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Showing posts from June, 2016

Hedge Funds' Brexit Pain?

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Christopher Langner of Bloomberg reports, Hedge Funds' Brexit Pain:
Hedge fund managers won't admit it, but they live for the quarter. While some of the bigger firms update clients more often, regular outfits provide an update four times a year, after which investors often decide to redeem their holdings or leave things as is.

So it couldn't be more unfortunate that Brexit happened just five trading days before the end of the second quarter. Even the savviest of money managers would struggle to recoup the kind of losses seen over the past two sessions. And a smaller gain, or a negative return, could spur outflows from an industry already under fire.

Hedge funds globally saw a net $15 billion exit from January to March, reducing assets under management to $2.86 trillion from $2.9 trillion, Chicago-based Hedge Fund Research said in April. In Asia, investors redeemed $2.9 billion in the first quarter, the most in seven years, data from eVestment show. That was after big outf…

Teachers Wage War on Hedge Funds?

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Brody Mullins of the Wall Street Journal reports, Teachers Union and Hedge Funds War Over Pension Billions:
Daniel Loeb, Paul Singer and dozens of other hedge-fund managers have poured millions of dollars into promoting charter schools in New York City and into groups that want to revamp pension plans for government workers, including teachers.

The leader of the American Federation of Teachers, Randi Weingarten, sees some of the proposals, in particular the pension issue, as an attack on teachers. She also has influence over more than $1 trillion in public-teacher pension plans, many of which traditionally invest in hedge funds.

It is a recipe for a battle for the ages.

Ms. Weingarten started by targeting hedge-fund managers she deemed a threat to teachers and urged unions to yank money from their funds. Then she moved to Wall Street as a whole.

Her union federation is funding a lobbying campaign to eliminate the “carried-interest” tax rate on investment income earned by many money manag…

Ontario Teachers' Brazilian Blunders?

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Theresa Tedesco of the National Post reports, Buyer beware: How the Ontario Teachers’ Pension Plan got caught in the fallout of Brazil’s biggest scandal:
An investigation into money laundering at gas stations and laundromats that began two years ago in southern Brazil has since mushroomed into a wide sweeping corruption scandal, creating a national soap opera that has enthralled Brazilians as it reaches into the upper echelons of the country’s political and corporate elites.

Operation Lava Jato (Car Wash), launched by Brazil’s federal police, has ensnared top executives at Brazil’s powerful state-controlled oil giant Petroleo Brasileiro SA (Petrobras) who are alleged to have accepted bribes from a cartel of companies to enrich themselves while also channelling funds to politicians.

The fallout has included the recent impeachment of President Dilma Rousseff and the arrest of dozens of senior politicians and business leaders. But also caught up in the tumult are hundreds of millions of …

Profiting From Brexit?

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Rachael Levy of Business Insider reports, A select group of hedge funds made some serious money on Brexit:
The UK has voted to leave the European Union, a shock decision that sent markets crashing on Friday.

For a small band of hedge funds, the decision, and its impact on the market, led to outsize returns.

The gains are especially noteworthy, as many funds went in to the vote having reduced risk.

"An unusually low number of client incoming calls and modest trading volumes away from the Russell rebalancing may speak to the already light positioning ahead of the UK referendum," Credit Suisse said in a note Friday.

In addition, betting on a binary outcome such as Leave-Remain is a brave bet. Four out of five European hedge funds polled expected Britain to stay in the EU, according to a Preqin poll earlier this month, and most polling immediately before the vote suggested Remain would carry the day.

Still, several funds posted impressive returns. The NuWave Matrix F…

Europe's Minsky Moment?

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Herbert Lash and Marc Jones of Reuters report, World stocks tumble as Britain votes for EU exit:
Global capital markets reeled on Friday after Britain voted to leave the European Union, with $2 trillion in value wiped from equity bourses worldwide, while money poured into safe-haven gold and government bonds. Sterling suffered a record plunge.

The blow to investor confidence and the uncertainty the vote has sparked could keep the Federal Reserve from raising interest rates as planned this year, and even spark a new round of emergency policy easing from major central banks.

The traditional safe-harbor assets of top-rated government debt, the Japanese yen and gold all jumped. Spot gold rose more than 5 percent and the yield on the benchmark 10-year U.S. Treasury note fell to lows last seen in 2012 at 1.5445 percent.

Stocks tumbled in Europe. London's FTSE dropped 2.4 percent while Frankfurt and Paris each fell 6 percent to 8 percent. Italian and Spanish markets, and European bank st…