Fresh from having made $1bn impeccably timing the putative US recovery in the first half of this year (and Japan, natch), Andrew Law of Caxton Associates – one of the world’s most successful macro traders – has now turned bearish, and in quite a big way.
Caxton, a hedge fund named after the printer (its now-retired founder Bruce Kovner is a billionaire bibliophile), believes the Fed will keep running its presses:
We have been expecting the US economy to reach escape velocity led by housing and corporate capital expenditure… but for whatever reason that just hasn’t happened…tapering is off the table for the foreseeable future.
Caxton is long across the US yield curve (the debt debacle has been a good buying opportunity, if nothing else). Mr Law has spoken extensively with us about his view on the global economy and the state of the hedge fund industry. Tree-based publishing issues mean those thoughts came in truncated form. Below are some extended excerpts from him. Read more
A timely piece of research, this.
Presented without comment, the European Union’s official – though unpublished – account on the nature of the sovereign CDS market, its impact upon bond spreads, both theoretical and empirical, with specific regard to Greece, 2008-10 in full. Read more
Paulson & Co may well have made more than $1bn from its long position in Citigroup, but the firm’s really big bet — the one that has seen the firm’s assets swell by around $8.4bn over the past 12 months (before, ahem, fees) — has been gold.
Not that that many external investors have been beneficiaries, of course. A third of Paulson & Co’s $36bn in assets under management may well be denominated in the gold share classes, but a lot of that is Mr Paulson’s — and some of his employees’ — own wealth (employees of the firm now account for 42 per cent of capital). According to the firm’s investor letter: “Approximately 178 of our investors, representing about 31 % of our investors and 38% of our AUM, have elected to be in our Gold Share classes.” Read more
Brevan Howard — Europe’s largest hedge fund manager, the world’s 4th — is launching a new fund, the FT reports.
A new computer-driven fund. Read more
Estimated Sep performance numbers sent out to investors:
CQS Directional Opportunities: +7.69% (ytd: +21.92%)
CQS ABS: +0.34% (ytd: +14.09%)
CQS Convertibles & Quantitative Strategies: +1.39% (ytd: +4.55%)
CQS Credit Long/Short: +0.17% (ytd: +9.17%)
CQS Asia: +2.3% (ytd: +5.59%)
CQS Diversified: + 2.56% (ytd: +10.14%) Read more
Those Paulson & Co September performance numbers in full:
Advantage Plus: +12.41%
Credit Opportunities: +3.94%
Gold: +5.67 Read more
As the FT reported this morning, the voluble and prescient Hugh Hendry is shortly to close a new fund launched only a few months ago designed to profit from a China slowdown.
As has been reported elsewhere previously, Hendry’s mechanism for such a trade is part of what makes it interesting. He’s shorting China, via Japan. Read more
Out from AR magazine just moments ago is their annual ranking of the biggest hedge fund managers in the US. Unsurprisingly, Bridgewater is still number one. Surprisingly, it has increased its lead by a significant margin.
The firm now manages a titanic $50.9bn according to AR. Its nearest rival is JP Morgan – the bank – which manages around $41.1bn in hedge funds connected to its Highbridge business. Read more
Boing. This month, through to the 10th:
Paulson Advantage +5.03%
Paulson Advantage Plus +7.5% Read more
Just out on the wires, from York flaks:
Credit Suisse announced today that its Asset Management division has agreed to acquire a minority interest in York Capital Management (“York”), a leading global hedge fund manager, based in New York. York will continue to operate independently and will continue to be led by Jamie Dinan, founder and Chief Executive Officer, Dan Schwartz, Chief Investment Officer, and the firm’s senior management team. Read more
As Absolute Return reported on Friday, Paolo Pellegrini – the Stan Druckenmiller to John Paulson’s Soros – is winding down his hedge fund, PSQR Capital.
PSQR has only been going since 2008, when Pellegrini (who masterminded Paulson & Co’s short US subprime uber-trade) somewhat suddenly left the totemic fund manager. Read more
A third of institutional investors – by common consent the holy grail of hedge fund clients thanks to their willingness to ride out a little bit of vega – say they’re looking to up their allocations to hedge fund managers, according to a new survey.
But there is a case to be made that institutional investors are, when it comes to hedge funds, masochists contrarians. Read more
Totemic hedge fund manager John Paulson may be dialing down his long-US positions, though irritatingly it might just have been the wrong time to do so.
After a brutal May and June for the Paulson funds, July was kinda rosy (excepting, of course, for the gold situation…): Read more
Guillaume Rambourg, the star hedge fund veteran at the FTSE-listed UK asset manager Gartmore has resigned from the firm.
Here’s the RNS: Read more
According to the BBC, new EU rules to regulate bank bonuses – announced on Thursday – will hit Mayfair hard: the onerous restrictions on pay, says Robert Peston, the BBC’s business editor, will apply to hedge funds too:
I have learned that the bonuses paid to senior executives at hedge funds and fund managers are to be subject to strict conditions, under new EU-wide rules that have been agreed by EU members states and legislators. Read more
Precise details on the nature of the Volcker rule – or Dodd-Frank Act, as it is now known – are still thin on the ground.
Some hedge funds have reason to be thankful for the 3 per cent concession contained in the latest draft (meaning banks will be allowed to invest an amount equivalent to 3 per cent of their tier-1 capital in alternative investments, as opposed to none of it). But today’s release also gives grounds to be downbeat. Read more
One of the more interesting things to watch at the GAIM hedge fund conference in Monaco this year – more for light, than heat, truth be told – was Mike Novogratz, one of the founders of the giant Fortress Group, and Hugh Hendry, the voluble manager behind the definitely smaller but in some ways no less influential Eclectica Asset Management, slugging it out.
The GAIM organisers’ own blog post more or less neatly summed up the contest: Read more
What do eastern mysticism, violence, mammon, and am dram have in common? They are all dinner and drinks topics of conversation amongst hedge fund managers in Monaco.
Networking – or at least, meeting old colleagues – is half the reason, if not more, for coming to the GAIM conference. Most of the important stuff hedge fund managers come here to achieve happens in the evenings at places like Jimmyz or Sass Cafe. Or the Casino. Or even, if you’re managing a few bil, Le Louis XV. Racking up massive dinner or drinks costs is de rigueur. Read more
The FT’s Sam Jones is at the GAIM 2010 hedge fund conference in Monaco. He’s hoping to help justfiy the trip by posting regular updates to FT Alphaville. Read more
The great and the good of the European hedge fund industry are arriving by plane, helicopter, superyacht and… bus (me) to Monaco today in preparation for the opening of the 2010 GAIM conference tomorrow – the hedge fund industry’s biggest annual bash.
Big-ticket names including Leda Braga – the Brazilian superquant behind Bluecrest’s BlueTrend fund – the Man Group’s Peter Clarke and IKOS’ Elena Ambrosiadou (yacht apparently in tow offshore – how many >250ft sailing yachts can their be?) are coming to ritzy Monte Carlo to speak on the future of the industry – and hopefully raise a little bit of money for their funds in doing so. Read more
An end of May snapshot…
Tudor BVI Global MTD (2.26%) YTD: (0.49%) Read more
It’s not so much the depth of the losses, FT Alphaville writes — though in some instances they have been nasty. Rather, it’s their breadth — across strategies, asset classes and managers — that has made May a particularly painful month for much of the hedge fund industry. Read more
Spare a thought for Michael Platt.
It’s not exactly the Caymans. Read more
Eurocrats’ hackles have been raised in Brussels all week – not least because of this:
The above is a letter sent by US Treasury Secretary Tim Geithner to Michel Barnier, the newly installed EU Internal Markets Commissioner, concerning the controversial AIFM directive and obtained exclusively by the Financial Times. Read more
Nevsky Capital — the $7bn London-based emerging markets hedge fund manager that spun out of Thames River in 2007 — is to wind-up its flagship fund.
Martin Taylor and Nick Barnes, the managers of the $3.3bn flagshup fund, are throwing in the towel — for now. Both will continue to run the fund for the next 12 months. Thereafter it’s time with the family, or some such. Read more
I think that derivative products… the CDS on sovereign debt have to be at least very, very regulated, rigorously regulated, limited or banned, this is a personal position on financial instruments
In his regular column in Monday’s Financial Times, Wolfgang Münchau argued that naked credit default swaps – that is, CDS positions taken by investors who do not own the underlying bond to which the contract refers – should be banned. Read more
Off the bat, there are some obvious hedge fund losers – or at this stage, to be clear, potential losers – from the wide-ranging Obama/Volcker financial reform package unveiled on Thursday.
Highbridge Capital is, of course, the foremost. Read more
Statement from the UAE central bank:
Central Bank of the UAE announced today that it stands behind UAE banks and branches of foreign banks operating in the UAE . Read more
Herein in full is “annex II” – the last minute principles to heavily regulate European hedge fund managers’ pay appended to the European Union’s draft Alternative Investment Fund Manager directive in the past 48 hours by the Swedish presidency of the EU council.
The measures have been criticized as being even more severe than the bonus clampdown facing bankers. Read more