Singapore Hedge Fund

Alternative asset management in Singapore

Most hedge funds failed to make money in June

From Reuters, Singapore.  Most strategies employed by hedge fund managers globally failed to generate positive returns in June as stock markets moved sideways and commodity prices slid during the month, according to estimates from Lipper on Tuesday.

The best-performing hedge fund strategy was “convertible arbitrage” which returned 0.28 percent, while the worst-performing strategy was “managed futures” which lost 1.59 percent. Long/short equity hedge funds declined 0.23 percent.

Overall, nine of the 13 strategies tracked by Lipper lost money last month.

“Managed futures managers were hit in June by the lack of a clear trend as intra-month volatility spikes resumed across a number of asset classes,” Lipper’s global head of hedge fund research Aureliano Gentilini said in a report.

Commodity prices fell in June, with the Reuters/Jefferies CRB Index .CRB declining 1.22 percent, as gains in industrial metals and energy were offset by losses in agricultural, soft commodities and precious metals, said Lipper, a unit of Thomson Reuters.

Hedge fund managers have come under increased scrutiny since last year due to their failure to generate positive returns in bear markets as they are supposed to, resulting in outflows from the industry. Many observers say, however, that withdrawals are easing and managers could see inflows before the end of 2009.

Strategies used by managers include arbitrage, which typically involves exploiting different valuations of what is essentially the same underlying security such as the price of a stock and its price in the forward market.

Managed futures traders, on the other hand, focus on trading futures contracts in areas such as metals, grains, stocks and currencies.

Reuters

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Green shoots for Hedge Fund Jobs

From our good friends at FHN…It is far from the go-go years of 2006 and 2007 for those looking for jobs with alternative investment firms. Yet, rays of silver are starting to peak out from under the economic crunch clouds.

That’s what Robert Olman, founder and president of Alpha Search Advisory Partners is beginning to see.

Olman told HedgeFund.net that he is seeing more appetite among hedge fund firms, not only for hiring personnel, but also for acquisitions.

Distressed debt, global macro, high-frequency trading and emerging markets, are the top strategies for hiring and for acquisition, Olman said.

“That’s followed by very sector specific equity long-short, financials being top of the heap,” he said.

Alpha Search is highly specialized, placing only portfolio managers and senior analysts with a track record of generating trade ideas, as well as risk managers and marketers. Most of those placed by the firm have an average of 7 years or more experience, Olman said.

In those specializations, Olman said, “we are seeing the hedge fund managers now creating strategic plans for hiring. We’re getting offers coming in and acceptances.”

But the recession has wrought changes to the hiring process.

“Compensation is down 20% to 25% in terms of initial offers and targeted bonuses,” Olman said.

Alpha Search recently started up an advisory service for consolidating hedge fund firms as a natural outgrowth of its recruitment business.

“We have funds with $1 billion to $2 billion in assets under management, funds that are looking at acquiring $200 to $600 million AUM funds, basically single manager, single strategy funds, in strategies or asset classes they don’t cover,” Olman said.

“It’s a given now that size does matter,” he said. “The bulk of money coming in is going to larger funds, while smaller funds are competing for an ever-shrinking pool of capital.”

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OakRun Capital appoints new executives in Singapore

Another good piece og news from Alex :

Hedge fund manager OakRun Capital announced the appointment of Mark Potter and Brian Long, both experienced Asia investment executives. The expansion is to build strategic relationships with local institutional investors and provide access to its hedge funds and investment products, including the new OakRun Short Term Income Fund.

Potter, an experienced investment executive based in Singapore, joins the firm as Director of Asia Institutional Marketing and Distribution. Long, a senior level investment professional based in Singapore, has been named Director of Asia Institutional Relations.

The OakRun Short Term Income Fund charges a 1% management fee and a 10% incentive fee with a $1MM minimum investment requirement, it returned 0.73% (9.26% Annual Yield) for June 2009 and paid out its third quarterly dividend.

“Asia is a natural market for OakRun Capital,” Potter explained, “Together, the team has extensive experience in the region, speaks several local languages and has built very strong personal and institutional relationships.”

“The flagship Short-Term Income Fund has received incredible initial feedback from institutions. There are very few products or funds, if any, like the OakRun Short Term Income fund that can provide investors with high credit quality, superior performance, and stable income distributions. The fund is invested in highly liquid instruments with substantially higher yields than comparable investments with duration of less than 45 days,” Portfolio Manager, Arturo Neto, CFA, said.

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Penjing Asset Management Ltd, Hong Kong to Expand Seeding of New Hedge Funds

Ronnie Wu, chief investment officer of the $400 million hedge fund of funds house Penjing Asset Management Ltd., will start a pool of money dedicated to providing early investments to new hedge funds next month.

It aims to make five to six investments with the flagship Penjing Asia Fund by year-end, he said in an interview yesterday. The new pool will begin with about $25 million from Wu’s family and friends and then raise capital from investors after the initial money has been deployed.

Wu is seeking to profit from the spurt of start-ups emerging from a financial crisis that’s caused $1.5 trillion in losses and writedowns at financial firms globally and seen more than 300,000 jobs lost, according to data compiled by Bloomberg.

“When I first managed Asian funds of funds back in 2002, we saw a lot of talent but very little capital after the 2000 technology bubble,” said Wu. “The current environment is worse than 2002. You have a lot of experienced talent whose alternative to starting on their own is to sit at home.”

About 150 new funds were set up globally in the first quarter, the highest since the second quarter of 2008, according to Chicago-based Hedge Fund Research Inc. Managers are finding it harder to raise money as investors pulled more than $103 billion from the global industry in the three months to March, reducing total assets managed to $1.33 trillion.

Some managers have left investment banks cutting down on proprietary trading, while others are striking out on their own after the worst hedge fund industry performance on record made some firms unable to charge performance fees, prompting job cuts.

Start-ups

Nick Taylor, ex-head of Citadel Investment Group LLC’s principal investments business in Asia and Europe, Shafiq Karmali, a former Goldman Sachs Group Inc. trader, and Edwin Wong, previously a Lehman Brothers Holdings Inc. managing director, are among those starting new hedge funds in Asia.

“This is turning out to be the year of start-ups as we see an increasing supply of successful and quality managers who are leaving the prop desks of big banks and global hedge funds to start their own shop,” said Christophe Lee, chairman of the Hong Kong and China national group of London-based Alternative Investment Management Association.

Penjing most recently seeded a fund three months ago and will invest in another next month, he added.

The new pool will have fewer seeding restrictions than Penjing’s existing funds of funds, which cap any single holdings at 5 percent of their investments to diversify risks.

“If we like a certain manager and think we can benefit from their growth by seeding them, the flagship fund is not an ideal vehicle because of its diversified nature and stringent liquidity requirements,” said Wu. “If we create a dedicated seeding vehicle, then the participation is much higher, together with a high risk profile.”

Wu is looking for candidates that meet at least one of the following criteria: strong performance, unique investment strategy, or the potential to rapidly expand assets, he said.

While his seeding activity will focus on startups, it may also include new offerings from managers that have been in operation for a while.

Penjing’s seeding investments so far range from $5 million to $15 million each. Future investments could amount to as much as $25 million after the new pool is set up, Wu said.

Capital Inflows

The company has attracted new capital from investors since May, Wu said. The inflows, the first Penjing has seen since Lehman’s collapse in September, came mostly from private banks representing wealthy individuals, he added.

Yet Penjing is still experiencing some investor withdrawals, leaving its assets under management largely flat, said Wu.

Penjing Asia Fund, set up in April 2005, returned 9.8 percent this year through May, according to a newsletter to investors. The Eurekahedge Asia-Pacific Multistrategy Fund of Funds Index, tracking 54 members, gained 3.8 percent in the same period.

Patrick Kemmis
Senior Partner
VBK Partners LLP

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Darwin Japan Hedge Fund Returns 31% Since January on Small Caps

Darwin Capital Premier LS1 Fund, a hedge fund investing in Japanese stocks, has returned 31 percent since opening to investors in January as bets on companies including JP-Holdings Inc. and Daiken Medical Co. paid off.

The fund, advised by DarWin Capital Partners Ltd., began on Jan. 20 after running under a limited partnership structure since June 2006, according to Takafumi Sahoda, founding president of Darwin Capital in Tokyo. Prior to the January start, the strategy returned 224 percent in the 27 months through October 2008 compared with a 54 percent slide in the benchmark Nikkei 225 Stock Average in the same period, he said.

Sahoda wants to grow the fund’s assets under management to 3 billion yen ($31 million) by the end of 2010 from the current 400 million yen. The fund invests in Japanese listed companies with a market value of up to 100 billion yen using a long-short strategy that bets on rising and falling prices.

“What I’ve learnt over the years is that doing the legwork to find good investments bears fruit,” said Sahoda, 33, who formerly worked at Daiwa SB Investments Ltd. and Nissay Asset Management Corp. “When it comes to investing in small-to-medium cap stocks, it’s very important that you find ways to exit given the limited liquidity.”

Sahoda set up the firm in April 2006 in the wake of the so- called “Livedoor shock,” when executives at Internet provider Livedoor Co. were arrested for fabricating profits, sparking concerns about the finances of second-tier companies.

That contributed to a 34 percent slide in the Japanese small-cap market that year as measured by the Jasdaq Stock Index, a benchmark for Japan’s smaller companies.

JP, Daiken Medical

The fund has invested in Nagoya prefecture-based JP- Holdings, which operates daycare centers in Japan, and is expected to benefit from government subsidies for working parents, Sahoda said. JP-Holdings has gained 96 percent this year, compared with the 0.2 percent decline by the Jasdaq index.

Daiken Medical, an Osaka-based medical equipment maker, has also contributed to the fund’s gain since going public in March. The company, which owns patents for medical devices, has risen 71 percent since its initial offering price.

Managers of Japanese long-short funds have returned 5.5 percent this year through June, compared with a 9.4 percent gain by global hedge funds, according to data by Eurekahedge Pte. Darwin’s Premier LS1 fund has returned 20 percent through July 8 since inception after fees.

Investors of the fund, managed by United Investments Co., currently consist of high net-worth individuals in Japan, according to Sahoda. He aims to attract new investors such as pension funds and fund of funds in Japan and abroad.

Hedge funds are mostly private pools of capital whose managers participate substantially in the profits from their speculation on whether the price of assets will rise or fall.

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June report: Hedge Funds Little Changed, Drew $4 Billion

Hedge funds had net inflows of $4 billion in June as the index measuring their performance remained little changed after posting its longest stretch of monthly gains since July 2007, according to Eurekahedge Pte.

The industry had net inflows for the second consecutive month, bringing total assets under management to $1.33 trillion, according to a preliminary report by the Singapore-based research firm, based on the 35 percent of funds that reported June performances. The Eurekahedge Hedge Fund Index, tracking more than 2,000 funds, lost 0.02 percent, taking its year-to- date advance to 9.4 percent, the report showed.

The stall in performance by hedge-fund managers, who posted the worst year on record in 2008, came as the MSCI World Index declined for the first month in four in June, losing 0.6 percent.

“There is such a dichotomy in views at present that many investors are a bit frozen in their tracks for the near term,” said Kirby Daley, a senior strategist in Hong Kong with Newedge Group’s prime brokerage business. “It may be a slow summer for flows into hedge funds, but we expect moving into the fall, these will pick up again as investors need to get money working.”

About 250 new hedge funds started in the first half, while more than 370 closures were confirmed, Eurekahedge said. In 2008, 603 funds started, while 859 closed, the firm said.

Five out of Eurekahedge’s seven regional indexes rose in June, with Asian and Latin American managers as the best performers, the report showed. The Eurekahedge North American Hedge Fund Index added 0.7 percent.

Asian Gains

In Asia, gains in the stock markets of countries including Japan, Hong Kong and China buoyed funds, while in Latin America, the strengthening of the Brazilian real helped, the firm said.

The Eurekahedge Asian Hedge Fund Index climbed 1.8 percent, the best performing region, while the measures tracking Japan and Latin America followed, advancing 1.5 percent and 1.3 percent, respectively.

The Eurekahedge Eastern Europe & Russia Index and the measure tracking European hedge funds lost 2 percent and 0.4 percent respectively, as weakness in the region’s banking sector pushed stocks lower, Eurekahedge said.

Seven out of nine Eurekahedge measures tracking different hedge-fund strategies rose. Managers investing in fixed income had an average 2 percent return, the best performance, profiting from bets to sell U.S. Treasury bonds on speculation the Federal Reserve may raise interest rates in the near future, it said.

Macro-Fund Managers

Macro-fund managers, who wager on trends in stocks, bonds and currencies worldwide, and managers who trade futures, known as commodity trading advisers or CTAs, were the two strategy groups that posted declines in June partly owing to the lack of direction in commodity markets, Eurekahedge said.

Eurekahedge’s global index slid 12 percent last year, the most since the Singapore-based firm began tracking data in 2000. In May, the industry recorded net inflows for the first time in 10 months, gaining $1.5 billion, while total assets rose by $5 billion, Eurekahedge said last month.

Hedge funds are mostly private pools of capital whose managers participate substantially in the profits from their speculation on whether asset prices will rise or fall.

Eurekahedge plans to release a full report later this month.

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Winners of the Asian Hedge Fund Awards 2009

The news is a month old… but for thoses who missed it, here are the winners of the Asian Hedge Fund Awards 2009 held in Singapore on the 29 may 2009:

Regional Awards

Presented by:

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Best Asian Hedge Fund
Artradis AB2 Fund

Presented by:

Best Asia ex-Japan Hedge Fund
PMA Harvester Fund

Presented by:

Best Japan Hedge Fund
Prowess of Japan Fund

Presented by:

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Best Singapore Hedge Fund
Artradis AB2 Fund

Presented by:

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Best Greater China Hedge Fund
QBridge Fund

Presented by:

Best New Asian Hedge Fund
DoReMi Fund

Click here for the nominations

Strategic Mandate Awards

Presented by:
Best Asian Multi-Strategy Hedge Fund
Artradis AB2 Fund
Presented by:
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Best Asia-based Macro Fund
BIA Pacific Macro Fund
Presented by:
Best Asian Other Strategies Hedge Fund
Northwest China Opportunities Fund
Presented by:
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Best Asia-based CTA/Managed Futures Fund
The Merchant Commodity Fund
Presented by:
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Best Asian Long/Short Equities Fund
Riley Paterson Asian Opportunities Fund

Click here for the nominations

Judges

The winners were selected by an independent panel of judges based on both quantitative data and qualitative knowledge of the funds listed in the Eurekahedge database.

The five judges are:

Peter Douglas,
Principal, GFIA, Singapore & Chairman,
AIMA Singapore Chapter
Richard Johnston,
Managing Director,
Albourne Partners,
Hong Kong
David Walter,
Director,
Pan Asia Alpha Strategies,
Singapore
John Knox,
Director,
LGT Capital Partners (Asia Pacific) Limited,
Hong Kong
Akane Hashimoto,
Director,
HC Asset Management Co Ltd,
Japan

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London Mayor: Hedge Fund might leave London for Singapore

We are Migrating the blog here: http://singaporehedgefund.com – faster, better,bigger…….

I know, it sounds like a tabloid headline but basicaly not too far from the truth 🙂

Mayor warns EU not to strangle world’s premier financial centre

The Mayor of London, Boris Johnson, today called on the Government to help him resist the EU Commission’s dangerous plans to regulate financial services. He fears that the plans could threaten London’s status as the global capital of financial services, and will result in European investors losing out and seriously damage the capital’s financial services industry. The Mayor fired off his warning directly to Lord Mandelson as he addressed a major economic conference in London, attended by both the Business Secretary and Shadow Chancellor, George Osborne.

Boris Johnson told delegates that he is so concerned he has sought an urgent meeting to personally lobby EU Commissioners and make the case for London. He singled out the EU draft directive on Alternative Investment Fund Management as a measure that would seriously weaken the European marketplace for hedge funds, private equity and venture capital. It will substantially reduce the choices available for investors, put up protectionist barriers around Europe, and give a huge competitive boost to financial centres outside the EU, such as New York, Singapore, Hong Kong, and Geneva – to Europe and London’s ultimate disadvantage.

In London alone, the private equity and venture capital industry directly employs around 7,000 people and it is estimated a further 35,000 people are employed directly and indirectly by hedge fund managers.  The industries are overwhelmingly based in the capital, with 80 per cent of European hedge funds and 60 per cent of European private equity funds located here. Sources close to the hedge fund industry estimate that their tax contribution alone is around £3 billion per annum. More importantly, many commentators, including EU Commission’s influential report by Jacque de Larosiere, have agreed that the hedge fund industry combined with other alternative funds do not pose a material systemic risk to the financial system as a whole.

The Mayor said: “I support strong and sensible regulation of financial services to prevent a recurrence of the financial crisis that everyone in Europe is now suffering. However, in my book this means regulating at the right level. As financial services are a global business, this must be set at a global level by the G20.

“My greatest worry is that this is just the start of a flood of draft directives that will start to filter out of Brussels. London is the home of hedge funds and private equity, but having a strong hedge fund and private equity industry is not just good for London, it is good for Europe. No other European city’s financial services sector is competing on the same international level as London, and the EU Commission must recognise this. That is why I’ve decided to personally take the lead on this and lobby key figures. London’s main competitors are outside the EU, including New York and Hong Kong, so it’s blatantly obvious that this unilateralist approach will damage our competitiveness.”

The Mayor is keen to ensure that any European regulation of the financial services industry appreciates that London is competing with international cities such as New York, Geneva, Hong Kong and Singapore. As a result the Mayor is calling for more effective international regulation that works across all of the capital’s competitors and for draft EU legislation to assist, not cut across, those efforts. He is encouraging the government to engage much more swiftly before these directives are issued so that the regulation is right for Europe, the UK and London.

The Mayor’s comments were part of a speech on his proposals for London’s economic development, set out in Rising to the Challenge, published in May. The conference, organised by the London Development Agency, is bringing together over 300 leading politicians, business people, commentators and policy makers to discuss and debate the key issues facing London’s economy and to help develop solutions to shape the future of our capital.

In his speech, he called for London to promote more powerfully its position as the world’s undisputed capital of business and ensure that central government work with the city to help keep the capital highly competitive in future. He committed to maintain London as a world-leading low carbon capital, undertake initiatives to improve Londoners’ skills and employability and to continue to invest in projects for London’s long-term economic growth.

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Even Hedge Fund can burn their wings in Indonesia…

We are Migrating the blog here: http://singaporehedgefund.com – faster, better,bigger…….

This is a really good piece of news found on AsianInvestor

Once upon a time, Indonesia had a reputation for sharp practise. However, the balloon of epiphany went up after the Asian economic crisis of the late-1990s. The gatekeepers of Indonesia realised that, in business, their old game was up, and in order to obtain foreign investment, they would have to play fairly and decently. They did just that and everyone lived happily ever after.

It makes a nice fairytale ending, but who really is that lying in the bed of Little Red Riding Hood’s granny? And why does granny have such big teeth?

Hedge fund investors are finding the wolf under the eiderdown in the form of a deal they undertook with Central Proteinaprima in Indonesia. CQS, Marathon, Highbridge and GLG Partners, among others, are understood to have bought $200 million in 2% secured exchangeable bonds issued by a company called Red Dragon in 2007. The bonds were convertible into ordinary shares of Central Proteinaprima.

Red Dragon is a Singapore special purpose vehicle controlled by the Chearavanont family, which is behind both the bond issuer and the Charoen Pokphand Group that hails from Thailand.

The bonds that the hedge funds bought should have given them a 70% stake. However, the company undertook a rights issue, didn’t tell the hedge funds about it, and that has diluted their interest to about 41%.

That’s the precise moment when the two parties fell out of love.

Bondholders complained. Red Dragon got in high dudgeon and hired the lawyer that crushed Manulife in Indonesia. The firm started issuing multiple $1 billion writs suing just about everyone connected with their investor counterparties.

On the side of the Chearavanont family, up popped Hendrik Tee, the former CFO of consummate debt reneger Asia Pulp and Paper.

AsianInvestor tried to obtain a comment from Red Dragon regarding this story, but there had been no response at the time of publication.

If anything material has come out of financial crises, it is the invention of a new job description; a person who rapidly switches a white hat for a black hat and advises companies on how to combat investors.

It seems to add insult to injury that not only have the investors been diluted, but for the perceived upset they have inflicted on the issuer, they might also be billed billions of dollars.

Aha, but surely the court with jurisdiction over the deal is going to adjudicate that this a frivolous counter claim? Not so, because the governing law in the documentation is not only English, but Indonesian law as well. So it is back to the South Jakarta District Court, a familiar forum for foreign financial institutions.

There are two sides to every story, so AsianInvestor readers need not leap to conclusions just yet. We have asked Central Proteinaprima and Red Dragon to tell us their version of events.

Though it appears the moral of this story so far is that investors (yes even the sophisticated ones) need to read the fable of the frog that allows the scorpion to ride across the river on its back.

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Ex-CLSA Banker Pleads Guilty to Insider Dealing in Hong Kong

We are Migrating the blog here: http://singaporehedgefund.com – faster, better,bigger…….HONG KONG — Securities regulators here scored another criminal conviction for insider trading after an ex-banker at CLSA Equity Capital Markets Ltd. and a former hedge fund manager both pleaded guilty to charges of insider dealing Tuesday.

The two were remanded in jail custody and await sentencing on July 13.

This case is the Hong Kong Securities and Futures Commission’s eighth conviction for insider trading over the past 12 months, and underscores the watchdog’s recent efforts to toughen up its record. Additional cases are pending.

In pressing its case, the regulator accused Allen Lam, a former CLSA investment banking director, and Ryan Fong, an ex-hedge fund manager at HSZ Ltd., of improperly trading Hong Kong-listed shares of Media Partners International Holdings Inc., an outdoor advertising company based in Shanghai.

According to the regulator, in 2005, the CLSA banker tipped off Fong that a buyer would soon be acquiring a controlling stake in Media Partners, paying a substantial premium to the market price for the shares. At the time, CLSA was acting as the buyer’s financial adviser.

Fong then went about accumulating 10.6 million Media Partner shares at prices ranging between 60 and 83 Hong Kong cents (roughly eight to 11 U.S. cents), the SFC said. The two stayed in contact via email, according to the regulator, using a code, “the French car,” to refer to the deal.

On Sept. 21, JCDecaux Pearl & Dean Ltd., a rival company in Hong Kong, disclosed it would acquire 73.38% of Media Partners at HK$1.141 per share.

After Media Partners’ stock rose, Fong unloaded his shares for nearly HK$1.10, the SFC stated, generating a profit of HK$3.39 million (about US$437,000) for HSZ and pocketing HK$1.03 million himself.

Tuesday’s victory bolsters the SFC’s efforts to crack down on insider trading, which was only made a criminal offense in 2003.

Despite Hong Kong’s role as a financial hub with one of the most liquid stock markets in the region, regulators here have been criticized in the past for lax enforcement of the city’s securities laws. But over the last year and a half, the SFC has gone on the offensive by aggressively pursuing insider trading and other market abuses.

In May, the SFC won one of its biggest victories to date when a Hong Kong court supported the regulator’s request to block a bid to privatize PCCW Ltd., Hong Kong’s dominant telecommunications service provider. The SFC argued that a shareholder vote approving the deal had been rigged. The buyout group, led by PCCW chairman Richard Li, denied the claims and said it would appeal the verdict.

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