Tag Archives: Hedge Fund manager

Ex-Touradji Trader Crone Starts Citrine Commodity Hedge Fund

Paul Crone, the former head trader at Touradji Capital Management LP who left the firm in March after seven years, has started a metals hedge fund in New York, according to Citrine Capital Management LLC, his new company.

Reported by Chanyaporn Chanjaroen, Bloomberg, Citrine, located on the 34th floor of the Chrysler Building, has a team of three led by Crone, who’s chief investment officer, according to a statement. The fund will trade listed derivatives in base metals, gold and platinum-group metals, Crone said in an e-mail interview, declining to specify how much money the fund has raised nor its target size.

Crone, 40, is among traders starting hedge funds this year looking to profit from a bull run in commodities that began last month as policy makers from China to the U.S. ramp up stimulus to boost their economies. Commodity hedge funds tracked by the Newedge Commodity Trading Index advanced 0.9 percent on average in August, erasing the year’s loss.

Citrine hired Mike Connolly, formerly at HSBC Securities USA Inc., as a trader, and Drew Ries, who used to work at Susquehanna International Group LLP, as chief operating officer, according to the e-mailed statement. Energy Alpha Strategies, a London-based commodity-focused investment firm, is a so-called strategic partner, it said.

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Moore Capital Said to Cut Jobs in Team Restructuring

Moore Capital Management LLC, the $15 billion hedge fund run by Louis Moore Bacon, cut 10 to 15 investment jobs as it restructures one of its equity teams, according to three people with knowledge of the matter.

The portfolio managers and research analysts were let go on Sept. 11, said one of the people, who asked not to be identified because the information is private. Patrick Clifford, a spokesman for New York-based Moore, declined to comment.

“Apart from a few hedge funds, it’s not that typical to see a large reduction in headcount in the industry,” said Ronen Schwartzman, founder of Ten Capital Advisors LLC, a New York- based firm that advises clients on investing in hedge funds. “Performance must be having an impact.”

Bacon, 56, hired his older brother, Zack Hampton Bacon III, in February to oversee strategic planning, a person briefed on the matter said that month. Bacon told clients last month that he planned to return $2 billion, or about 25 percent of his main fund, to investors, saying it may be too big for him to generate returns in line with historic profits as “liquidity and opportunities have become more constrained.”

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Hedge Fund Liquidations Up 14% In H1 2012

 

Hedge fund liquidations in the first half of 2012 were up 14% over H1 2011 totals, reports Hedge Fund Research in its latest industry report.

 

A total of 192 funds closed up shop Q2 2012 alone.

 

In terms of launches, there were 304 in Q1 and 245 in Q2 2012, the latter being the lowest quarterly total since Q4 2010.

 

Industry performance declined in the second quarter of ‘12, with the HFRI Fund Weighted Composite Index falling 2.8%, although performance improved through the end of August, with the index gaining 1.7% in the first two months of the third quarter.

 

The gap between the top and bottom decile of funds narrowed to 23.2% in Q2, with the top decile reporting an average gain of 7.0% and the bottom reporting an average decline of 16.2%.

 

Management fees remained largely unchanged at 1.57% across the industry, although funds launched in 2012 carried an average fee of 1.65%. Incentive fees were also up industry-wide, adding 4 basis points to 18.76% while funds launched in 2012 carried average incentive fees of 18.23%—up 15 basis points over funds launched in 2011. Over 80% of funds charge incentive fees between 16 and 20%.

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Hedge Fund Backed Reinsurers Investment Assets Pose a Risk

In an article published by Fitch Ratings their director of insurance Martyn Street says that hedge fund backed reinsurers may find achieving their goals, of “using stable premium flows in lower-risk underwriting business to support higher returns on the companies’ asset portfolios” a challenge. As simple as the hedge fund reinsurer business model sounds, there are risks associated with the hedge funds ability to continue generating high investment returns.

Fitch notes that making a profit on the asset side has always been a fundamental part of the re/insurer business model, although the low-interest rates and yields from mainstream investments have significantly reduced earnings from investments for most re/insurers, making it harder to offset technical losses.

For these new reinsurers who are reliant on the hedge fund returns, as they invest substantially all of their premium income in the hedge fund strategies, the difficulty will be in maintaining double-digit returns over the longer term. As an example Fitch cites PaCRE, a reinsurer that was launched in April by hedge fund manager John Paulson’s firm in collaboration with reinsurer Validus Re. Paulson’s Advantage Plus hedge fund suffered a 50% decline in 2011 versus a 17% rise in 2010.

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SEC Says Illinois Hedge Fund Manager Hid Major Losses During Financial Crisis

In suits filed in Illinois, the SEC and the Commodity Futures Trading Commission took emergency enforcement action against hedge fund manager Nikolai Battoo for allegedly exaggerating the value of the assets he managed and concealing major losses from investors during the 2008 financial crisis.

Alex Akesson, editor of Hedgeco.net reports that the SEC alleges that Nikolai Battoo claims to manage $1.5 billion on behalf of investors around the world, including at least $100 million for U.S.-based investors. But contrary to Battoo’s proclaimed track record of exceptional risk-adjusted returns for his investors, he actually suffered major losses in 2008 due to his investments in the Bernard Madoff Ponzi scheme and a failed derivative investment program.

“Rather than admit the losses to investors,” The SEC said, “Battoo has been overstating the value of his investments in a variety of ways. By boasting benchmark-beating returns, he has continued to attract new investors. However, during the past several months, investors have requested redemptions on their investments with Battoo. Instead of paying them, Battoo has provided a series of excuses ranging from the MF Global collapse to others placing a hold on investors’ money due to government investigations.”

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Study Shows Hedge Funds Improve Risk Management

New research suggests hedge funds are continuing to beef up risk management, and well they might: the report says they face 14 distinct forms of risk.

Risk Roadmap: Hedge Funds and Investors’ Evolving Approach to Risk, a study by the Managed Funds Association, BNY Mellon and HedgeMark based on interviews with chief risk officers of “leading global hedge funds,” found that 91% employed a third party administrator in some risk management capacity. Moreover, the risk officers surveyed expect that in five years, 41% of investor reporting will be published daily or weekly, up from 22% today and just 12% in 2007.

The study also found that 79% of firms now separate risk manager and fund manager functions; that 55% of firms considered liquidity risk their highest priority; that 60% of larger hedge funds have a dedicated risk management function and 84% use off-the-shelf risk analytics for portfolio management or trading.

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Hedge Fund Association Expands Leadership Team

The Hedge Fund Association, an international organization that represents investors, hedge funds and service providers, today announced that it has appointed Don Steinbrugge, chairman of Agecroft Partners, to its board of directors. Mr. Steinbrugge will join the segment of the group’s board which represents the interests of hedge fund investors. The HFA also selected Joel Schwab, managing director of Hedge Fund Research (HFR) to be its new Midwest chapter director and Kislay (Sal) Shah of McGladrey to fill the newly created role of Connecticut chapter director. Mr. Shah also continues to serve on HFA’s board of directors representing the interests of hedge fund service providers.

Mr. Steinbrugge is the chairman and founder of Agecroft Partners, an award-winning hedge fund consulting and marketing firm, and has had a distinguished 27-year career in institutional investment management sales. Prior to forming Agecroft Partners, he was the head of sales and a founding principal of Andor Capital Management, which at the time ranked as the 2nd largest hedge fund in the world. Prior to that, he also held the roles as head of institutional sales for Merrill Lynch Investment Managers (now part of Blackrock) and head of institutional sales for NationsBank (now Bank of America Capital Management). Steinbrugge is also member of the investment committee for The City of Richmond Retirement System and The Science Museum of Virginia Endowment Fund, which gives him valuable insights into institutional investors’ decision making processes.

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