Monday, October 26, 2009

How does a hedge fund work?

Candice Choi of the The Associated Press recently took time to break down how a hedgefund works and what are the basic ins-and-outs of investing in one. For example, one must have at least a $200,000 income, and the fact that hedge funds are not allowed to advertise, but are reliant on the word-of-mouth marketing by their investors. Read the full article here.

Tuesday, October 13, 2009

Investing continues, but with more caution

According to Financial Planning, more investors are turning back to hedge funds, according to JP Morgan's private bank. But the investors are paying more attention to certain things such as market volatility, liquidity and overall risk. They also care about the transparency of their investments. Read the full article here.

Wednesday, October 7, 2009

Investors returning to high risk investments

According to Reuters, JP Morgan Chase is seeing more investors turning to high risk investments. As investors has held back from investing in high risk opportunities over the past year, now investors are returning, as they believe that the financial crisis is, for the most part, over. Read more about new new income investment flow here.

Monday, September 21, 2009

Possible EU hedge fund regulations could cost $1.3 billion euros

According to Reuters, the EU has introduced a new legislative action called "Alternative Investment Fund Managers" directive with could impose regulations on where hedge fund can be sold along with imposing control on the leverage. This bill was adopted in order to control future financial mishaps. Should it be adopted, it will go into effect in 2012. Read the full article here.

Tuesday, September 8, 2009

Hedge funds continue to grow in August

According to Reuters, hedge funds continued to grow on account of the hope of economic recovery. The average hedge fund rose 1.85%, which was the sixth straight month that hedge funds continued their increase in funds after facing the steep losses late last year. Read the full article here.

Monday, August 31, 2009

London Mayor speaking out about financial regulation

According to the the Daily Telegraph, the Mayor of London, Borris Johnson, does not agree with the current possible European financial regulation of the hedge fund industry. Over 80% of the hedge funds in the world are in the UK, Johnson feels that they need to be protected from the possible regulation. Read the full article here.

Friday, July 31, 2009

TerraVerde Capital Management launches "Green" fund

According to FINAlternatives, TerraVerde Capital Management has launched a fund of hedge funds that will invest in opportunities focusing on the global reduction of carbon emissions.

Richard Bookbinder, managing member of Bookbinder Capital Management, stated:
“Managers that we invest with have underlying strategies that in someway are investing in company that are doing something to reduce carbon, such as clean energy, clean technology, water, weather, agriculture, carbon/carbon trading, the whole gamut."

Read more here.

Thursday, July 30, 2009

Hedge fund managers look to gold for personal investment

A recent survey found that 20 out of 22 hedge fund managers bought gold as a personal investment to protect their personal fund from inflation.

Jeremy Charlesworth, chief investment officer at Moonraker, stated "Gold is the ultimate currency, performing best when economies are at extremes, whether that is inflationary or deflationary."

Read more here.

Tuesday, July 28, 2009

Is there a need for more transparency in the hedge fund business?

In a recent article at FINalternatives, they interviewed CEO Gerald Mentz and Managing Director Meredith Jones of PerTrack. PerTrack is best known in the asset management industry for their analytical software. In this interview, they look at the hedge fund industry now, and where it's headed. Read the full article here.

Thursday, July 23, 2009

HSBC opens new business for hedge funds

Reuters is reporting that HSBC has created a new business unit to target to offer hedge funds and their managers prime services. HSBC Prime Services is a partnership between Global Markets and HSBC Securities Service Units, and will focus on teh equity and fixed income platforms. For more on the new business unit, read here.

Monday, July 20, 2009

New hedgefund to start in Asia

A new Hong Kong based hedge fund will be started by Transbridge Investment Partners. They've hired John Liptak, who is the former head of Bank of America's Asia Special Strategies group to run this hedge fund. It will seek out the mispriced and undervalued securities, and focus in pan-Asia. Read the full story here.

Friday, July 10, 2009

Hedge funds strong in first half of year

According to the Wall Street Journal, hedge funds performed exceedingly well in the first half of 2009, outpacing the stock market in the first half of this year. According to the Hennessee Hedge Fund Index, performance rose 11.7%. This will likely lead to new resiliency and growth in the months to come for hedge funds. Read the full article here.

Wednesday, July 8, 2009

Meriwether To Shut Hedge Fund After Losses

The Wall Street Journal reports that John Meriwether is shutting down the flagship hedge fund he founded in 1999 at his firm, JWM Partners, according to Bloomberg, after it lost 44% between September 2007 and February this year.

This failure, whose effects were magnified by high levels of borrowings the fund made to invest in markets, led the U.S. Federal Reserve to organise a bailout by the portfolio's creditors, and to begin examining the role of hedge funds in financial markets - an examination which continues to this day, and which arguably has intensified since LTCM failed.

What other causes may have contributed to Meriwether's failure?

Thursday, June 18, 2009

Stress tests should be peformed on hedge funds

According to an article at Reuters, hedge fund managers believe that more rigorous stress tests should be performed on hedge funds before they are invested in. These stress tests show how the hedge funds will react to extreme market conditions, they are also key to answering questions such as how your fund is making and loosing money. Read the full article here.

Monday, June 15, 2009

Asian hedge funds look for gain in second half of 2009

According to Reuters, experts are predicting that Asian hedge funds will see an increase in growth in the second half of 2009. They believe this region will recover faster than the US and Europe, in addition to the new asset allocation models adopted by US pension funds.

Aureliano Gentilini, global head of hedge fund research at Lipper, a unit of Thomson Reuters, stated, "Appetite for risk will progressively resume, with new fresh money flows poured to emerging countries as investors' confidence is restored."

Read the full article here.

Wednesday, June 10, 2009

Hedge fund mangers take the risky route

A new article in the New York Times looks at how some hedge fund managers have switched strategies. With the rebound of the markets starting in mid-March, investors who had invested in the risky stocks beforehand.

Even GLG Partners, the hedge fund manager based in London that was hit hard by redemptions and poor returns in 2008, has experienced a turnaround, its funds rising 11 percent for the year, in part because of its large exposure to emerging markets, which have led the global rally.

Read the full article here.

Friday, June 5, 2009

Attempt to regulate hedge funds fail

According to the Wall Street Journal, the attempt for Connecticut to regulate hedge funds has failed. The State Senate passed a bill last week in order to introduce more transparent regulations for hedge funds. However, the House failed to vote on the issue before the legislative season ended Wednesday. For more details, read here.

Friday, May 22, 2009

Insurance increases for hedge funds

According to a recent article at Bloomberg, the cost to insure hedge funds has risen 20% in the past six months. This is largely due to the bankruptcy of the Lehman Brothers and the Bernie Madoff scandal. Read the full article here.

Wednesday, May 20, 2009

Strong April for hedge funds

According to the Wall Street Journal, hedge funds are coming off their strongest month in more than three years in April 2009. The Morning Star Hedge Fund Index rose 3.4%.

Nadia Papagiannis, Morningstar hedge fund analyst,
"Over the last two months, the bulls have dominated the markets, and stories of green shoots in the economy colored the financial media. Many hedge fund managers weren't confident in the sustainability of the rally, and invested with a more conservative market exposure."

Read the full article here.

Tuesday, May 19, 2009

Mergers and acquisitions headed for hedge fund industry

With the current turmoil in the hedge fund industry, it is bracing for a wave of mergers and acquisitions. These will result in bolstering depleted assets and increase the different sources for revenue. A third reason for these impending mergers is the fact that big firms will be looking to round out their assets, by going global and acquiring funds that will be located in different regions. Read the full article here.

Thursday, May 14, 2009

Big plans for FRM Capital Advisors

According to Bloomberg, FRM Capital Advisers will contribute $300 million in strategic investments to hedge funds. They may also be hiring six more managers to aid their investments. The company makes investments in hedge funds for two to four years then takes a share of their fees from the incomes for up to ten years. Read the full story here.

Wednesday, May 6, 2009

More details in the Madoff case

According to the Reuters, Bernie Madoff's personal fortune and business fortune were inseparable. Documents were released Tuesday giving more detail to the situation.

"Madoff used BLMIS to siphon funds which were, in reality, other people's money, for his personal use and the benefit of his inner circle. Plain and simple, he stole it," stated Trustee Irving Picard.

Thursday, April 23, 2009

Hedge funds down in first quareter

According to a recent article at Pensions and Investments, hedge funds fell 7.4% in the first quarter to $1.3 trillion. A large part of this was due to the $1.4 billion in redemptions.

Kenneth J. Heinz, HFR president, made the comment:
“Extreme investor risk aversion subsided into the end of the first quarter, but remained at elevated historical levels as industry consolidation continued through quarter end."

Monday, April 20, 2009

Hedge fund industry will have re-evaluate business model

According to a new article at CNN Money, the hedge fund industry has fallen to $1 trillion, this is down from $2 trillion last year, but is a result of the worst economic year for hedge funds. The article believes that hedge funds will continue to grow, and will receive plenty of investments between 2010 and 2013. This current economic downturn will force the industry to face its downfalls and readjust its business models. Read the full article here.

Wednesday, April 15, 2009

USB looses key hedge fund advisor

According to the Wall Street Journal Europe, Alexander Ineichen has left UBS after eight years. He was a key adviser for the their hedge funds.

Mr. Ineichen didn't manage money at the units, but did produce numerous reports on the state of the hedge-fund industry. Along with peer Huw van Steenis, head of European banks and financials research at Morgan Stanley, Mr. Ineichen has been one of the most well regarded and influential voices commenting on issues facing the industry.

For the full story, read here.

Monday, April 6, 2009

Terms for assets for fund managers eased

Bloomberg reports that a deadline to buy certain securities for fund managers has been extended to April 24. This new deadline will allow more time for public-private investment funds to buy legacy securities which are currently on the balance sheet.

When the program was first detailed last month, the Treasury said that for money managers to be selected to run one of about five public-private investment funds, firms had to prove an ability to raise $500 million in private capital, have a minimum of $10 billion in mortgage backed securities under management, a proven track record in these securities and headquarters in the United States.

Read the full story here.

Wednesday, April 1, 2009

Cayman Islands may protect hedge fund

According to Bloomberg, the Dynamic Decisions Corporate Management may be moved to the protection of an outside firm after the management was accused of gross mismanagement and misfeasance.

According to the filing, London-based Dynamic Decisions founder
Alberto Micalizzi had stated that the fund had “substantial” losses last year and that assets may have fallen to as low as $20 million, excluding illiquid investments. The fund had $550 million at the end of 2008, according to a March 13 conference call the fund’s board had with investors.

Read the full report here.

Friday, March 27, 2009

Millennium Management growing

In a report from Bloomberg, they report that hedge fund Millennium Management has hired more than 15 people since November. They overlook $11.5 billion in assets. They're continuing to hire and secure top talent while many of the financial firms are facing significant layoffs. Click here to read the article.

Wednesday, March 25, 2009

Cayman Islands Tax Information Assistance is Extended to 7 European Countries

According to this article on Hedge Funds Review, seven more European countries are now able to request tax information from the Cayman Islands under provisions in the Tax Information Authority Law. The countries include Germany, Austria, Belgium, the Czech Republic, Luxembourg, the Slovak Republic and Switzerland. Requests related t o civil, administrative, and criminal tax matters are all welcomed.

Tuesday, March 24, 2009

Now is the time to start a hedge fund

In a recent article published by Reuters, they say that now is the time to start a hedge fund. Due to the fallout of last year, they're now employing dislocation and creative destruction to make hedge funds work. There is also abundant talent available, due to the number of employees leaving companies such as JP Morgan and Goldman. The one challenge, however, is obtaining new investors and money to start the hedge funds.

Do you agree? Is now the time to start creating and investing in hedge funds?

Thursday, March 19, 2009

Closed hedge funds

The New York Times recently wrote an article about those hedge funds that did not make it out of the turmoil of the recent stock market. Last year, 200 hedge funds have shut down, which at one point controlled $84 billion. Some of those included: Fairfield Greenwich, Treemont Group, and Kingate Management; all of which had money invested with Madoff. Drake Management also shut down, but had no funds invested in that scheme. For more, read the article here.

Monday, March 16, 2009

Hedge funds are still a good place to grow money

In a recent article at Risk without Reward, they look at three reasons why hedge funds are still a great place for investors to put their money. They focus on the fact that hedge fund managers should be paid for their performance, and shouldn't be allowed to change the rules midway through the process. They also focused on three key points:

1) Gating while charging fees is unacceptable
2) Pay for performance works
3) Don't tinker with high water marks

Wednesday, March 11, 2009

Fund of funds shifting to due diligance and diversifying

In an article at The Business Insider, they point out that assets under the management of fund of funds have shrunk only 30%. The Madoff scandal has had its impact in this industry, as many funds of funds poured money into Madoff scheme, often without making that particular investment "strategy" perfectly clear to investors. Alternative investment strategies have also shifted, as many international investors have begun to rebalance their portfolios. For the full story, click here.

Monday, March 9, 2009

Hedge funds alert to hammer falls

According to's Pauline Skypala, there is concern in hedge fund quarters that much of the rhetoric puts that industry squarely in the frame for blame, and for reform. In his speech to the US Congress last week, UK prime minister Gordon Brown was perceived to be dissing hedge funds as much as investment banks when he said: “How much safer would everybody’s savings be if the whole world finally came together to outlaw shadow banking systems and offshore tax havens.” Read the rest of her article, here.

Friday, March 6, 2009

IMF calls for coordination across countries

In a recent article at Financial Times, they state that the IMF warned banks that they should have a binding international code of conduct to influence behavior of banks when financial crises stretch across borders. They also took the blame for failing to provide leadership.

In a major study of the lessons learned from the financial crisis, the IMF also accepted blame for missing the dangers arising from weakly regulated financial institutions and admitted it had failed to provide global leadership.

But the fund argued that global economic imbalances, notably the huge current account deficit in the US and corresponding surplus in China, had played only a secondary role in creating the crisis.

Thursday, March 5, 2009

Caveat Emptor - The Elusive Definition of Hedge Fund Due Diligence

GAIM Cayman speaker, Jason Scharfman, Corgentum Consulting, LLC writes in a recent article
concerning the term due diligence and its frequent use within hedge fund vernacular. Scharfman writes, yet the exact definition in practice seems quite elusive. One need only examine a cross section of due diligence providers to see that a wide range of services are classified, sometimes misleadingly so, by this term. So what exactly are investors buying when they purchase hedge fund due diligence services?
  • Is it background investigation work?
  • How about compliance reviews?
  • What about investment strategy reviews?
  • Is it a review of operational risks?
For a full overview of his thoughts, visit his original article here.

Tuesday, March 3, 2009

Hedge fund investors want changes

In a recent article at The Australian, they look at the current problem hedge fund managers are facing. Investor boards, such as university endowments and foundation trusts, are demanding that there should be a change in the way hedge funds are operated. However, hedge fund managers are likely to agree to little changes, but not major movements, as they see themselves as major assets to the industry. Investors would like clearer rules on redemption rules and lower fees among other changes.

Wednesday, February 25, 2009

What's Wrong with Risk Management?

Eurekahedge, in a recent article suggests that the biggest problem that relates to risk management is the issue of corporate governance. Within financial institutions, especially in the banking industry, risk management is a must under current regulatory frameworks. The reason for setting up risk management is to balance the benefit between the owenrs of capital and the profit-making function of the bank. Investors provide the capital to financial institutions of generating profit. In turn, these financial institutions then organize resources like proprietary traders, financial engineers, operations support, etc to make use of this capital to generate profits. In return, the compensation of the profit-makers is largely based on how much money they can make. Under these circumstances, the profit-marker has more compensation if it can generate more profit. For the full article, please click here. What further insight can you offer?

Monday, February 23, 2009

The future of Funds of Funds

In a recent article at Bulletin Wealth, they look at the future of funds of funds after last year's downfall in the hedge fund industry. Will this result in a total overhaul for the hedge fund industry? Will the investors possibly have more of a say in what they're contributing their money to? Read the article here.

Friday, February 20, 2009

Tom Berner, Regulatory Reform: Change We Can Believe In

Tom Berner guest blogged for Sunshine Notes a report on regulatory reform and how it will change with the Obama administration. Berner notes two principles which should guide President Obama’s regulatory proposals.

1. You cannot improve or regulate the way the market system works, but most of the world economy operates in a bastardised form of market system where psychology and politics, institutionalized by the existing structure of the economy, alter the way the market functions.

2. The immortal Roman question, “Quis custodiet custodes?” (”Who will watch the watchdogs?”) should never leave President Obama’s consciousness.

Berner expands on both principles in his post. What do you think this will mean for the future of finance? We'd like to hear your thoughts.

Wednesday, February 18, 2009

Questions your hedge fund manager should be able to answer

I recently came across an article at Corgentum written by Jason Scharfman, who will be presenting at Gaim Ops Cayman, and he listed ten questions ever investor should ask their hedge fund manager.

They are:
  1. Appropriate Resources – Are sufficient resources (i.e., staffing levels, budget, etc.) committed to due diligence as compared to other functions such as client service or investment management?
  2. Intensity – What exactly does your advisor’s due diligence process entail (i.e., documentation collection, on-site visits, etc.)?
  3. Documentation – How does your advisor document the due diligence process?
  4. Scope – Is separate operational due diligence performed on operational risk, or is all due diligence – investment and operational – lumped together?
  5. Qualifications – What makes the individuals performing due diligence particularly suited to vet a hedge fund’s investment and/or operational risks?
  6. Diverse Skill Sets – Is there diversity of skill sets among due diligence analysts to ensure a variety of risks are vetted, or do they all have the same general background (i.e., all former hedge fund accountants)?
  7. On-Going Monitoring – After the initial due diligence process is complete, does your advisor perform any on-going due diligence?
  8. In-house or Outsourced – Does your advisor outsource any part of the due diligence process, such as background investigations, to other firms or is all due diligence performed in-house?
  9. Service Providers – Is due diligence performed on a hedge fund’s service providers (i.e., auditors, administrators, etc.)?
  10. Previous Examples – Can your advisor cite recent examples of hedge fund managers they have ever not hired (or fired) because of items uncovered during the due diligence process?

Tuesday, February 17, 2009

Risk Management Key To Funds Of Funds Success

According to Aleksey Matiychenko of FINAlternatives, Barclay’s Global Data Feeder database estimated that about 18% of hedge funds either shut down or stopped reporting performance. Experts agree that the number of funds that go out of business will continue to increase throughout 2009. Matiychenko, using the chart above, teaches what went wrong. Click on the picture for his article.

Follow the link provided above for a sample chart.

Thursday, February 12, 2009

FSA Increases pay

The FSA is set to increase the pay of regulators by 10 million pounds. They believe that by increasing this pay, they'll be able to attract and keep a skilled staff, and will pay will be comparable to the pay of regulators in London. The funds also will help keep the new 'intrusive and directive' supervision. For the full story, see the article at the Guardian.

Wednesday, February 11, 2009

Hedge-Fund Managers Help Raise $1.7 Million at Gala

In lighter news, Bloomberg reports that The annual Hedge Funds Care benefit - - backed by Kenneth Tropin and Michael Vranos -- will downsize from a black-tie dinner to a cocktail party tomorrow night in New York. The nonprofit, which aids child-abuse prevention programs, is hoping a laidback atmosphere will encourage some donors to write bigger checks -- and allow jobless hedge-fund managers to network while eating mini-hot dogs and shrimp instead of filet mignon.

Kathryn Conroy, director of the benefit said she expects Wednesday’s event at Manhattan’s Cipriani 42nd Street will raise about $1.7 million, down from $2.2 million last year. Hedge Funds Care branches in Atlanta, London, Toronto and other cities are scheduling separate fundraisers.

Shows that even in times of trouble, many Hedge Funders put kids first.

Monday, February 9, 2009

Hedge Fund Fee Structures – Economist Discuss how current 2 and 20 Incentivizes Managers

A recent article at the Economist examines a new paper out by two professors at the Case Business School in London. The paper, “Locking in the Profits or Putting it All on Black? An Investigation into the Risk-Taking Behaviour of Hedge Fund Managers”, written by Andrew Clare and Nick Motson, looks at whether hedge fund managers let the fee structure affect the way they run their hedge funds.

A few of the findings from the study include that the hedge fund managers have built in protection from the years where hedge funds perform poorly. Also, that managers who have a solid performance throughout the year typically tend to reduce risk towards the end of the year. For more on this, read the article at the Economist.

Friday, February 6, 2009

The Wild Hedge Fund World: Tamed Through Crisis

According to Michael Maiello of, Forbes was a media partner to Markets Media, host of the Global Markets Summit in New York City. Forbes Intelligent Investing Editor Michael Maiello moderated a hedge fund industry panel that included activist investors Clay Lifflander of Millcap Advisors and Stephen Roseman of Thesis Capital, along with Samuel Hocking, global head of sales for the prime brokerage at BNP Paribas and Kenneth Springer of Corporate Resolutions. Read the transcript from their meeting on Maiello's article here.

Wednesday, February 4, 2009

With changes, current hedge fund model doesn't work

Felix Simon recently took a look on his blog at why the current hedge fund model doesn't work when the value of a hedge fund decreases.

If the value of a hedge fund is rising, then 2-and-20 works as intended: the fund manager gets paid more the more that the value of the fund goes up.

But if the value of the fund falls a lot, then suddenly the fund manager loses pretty much all of his incentives, things start going rather pear-shaped, and there's a good chance that fund investors will end up getting shafted by their fund manager.

What do you think of the situation? Do you agree with Felix?

Tuesday, February 3, 2009

Hedge Funds Quick to Register with SEC

Jeff Benjamin reports, the majority of hedge funds based in the United States are voluntarily registering with the Securities and Exchange Commission, according to Hedge Fund Research Inc. in Chicago and

Almost 55% of more than 2,000 United States-based hedge fund firms are registered with the SEC as of last Friday despite a lawsuit two years ago that overturned a rule requiring hedge fund managers to register as investment advisers.

"It's tough to speculate on exactly why these firms are registering beyond that they certainly feel it is beneficial to be able to show clients they are registered," said Kenneth Heinz, president of HFR.

Is your firm registered? What made the decision for you register or not to register?

Friday, January 30, 2009

Latest updates from the Madoff scheme

Bloomberg recently recounted all of the events that have currently happened since the Madoff scheme was busted. Madoff Enablers Winked at Suspected Front-Running take an in-depth look at the events that have occurred up until this time.

Thursday, January 29, 2009

Has the moment for greater UK hedge fund regulation passed?

According to Laurence Fletcher at Reuters, UK Hedge Fund managers are undergoing rigorous questioning because of worries about future Ponzi schemes. Investors are beginning to pull back assets and are now playing it safe. The current temporary ban on short-selling financials in the UK has encountered much criticism from analysts and hedge fund executives. It will be interesting to see if the UK will soon follow the U.S., where Treasury Secretary nominee Timothy Geithner has pledged to pursue hedge fund registration. What do you think?

Tuesday, January 27, 2009

Proactive due diligence in today's world

Sidney Wigfall recently took a look at what needs to be done for due diligence in a post-Madoff world. These complex funds lack transparency, and it's imperative that they be monitored by proactive due diligence.

Due diligence is the process and set of procedures used to gather, analyze, and evaluate information about a particular investment and/or investment manager for purposes of deciding whether such investment opportunity is appropriate and prudent.

For more on what change with the oversight on hedge funds read
Due Diligence: Implications for Investors In A Post Madoff World.

Sidney Wigfall will be joining us as a speaker at GAIM Ops Cayman. Find out more here.

Monday, January 26, 2009

PwC Proposal on Fair Value Accounting

PwC has released a discussion paper proposing changes to fair value accounting. According to Castle Hall Alternatives, they do not propose eliminating fair value accounting - thankfully - but they do suggest that, for banks, only "credit related" losses be reflected in net income (this is, of course, the headline number that everyone focuses on for publicly traded entities.) Other changes in current market value unrelated to the borrower's ability to repay a loan, such as write downs due to an illiquid or dysfunctional market, would be recorded in "other comprehensive income". OCI is essentially a bucket for items that companies don't want to pass through their reported, "business" P&L.

Thursday, January 22, 2009

Hedge fund investors removing money

According to Bloomberg, $152 billion was withdrawn from hedge funds in the fourth quarter of 2008. At the same time, hedge fund investors saw the lowest return on investments in two decades.

Kenneth Heinz, the president of Hedge Fund Research, said:
“Investor risk aversion remained at historically extreme levels through year end. Investor redemptions were widespread and indiscriminate across fund strategies, regions, asset sizes and performance.”

Monday, January 19, 2009

Fee structure for hedge funds in question

Recently at the Wall Street Journal, they question whether the current fee structure for hedge funds is still working due to their poor performances. The current structure is 2% of assets and 20% of gains, which allows investors to make money no matter what the market performance is. However, last year, this did not pan out, as many of the investors managed to loose even some of their original investments. For more, read the article at the Wall Street Journal.

Friday, January 16, 2009

Mary Schapiro: SEC Chief Nominee

"I have never been afraid to go after people I thought had violated the public trust," said SEC Chief Nominee Mary Schapiro at her nomination hearing this week. Schapiro has vowed to go after white collar financial crime and restore the public trust within the Securites and Exchange Commission. Among the many items on her list to change, Schapiro spoke about slowing down the IFRS transition process. According to, she said she would immediately focus on fixing the regulatory holes that contributed to the credit crisis. How do you think she will impact the changing economic climate of the US? We'd like to hear your thoughts.

Wednesday, January 14, 2009

Why do fund of funds exist?

Clusterstock recently asked Why do Fund of Funds exist? The article states that it's evident that due diligence by fund of funds is not occurring, which is evident due to the recent unveiling of the Madoff scheme. Fund of funds really can't go through the books of these hedge funds, they simply aren't allowed. Fund of funds are simply selling access to these hedge funds.

What do you think?

Tuesday, January 13, 2009

Hedge Funds and Funds of Funds: Biting the Hand That Feeds You

Seeking Alpha covered the "juicy" quote about the Fund of Funds bunch from a hedge fund manager.

"Funds of funds are, in general, a highly overrated bunch, many of them attracting people who can't manage money themselves," says Jonathan Trugman, who runs a small New York stockpicking hedge fund, Pendulum Capital Management, that made money in 2008. "You have to be selective about which funds of funds you do business with, because much of it is allocated more by marketers and back-slappers than by true analysts."

Hm...What do you think? The writer of this particular article seems that its part of the human condition to resent those that we are dependent upon. Within this closed world, should we be constantly worried over those who closely align with us yet may be the enemy?

Your thoughts are appreciated.

Monday, January 12, 2009

Giovanni Beliossi, Managing Partner and CEO at FGS Capital, weighs in on 2009 Hedge Fund Strategies for Success

Giovanni Beliossi, Managing Partner and CEO at FGS Capital and guest host Ron Ianieri from the Options University weigh-in on CNBC's Martin Soong & Sri Jegarajah, YouTube video --what is the alternative investment industry is doing to cope with the credit crisis.

Friday, January 9, 2009

Fund managers warn against sharing short selling trade practices

According to an article at the Albourne Village, association representing fund managers in th US, UK and Australian have let officials know that publishing their techniques about short selling trade positions could ruin the industry. They fear that if the information is made public, other investors will mimic their actions and use similar trading strategies. The three associations represented, Financial Services Association, the Investment Company Institute of the US and the Investment Management Association of the UK, have over $15 billion currently under their management.

Read the article here.

Thursday, January 8, 2009

Poll: Hedge Fund Oversight Should Top SEC Agenda

According to Greg Schulas and Ignites, The Securities and Exchange Commission should make stricter hedge fund regulations a top priority of its 2009 agenda. That’s according to a strong plurality of Ignites poll respondents.Approximately 49%, or 230 voters, said placing more stringent regulations on hedge funds should be the first item on the SEC’s to-do list. The high ranking comes in the wake of Bernie Madoff's alleged $50 billion-plus Ponzi scheme, which has renewed calls for tougher hedge fund oversight.
With tougher oversight, more due diligence can occur--but at what cost?
How do you see this implementation working with Hedge Funds?
We'd love to hear your thoughts.

Wednesday, January 7, 2009

White Paper by Pershing Confirms Importance of Counterparty Risk Management to Managers

HedgeFunds Review discusses in this latest article that the results of a survey published by Pershing shows us that hedge funds are viewing counterparty risks as a much more important issue than they have in the past. Over 50% of hedge funds surveyed mentioned that they were currently monitoring counterparty risks on a daily basis and of those almost 85% consider it an important business issue.

The economic crisis has put more pressure in the eyes of hedge funds managers to keep a close watch on counterparty risks. Even though more managers are starting to pay attention to counterparty risks, there is still much work to be done on creating a comprehensive automated system. Currently, most hedge funds rely on a manual process to keep track of the counterparty relationships. How is your hedge fund dealing with counterparty risks?

Hedgeweek has also written a similar article.

Tuesday, January 6, 2009

Madoff investors may have to return profits

In the recent ruling of the Bayou Group, those who cashed out with their interest two years of the collapse of the hedge fund were forced to had back their principle as well as their interest received. This is enough evidence to prove that they saw something wrong with the hedge fund. This could provide a road map for recovering investments in the Madoff hedge fund. Those who invested may have to return their interest, as well as the principal originally invested in the business. For more on the story, read the article here at Newsweek.