July 29, 2008

Lone Star Funds' agreement to buy the bulk of Merrill's mortgage securities, once valued at $31 billion, for 22 cents on the dollar was the latest audacious deal by the Dallas-based private equity firm.

July 18, 2008

Perella Weinberg Partners' Xerion hedge fund rose 24 per cent this year, helped by wagers that the value of investment-grade bonds of financial-services firms would fall, according to a letter sent to investors. The USD837 million fund, which invests in the shares and debt of troubled companies, has far outstripped competitors, which have lost 1.6 percent on average in the first half of 2008, according to Chicago-based Hedge Fund Research Inc.

Brevan Howard Asset Management, one of Europe's biggest hedge fund managers with USD24 billion under management, has established multiyear incentive structures, according to a report in the the Wall Street Journal. In a bid to reduce undue risk-taking among traders, who are tempted by hopes of a bonus boost, Brevan Howard will deliver annual payouts in segments over a multiyear span— with the right to hold back some of the bonus in case of underperformance.

June 10, 2008

Many hedge funds had a rough June, pummeled by falling equity and credit markets. But not Clarium Capital, the USD6.4 billion hedge fund founded by PayPal co-founder Peter Thiel. The San Francisco-based firm posted gains of 16 per cent in June, giving it year-to-date returns of a staggering 57.9 per cent, according to a note the firm sent to investors this week. It is unclear from the note how Clarium generated such outsized returns.

July 09, 2008

Today, our Investor Intelligence Sentiment Indicator which measures the percent of investment letters that are bullish, hit a 14-year low of 36.8, rivaled only by the reading during the 1994 bond market crash and showing greater bearishness than the October 2002 bear market low, the 9-11 terrorist attacks, or the Asian, LTCM, or Russian Default Crisis. These extreme bearish readings have in the past been associated with excellent buying opportunities.

July 08, 2008

Amid an internal investigation to determine the cause of a modeling error that affected ratings of around $1 billion in credit products, the head of Moody’s Investors Service’s global structured finance business, Noel Kirnon, has been fired.
The unit of New York-based Moody’s Corp. announced yesterday that Mr. Kirnon’s position as head of structured finance will be filled by chief credit officer Andrew Kimball until a permanent replacement is found.

As hedge funds begin to behave increasingly like equities markets, investors have begun to seek out niche hedge-fund strategies that are less likely to mirror share-market moves. It is important for hedge funds' reputation that they not echo equity markets too closely. Their managers typically levy a 2% management fee and 20% performance fee on their investors on the expectation that they are delivering something different from traditional equity funds, which usually levy a 1.5% management fee and no performance-linked charges.

US credit manager Aladdin Capital are each raising USD3 billion (EUR1.9 billion) to back small hedge fund managers, eFinancial News reports. Lehman Brothers aims to raise USD3 billion to USD5 billion for a fund to buy strategic minority stakes in hedge fund managers, according to sources at the bank. The fund, which has been called Omega, plans to invest in up to 12 managers, and follows a series of investments by Lehman, including stakes in GLG Partners, DE Shaw, and BlueBay Asset Management. Lehman declined to comment.