Hedge Fund Marketing Plan | Sales Plans for Hedge Funds

HF Marketing Plan

Hedge Fund Marketing Plan | Tenacity Q & A

Question: Richard, from a capital raising perspective, what would you say is the time frame to raise money (say $10+ million) for a small, start-up hedge fund with no name recognition and with principals who have no name recognition and no pedigree in the alternative investment world? I would say 12 months at best. What do you think?

Answer: Great question. I would say 16 - 20 months would be realistic if they keep their heads down, have a great team and solid investment process. Those are big if's though - it is easy to get distracted or discouraged. The first fund I marketed took 9 months straight of cold calling, emails and conferences to raise a single dollar but after 18 months we were raising $1M/week in new assets.

Related to Hedge Fund Marketing Plan:

Permanent Link: Hedge Fund Marketing Plan

Tags: Hedge Fund Marketing Plan, Hedge Fund Marketing Plans, Hedge Fund Asset Raising Plans, Plan for Raising Hedge Fund Capital, Plan on how to raise capital for hedge funds, hedge fund

Man Group Hedge Fund | Hedge Fund Tracker Update

Man Group

Warning by Man as fund falters

Just a quick note to inform you that our RAB Capital notes have been updated within our Hedge Fund Tracker Tool read it now by clicking here.

Free Daily Hedge Fund Newsletter

Related to Man Group Hedge Fund Tracker Update:

Permanent Link: Man Group Hedge Fund Update

Tags: Man Group, Peter Clarke, AHL, Glenwood, Man Global Strategies, RMF, Numis Securities

Market Index Fund Investments | Hedge Fund Notes

Market Index Fund

Market Index Fund Investments

Ever wonder what hedge funds use when they just want to go along with an index, reaping the gains from a possible rally or helping to diversify and take risk out of their potfolio equation? That’s a no-brainer; just buy shares of a tracking index. QQQQ for the NASDAQ, DIA for the Dow Jones, IWM for the Russell 2000 and SPY for the S&P 500 are all vehicles of choice if you wish to track tick for tick an index. Compiling data from TickerSpy’s database of hedge funds shows that 61 have a position in the market index itself. The most popular by far is the SPY, numbering 37 out of the total 61 funds currently holding a position indirectly in the US markets.

So, what is the SPY? Technically speaking it is known as the SPDR Trust, Series 1 and is a unit investment trust that issues Standard & Poor’s Depositary Receipts. But in laymen terms; it is a tracking stock for the S&P 500 Composite Stock Index, which consists of the US’s largest companies. Its value is roughly worth 1/10th of the index and mirrors the S&P’s daily undulations. Investors and traders alike can buy and sell shares of the SPY just like that of GM or YHOO. The advantage is that there is no need to create and balance a basket of stocks resembling the index, and entry and exit from the market is as easy as the click of a mouse.

A very liquid market, easy entry / exit and profit opportunity draws hedge funds to favor index trackers, such as the SPY. According to TickerSpy’s most current data on SPY holdings, 37 hedge funds had positions totaling $5.47 billion. However; quarter-over-quarter investment in the SPYs declined $1.43 billion dollars or 21%. Money has been coming out of the index trackers and flowing into other investment opportunities or just sitting on the sideline.

Eight of the 37 funds took new positions as of the start of the quarter, perhaps betting on an exhaustion and overextension of the current downtrend. Thirteen of the 37 took money off the table and slashed positions; while sixteen put more money on adding to their current holdings.

The bag is mixed when it comes to the number of funds adding to or taking away from SPY positions. But one thing is clear; the larger firms have been dumping the SPYs, while smaller firms have been picking them up. Four funds accounted for 90% of the cash outflows from the SPY while the 24 funds establishing new and adding to positions only generated $585 million in cash inflows.

Guest post contributed by Anthony Zipparro

Free Daily Hedge Fund Newsletter

Related to Market Index Fund Investments by Hedge Funds:

Permanent Link: Market Index Fund Investments

Tags: Market Index Fund, Market Index Funds, Stock Market Index Funds, Index Stock Market Funds, Stock Market Investing by Index Funds, index fund, index funds

Hedge Fund Redemption Day | September 30th

Hedge Fund Redemption Day

Hedge Fund Redemption Day | Details

Hedge Fund Redemption DateToday is the last day of Q3 which means deadline day for thousands of hedge funds which now owe payments to those investors who have requested a redemption. Here's a quick run down on redemptions:

Redemption Notice Periods: Most hedge funds have 45-65 day redemption notice periods. This means investors must notify hedge funds 45-65 days before quarter end.

Lock Up Periods: Most hedge funds have lock up periods - the average length of which is one year. What this means is that when someone invests in a hedge fund they agree that they will not take their money out within a certain amount of time requested by the manager. Lock-up periods can range from 3 months to 5+ years. Many funds offer relatively soft lock-up periods which allow investors to pull their money within the lock-up period but penalize them by 1.5-2.5% for doing so.

Gating Clauses: Another way in which hedge funds are shielded from an immediate or short-term run on their assets is through the use of what are often called Gating Clauses. Gating clauses allow hedge fund managers to stipulate that only a certain percentage of assets may be withdrawn from the fund per quarter or year. These were not often used in the past but rumors of dozens of managers recently "closing the gate" have been numerous.

Institutional Investors & Small Hedge Funds: The wild cards here are institutional investors and small hedge funds. Institutional investors often invest such large amounts of money they negotiate more flexible or lenient capital constraint agreements when they make hedge fund investments. On the same note of lenient terms, many small hedge funds do not have gating clauses and often tout their short lock-up periods.

Free Daily Hedge Fund Newsletter

Related to Hedge Fund Redemption Day:

Permanent Link: Hedge Fund Redemption Date

Tags: Hedge Fund Redemption Date, Hedge Fund Redemption Dates, Hedge Fund Redemption, Hedge Fund Redemptions, Redemptions by Hedge Fund Mangaers, hedge funds redemptions

Absolute Capital Management | Holdings & Hedge Fund Notes

Absolute Capital Management

Absolute Capital | Hedge Fund Notes

Absolute Capital Management | Jonathan TreacherThe following piece on Absolute Capital Management is being published as part of our daily effort to track hedge funds in the industry. To review other hedge fund research notes please see our Hedge Fund Tracker Tool.

Troubled hedge fund firm Absolute Capital Management Holdings will see more investors than expected head for the door, it said today. The Swiss-based firm, which is listed on London’s Alternative Investment Market, posted a €1.2 million loss for the first half, and said it would not recommend a dividend. The firm’s assets under management at the end of June were just US$884 million, down from US$3.25 billion a year ago, due to hedge fund redemption requests and poor performance as well as the demerger of its emerging markets credit division, Argo Group. In July, Absolute Capital Management's Chairman Jonathan Treacher said he expected as much as €500 million in redemptions.

“While the performance of certain of our funds’ A class portfolios in the first six months has been encouraging, looking ahead, the group expects to have substantial redemptions from its funds at the end of the lock-up periods,” the firm said, due in part to the liquidation of its Absolute Activist Value Fund. It added that it would continue to monitor the viability of its other funds.

Last year, AbCap was rocked by the abrupt departure of co-founder Florian Homm and the revelation that Homm had put as much as a quarter of AbCap’s equity fund’s assets into highly-illiquid pink sheets. The firm then suspended redemptions, putting the illiquid assets into side pockets. Source

Free Daily Hedge Fund Newsletter

Related to Absolute Capital Management Hedge Fund Notes

Permanent Link: Absolute Capital Management | Jonathan Treacher
Tags: Absolute Capital Management , London’s Alternative Investment Market, Argo Group, Jonathan Treacher, Absolute Activist Value Fund, Florian Homm, absolute capital hedge fund

Powe Capital Management LP | Hedge Fund Tracker Notes | 1 Page Guide

Powe Capital Management

Powe Capital Management | Hedge Fund Notes

The following piece on Powe Capital Management is being published as part of our daily effort to track hedge funds in the industry. To review other hedge fund research notes please see our Hedge Fund Tracker Tool.

Rory Powe, one of London's best-known fund managers, is closing his flagship hedge fund after poor performance prompted investors to flee. Powe Capital's €330m Modulus Europe is to be liquidated after a six-year winning streak ended last summer, and it lost 21 per cent this year. Since being set up in 2002 it was up 64.8 per cent. Many other hedge funds have shut down or restructured this year in the face of investor redemptions as the industry has produced some of its worst performance ever. Before Mr Powe set up his hedge fund, he ran one of the country's biggest unit trusts, gaining a stellar reputation after his fund soared on the back of technology investments - but Invesco Perpetual European Growth then plunged again when it was caught out by the dot com bust.

Mr Powe said he and a team of seven - reduced from 10 - would continue running two other hedge funds, the €110m Principia Europe and the €17m Tensor Europe. "The fund suffered because of its exposure to small and medium-sized companies and the fact that stock picking and bottom-up research and analysis has really gone unrewarded in the markets of the past year," he told the Financial Times. He said it was hard to manage the fund in the face of big investor withdrawals, and closing was better than either limiting redemptions or cashing in the easiest to sell holdings, which would leave investors who remained with a fund "unacceptably skewed towards its least liquid names". In a letter to investors, Mr Powe said the fund, now in the hands of liquidators, was able to return the 80 per cent it held in cash immediately and had another 20 per cent in hard-to-trade stocks which would be wound down over time, with no management fee. He expressed "regret and sadness" but said the closure was done in the best interests of investors. Source

Free Daily Hedge Fund Newsletter

Related to Powe Capital Management LP Hedge Fund Notes:

Permanent Link: Powe Capital Management LP | Rory Powe
Tags: Powe Capital, Rory Powe, Modulus Europe, Invesco Perpetual European Growth, Principia Europe, Tensor Europe,hedge fund, hedge funds, hedge fund manager, Powe Capital Management

RAB Capital Hedge Fund | Hedge Fund Tracker Update

RAB Capital

RAB Wins New Lockup In Investor Vote

Just a quick note to inform you that our RAB Capital notes have been updated within our Hedge Fund Tracker Tool read it now by clicking here.

Free Daily Hedge Fund Newsletter

Related to RAB Capital Update:

Permanent Link: RAB Capital Update
Tags: RAB Capital, Special Situations fund, Stephen Couttie, Philip Richard, RAB Capital Hedge Fund

Tudor Hedge Fund | Paul Tudor Jones 13F Holdings Analysis

Tudor Hedge Fund

Tudor Hedge Fund 13F Holdings Analysis

Tudor Hedge Fund | Paul Tudor JonesThis post is being written as part of HedgeFundBlogger.com's Investment Securities Tool which analyzes the holdings of hedge fund managers.

Next up in the macro hedge fund tracking series we have Tudor Investment Corp, the brainchild of Paul Tudor Jones. Taken from Wikipedia, the bio of PTJ is as follows: "In 1980 he founded Tudor Investment Corporation which is today a leading asset management firm headquartered in Greenwich, Connecticut. The Tudor Group, which consists of Tudor Investment Corporation and its affiliates, is involved in active trading, investing and research in the global equity, venture capital, debt, currency and commodity markets. One of Jones' earliest and major successes was predicting Black Monday in 1987, tripling his money during the event due to large short positions. Jones uses a global macro strategy when trading in some of his funds. This strategy can be seen in the 1987 PBS film "TRADER: The Documentary". The film shows Mr. Jones as a young man predicting the 1987 crash. Jones' firm currently manages$17.7 billion (as of June 1, 2007). Their investment capabilities are broad and diverse, including global macro trading, fundamental equity investing in the U.S. and Europe, emerging markets, venture capital, commodities, event driven strategies and technical trading systems." So, as you can see, PTJ is quite an accomplished gentleman, earning him the title of THE macro trader.

So, now that we've got a background on Jones and Tudor Investment Corp, let's take a quick look at his portfolio highlights. Keep in mind that this is merely a brief summary of Tudor's top holdings. Due to the time sensitive nature of the 13F material, I wanted to get this information posted before the next set of filings come out in November.

Top 20 Holdings by % of portfolio
1. Plains Exploration and Production (PXP) - Added to his position by $160 million
2. Anadarko Petroleum (APC) - Nearly doubled his stake
3. Mirant (MIR) - Increased position by 21%
4. Elan (ELN) - Decreased position by 22%
5. SPDR Trust (SPY) - New position
6. Entergy (ETR) - New position
7. Occidental Petroleum (OXY) - New position
8. NRG Energy (NRG) - Added to his position very slightly
9. Alcoa (AA) - Increased stake by nearly 33%
10. Mastercard (MA) - Increased stake by 12%
11. Wellpoint (WLP) - New position
12. Williams Companies (WMB) - Decreased position by 34%
13. Qualcomm (QCOM) - Decreased position by 30%
14. DirecTV (DTV) - Literally added only 3 more shares
15. Marvell Technology (MRVL) - Increased stake by 3.6%
16. Allegheny Energy (AYE) - Decreased stake by 26%
17. Fidelity Information Services (FIS) - Increased position by 76%
18. Verisign (VRSN) - Increased stake by 49%
19. CSX Corp (CSX) - Decreased stake by 18.6%
20. Heinz (HNZ) - De
creased position by 20.7%

At the time of the filing, Tudor Investment Corp's total equity portfolio totalled around $5.7 billion. So, I just want to re-emphasize that since they are a macro fund, they obviously have additional positions in the commodity, currency, futures, or other markets. But, at the same time, they still have a sizable chunk of money in the equity markets.

Paul Tudor Jones was out adding brand new positions to his portfolio in a big way. He established new positions in: The Spiders (SPY), Entergy (ETR), Occidental (OXY), and Wellpoint (WLP). Not only did he start new positions in these names, but he brought them all up to top 10 holdings within one quarter. I want to highlight his stakes in Entergy and Occidental, as they are both energy related. I'm slowly but surely starting to see ETR pop up in numerous hedge fund portfolios, so it's definitely worth keeping any eye on. These funds could be establishing this as one of their ways to play the nuclear energy space, as the alternative energy train picks up steam. We'll see if he adds to this position in the next round of 13F filings. At the time of filing, his stake in ETR was worth a bit over $201 million. Secondly, Occidental (OXY) is another 'hedge fund favorite' energy play. This integrated energy producer has definitely been firing on all cylinders fundamentally. But, with the recent volatility in the commodities markets, one would have to assume that PTJ has felt some pain with this position. He had this position as of June 30th (the time of the filing), and around then OXY was trading around $87.50. In the coming months, OXY would drop to as low as $65, before rebounding to current levels of around $80. So, we'll wait and see next time if he bailed ship or if he stuck with this name. At the time of filing, his position in OXY was worth $181 million. If I were to bet, I would say that he did not add to this position, because one of his rules is never to average down on a loser.

Interesting to see that Paul Tudor Jones decreased his position in Qualcomm (QCOM) by 30%. QCOM is by far one of the most common names in hedge fund portfolios these days. So, whether he was taking profits or saw something he fundamentally disliked remains to be seen. We'll have to monitor this next quarter to see if he continues to sell down his position. It's always interesting to see how various funds handle a position they have in common with numerous other well-respected funds.

I also want to point out his decision to add to his Verisign (VRSN) position. He upped his stake by nearly 50%, bringing it up to his 18th largest position. I haven't seen this name pop up in too many funds' portfolios, so I was intrigued to see him beef up his stake pretty substantially.

So, while last quarter's glimpse inside Tudor's portfolio is interesting, it will be much more interesting to see what they've done with these holdings come November. We already knew hedge funds (and macro funds in particular) had a rough July. And, it's easy to see why, with the heavy commodity exposure many of them had. But, as of a few weeks ago, Tudor was still up on the year, in a year when many funds are seeing red from all the whipsawing.

Tudor Investment Corp's full 13F filing listing every position can be found at the SEC.

View our Hedge Fund Tracker research by clicking here or are 13F analysis work by clicking here.

Free Daily Hedge Fund Newsletter

Related to Investment Securities/Holding Tool:

Permanent Link: Tudor Hedge Fund | Paul Tudor Jones

Tags: Tudor Hedge Fund, Tudor Investments Group, Tudor Investments Hedge Fund, Tudor Investments, Paul Tudor Jones, Paul Tudor, Hedge Fund Managers Paul Tudor New York

A to B Capital | Childrends Fund | Avenue Capital News

Hedge Fund News

Hedge Fund Video Notes

Here is a short video on recent hedge fund developments related to A to B Capital, The Children's Investmetn Fund and Avenue Capital. If you are reading this via my daily hedge fund newsletter please click here to watch the video now.

Free Daily Hedge Fund Newsletter

Related to Hedge Fund News Update:

Permanent Link: Hedge Fund News Update

Tags: A to B Capital, Childrens Hedge Fund, Avenue Capital, hedge fund, hedge fund manager

Shot Selling Ban & Hedge Funds | A Disruption of Free Markets

Short Selling Ban

Short Selling Ban on Hedge Funds

Here is a recent article on the short selling ban and hedge fund managers - how it is affecting them. On the phone with a fund of hedge fund and a long/short group over the weekend I have heard them express the pains of their clients adjusting models, investment processes and research. Here's the article:

The short selling ban has boosted shares of many financial companies, but it's roiling the $2 trillion hedge fund industry. That's because managers have been left with limited access to one of their most important investment tools. Short sellers, who specialize in betting against shares, along with convertible arbitrage funds and so-called relative value managers have been among the hardest hit, investors said this week.

"If this goes on longer, it will become much more problematic," Bill Ferrell, head of hedge fund investment firm Ferrell Capital Management, said in an interview. "Whenever government intervenes in a free market, you're playing with fire." Source.

Free Daily Hedge Fund Newsletter

Related to Short Selling Ban:

Permanent Link: Short Selling Ban

Tags: Short Selling Ban, Ban on Short Selling, Short Selling, Ban, Short Selling Rules, Rules on Short Selling, Short Selling and Hedge Funds, Hedge Funds who Sell Stocks Short

Wealth Management Services | Family Office Trends

Wealth Management Services

Wealth Management Services | Family Offices

I recently wrote an article on wealth management services. Specifically it covered the top 3 trends affecting family offices. Here's a short excerpt and link to this article:

Family offices are private wealth management advisory firms that serve ultra-high-net-worth clients. According to the Family Office Exchange, there are more than 3,500 family offices based in the United States. By offering a complete outsourced solution to managing finances and investments, including budgeting, insurance, charitable giving, family-owned business, and wealth transfer and tax services, these offices set themselves apart from traditional wealth management firms. Although they vary in their level of service, most typically invest heavily in consultants, databases and analytical tools that help them conduct due diligence on money managers or optimize a portfolio of investments for tax purposes.

In this article, we'll review the top three trends affecting family offices, including the rapid growth of the family office industry, the types of family office services provided, and the increasingly sophisticated use of hedge funds and alternative investments by both single and multifamily offices.

Family Office Facts
There are two types of family offices: single-family offices (SFOs) and multifamily offices (MFOs). Single family offices serve one wealthy family, while multifamily offices operate more like traditional private wealth management practices with multiple clients. Multifamily offices are much more common because they can spread heavy investments in technology and consultants among several high-net-worth clients instead of a single individual or family. According to the Greycourt White Paper "Establishing A Family Office: A Few Basics", the minimum size for a family office can vary, because "If the goal is simply to provide family-wide accounting and bookkeeping, a family with as little as $50 million will find it economical to establish an office. On the other hand, a fully integrated family office is probably accessible only to very large families, typically those with more than $1 billion."

Read the full article by clicking here.

To learn more about family offices please see our other website - http://FamilyOfficesGroup.com

Free Daily Hedge Fund Newsletter

Related to Wealth Management Services:

Permanent Link: Wealth Management Services

Tags: Wealth Management Services, Wealth Management, Wealth Services, Family Offices, Family Offices Wealth Management, wealth management group, wealth management firms

Harbinger Capital Partners Fund | Hedge Fund Notes

Harbinger Capital Partners

Harbinger Capital Partners | Hedge Fund Notes

Harbinger Capital Partners Hedge FundThe following piece on Harbinger Capital Partners is being published as part of our daily effort to track hedge fund events in the industry. To review other hedge fund research please see our Hedge Fund Tracker Tool.

Resource #1: (2.2.09) Philip A. Falcone, the manager of Harbinger Capital Partners, is moving toward total control of his hedge fund.

Mr. Falcone is buying out Harbert Management, the firm that backed Harbinger’s start-up, the newsletter Hedge Fund Alert reports. Harbert, an alternative-investment manager based in Birmingham, Ala., acquired a stake in Mr. Falcone’s New York firm when it provided $25 million of seed capital for Harbinger’s first fund in 2001. source

Resource #2: (11.13.08) We have just uploaded a short video debate about whether hedge funds should be blamed for the recent market collapse. View the video now by clicking here: Congressional Hearings on Hedge Funds | Video

Resource #3:

"Philip Falcone, of New York-based Harbinger Capital, rang up the incredible profit by shorting a whopping 117 million Wachovia shares at $30 back in May after his top analyst and investment chief pointed out problems with the Charlotte, N.C.-based bank's mega-billion dollar Option ARM loan portfolio.

The mortgages were defaulting at a fast rate which could make them worth only pennies on the dollar by year's end, the analyst's research revealed, according to sources at Harbinger. In addition, Wachovia would be socked with sky-high capital costs related to $40 billion of debt maturing in the fourth quarter, the sources added.


The super-profitable trade will remind some of Falcone's move earlier this year in the iron-ore sector - he made a huge profit when Cleveland Cliffs stock doubled on huge demand for the mineral.

Falcone has proven time and again that he can spot opportunity before the market sees it and gets in when the value, or lack of it, isn't yet priced into the stock. Source

Resource #4: Harbinger Capital | 13F Hedge Fund Holdings Analysis

Resource #5:

Harbinger Capital Partners Special Situations Fund L.P. wants to probe cash transfers among Lehman Brothers Holdings Inc. and its affiliates that occurred in the month before it filed the largest bankruptcy in history.

Harbinger, a unit of Harbert Management Corp. of Birmingham, Alabama, also wants testimony from Lehman's finance chief Ian Lowitt and to get documents explaining asset transfers among Lehman, Lehman Brothers International (Europe) and Lehman Brothers Special Financing Inc., according to Harbinger's request filed yesterday in U.S. Bankruptcy Court in New York.
Lowitt's statement accompanying Lehman's Sept. 15 Chapter 11 filing doesn't make clear how cash moved to and from the holding company to affiliates, the motion for an investigation said.
Bay Harbour Management LC, another hedge fund, challenged the court order approving the sale of Lehman's North American business to Barclays Plc. The fund had said $8 billion was improperly transferred out of the investment bank's European units prior to its collapse.
``Court filings provide no disclosure as to where the reported massive cash sweeps went, or whether LBI had recently received cash infusions from Lehman affiliates, in derogation of the rights of creditors,'' according to Harbinger's filing.

Lehman spokeswoman Monique Wise couldn't immediately comment on the Harbinger filing. Harbinger Special Situations Fund and Harbinger Capital Partners Master Fund I Ltd. said they are owed at least $250 million by Lehman Brothers Special Financing Inc.
Frozen Assets.

PricewaterhouseCoopers, the administrator for Lehman's U.K insolvency, said yesterday dozens of hedge funds that used Lehman as a prime brokerage to borrow securities and clear trades will have to wait weeks to retrieve assets frozen by the bankruptcy. Source.

Resource #6: Activist fund Harbinger Capital said it expects to hold talks with Leap Wireless International Inc (LEAP.O) about the wireless service provider's management and operations.

Harbinger, Leap's second biggest shareholder, with a 14.8 percent stake, said in a filing at the U.S. Securities and Exchange Commission that it expected to engage in discussions with Leap regarding near-term and long-term management and operations and ideas for maximizing shareholder value.

A spokesman for Harbinger declined to comment beyond the filing.

Leap spokesman Greg Lund said the company was open to talk with any shareholder including Harbinger but declined to comment on any specific discussions.

"We respect and welcome the views and opinions of all Leap stockholders," he said. "We look forward to continuing the open and productive dialogue we've had and expect to have with all of our stockholders." Source

Related to Harbinger Capital Partners Fund:

Tags: Harbinger Capital Partners, Special Situations Fund L.P., Lehman Brothers Holdings Inc. , Harbert Management Corp. of Birmingham, Ian Lowitt, Barclays Plc, Monique Wise, Harbinger Capital Partners Master Fund I Ltd., PricewaterhouseCoopers

Hedge Fund vs. Bank Blowups | 1 Page Analysis

Hedge Fund Blowups

Hedge Fund Vs. Bank Blowups

Last week a member of a hedge fund professionals networking group on LinkedIn asked a question about why we have seen more investment bank blow ups than hedge funds.

In the past 2 years there have, of course, been hedge fund blow ups starting with Amaranth in September 2006. Unlike troubled investment banks not all hedge funds suffering losses and closing downs receive press coverage. We have seen a few notable names, such as hedge funds managed by Bear Stearns, Sowood, Peloton and a few others mentioned in the papers. Many more troubled hedge funds managed to avoid major headlines. It’s not necessarily clear what exactly constitutes a hedge fund blow up. For the names mentioned above the loss was sudden and quick and resulted in eventual termination of the funds. Amaranth lost close to six billion dollars in just one week. Peloton earned a spectacular return of almost 90% in 2007 just two months before the blow up. These, however, are extreme cases. Many hedge funds suffer the slow death as they enter into periods of large draw downs. In this study we tried to identify hedge funds that have terminated since January 2008.

To analyze the rate of failure among hedge funds this year, we ran the analysis on the universe of hedge funds, fund o funds and CTA that report to Barclay’s Global Data Feeder database. To identify the blown up funds we first looked at the funds that stopped reporting performance to the database. We realize that there may be various reasons why a hedge fund would stop reporting to the database, but we believe that primary reason would be a significant drop in performance. To avoid double counting we focused primarily on the “On Shore” funds reporting performance in United States Dollars. There were 3,998 funds that reported performance at the beginning of the year. Of these funds 366 have not reported their performance since May 31, 2008. Chart 1 shows the distribution of the cumulative return of these funds since January 2007 (or later if the funds launched after January 2007).

Out of the 364 funds -156 funds or (43%) have had negative cumulative performance through their last reported date. Chart 2 shows the distribution of Maximum draw down achieved during the same period.

As we mentioned above we cannot be sure whether or not the funds that stopped reporting to Barclay’s database have indeed blown up. We do, however, consider it likely that hedge funds that stopped reporting after experiencing an extreme drawdown are in a “blow up” situation. Chart 2 shows that almost a third of the funds have experienced a drawdown of 15% or higher. This brings our estimate of defaulted funds to 2.5% or (100 out of 4,000).

Given the current market environment the estimate seems low. One factor that may account for relatively low blow up rate is the hedge fund liquidity. As an asset class, hedge funds enjoy the benefit of providing relatively stable asset base that is protected by long lock ups, strict redemption schedule, and withdrawal fees. Given these restrictions hedge funds that experience large losses are able to survive longer. It’s generally expected that the industry will experience significant redemptions at the end of the year, which may bring to the run on many hedge funds and lead to higher blow up rate. In the future issues of this newsletter we will attempt to examine the factors that may be helpful in identifying potential blow ups.

Guest post by Aleksey Matiychenko of Risk-AL, LLC

Free Daily Hedge Fund Newsletter

Related to Hedge Fund & Bank Blowups:

Permanent Link: Hedge Fund vs. Bank Blowups

Tags: Hedge Fund Blowups, hedge fund, hedge funds, investments, invest, investing, bank blowups, bail meltdowns, bank meltdown, hedge fund shut down, hedge fund closures

The Blackstone Group | Kailix Advisors Hedge Fund Holdings

The Blackstone Group

The Blackstone Group | Kailix Advisors

The Blackstone Group | Kailix AdvisorsThe following piece on The Blackstone Group and Kailix Advisors is being published as part of our daily effort to track hedge fund events in the industry. To review other hedge fund research please see our Hedge Fund Tracker Tool.

Formed in 2006, Blackstone Kailix Advisors invests primarily in equity investments on a long and short basis and is the hedge fund arm of The Blackstone Group. According to Blackstone.com AUM was approximately $2.6 billion as of June 30, 2008. The assets of TickerSpy’s top 25 holdings as of April 1st 2008 totaled over $3.6 billion. Long-term exposure is targeted at 20%-30% net long (long positions less short positions).

Manish Mittal is the fund’s Chief Investment Officer as well as a Senior Managing Director of The Blackstone Group. Kenneth Miller is the head trader and Vito Tanzi is the Chief Financial Officer. Kenneth Miller was a trader at SAC Capital Advisors under Manish Mittal before joining in 2006. The background of both Mr. Miller and Mr. Mittal focus on equity investments, while also branching out into derivatives and commodities.

Resource #1: (3.4.09) The Blackstone Group wrote down the value of four out of five private equity funds it manages, according to a letter to investor.

The New York-based p.e. giant, which reported a fourth-quarter loss of $827.1 million last week, did no better by its clients than it did by its investors. Three of the five funds covered by the letter posted double-digit losses last year, Reuters reports, while just one enjoyed a positive return. All told, Blackstone wrote down the value of its p.e. portfolio by 20% in the fourth quarter alone, and 31% on the year. source

Resource #2: State-owned company China National Chemical Corporation (ChemChina) and hedge fund manager the Blackstone Group announced the closing of Blackstone’s investment in ChemChina subsidiary, China National Bluestar Corporation.
Bluestar has also completed its group restructuring and has registered as a Sino-foreign joint stock limited company. Blackstone will invest up to $600 million in Bluestar for a 20% stake. Two Senior Managing Directors of Blackstone, Antony Leung and Ben Jenkins, will join the board of Bluestar.

Headquartered in Beijing, ChemChina was founded in 2004, and administrated by the State-owned Assets Supervision and Administration Commission of the State Council of China. Through fast growth in the last 4 years, ChemChina is now a large group corporation with both asset value and revenue exceeding RMB100 billion ($14.6 billion). ChemChina is ranked 35th among China’s top 500 corporations, according to National Bureau of Statistics of China.

The Blackstone Group’s alternative asset management businesses include the management of corporate private equity funds, real estate opportunity funds, funds of hedge funds, mezzanine funds, senior debt funds, proprietary hedge funds and closed-end mutual funds.

Resource #3: Blackstone’s Kailix Advisors portfolio’s top 15 long equity holdings and changes in
holdings according to TickerSpy.com are as follows and were updated April 1st, 2008:

*Position percentages represents share of AUM. Leverage and short proceeds skew the following holdings as of a percent of total holdings and are not accounted for.

New Positions:
  • Alpha Natural Resources (ANR) = 2,600,000 shares / 4.90% of portfolio
  • Allegheny Technologies (ATI) = 1,200,000 / 2.38%
  • Fording Canadian Coal Trust (FDG) = 1,200,000 / 2.51%
  • Lorillard Inc (LO) = 1,700,000 / 3.33%
  • The Mosaic Company (MOS) = 950,000 / 3.42%
  • Potash Corp (POT) = 800,000 / 4.45%
  • SPDR Trust (SPY) = 1,700,000 / 6.41%
Existing Positions (No Change):
  • Allied Waste Industries (AW) = 47,900,000 shares / 16.67% of portfolio
  • Orbitz Worldside (OWW) = 46,000,000 / 9.02%
  • TRW Automotive Holdings (TRW) = 46,100,000 / 30.25%
Existing Positions (Increases):
  • Rockwood Holdings (ROC) = 2,900,000 shares / 2.92% of portfolio
  • Weyerhaeuser Co (WY) = 1,800,000 / 3.04%
Existing Positions (Decreases):
  • Alliance Data Systems (ADS) = 2,500,000 shares / 5.30% of portfolio
  • BHP Billiton Limited (BHP) = 1,600,000 / 5.28%
  • Precision Castparts (PCP) = 1,000,000 / 4.37%
Analysis of New Positions:
71% of new positions back in April consisted of equities concentrated on commodities. Basic Material and Energy Sector stocks made up 5 of the 7 top new holdings for Kailix Advisors. The SPDR trust was another big position, in essence betting on a positive S&P 500 movement.

by Guest Contributor Anthony Zipparro

Free Daily Hedge Fund Newsletter

Related to The Blackstone Group:

Permanent Link: The Blackstone Group | Kailix Advisors

Tags: The Blackstone Group, Blackstone Group, Kailix Advisors, Kailix Advisors Hedge Fund, Kailix Advisors Hedge Fund Holdings, Black Stone Group Hedge Fund Arm, hedge fund

Top Hedge Fund Holdings | What are They Buying?

Hedge Fund Holdings

Top Hedge Fund Holdings Research

Top Hedge Fund HoldingsAs of July 1st 2008, it appears that hedge funds poured money into the technology and service sectors. According to TickerSpy.com, the 20 most tracked hedge funds on the site had 27.9% of all holdings within those two sectors. The quarter-over-quarter results presented by TickerSpy.com showed holdings and changes in holdings as of July 1st 2008, as compared to the quarter earlier. These holdings are based on TickerSpy’s data, which shows the top 15 holdings of each hedge fund quarter-over-quarter.

Total equity holdings of the 20 most tracked hedge funds amassed to $91.4 billion dollars, up from the previous quarter by $9.76 billion or 12%. New positions in equities totaled $9.54 billion, while existing positions saw a net inflow of just $219 million (net inflow: all money flowing into existing positions less all money flowing out of existing positions).

Companies or indices that saw the largest net inflows were Yahoo! and Philip Morris, with the SPY (SPDR tracking index for the S&P 500) and Google seeing the largest net outflows. The top eight in each category were (in millions):

Of the over 200 top holdings of hedge funds, nearly $25.5 billion or 27.9% were in either the technology or services sector. Which stocks? Below is a chart detailing the top 25 holdings by dollar amount that were seen in the portfolios, as well as a pie chart showing the top twelve stocks that made up over one-third of total fund holdings.

However, some companies such as Icahn Enterprise are held by only one fund (Icahn Associates) and the large dollar amount slightly skews the accuracy of the holding data. So I also compiled the 14 most widely held securities, determined by the number of funds that held them, as well as the dollar amount of the holdings.

To review our Hedge Fund Tracker research please click here. To review our 13F Hedge Fund Securities Analysis work please click here.

Free Daily Hedge Fund Newsletter

Related to Top Hedge Fund Holdings:

Tags: Top Hedge Fund Holdings, Top Holdings of Hedge Funds, Top Holdings of Hedge Fund managers, hedge fund, hedge funds, investments, holdings, stock market, markets
Securities discussed above include: Icahn Enterprise (IEP), ABB Ltd (ABB), AK Steel Holding (AKS), Alpha Natural Resources (ANR), Apple Inc (AAPL), AT&T (T), Bank of America (BAC), Calpine Corporation (CPN), Cisco Systems (CSCO), Cleveland-Cliffs (CLF), Conoco Philips (COP), Exxon Mobil (XOM), Fairchild Semiconductor International (FCS), General Electric (GE), Google (GOOG), Hess Corp (HES), iShares Russell 2000 (IWM), JPMorgan Chase (JPM), MasterCard (MA), Microsoft (MSFT), Motorola (MOT), Occidental Petroleum (OXY), Peabody Energy (BTU), Pfizer (PFE), Potash (POT), Qualcomm (QCOM), Research in Motion (RIMM), SPDR Trust (SPY), Target Corporation (TGT), Wal-Mart Stores (WMT), Weatherford International (WFT), Yahoo! (YHOO)