' Fraga said.
To contact the reporter on this story: Adriana Brasileiro in Rio de Janeiro at abrasileiro@bloomberg.net ; Laura Cassano in New York at lcassano@bloomberg.net
Tuesday, July 24, 2007
Friday, July 13, 2007
Novo Mercado na LSE
New LSE market launch will target hedge funds
By James Quinn and Yvette Essen
The London Stock Exchange is to launch a new market with lighter regulation in a bid to attract hedge funds and private equity funds from rival bourses such as NYSE Euronext.
The LSE will open the new Specialist Fund Market for business from November.
The SFM will be aimed at the institutional investors, filling the gap between the main market and the lightly regulated Alternative Investment Market.
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It is hoped the new market will be as successful as NYSE Euronext has been at attracting large hedge funds to list entities in Amsterdam.
London-based hedge funds Marshall Wace and Boussard & Gavaudan have both chosen Amsterdam over London to list funds.
One of the key drivers behind setting up the new market was the decision by the Financial Services Authority to drop a previously proposed two-tier listing regime for investment firms.
Following industry consultation, the FSA dropped its two-tier plan after criticism that its investors might not be as well protected, with the regulator instead opting for a single listing regime.
The admission process to the SFM will be different from applying to join the main market, although the FSA will still monitor conformity to rules and regulations.
Entities and funds quoted on the SFM will not be "listed" in the strictest sense of the word, however, and so that will prevent certain institutions from investing in them.
The new market will also make it slightly easier for funds to operate, as they will not have to disclose assets over 10pc, and there will be no requirement for a sponsor.
In addition, funds that trade on the SFM will not be eligible for inclusion in index tracker funds, as the FTSE indices are limited to primary listed securities.
Martin Graham, the LSE's director of markets, said: "Hedge funds and private equity are an increasingly important asset class that pension funds and other institutional investors want access to in order to diversify their overall portfolios and improve their returns."
Although the LSE has been successful in attracting a few such funds - such as Brevan Howard's BH Macro fund - in reality the number so far has been limited, and Mr Graham hopes the new market will make it easier for the LSE to compete with its rivals.
Meanwhile, the LSE yesterday insisted it is on track to complete its proposed £1.1bn takeover of Borsa Italiana, in spite of early opposition from Nasdaq at the British bourse's annual general meeting on Wednesday.
By James Quinn and Yvette Essen
The London Stock Exchange is to launch a new market with lighter regulation in a bid to attract hedge funds and private equity funds from rival bourses such as NYSE Euronext.
The LSE will open the new Specialist Fund Market for business from November.
The SFM will be aimed at the institutional investors, filling the gap between the main market and the lightly regulated Alternative Investment Market.
advertisement
It is hoped the new market will be as successful as NYSE Euronext has been at attracting large hedge funds to list entities in Amsterdam.
London-based hedge funds Marshall Wace and Boussard & Gavaudan have both chosen Amsterdam over London to list funds.
One of the key drivers behind setting up the new market was the decision by the Financial Services Authority to drop a previously proposed two-tier listing regime for investment firms.
Following industry consultation, the FSA dropped its two-tier plan after criticism that its investors might not be as well protected, with the regulator instead opting for a single listing regime.
The admission process to the SFM will be different from applying to join the main market, although the FSA will still monitor conformity to rules and regulations.
Entities and funds quoted on the SFM will not be "listed" in the strictest sense of the word, however, and so that will prevent certain institutions from investing in them.
The new market will also make it slightly easier for funds to operate, as they will not have to disclose assets over 10pc, and there will be no requirement for a sponsor.
In addition, funds that trade on the SFM will not be eligible for inclusion in index tracker funds, as the FTSE indices are limited to primary listed securities.
Martin Graham, the LSE's director of markets, said: "Hedge funds and private equity are an increasingly important asset class that pension funds and other institutional investors want access to in order to diversify their overall portfolios and improve their returns."
Although the LSE has been successful in attracting a few such funds - such as Brevan Howard's BH Macro fund - in reality the number so far has been limited, and Mr Graham hopes the new market will make it easier for the LSE to compete with its rivals.
Meanwhile, the LSE yesterday insisted it is on track to complete its proposed £1.1bn takeover of Borsa Italiana, in spite of early opposition from Nasdaq at the British bourse's annual general meeting on Wednesday.
Thursday, July 05, 2007
Aumento de Impostos sobre Ganhos de Capital
Ótimo artigo a favor do aumento de impostos em ganhos de capital. Essa discussão aumentou recentemente por causa dos ganhos extraordinários obtidos pelos gestores do Blackstone.
A Career in Hedge Funds and the Price of Overcrowding
By ROBERT H. FRANK
Published: July 5, 2007
What are the career aspirations of the nation’s most accomplished and ambitious students these days? I haven’t seen a formal survey, but a rapidly growing percentage of the best students I teach say they want to manage hedge funds or private equity firms.
Little wonder. According to Institutional Investor’s Alpha magazine, the hedge fund manager James Simons earned $1.7 billion last year, and two other managers earned more than $1 billion. The combined income of the top 25 hedge fund managers exceeded $14 billion in 2006.
These managers also enjoy remarkably favorable tax treatment. For example, even though “carried interest” — mainly their 20 percent commission on portfolio gains — has the look and feel of ordinary income, it is taxed at the 15 percent capital gains rate rather than the 35 percent top rate for ordinary income. That provision alone saved Mr. Simons several hundred million dollars in taxes last year.
Congress is now considering a proposal to tax carried interest as ordinary income. To no one’s surprise, private equity lobbyists were quick to insist that doing so would cause grave economic damage. The deals brokered by their clients often create enormous value, to be sure. Yet the proposed legislation would not block a single transaction worth doing. What is more, economic analysis suggests that it would actually increase production in other sectors of the economy by reducing wasteful overcrowding in the market for aspiring portfolio managers.
This market is what economists call a winner-take-all market — essentially a tournament in which a handful of winners are selected from a much larger field of initial contestants. Such markets tend to attract too many contestants for two reasons.
The first is an information bias. An intelligent decision about whether to enter any tournament requires an accurate estimate of the odds of winning. Yet people’s assessments of their relative skill levels are notoriously optimistic. Surveys show, for example, that more than 90 percent of workers consider themselves more productive than their average colleague.
This overconfidence bias is especially likely to distort career choice because, in addition to the motivational forces that support it, the biggest winners in many tournaments are so conspicuous. For example, N.B.A. stars who earn eight-figure salaries appear on television several nights a week, whereas the thousands who failed to make the league attract little notice.
Similarly, hedge fund managers with 10-figure incomes are far more visible than the legions of contestants who never made the final cut. When people overestimate their chances of winning, too many forsake productive occupations in traditional markets to compete in winner-take-all markets.
A second reason for persistent overcrowding in winner-take-all markets is a structural problem called “the tragedy of the commons.” This problem helps explain, for instance, why we see too many gold prospectors, an occupation that has much in common with prospecting for corporate deals. In the initial stages of exploiting a newly discovered gold field, adding another prospector may significantly increase the total amount of gold found. Beyond some point, however, additional prospectors contribute little. The gold found by a newcomer to a crowded field is largely gold that would have been found by existing searchers.
A simple numerical example helps illustrate why private incentives often lead to wasteful overcrowding under these circumstances. Consider a man who must choose whether to work as an engineer for $100,000 or become a prospector for gold. Suppose he considers the nonfinancial aspects of the two careers equally attractive and expects to find $110,000 in gold if he becomes a prospector, $90,000 of which would have been found in his absence by existing prospectors. Self-interest would then dictate a career in prospecting, since $110,000 exceeds the $100,000 engineering salary. But because his efforts would increase the total value of gold found by only $20,000, society’s total income would have been $80,000 higher had he instead become an engineer.
Similar incentives confront aspiring portfolio managers. Beyond some point, adding another highly paid manager produces little increase in industry commissions on managed investments. As in a crowded real estate market, the additional manager’s commissions come largely at the expense of commissions that would have been generated by existing managers. So here, too, private incentives result in wasteful overcrowding.
Matthew Rhodes-Kropf, a finance professor at Columbia Business School, has argued that higher taxes on hedge fund and private equity firm managers are bad economic policy. “Private equity is a very important part our economy,” he said, adding that higher taxes will discourage it. Others have characterized the proposed legislation as envy-driven class warfare.
Both observations miss the essential point. No one denies that the talented people who guide capital to its most highly valued uses perform a vital service for society. But at any given moment, there are only so many deals to be struck. Sending ever larger numbers of our most talented graduates out to prospect for them has a high opportunity cost, yet adds little economic value.
By making the after-tax rewards in the investment industry a little less spectacular, the proposed legislation would raise the attractiveness of other career paths, ones in which extra talent would yield substantial gains. And the additional tax revenue could pay for things that clearly need doing. For example, we could reduce the number of children who currently lack health insurance, or reduce the number of cargo containers that enter our ports without inspection.
Opponents of higher taxes often invoke the celebrated trade-off between equity and efficiency. But that objection makes no sense here. Ending preferential tax treatment of portfolio managers’ earnings would serve both goals at once.
Robert H. Frank, an economist at Cornell University, is the author of “The Economic Naturalist” and the co-author, with Philip Cook, of “The Winner-Take-All Society.” His “Falling Behind: How Rising Inequality Harms the Middle Class,” will be published next week. Contact: www.robert -h-frank.com.
A Career in Hedge Funds and the Price of Overcrowding
By ROBERT H. FRANK
Published: July 5, 2007
What are the career aspirations of the nation’s most accomplished and ambitious students these days? I haven’t seen a formal survey, but a rapidly growing percentage of the best students I teach say they want to manage hedge funds or private equity firms.
Little wonder. According to Institutional Investor’s Alpha magazine, the hedge fund manager James Simons earned $1.7 billion last year, and two other managers earned more than $1 billion. The combined income of the top 25 hedge fund managers exceeded $14 billion in 2006.
These managers also enjoy remarkably favorable tax treatment. For example, even though “carried interest” — mainly their 20 percent commission on portfolio gains — has the look and feel of ordinary income, it is taxed at the 15 percent capital gains rate rather than the 35 percent top rate for ordinary income. That provision alone saved Mr. Simons several hundred million dollars in taxes last year.
Congress is now considering a proposal to tax carried interest as ordinary income. To no one’s surprise, private equity lobbyists were quick to insist that doing so would cause grave economic damage. The deals brokered by their clients often create enormous value, to be sure. Yet the proposed legislation would not block a single transaction worth doing. What is more, economic analysis suggests that it would actually increase production in other sectors of the economy by reducing wasteful overcrowding in the market for aspiring portfolio managers.
This market is what economists call a winner-take-all market — essentially a tournament in which a handful of winners are selected from a much larger field of initial contestants. Such markets tend to attract too many contestants for two reasons.
The first is an information bias. An intelligent decision about whether to enter any tournament requires an accurate estimate of the odds of winning. Yet people’s assessments of their relative skill levels are notoriously optimistic. Surveys show, for example, that more than 90 percent of workers consider themselves more productive than their average colleague.
This overconfidence bias is especially likely to distort career choice because, in addition to the motivational forces that support it, the biggest winners in many tournaments are so conspicuous. For example, N.B.A. stars who earn eight-figure salaries appear on television several nights a week, whereas the thousands who failed to make the league attract little notice.
Similarly, hedge fund managers with 10-figure incomes are far more visible than the legions of contestants who never made the final cut. When people overestimate their chances of winning, too many forsake productive occupations in traditional markets to compete in winner-take-all markets.
A second reason for persistent overcrowding in winner-take-all markets is a structural problem called “the tragedy of the commons.” This problem helps explain, for instance, why we see too many gold prospectors, an occupation that has much in common with prospecting for corporate deals. In the initial stages of exploiting a newly discovered gold field, adding another prospector may significantly increase the total amount of gold found. Beyond some point, however, additional prospectors contribute little. The gold found by a newcomer to a crowded field is largely gold that would have been found by existing searchers.
A simple numerical example helps illustrate why private incentives often lead to wasteful overcrowding under these circumstances. Consider a man who must choose whether to work as an engineer for $100,000 or become a prospector for gold. Suppose he considers the nonfinancial aspects of the two careers equally attractive and expects to find $110,000 in gold if he becomes a prospector, $90,000 of which would have been found in his absence by existing prospectors. Self-interest would then dictate a career in prospecting, since $110,000 exceeds the $100,000 engineering salary. But because his efforts would increase the total value of gold found by only $20,000, society’s total income would have been $80,000 higher had he instead become an engineer.
Similar incentives confront aspiring portfolio managers. Beyond some point, adding another highly paid manager produces little increase in industry commissions on managed investments. As in a crowded real estate market, the additional manager’s commissions come largely at the expense of commissions that would have been generated by existing managers. So here, too, private incentives result in wasteful overcrowding.
Matthew Rhodes-Kropf, a finance professor at Columbia Business School, has argued that higher taxes on hedge fund and private equity firm managers are bad economic policy. “Private equity is a very important part our economy,” he said, adding that higher taxes will discourage it. Others have characterized the proposed legislation as envy-driven class warfare.
Both observations miss the essential point. No one denies that the talented people who guide capital to its most highly valued uses perform a vital service for society. But at any given moment, there are only so many deals to be struck. Sending ever larger numbers of our most talented graduates out to prospect for them has a high opportunity cost, yet adds little economic value.
By making the after-tax rewards in the investment industry a little less spectacular, the proposed legislation would raise the attractiveness of other career paths, ones in which extra talent would yield substantial gains. And the additional tax revenue could pay for things that clearly need doing. For example, we could reduce the number of children who currently lack health insurance, or reduce the number of cargo containers that enter our ports without inspection.
Opponents of higher taxes often invoke the celebrated trade-off between equity and efficiency. But that objection makes no sense here. Ending preferential tax treatment of portfolio managers’ earnings would serve both goals at once.
Robert H. Frank, an economist at Cornell University, is the author of “The Economic Naturalist” and the co-author, with Philip Cook, of “The Winner-Take-All Society.” His “Falling Behind: How Rising Inequality Harms the Middle Class,” will be published next week. Contact: www.robert -h-frank.com.
Friday, June 29, 2007
Buttonwood
Coluna Buttonwood do The Economist falando ampliação das atividades dos hedge funds.
Buttonwood
Identity crisis
Jun 28th 2007
From The Economist print edition
As the line blurs between hedge funds and banks, a bit of mystique goes missing
PEOPLE have trouble defining the term hedge fund. For some it simply conveys an aura of big money tinged with a dashing hint of menace. But within a few years the term may be even more meaningless than it is now, because hedge funds are rapidly becoming indistinguishable from the rest of the financial-services industry.
D.E. Shaw, an American group, is a case in point. It started as a “quantitative” manager, using sophisticated computer models to pick stocks and, with $26 billion under management at the end of 2006, was ranked as one of the four largest fund groups in the world.
But hedge funds were only the beginning; there is barely a financial activity in which D.E. Shaw is not now involved. In early June it announced a bid for James River, an insurance firm. The group already has an arm, Laminar Direct Capital, that makes direct loans to firms. It has considered moving into private equity and owns FAO Schwarz, a big toy store. As well as running hedge funds, it operates a “long-only” business, which buys assets in the hope they rise in price.
As hedge funds like D.E. Shaw move in one direction, investment banks and conventional fund managers are shifting in the other. Many have bought hedge-fund groups outright (such as JPMorgan Chase's purchase of Highbridge Capital Management) or have taken minority stakes in them (Lehman Brothers bought 20% of D.E. Shaw in March). Others either operate funds-of-hedge-funds (Goldman Sachs) or have set up separate hedge-fund arms (Gartmore and—less successfully of late—Bear Stearns).
There also seems to be a growing belief that there is more to investment than long-only management. The latest fashion is 130/30 funds, which use borrowed money to combine 130% long positions with 30% short (betting on falling prices). According to this philosophy, stopping fund managers from shorting stocks is like preventing Tiger Woods from using all the clubs in his bag; smart investors should be able to spot overpriced stocks as well as underpriced stocks. Such products, which have been dubbed “hedge funds lite”, allow investors such as pension funds to take their first steps into the world of “absolute return” investing.
It is not too difficult to work out why banks and traditional fund-management firms should want to be more like hedge funds. For a start, the annual management fees are a lot higher. Second, as the flotations of Fortress and Blackstone, two large and varied alternative-investment firms, have shown, the stockmarket is willing to pay a very high multiple for companies that earn performance fees.
But why do hedge-fund groups want to move the other way? Part of the reason is the Darwinian environment in which they operate. They are constantly on the lookout for markets that are inefficient or areas that offer excess returns. In banking and insurance, for example, hedge funds may benefit because they lack either the costly infrastructure or regulatory burdens that impede the traditional operators; borrowers say hedge funds are much quicker than banks at deciding whether to make a loan.
For the individual hedge-fund manager, diversifying makes sense. Some strategies may be profitable for a while, but then have bad years, as convertible-arbitrage managers found out in 2005. If returns are bad enough, the business can disappear overnight. But that is far less likely to happen with a range of strategies.
There is a further level of protection if the manager raises “permanent capital” by issuing shares. Hedge-fund investors have the right to withdraw their capital, subject to lengthy notice periods. But if the manager is running a listed fund, investors can redeem their holdings only by selling them on the open market; the annual management fee is unaffected.
Permanent capital can also be raised in a different way if the hedge fund issues bonds (as Citadel did last year) or floats shares of the management company (this week London-based GLG Partners became the latest to aim for a New York listing). Such capital-raising exercises allow founders to cash in their holdings and also give the hedge funds some independence from their prime brokers, on whom they depend heavily when borrowing money.
But flotations also force hedge-fund managers to be more transparent, diluting the mystique on which their high fees partly depend. And they accelerate the process by which boutiques turn into broadly based financial groups, with all the bureaucracy that implies (bureaucracy that many managers went into the business to escape). Hedge funds may be gaining fame and fortune as they expand, but they may be losing part of their soul.
Buttonwood
Identity crisis
Jun 28th 2007
From The Economist print edition
As the line blurs between hedge funds and banks, a bit of mystique goes missing
PEOPLE have trouble defining the term hedge fund. For some it simply conveys an aura of big money tinged with a dashing hint of menace. But within a few years the term may be even more meaningless than it is now, because hedge funds are rapidly becoming indistinguishable from the rest of the financial-services industry.
D.E. Shaw, an American group, is a case in point. It started as a “quantitative” manager, using sophisticated computer models to pick stocks and, with $26 billion under management at the end of 2006, was ranked as one of the four largest fund groups in the world.
But hedge funds were only the beginning; there is barely a financial activity in which D.E. Shaw is not now involved. In early June it announced a bid for James River, an insurance firm. The group already has an arm, Laminar Direct Capital, that makes direct loans to firms. It has considered moving into private equity and owns FAO Schwarz, a big toy store. As well as running hedge funds, it operates a “long-only” business, which buys assets in the hope they rise in price.
As hedge funds like D.E. Shaw move in one direction, investment banks and conventional fund managers are shifting in the other. Many have bought hedge-fund groups outright (such as JPMorgan Chase's purchase of Highbridge Capital Management) or have taken minority stakes in them (Lehman Brothers bought 20% of D.E. Shaw in March). Others either operate funds-of-hedge-funds (Goldman Sachs) or have set up separate hedge-fund arms (Gartmore and—less successfully of late—Bear Stearns).
There also seems to be a growing belief that there is more to investment than long-only management. The latest fashion is 130/30 funds, which use borrowed money to combine 130% long positions with 30% short (betting on falling prices). According to this philosophy, stopping fund managers from shorting stocks is like preventing Tiger Woods from using all the clubs in his bag; smart investors should be able to spot overpriced stocks as well as underpriced stocks. Such products, which have been dubbed “hedge funds lite”, allow investors such as pension funds to take their first steps into the world of “absolute return” investing.
It is not too difficult to work out why banks and traditional fund-management firms should want to be more like hedge funds. For a start, the annual management fees are a lot higher. Second, as the flotations of Fortress and Blackstone, two large and varied alternative-investment firms, have shown, the stockmarket is willing to pay a very high multiple for companies that earn performance fees.
But why do hedge-fund groups want to move the other way? Part of the reason is the Darwinian environment in which they operate. They are constantly on the lookout for markets that are inefficient or areas that offer excess returns. In banking and insurance, for example, hedge funds may benefit because they lack either the costly infrastructure or regulatory burdens that impede the traditional operators; borrowers say hedge funds are much quicker than banks at deciding whether to make a loan.
For the individual hedge-fund manager, diversifying makes sense. Some strategies may be profitable for a while, but then have bad years, as convertible-arbitrage managers found out in 2005. If returns are bad enough, the business can disappear overnight. But that is far less likely to happen with a range of strategies.
There is a further level of protection if the manager raises “permanent capital” by issuing shares. Hedge-fund investors have the right to withdraw their capital, subject to lengthy notice periods. But if the manager is running a listed fund, investors can redeem their holdings only by selling them on the open market; the annual management fee is unaffected.
Permanent capital can also be raised in a different way if the hedge fund issues bonds (as Citadel did last year) or floats shares of the management company (this week London-based GLG Partners became the latest to aim for a New York listing). Such capital-raising exercises allow founders to cash in their holdings and also give the hedge funds some independence from their prime brokers, on whom they depend heavily when borrowing money.
But flotations also force hedge-fund managers to be more transparent, diluting the mystique on which their high fees partly depend. And they accelerate the process by which boutiques turn into broadly based financial groups, with all the bureaucracy that implies (bureaucracy that many managers went into the business to escape). Hedge funds may be gaining fame and fortune as they expand, but they may be losing part of their soul.
Wednesday, June 27, 2007
Independência
Artigo sobre a tentativa de hedge funds de se tornarem menos dependentes do crédito de prime brokers.
London, London
Artigo sobre a primazia de Londres sobre outros centros financeiros quando o assunto é hedge funds.
Tuesday, June 26, 2007
BlackRock compra Quellos
BlackRock to Buy Quellos Unit for Up to $1.7 Billion (Update2)
By Andrei Postelnicu
June 26 (Bloomberg) -- BlackRock Inc., the largest publicly
traded U.S. asset manager, agreed to buy a fund unit of Quellos
Group LLC for as much as $1.7 billion to expand in one of the
fastest growing parts of the money management business.
BlackRock, which oversees about $1.15 trillion, will pay $562
million in cash and $188 million in stock for Quellos's funds that
invest in other funds, the companies said in a statement today.
New York-based BlackRock will also pay as much as $970 million
over the next 3 1/2 years if unspecified conditions are met.
``We are extremely excited to welcome the Quellos team to
BlackRock,'' Chief Executive Officer Laurence D. Fink said in the
statement. ``We will combine our hedge and private equity fund of
funds activities on a unified platform.''
The combined business will be one of the largest fund of
funds managers in the world, with more than $25.4 billion in
assets, BlackRock said. Funds of funds typically invest in a range
of different hedge or private equity funds to diversify risk and
provide more predictable returns.
Quellos, based in Seattle, looks after more than $20 billion
in assets. Jeffrey Greenstein, Quellos's CEO, will step down from
his post after the completion of the transaction. He will remain
as an adviser to help with the transition, BlackRock said.
Adding Money
Bryan White, chief investment officer at Quellos, will become
BlackRock's global head of funds of funds, to be renamed BlackRock
Alternative Advisors.
Quellos has been investigated for tax-advisory activities it
has discontinued and which are not part of the transaction with
BlackRock, the companies' statement said.
BlackRock was advised in the transaction by New York-based
Citigroup Inc. and law firm Skadden, Arps, Slate, Meagher & Flom
LLC. Quellos was advised by UBS AG and the law firm Paul Weiss
Rifkind Wharton & Garrison LLP.
The transaction is expected to close around Oct. 1, pending
regulatory approvals, the companies said.
Hedge funds attracted $60 billion in new money in the first
quarter, bringing industry assets to $1.57 trillion, according to
Chicago-based Hedge Fund Research Inc.
--Editor: Connelly
By Andrei Postelnicu
June 26 (Bloomberg) -- BlackRock Inc., the largest publicly
traded U.S. asset manager, agreed to buy a fund unit of Quellos
Group LLC for as much as $1.7 billion to expand in one of the
fastest growing parts of the money management business.
BlackRock, which oversees about $1.15 trillion, will pay $562
million in cash and $188 million in stock for Quellos's funds that
invest in other funds, the companies said in a statement today.
New York-based BlackRock will also pay as much as $970 million
over the next 3 1/2 years if unspecified conditions are met.
``We are extremely excited to welcome the Quellos team to
BlackRock,'' Chief Executive Officer Laurence D. Fink said in the
statement. ``We will combine our hedge and private equity fund of
funds activities on a unified platform.''
The combined business will be one of the largest fund of
funds managers in the world, with more than $25.4 billion in
assets, BlackRock said. Funds of funds typically invest in a range
of different hedge or private equity funds to diversify risk and
provide more predictable returns.
Quellos, based in Seattle, looks after more than $20 billion
in assets. Jeffrey Greenstein, Quellos's CEO, will step down from
his post after the completion of the transaction. He will remain
as an adviser to help with the transition, BlackRock said.
Adding Money
Bryan White, chief investment officer at Quellos, will become
BlackRock's global head of funds of funds, to be renamed BlackRock
Alternative Advisors.
Quellos has been investigated for tax-advisory activities it
has discontinued and which are not part of the transaction with
BlackRock, the companies' statement said.
BlackRock was advised in the transaction by New York-based
Citigroup Inc. and law firm Skadden, Arps, Slate, Meagher & Flom
LLC. Quellos was advised by UBS AG and the law firm Paul Weiss
Rifkind Wharton & Garrison LLP.
The transaction is expected to close around Oct. 1, pending
regulatory approvals, the companies said.
Hedge funds attracted $60 billion in new money in the first
quarter, bringing industry assets to $1.57 trillion, according to
Chicago-based Hedge Fund Research Inc.
--Editor: Connelly
Monday, June 25, 2007
Outro IPO: Man
Man IPO Pricing Values U.S. Arm at up to $5 Billion
By Reuters | Thursday, June 21, 2007
LONDON (Reuters)—Man Group, the world's biggest listed hedge fund firm, has set the indicative price range for the flotation of its U.S. brokerage arm, MF Global, valuing the unit between $4.6 billion and $5 billion.
Man, which unveiled plans in March to de-merge the unit, said on Thursday that it had set the range for the initial public offering at $36 to $39 a share.
Michael Long, an analyst at Keefe, Bruyette & Woods, told Reuters the valuation was slightly above his expectations.
The pricing comes as Blackstone Group, one of the world's biggest private equity investment firms, prepares to float in an IPO as large as $4.75 billion, making it the U.S.'s biggest so far this year.
In September, Man will list the Man Dual Absolute Return Fund, a hedge fund, in New York.
Net proceeds from the flotation of MF Global, which is subject to shareholder approval, will be returned to investors later this year.
In March Peter Clarke, who took over as Man's chief executive from Stanley Fink, told Reuters the business had started to have "a separate, stand-alone identity of its own."
Man said last month that Citigroup, JPMorgan, Lehman Brothers, Merrill Lynch and UBS Investment Bank were underwriting the IPO, and that MF Global had applied to list its shares on the New York Stock Exchange under the ticker symbol "MF."
Man Group's shares were up 0.7% at 630 pence at 10:00 GMT in a falling London market, having risen 2.2% on Wednesday after reporting a weekly 3.55% rise in the net asset value of its flagship AHL fund.
By Laurence Fletcher
By Reuters | Thursday, June 21, 2007
LONDON (Reuters)—Man Group, the world's biggest listed hedge fund firm, has set the indicative price range for the flotation of its U.S. brokerage arm, MF Global, valuing the unit between $4.6 billion and $5 billion.
Man, which unveiled plans in March to de-merge the unit, said on Thursday that it had set the range for the initial public offering at $36 to $39 a share.
Michael Long, an analyst at Keefe, Bruyette & Woods, told Reuters the valuation was slightly above his expectations.
The pricing comes as Blackstone Group, one of the world's biggest private equity investment firms, prepares to float in an IPO as large as $4.75 billion, making it the U.S.'s biggest so far this year.
In September, Man will list the Man Dual Absolute Return Fund, a hedge fund, in New York.
Net proceeds from the flotation of MF Global, which is subject to shareholder approval, will be returned to investors later this year.
In March Peter Clarke, who took over as Man's chief executive from Stanley Fink, told Reuters the business had started to have "a separate, stand-alone identity of its own."
Man said last month that Citigroup, JPMorgan, Lehman Brothers, Merrill Lynch and UBS Investment Bank were underwriting the IPO, and that MF Global had applied to list its shares on the New York Stock Exchange under the ticker symbol "MF."
Man Group's shares were up 0.7% at 630 pence at 10:00 GMT in a falling London market, having risen 2.2% on Wednesday after reporting a weekly 3.55% rise in the net asset value of its flagship AHL fund.
By Laurence Fletcher
Outro artigo sobre o Bear Stearns
Why the Bear Stearns Mess Will Be Contained
(From TheStreet.com, provided by LexisNexis) | June 22, 2007 Friday 17:37 PM EST
Lever up and mismark, a toxic combination. That's my understanding of what happened at Bear Stearns'(BSC:NYSE) hedge funds. And I believe there will be no fallout whatsoever beyond the funds, despite the innate desire by so many people to rumor and panic the marketplace.
It's driving me crazy that there is such unsophisticated reportage of this subprime issue.
First, most of the subprime blowups do not involve credit defaults. In fact, other than New Century Financial, which had to restate all its financials because of defaults, most of the problems have been a lack of liquidity caused by the fear of defaults.
I say that because there is tons of demand for this paper from the likes of sophisticated hedge funds at Lone Star and Farallon Partners. I don't know the Lone Star guys, but the people at Farallon are just about the best in the game and there is no way they'd be buying up these loans if they weren't confident that there would be a payoff well in excess of what they are putting up. Lone Star seeks a similar return. These are the buyers of this kind of paper, and they have done amazingly with it.
That's because they have cash. Which brings me to what these crises are really about: liquidity.
When banks loan to these subprime lenders -- and they can't lend without that capacity -- the subprime lenders become hostage to the credit committees of the big outfits, outfits like Merrill(MER:NYSE) and JPMorgan Chase(JPM:NYSE).
If the credit committees of these big banks smell trouble, they cut off the credit. That's the real worry for the subprime outfits, liquidity, not creditworthiness. Any hint of problems and the liquidity dries up even if there will turn out not to be much of a credit problem with the actual loans. I say that because the Farallons and the Lone Stars are buying these loans fairly close to par. They wouldn't if there was a real risk of credit defaults on subprime.
Not everyone has been that careful. These Bear funds weren't. They borrowed a huge amount of money from the likes of JPMorgan and Merrill, and now those guys are squeezing Bear. And believe me, this is a competitive world and they like to squeeze Bear.
It was quite a business to do what the Bear hedge funds did, which was to borrow a lot of money and buy high-yielding debt at, say, 10 times the capital they had under management. But the same credit committees that were worried about the credit of the subprime loans -- and again, I am saying that there is an overreaction by these credit committees but they are overreactors from way back because their whole job is pretty much to say no because one error can wipe out a year of profits -- are now worried about the lack of liquidity at the Bear fund, most likely because of redemptions.
The problem will go away with liquidity, which is why Bear Stearns is ponying up the money. The credit committees at the various other brokers will stop squawking and you will see an end to all of this.
But you have to understand that at no time was the credit of the actual paper really questioned. These firms just didn't want to lend to a hedge fund that had borrowed massive amounts of money to lever up in subprime and then suffered a hiccup when investors saw the true net worth of the portfolio marked to market.
I believe that had everyone had patience and had the credit committees not been so aggressive, this crisis would have been avoided. Again, it is not the subprime loans that are in question, it is the stewardship of the hedge funds themselves and the investors in those hedge funds that should be questioned.
Which is why I am saying that this problem will be contained. I don't want to be Bear; it will have to take a short-term hit on this stuff; but it is mostly a public relations issue. The vast and profitable organization of Bear can absorb any hit while the paper that the funds had comes back to life.
But you must understand that it is liquidity or the lack of it, not credit (as the rumor and panic players want to force on you), that is driving this. One is just a fact of life, the other would be a true crisis. We don't have one.
Blame some bad managers, not the subprime mortgage business. I am not dismissing the problems of subprime. Lots of people bought homes, watched them appreciate and then took out home equity loans against them. Those people are in trouble. And there are a lot of them -- but that won't be more than a blip for the financial markets.
If people understood this enough, if they were sophisticated about the differences between credit and liquidity, you'd simply be saying, "Those guys had a bad strategy and who can blame people for pulling out before the leverage wiped out their assets? And who can blame the credit committees for worrying?"
Random musings: I worry about Blackstone -- it chews up a lot of capital and we don't want supply here, especially with KKR behind it. Why do these firms need to do these deals? Why bother with the public? Just to get richer, I guess. I don't want to own this paper. ... UBS finally raises MasterCard(MA:NYSE) to my price target of $190. ... Enough people get there and I am out of here! Will Friday's charms -- it always seems to go up Fridays -- be able to offset morning weakness based on the bogus reporting on the Bear Stearns stuff above? I think so. ... Did GE(GE:NYSE) ever seriously consider buying Dow Jones(DJ:NYSE)? Just asking.
(From TheStreet.com, provided by LexisNexis) | June 22, 2007 Friday 17:37 PM EST
Lever up and mismark, a toxic combination. That's my understanding of what happened at Bear Stearns'(BSC:NYSE) hedge funds. And I believe there will be no fallout whatsoever beyond the funds, despite the innate desire by so many people to rumor and panic the marketplace.
It's driving me crazy that there is such unsophisticated reportage of this subprime issue.
First, most of the subprime blowups do not involve credit defaults. In fact, other than New Century Financial, which had to restate all its financials because of defaults, most of the problems have been a lack of liquidity caused by the fear of defaults.
I say that because there is tons of demand for this paper from the likes of sophisticated hedge funds at Lone Star and Farallon Partners. I don't know the Lone Star guys, but the people at Farallon are just about the best in the game and there is no way they'd be buying up these loans if they weren't confident that there would be a payoff well in excess of what they are putting up. Lone Star seeks a similar return. These are the buyers of this kind of paper, and they have done amazingly with it.
That's because they have cash. Which brings me to what these crises are really about: liquidity.
When banks loan to these subprime lenders -- and they can't lend without that capacity -- the subprime lenders become hostage to the credit committees of the big outfits, outfits like Merrill(MER:NYSE) and JPMorgan Chase(JPM:NYSE).
If the credit committees of these big banks smell trouble, they cut off the credit. That's the real worry for the subprime outfits, liquidity, not creditworthiness. Any hint of problems and the liquidity dries up even if there will turn out not to be much of a credit problem with the actual loans. I say that because the Farallons and the Lone Stars are buying these loans fairly close to par. They wouldn't if there was a real risk of credit defaults on subprime.
Not everyone has been that careful. These Bear funds weren't. They borrowed a huge amount of money from the likes of JPMorgan and Merrill, and now those guys are squeezing Bear. And believe me, this is a competitive world and they like to squeeze Bear.
It was quite a business to do what the Bear hedge funds did, which was to borrow a lot of money and buy high-yielding debt at, say, 10 times the capital they had under management. But the same credit committees that were worried about the credit of the subprime loans -- and again, I am saying that there is an overreaction by these credit committees but they are overreactors from way back because their whole job is pretty much to say no because one error can wipe out a year of profits -- are now worried about the lack of liquidity at the Bear fund, most likely because of redemptions.
The problem will go away with liquidity, which is why Bear Stearns is ponying up the money. The credit committees at the various other brokers will stop squawking and you will see an end to all of this.
But you have to understand that at no time was the credit of the actual paper really questioned. These firms just didn't want to lend to a hedge fund that had borrowed massive amounts of money to lever up in subprime and then suffered a hiccup when investors saw the true net worth of the portfolio marked to market.
I believe that had everyone had patience and had the credit committees not been so aggressive, this crisis would have been avoided. Again, it is not the subprime loans that are in question, it is the stewardship of the hedge funds themselves and the investors in those hedge funds that should be questioned.
Which is why I am saying that this problem will be contained. I don't want to be Bear; it will have to take a short-term hit on this stuff; but it is mostly a public relations issue. The vast and profitable organization of Bear can absorb any hit while the paper that the funds had comes back to life.
But you must understand that it is liquidity or the lack of it, not credit (as the rumor and panic players want to force on you), that is driving this. One is just a fact of life, the other would be a true crisis. We don't have one.
Blame some bad managers, not the subprime mortgage business. I am not dismissing the problems of subprime. Lots of people bought homes, watched them appreciate and then took out home equity loans against them. Those people are in trouble. And there are a lot of them -- but that won't be more than a blip for the financial markets.
If people understood this enough, if they were sophisticated about the differences between credit and liquidity, you'd simply be saying, "Those guys had a bad strategy and who can blame people for pulling out before the leverage wiped out their assets? And who can blame the credit committees for worrying?"
Random musings: I worry about Blackstone -- it chews up a lot of capital and we don't want supply here, especially with KKR behind it. Why do these firms need to do these deals? Why bother with the public? Just to get richer, I guess. I don't want to own this paper. ... UBS finally raises MasterCard(MA:NYSE) to my price target of $190. ... Enough people get there and I am out of here! Will Friday's charms -- it always seems to go up Fridays -- be able to offset morning weakness based on the bogus reporting on the Bear Stearns stuff above? I think so. ... Did GE(GE:NYSE) ever seriously consider buying Dow Jones(DJ:NYSE)? Just asking.
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