A website dedicated to sovereign wealth funds has published a list of the largest SWF in the world - interesting reading.
A website dedicated to sovereign wealth funds has published a list of the largest SWF in the world - interesting reading.
Posted at 08:56 AM | Permalink | Comments (0) | TrackBack (0)
Alpha Magazine's latest ranking of European hedge fund managers shows the following assets as of January 1, 2009 (see press release):
Alpha's Europe Hedge Fund Top 5Rank Firm Total Capital ($ millions) 1 Brevan Howard Asset Management 26,840 2 Man Investments 24,400 3 Barclays Global Investors 17,000 4 BlueBay Asset Management 16,700 5 Bluecrest Capital Management 13,273
Posted at 07:13 AM in Industry Statistics | Permalink | Comments (0) | TrackBack (0)
Kroll have recently published their latest Global Fraud Report. This is a very interesting summary of the causes and impact of a range of global frauds across industries.
"Ultimately fraud involves human beings, both as perpetrators and victims. Greed has again demonstrated that, even before the downturn, it was more than a match for good sense or ethics among many supposedly sophisticated investors – whether in the Madoff affair or the sub-prime follies which started the current economic slide. As this edition shows, understanding the effect of bad economic times on people’s emotions is essential to seeing where fraud is headed, and what might be done about it. Some individuals will be more careful to protect their assets. Others, however, will be more desperate: those with a criminal bent may look to maintain lifestyles through running scams; more honest ones might be more susceptible to get-rich-quick schemes or self-proclaimed Robin Hoods that promise to restore depleted finances. Still others, normally perfectly honest, may even engage in fraud and misrepresentation for what they consider noble motives – to preserve the jobs of thousands of colleagues.
As this edition notes, what role regulation can play in the face of people’s eternal willingness to believe the too-good-to-be-true is unclear. This does not mean we are helpless. Due diligence and compliance best practice, as well as applying the correct tools to fight back once fraudsters have struck, are all part of addressing this threat."
Couldn't agree more.
www.castlehallalternatives.com
Hedge Fund Operational Due Diligence
Posted at 08:16 PM in Hedge funds | Permalink | Comments (0) | TrackBack (0)
The National Post newspaper in Canada today published an interesting opinion piece commenting on the Canadian financial system. The article compares the fate of the US banking sector to the main Canadian banks – RBC, CIBC, TD, BMO, Scotiabank and National Bank.
The Post notes that “everywhere, economists are wondering how Canadian banks managed to avoid most of the crummy securitized debt that is crippling other democracies’ financial institutions.” This is not to say that Canada should be too self-congratulatory, mind you, as the country’s financial system has hardly been immune from the delights of securitization – asset backed commercial paper was a home-grown fiasco.
The comments which caught our eye, however, were the concluding paragraphs.
“International observers have noticed that Canada’s ‘principles based’ financial regulation takes a very different form from the ‘rules based’ style prevailing in the United States.
Down South, lenders are engaged in a constant chess game with the government. Here, the bank executives and regulators have absorbed each other’s values to such a great degree – both taking the view that, quite simply, the first goal of the Royal Bank of Canada is to ensure that there is still a Royal Bank of Canada 100 years from now – that internal audit procedures are tougher than any regulator would dare demand, and arguably more effective than any regime created solely by a narrow, politically shifting rule set. Plain old-school snobbery plays a role too. Only by a means of noblesse oblige can you staff a modern banking system, as we have, without dangling big short-term rewards in front of top executives and doing away with substantive board oversight.
Unfortunately, it’s not going to be easy for any foreign banking institution to import Canada’s banking culture without having had Canada’s history. But, hell, they could at least adopt some of the maxims. Toronto-Dominion’s CEO told Marie-Josee Kravis that he pulled TD out of the game of buying securitized debt products years before the crisis, for one simple reason: the instruments had become inscrutable. “If I cannot hold them for my mother-in-law,” he said, “I cannot hold them for my clients.” Given the “in-law” part, that’s not setting the consciousness bar very high – but it is higher, at any rate, than where many foreign institutions put it over the last decade.”
Regulation will, of course, be front and center for both hedge fund managers and hedge fund investors over the coming months. The debate over rules based or principle based regulation, however, is unlikely to be solved any time soon – principles lack specificity so we need rules; rules create loopholes, so we need principles. This is one of the insoluble conundrums of our age.
Perhaps the point of this article, however, is to remind us that rules ultimately regulate people, not inanimate corporations. What we need to think about, then, is the motivations of the decision makers ultimately subject to regulation. To put it simply, if people are motivated by short term cash and have no longer term responsibility - which is unfortunately a fairly common theme in this financial crisis - then the tighter the rules the better, because tight rules are the only way to reign in self-interested behavior.
On the other hand, if decision makers have a sense of accountability and an eye to the future, then we come back to the maxim that people can regulate themselves better than any government can. Governments are concerned by re-election - which often puts their time horizon not much further out than the quarterly earnings cycle which preoccupies so many business executives.
Against this background, we continue to believe that, in the hedge fund space, focus - and by focus we mean investor pressure - needs to be on alignment of interests between investors and managers. At the very least, changing incentive fees to a longer time horizon with clawback mechanisms etc. will create more accountability and something of a longer term time horizon in the manager community. Ultimately, that may well be far more effective at protecting investor interests than the regulatory rulebook.
castlehallalternatives.com
Hedge Fund Operational Due Diligence
Posted at 01:11 PM in Hedge funds | Permalink | Comments (0) | TrackBack (0)
The judge in the Chrysler bankruptcy case has now forced the hedge funds forming the "Chrysler non TARP lenders" to identify themselves as they pursue their case.
Posted at 07:11 AM in Hedge funds | Permalink | Comments (0) | TrackBack (0)
Alpha Magazine has published its most recent update of the top 10 single strategy hedge funds. This includes, helpfully, the position at January 1, 2009 - after Dec 31 redemptions.
"Alpha's" Hedge Fund 100 Top 10 Rank Firm Total Capital ($ millions) 1 Bridgewater Associates 38,600 2 JPMorgan Asset Management 32,893 3 Paulson & Co. 29,000 4 D.E. Shaw & Co. 28,600 5 Brevan Howard Asset Management 26,840 6 Man Investments 24,400 7 Och-Ziff Capital Management Group 22,100 8 Soros Fund Management 21,000 9 Goldman Sachs Asset Management 20,585 10 Farallon Capital Management 20,000 10 Renaissance Technologies Corp. 20,000
Posted at 07:28 AM in Industry Statistics | Permalink | Comments (0) | TrackBack (0)
We were shocked to learn of the untimely passing of Greg Newton, the voice behind the NakedShorts blog. I first met Greg at a conference in Canada a number of years ago, and thereafter had the opportunity - and privilege - to remain in contact on a range of blogging topics related to life, the universe, and sundry hedge fund everythings. A sad, sad loss.
Posted at 11:45 PM in Hedge funds | Permalink | Comments (0) | TrackBack (0)
On a (slightly) lighter note, we saw the attached cartoon in a Quebec magazine, L'actualite, this week. The cartoonist, Andre-Phillippe Cote, also drew the great panel on the Madoff scandal we referenced here.
Posted at 09:22 AM in Hedge funds | Permalink | Comments (0) | TrackBack (0)
According to Reuters, Ponzimonium is breaking out in the US.
"Hundreds of people in the United States are under investigation for financial scams, many involving Ponzi schemes, a U.S. regulator said on Friday, calling the phenomenon "rampant Ponzimonium."
While none are as mammoth as disgraced financier Bernard Madoff's $65 billion fraud, multimillion-dollar "mini Madoffs" are proliferating from New York to Hawaii, the head of the Commodity Futures Trading Commission said.
So far this year, the agency has uncovered 19 Ponzi schemes, which depend on an influx of new capital instead of investment profits to pay existing investors.
That compares with just 13 for all of 2008."
Posted at 07:37 AM in Hedge funds | Permalink | Comments (0) | TrackBack (0)
Our recent post on the "SEC's dirty laundry" made reference to "prospectus creep", or the tendency for hedge fund attorneys to add ever more disclaimers and "flexibility" to hedge fund offering documents.
Posted at 02:03 PM in Hedge funds | Permalink | Comments (0) | TrackBack (0)
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