WASHINGTON Recommendations for public companies and institutional investors regarding hedge fund activism were issued March 18 by the Conference Boards working group on hedge funds. For institutional investors, the 71-page report recommends promotion of transparent voting policies and prudent investment in activist hedge funds. Corporation executives are urged to pay attention to institutional holdings and trading activity in their stock and to develop an understanding of hedge fund investment strategies and activist tactics.
Representatives from the following firms were among the members of the working group: Alcoa Inc., Applebees International Inc. BGI, The Coca-Cola Co., Bulldog Investors and the Florida State Board of Administration.
The Conference Board is seeking public comment about the report, which is available at http://www.conference-board.org/workingGroups/wkgGrpDescribe.cfm?Council_ID=245. Comments are due by April 30 and should be sent to Matteo Tonello at [email protected]
Hedge fund debuts slowed in 2007
CHICAGO Hedge fund launches were down in 2007 to 1,152 new funds from 1,518 in 2006, according to new data from Hedge Fund Research. Historical HFR data showed that 2,073 hedge funds debuted in 2005. In 2007, investors demonstrated a preference for established managers, as evidenced by the concentration of assets in the largest funds, with requirements for institutional infrastructure likely constituting a higher hurdle for new fund launches, HFR President Kenneth J. Heinz said in a news release. HFR researchers also reported that the pace of hedge fund closures was down 21% to 563 fund liquidations in 2007, compared to 717 the prior year.
10% of global private equity from sovereign funds
LONDON Sovereign wealth funds committed between $120 billion and $150 billion to private equity in 2007, representing 10% of global private equity commitments, according to data released this month by Private Equity Intelligence. This is the first time PEI has done this research.
Total assets in sovereign wealth funds were $3.05 trillion in 2007, PEI said. An estimated 60% of sovereign wealth funds are investing in private equity and an estimated 62% are investing in real estate. Some 95% own real estate directly, 60% invest in real estate funds and 39% have a separate real estate investment arm.
Carlyle Capital officially liquidates
WASHINGTON Carlyle Capital Corp., a publicly traded debt fund sponsored by private equity firm Carlyle Group, announced it is winding up and will be liquidating its assets.
Debt renegotiations with lenders collapsed earlier this month and, as expected, lenders sent default notices and are in the process of taking over the companys assets: a $21.7 billion portfolio of U.S. government agency AAA-rated residential mortgage-backed securities.
As a result, the company believes its liabilities exceed its assets, according to a notice issued last night.
Class A shareholders all six non-U.S.-based managing directors of Carlyle Group approved the board of directors recommendation to wind up the company on March 16. The six are Jean-Pierre Millet, Wolfgang Hanreider, David Fitzgerald, Robert Edward Hodges, Gregor Anderas Philip Bohm and Eric Sasson. All remaining assets will be sold by a court-appointed liquidator.
Hedge funds hold nearly $2.2 trillion, report says
PARIS Assets managed in nearly 10,000 hedge funds totaled $2.16 trillion as of Dec. 31, estimated researchers at Credit Agricole Structured Asset Management in a new report. The CASAM 2007 Industry Report said that while most hedge funds are domiciled outside of the U.S., mostly in the Cayman Islands, 60% operate in the U.S. and 25% have their principal operations in New York. Long/short equity was the largest hedge fund strategy, holding $568 billion as of Dec. 31, followed by event-driven multistrategy with $245 billion and global macro with $221 billion. CASAMs data were culled from the firms CISDM database covering more than 6,000 hedge funds, funds of funds, commodity trading advisers and commodity pools.
Capital Z takes stake in LightKeeper
NEW YORK Capital Z Asset Management bought a stake in emerging long/short equity hedge fund manager LightKeeper Investments. Terms of the deal and the size of Capital Zs stake in the $58 million global technology specialist were not disclosed, said spokeswoman Mary Beth Grover. CZAM manages funds that provide seed capital and buy minority stakes of hedge funds. With the stake in LightKeeper, CZAM expands its offering of investments in technology a proven alpha generator, CZAM CEO Christianna Wood said in a news release.
Hedge fund indexes in positive terrain
NEW YORK Most major hedge fund indexes moved into positive performance territory in February after negative January returns.
February performance of broad hedge fund indexes was led by Eurekahedge Hedge Fund index, at 2.72%; followed by Greenwich Global Hedge Fund index, 2.2%, HFRI Fund Weighted Composite index, 2.08%; Credit Suisse/Tremont Hedge Fund index, 1.61%; and Barclay Hedge Fund index, 1.58%. The HFN Hedge Fund Aggregate performance was 2.93%. Performance of major market indexes in February was -0.6% for the Lehman Aggregate Bond index; -3.5% for the S&P 500 index; and -0.7% for the MSCI World index.
Macro hedge fund strategies continued to benefit from global market volatility and had the best returns in the shortest month of the year with the HFRI Macro (Total) index returning 6.86% and the HFRI Macro: Systematic index, 5.04%.
Returns of most hedge fund indexes and strategies remained flat at best or negative for the year to date, although all beat the performance of major market indexes. For the first two months of the year, Credit Suisse/Tremont Hedge Fund index led the pack with a 0.10% return followed by Eurekahedge Hedge Fund index, 0.07%; HFRI Fund Weighted Composite index, -0.48%; and Greenwich Global Hedge Fund index, -0.6%. For the same period, the Lehman Aggregate Bond index returned -1.2%, while the S&P 500 index was -9.05% and the MSCI World index, -8.4%.
Kohlberg closes 6th midmarket buyout fund
NEW YORK Kohlberg & Co., closed the $1.5 billion Kohlberg Investors VI, a middle-market buyout fund. Investors include the $11.6 billion Ohio School Employees Retirement System, Columbus.
Threadneedle opens Asian long/short fund
LONDON The Asia Crescendo Fund, a long/short equity fund, was opened to investors by Threadneedle Investments. Jan de Bruijn, senior manager on the firms Asian investment team, is the portfolio manager. Analyst coverage of Asian equities is patchy beyond the well-known names this provides a fertile hunting ground for us given our emphasis on primary research and fieldwork, Mr. de Bruijn said in a news release. In the course of this research, we find lots of valuation anomalies in the region. The long-short structure increases our ability to turn those anomalies into alpha. The hedge fund is fundamentally managed.
Rydex offers fund of funds
ROCKVILLE, Md. Rydex Investments launched the Alternative Strategies Allocation Fund, a fund of funds that offers exposure to absolute-return, commodities, currency arbitrage, managed futures and real estate strategies through investment in Rydexs own and externally managed mutual funds and ETFs. The fund is quantitatively managed, said Edward Egilinsky, managing director of alternative investments. He said Rydex has been getting interest from defined benefit and defined contribution plan sponsors in the fund, which offers alternatives exposure at a lower cost in a single package. The fund also is available to retail investors, Mr. Egilinsky said.