California-based hedge fund manager, Convergence Capital Management Group LLC., is opening its absolute return diversified multi-strategy fund, Convergence Capital Partners Fund I LP. to qualified investors.
The Fund was launched in May 2013 and has since returned 20.8% gross in fees. Richard Hawkins, CAIA, and Alexander Olson are the managers of the Fund.
“The Fund is designed for the preservation of capital and will offer investors the advantage of an uncorrelated, stable return stream.” Richard Hawkins, co?founder and fund manager, said. By focusing on the options market, the fund offers investors access to a unique asset class. We feel the fund will appeal to both institutional and individual investors alike, and should be a core holding to further diversify their portfolios.”
The Fund targets a 12% net return annually to investors regardless of general stock market movements. The Fund takes advantage of structural inefficiencies and behavioral mispricings in the stock and stock option markets.
The Fund offers “Founder’s Class A” and “Founder’s Class B” shares, allowing early investors the chance to allocate opportunistically for better terms. The Founder’s class shares require a minimum investment of $100,000 and $500,000, respectively. Convergence will close these shares on December 31, 2014.
A Calpers spokesman told the paper that the investment staff will make a formal recommendation to the board in the fall.
Calpers reported a preliminary 18.4 percent return on investments for the 12 months that ended June 30, 2014. CalPERS assets at the end of the fiscal year stood at more than $300 billion.
“The retreat comes after many pension funds poured money into hedge funds in recent years in hopes of making up huge shortfalls.” The Wall Street Journal reports. “The officials overseeing pensions for Los Angeles’s fire and police employees decided last year to get out of hedge funds altogether after an investment of $500 million produced a return of less than 2% over seven years, according to Los Angeles Fire and Police Pensions General Manager Ray Ciranna. The hedge-fund investment was just 4% of the pension’s total portfolio and yet $15 million a year in fees went to hedge-fund managers, 17% of all fees paid by the fund.”
CalPERS 20-year investment return is 8.5 percent, while its return since 1988 is 8.9 percent.
Over a dozen hedge funds are accused of misusing a complex financial structure to claim billions of dollars in unjustified tax savings and to avoid leverage limits that protect the financial system from risky debt, a Senate Subcommittee investigation has found.
“These banks and hedge funds used dubious structured financial products in a giant game of ‘let’s pretend,’ costing the Treasury billions and bypassing safeguards that protect the economy from excessive bank lending for stock speculation.” Sen. Carl Levin said.
The improper use of this structured financial product, known as basket options, is the subject of a 93-page report which will be the focus of a Tuesday hearing at which bank and hedge fund officials and tax experts will testify.
“Americans are tired of large financial institutions playing by a different set of rules when it comes to paying taxes,” said McCain. “The banks and hedge funds involved in this case used the basket options structure to change the tax treatment of their short-term stock trades, something the average American investor cannot do. Hedge funds cannot be allowed to have an unfair tax advantage over ordinary citizens.”
The report outlines how Deutsche Bank AG and Barclays Bank PLC, over the course of more than a decade, sold financial products known as basket options to more than a dozen hedge funds. From 1998 to 2013, the banks sold 199 basket options to hedge funds which used them to conduct more than $100 billion in trades. The subcommittee focused on options involving two of the largest basket option users, Renaissance Technology Corp. LLC (“RenTec”) and George Weiss Associates.
The banks and hedge funds used the option structure to open proprietary trading accounts in the names of the banks and create the fiction that the banks owned the account assets, when in fact the hedge funds exercised total control over the assets, executed all the trades, and reaped all the trading profits.
Download the report, “Abuse of Structured Financial Products: Misusing Basket Options to Avoid Taxes and Leverage Limits” [PDF]
$8 billion hedge fund firm Black Diamond Capital Management, has appointed Samuel Farahnak as a Director in its Private Equity business.
Mr. Farahnak will focus on identifying and evaluating controlling equity investments and M&A opportunities.
“Sam’s wealth of experience and industry knowledge will further strengthen our private equity team and expand our sourcing capabilities,” said Stephen Deckoff, Managing Principal of Black Diamond. “We are pleased to have him join the Black Diamond team.”
“I am thrilled to be part of Black Diamond,” said Mr. Farahnak. “I look forward to working with the team to help achieve the firm’s long-term goals and continue its tradition of excellence.”
Prior to joining BDCM, Mr. Farahnak was a Vice President with Platinum Equity where he led many of the firm’s business development, investment origination and evaluation activities.
Steve Clark’s hedge fund, Omni Partners LLP, has been authorised by the Financial Conduct Authority (“FCA”) for a licence under the Alternative Investment Fund Managers Directive (“AIFMD”).
“It is Omni’s aim to be at the spearhead of alternative investment fund management best practice on a global basis. This licence is evidence of our commitment to providing the highest standards of integrity, ethics, and regulatory compliance to investors.” Omni’s CEO, Peter Coates, said.
The AIFMD has a number of aims including the enhancement of supervisory practices with a view to preventing instability within the European financial system, improving investor protection through the imposition of new depository standards, and enhancing transparency via new investor disclosure rules and mandatory reporting to competent authorities.
The granting of this licence allows Omni Partners to continue to offer wealth management and institutional clients access to its alternative investment funds as part of an EU-wide harmonised framework. Citibank International PLC has been appointed as independent depositary, complying with the requirements of the Directive.
Bank of America Merrill Lynch, in partnership with GCM Grosvenor and Sponsors for Educational Opportunity (SEO), recently collaborated with investors representing over $300 billion in assets to host a Hedge Fund Forum on Diversity.
The Forum, held last month in New York City, was led by Keith Glenfield, Head of Alternative Investments for Bank of America Merrill Lynch, and Michael Sacks, Chairman and CEO of GCM Grosvenor. The event, created to reinforce the importance of diversity in the industry, was attended by founders and senior executives from more than 40 hedge fund firms.
In his opening remarks, Glenfield urged participants to provide change leadership, noting that, “Diversity is a global business imperative, an important aspect of what makes advice, teams and solutions better and ultimately makes the industry stronger.” Mr. Sacks led an investor roundtable and acknowledged that “GCM Grosvenor is proud to be leading on this important issue.” The roundtable included speakers from the Employees Retirement System of Texas, Exelon Corporation, New York City Comptroller Scott M. Stringer’s Office, and the Robert Wood Johnson Foundation.
The call for leadership and action was clear as investors discussed the state of the industry, how their institutions viewed the topic, and the best approaches to increase the presence of diverse professionals in the hedge fund space. SEO identified three critical audiences along the talent continuum: college students, banking analysts and associates, and mid-career professionals. There is an opportunity with each group for managers to lend support and help construct a program that will focus on building a pipeline while also developing and training their existing talent base.
Martina Edwards, Director of SEO Alternative Investments programs, illustrated to forum attendees how SEO has been delivering well-vetted, high-achieving talent to leading partner firms for decades, and has served as a partner in finding diversity solutions that align with their respective business needs. She noted that, “SEO is looking to work with the hedge fund industry to create a bespoke program that will, over time, help to increase diversity at multiple career stages and equip the next generation of practitioners with the tools for success.”
SEO was recognized during the event for the strategic role it has played in furthering diversity through two key programs – SEO Career and SEO Alternative Investments. Since 1980, SEO Career has recruited and trained over 6,400 outstanding college students of color for summer internships with investment banks, corporate law firms and other leading Fortune 500 companies. SEO Alternative Investments, launched in 2009 and critically guided by a now 27-member LP Advisory Council, provides education, exposure, training and mentoring opportunities to talented finance professionals and college students from backgrounds traditionally underrepresented in the alternative investments sector.
Atlanta-based TLC Capital Group LLC is preparing the launch of a new option-hedged market neutral fund, the Salvus Hedged Yield Fund LP.
“The fund is designed for the preservation of capital and will offer investors the advantage of a defined market risk and a target high single digit ROR*.” CIO William J. Taylor said, “By investing exclusively in large- and mid-cap listed equities and hedging with corresponding listed options, the fund will offer unparalleled liquidity and transparency. We feel the fund will appeal to both institutional and individual investors alike, and should be a core holding for both.”
The Salvus Hedged Yield Fund LP will launch later this summer with a $250,000 minimum subscription per investor.
William Taylor is also co-author of the popular Professional Traders Opinion newsletter with Ron George and has been widely published on Futuresmag, Seeking Alpha and tastytrade. TLC Capital Group is a partner with MVS Capital Management and is also merging operations with registered investment advisor Salvus Financial LLC. The firm currently manages $25 million in AUM in an institutional SMA.
Bloomberg Markets magazine announced today that it is bringing together a group of experts to help hedge funds and other alternative structures increase transparency and define marketing practices in the wake of the JOBs act.
As of today, 21 people are on the Bloomberg Alternative Marketing Council, including Blackstone’s Avi Sharon, and Stanley Goldstein, Chairman and Founder of the New York Hedge Fund Roundtable.
The need for hedge funds to begin defining marketing best practices is significant, given a changing competitive landscape shaped not only by regulatory changes such as the JOBs act, but also by the growth of new structures such as liquid alternatives. One estimate indicates as much as $12.8 trillion of U.S. retail capital may ultimately be in play as a result of these changes, with nearly $1 trillion of potentially flowing into alternatives by 2017, including traditional hedge funds, liquid alts, and ’40 Act funds.
The advisory board includes:
* Ryan Alderman, Senior Vice President, Financial Services, Razorfish
* David Benway, CEO, Verinvest
* Jarvis Cromwell, Consultant, Hedge Fund Marketing Strategies, Bloomberg Markets
* Edward Dartley, Investment Practice Attorney, Pepper Hamilton LLP
* Dominic DiPasquale, Sales Management, Bloomberg LP
* Michael Dukmejian, Publisher, Bloomberg Markets
* Jonathan Ewert, CEO, Reputation Institute
* Stanley Goldstein, Chairman and Founder, New York Hedge Fund Roundtable
* John Griswold, Executive Director, Commonfund Institute
* Simeon Hyman, Head of Investment Strategy, ProShares
* Gary S. Kaminsky, Managing Director, Global Regulatory and Compliance, ConceptONE
* Candace Klein, Chief Strategy Officer, Dealstruck; Chief Counsel, Women Investing in Women; Of Counsel, Ellenoff, Grossman & Schole, LLP
* Patrick McCurdy, Managing Director, Wells Fargo Prime Services
* Maureen McGuire, CMO Emeritus, Bloomberg LPLayne Moskowitz, Sales Management, Bloomberg LP
* Samer Ojjeh, Principal, Financial Services, Ernst & Young
* Pen Pendleton, Partner, Cattell, Locke, Pendleton & Partners
* Dan Simon, President: Cognito Media
* Avi Sharon, Principal, Private Wealth, The Blackstone Group
* Ilaria Vigano, Regulatory Products, Bloomberg LPDavis Walmsley, Greenwich Associates
The Bloomberg Alternative Marketing Council says that they are planning invitation-only, in person gatherings that combine the latest thinking, case studies and best practices in alternative marketing with peer-to-peer networking as well as the sponsorship of surveys, white papers, web conferences and educational briefings.
Despite mixed returns, hedge funds grew assets under management by US$105.6 billion in the first half of 2014 bringing the current AUM of the global hedge fund industry to a record high of US$2.12 trillion, according to the July 2014 Eurekahedge Report.
- Net flows into global hedge funds totalled US$65.3 billion in the first half of 2014, closely trailing the US$67.0 billion inflows during the same period last year.
- European hedge funds attracted US$31.3 billion in net asset flows in the first half of 2014, up from US$15.9 billion over the same period last year.
- North American managers posted performance-based gains of US$29.6 billion while recording net asset flows of US$ 31.4 billion as at June-2014 year-to-date.
- Long/short equity hedge funds recorded their strongest mid-year asset flow numbers since H1 2006 – with net capital allocations of US$51.6 billion June year-to-date.
- New fund launches in Asia dropped in the first half of 2014 compared to the same period last year, with 40 hedge fund start-ups this year versus 70 in the previous year.
- North American multi-strategy and fixed income managers have performed consistently well this year, reporting gains of 8.33% and 6.35% respectively without a single losing month.
- India long/short equity funds returned another 5.69% in June, bringing their H1 2014 returns up to an impressive 32.81%.
- CTA/managed futures hedge funds recorded US$9.1 billion of outflows as of H1 2014, witnessing only one month of positive inflows in the last 12 months.
Hedge funds followed global equity markets higher to close 1.25% up by the end of June, with the Eurekahedge Hedge Fund Index reaching another new high during the month. Global equity markets saw another month of broad-based gains in June, with the strongest performers being Asia Pacific and Latin America for the emerging economies and North America for developed economies.
J.P. Morgan Alternative Asset Management (JPMAAM) has been named “Firm of the Year” among Large Fund of Hedge Funds managers at the 12th Annual Hedge Fund Industry Awards. Institutional Investor presented the award at a ceremony attended by more than 450 investors and hedge fund leaders at the Mandarin Oriental in New York.
With $11.4 billion under management (as of May 31, 2014), JPMAAM’s Hedge Fund Solutions platform is comprised of commingled funds of funds as well as a substantial number of customized and advisory accounts.
“We are honored by this prestigious award, which is a validation of our commitment to delivering hedge fund solutions to clients,” said Paul Zummo, CIO/CEO of the group. “This award also reflects our focus on unique investment strategies and our continual search for managers who can add alpha. Together, these factors have helped us drive outperformance for the benefit of clients.”
Overall consideration for the award was given to “performance, innovation, due diligence, risk management, firm culture and the proven ability of the firm to provide overall value in constructing hedge fund portfolios for clients,” according to Institutional Investor. Other finalists in the category included Goldman Sachs Hedge Fund Strategies, Morgan Stanley Alternative Investment Partners, Pacific Alternative Asset Management Company and Permal Group.
Clients of JPMAAM’s Hedge Fund Solutions group include many of the world’s largest and most sophisticated investors, including pension funds, sovereign wealth funds, university endowments, insurance companies and charitable foundations.