Fri, 18/01/2008 - 06:00
New York hedge fund manager Paulson & Co has signed up former US Federal Reserve chairman Alan Greenspan as an adviser. Paulson recently gained a following among investors for profiting from the US sub-prime market, whose collapse last summer the firm anticipated. The USD28bn firm will be Greenspan's only hedge fund consulting client. Greenspan has similar arrangements with fixed-income manager Pacific Investment Management Co. and Deutsche Bank of Germany.
Meanwhile, the US hedge fund trade body, the Managed Funds Association, has recruited Republican representative Richard Baker of the House Financial Services Committee as its new president and chief executive. Baker, who currently represents the district of Baton Rouge, Louisiana, will start work at the Washington-based association on February 7.
Did Wall Street firms improperly structure transactions to help hedge funds avoid dividend taxes? That question is at the centre of a new Senate investigation. Subpoenas have been issued to Citigroup, Lehman Brothers, Morgan Stanley and UBS. Investigators are examining the use of exotic derivatives by hedge funds and other offshore investors to sidestep taxes on US stock dividends. Roughly USD1bn withholding taxes are at stake.
Hedge funds continued to attract new capital during the fourth quarter, albeit at a slower pace. Hedge funds received USD30.4bn in the final three months of the year, compared with USD45.2bn between July and September, but roughly double the inflows from the same period of 2006, according to Chicago-based Hedge Fund Research. Total industry assets rose 30 per cent to USD1.87trn, including the USD194.5bn inflows for last year as a while.
Greenwich Alternative Investments said hedge funds posted an average gain of 11.5 per cent in 2007, outpacing the 5.5 per cent increase in the Standard & Poor's 500 Index. Looking ahead, hedge funds expect to have a positive performance in 2008, according to a Lipper survey. Distressed debt, global macro, long/short equity and emerging markets are billed as likely top performers this year.
Unhappy with a poor performance for 2007, investors in Renaissance Technologies' Institutional Equities Fund have withdrawn USD4bn, the first year in which the firm has suffered a new outflow of capital, leaving it with USD22bn of assets.
Private Advisors of Richmond, Virginia, is establishing an office in London. The USD4bn manager of hedge funds and private equity wants to expand its global reach as well develop its investment strategies.
Deephaven chief executive Colin Smith, along with principals Shailesh Vasundhra and Matt Nunn will next month buy nearly half of the Minnetonka, Minnesota, firm from its owner, Knight Capital Group. The firm runs USD4.4bn in assets. New Jersey-based Knight will pursue strategic alternatives for its remaining stake. Goldman Sachs analyst Daniel Harris expects Deephaven to be worth as much as USD600m.
SAC Capital of Stamford, Connecticut, has lost president Brian Cohn and finance chief James Rowen. Cohn will take personal time while Rowen is going to New York-based Renaissance Technologies as chief operating officer next month. SAC, which manages USD15bn, replaced Rowen with its accounting and operations head Daniel Berkowitz.
Bear Stearns has named Michael Minnikes as chief executive of its securities division. Minnikes formerly was the treasurer and joint president of the unit that handles its global clearing and prime brokerage businesses. Robert Upton, who previously worked in a corporate treasurer role, now has Minnikes's former title.
Meanwhile, Soros Fund Management has tapped BlackRock co-founder Keith Anderson as its investment chief. Anderson will start working at the New York outfit next month, replacing founder George Soros's son, Robert, who stepped aside in July.
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