***

HFA Holdings expects its EBITDA to fall to around US$3-4 million in the six months to 31 December 2011 from US$10.1 million a year earlier.

The ASX-listed FoHF says the drop in earnings is due to a fall in performance fee revenue as a result of the volatility in the global markets. In addition, there were one-off expenses relating to the departure of former CEO and founder, Spencer Young, who left the firm at the recent AGM, as well as other staff restructuring.

The firm’s asset under management and advice stood at US$6.03 billion as at 31 October 2011. HFA had net inflows of US$840 million in the 10 months to 31 October 2011.

***

Titanium Asset Management has appointed Paul Stanley as a senior portfolio manager with coresponsibility for the firm’s ASX 200 long/short fund, alongside Titaniumʼs CIO Peter Rice. Stanley was previously a portfolio manager for UBS Global Asset Management but left the firm in 2008, according to InvestorDaily.

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Challenger has appointed Cathy Hales as a GM for its boutique partnerships, replacing Michael Lovett who has joined Vanguard. Hales was previously COO for client relations at RREEF in New York. She will work with Challengerʼs CFO Brendan O’Connor to manage the boutique business which has $14.8 billion in AUM.

***

2011 is likely to be the strongest year for institutional investment in hedge funds since 2007,according to analysis by US-based Pensions & Investments (P&I) magazine.

Hedge funds received net inflows of US$39.9 billion in the first 11 months of the year, compared to $32.3 billion for all of 2010 and a record $66.1 billion in 2007.

P&I says its estimates of inflows is likely to be lower than actual, since many mandates orallocations are never announced publicly.

***

Asia ex-Japan’s institutional investors will outsource an estimated US$1.07 trillion by end2011 to external managers, according to Cerulli Associates. The amount is equivalent to 11.4 percent of the regionʼs total investible assets. Cerulli expects North Asia to continue to account for most of the outsourcing opportunities, with China having the most addressable assets in absolute terms.

Calpers likely to boost hedge fund allocations

• Next year, the firm plans to appoint dedicated FoHF staff in Asia to meet hedge fund managers and gather market information

• Aberdeen intends to grow its FoHF investor-base in Asia, which currently comprises about 5-10 percent of its global total

• The FoHF business manages about $5.5 billion across multiple funds, including one focused on Asian managers.

• Aberdeen runs a total of $280 billion in assets, of which $40 billion is in its alternatives division.

***

US based Enhanced Investment Technologies has launched a suite of absolute-volatility equity strategies targeted at institutional investors.  The firm is part of INTECH Investment Management LLC which is a $45.5 billion AUM subsidiary of Janus Capital Group.  EIT’s Low Volatility and Managed Volatility strategies will utilize the firm’s mathematical-based investment processes.

***

The board of Signature Capital has survived an attempted ousting instigated by boutique fund manager Geoff Wilson.  Wilson’s fund WAM holds a 13 percent stake in Signature, an ASX-listed fund of hedge fund.  He had objected to the placement of a 15 percent stake to family office AR Capital last month (see TripleA Partners September 2011)

***

Basis Capital has filed a new lawsuit worth $US1 billion against Goldman Sachs in the New York State Supreme Court.  The hedge fund is alleging fraud, breach of contract and negligence over the value of a CDO tied to US subprime mortgages that Goldman Sachs had sold to the fund.

The CDO had subsequently collapsed and resulted in the demise of Basis Capital.  A previous lawsuit filed last year by Basis was dismissed when the CDO transaction was not deemed to be a domestic transaction under US securities law.  Goldman has denied wrongdoing saying “we acted appropriately and refute in the strongest possible terms any suggestion that Basis Capital was misled.”

***

The QIC Alternative Beta Fund has ‘more than satisfied’ its objectives of providing a meaningful defense against dramatic equity market swings, according to James Dick, Head of Alternative Investments at the $58.7 billion fund manager.

Launched in end 2010, it returned 1.3 percent for the September quarter, compared to falls in the MSCI global equity index and ASX200 index of -14.8 percent and -11.6 percent, respectively.  Investments include listed infrastructure, insurance linked assets, commodities, timberland, alternative fixed interest and cash. The fund has reportedly attracted $200 million in commitments, of which $150 million has been invested.

***

Standard & Poor’s in association with Professional Planner magazine has named the best fund managers in Australia for 2011.  Sector winners include K2 Asset Management in ‘Alternative equity strategies’ and Winton (Macquarie Professional Series) in ‘Alternative diversified strategies.’

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BNY Mellon Asset Management has closed Ankura Capital, its Australian and Japanese equities boutique, according to I&T News.  The quantitative long-only equity fund manager is returning $1 billion to clients after it failed to gain “broad institutional support.”

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US fund manager Artisan Partners has selected Grey Pine Advisory as its third party distributor in Australia, according to InvestorDaily.  The newly established Grey Pine is owned by Whitney Drayton, a former Wellington Management director of institutional business development. Artisan has $51.8 billion AUM in active equity strategies.

***

The P&I/Towers Watson global 500 ranking of fund managers have been released.

Highlights…

• 18 Australian managers were included in the Global Top 500.  Their AUM grew by 49 percent to US$847 billion as at end 2010 from a year ago.
• A higher A$ and purchases of global asset managers by local firms were a key factor in the AUM rise.
• AUM by the world’s largest 500 fund managers rose by more than 4 percent in US dollar terms in 2010 to around US$65 trillion.
• Macquarie is the largest Australian manager, ranked 69 with AUM of US$252 billion.

Details at http://www.towerswatson.com/assets/pdf/5707/PI500-Analysis-YE2010.pdf

***

Pengana Capital has secured $12 million from one high-net-worth-focused dealer group for its   Asia Special Events Fund, according to InvestorDaily.  The event driven hedge fund now has $47 million AUM and a three-year record of 14.4 percent pa.  Pengana’s director of distribution Damian Crowley declined to identify the dealer group but said it had about $2 billion under advice.

***

Singapore-based hedge fund Komodo Capital Management is liquidating its flagship ‘KC Asia’ (global macro) fund, and its founder/CIO Angus Cameron will relocate to Australia for “personal reasons,” according to Reuters.

Cameron previously worked at Millennium Capital Management and founded Komodo in 2006.  The firm managed $120 million in 2008 but had $40 million before it started returning money to investors, according to Reuters. However, Cameron said he will continue to manage his own money and that of several clients (totalling around $40 million) from Australia using the same strategy as the KC Asia Fund.

Paris-based Eric Debonne, THEAM’s head of alternative multi-management, told Reuters the main focus would be finding liquid Asia credit and equity long/short strategies. THEAM manages 1 billion euros in about 15 fund of hedge funds.

Other fund of funds and hedge-fund seeders such as London-based FRM Capital Advisors and Swiss asset manager Gottex are also eyeing Asia to boost returns, noted Reuters.

Andrew Roberts’ Family Group (ARM) will acquire a 15 percent equity stake in Signature Capital Investments (SGI) via a private placement.

In return, SGI, an ASX-listed fund of hedge fund, will acquire a portfolio of international hedge fund investments of an equivalent value from ARM.  The family office will also provide investment services (in relation to hedge funds and other investment opportunities) to SGI on a competitive fee structure.

ARM is the main operating entity of Andrew Roberts, a member of the Roberts family, founders of the Multiplex Group (now Brookfield Multiplex).  It has more than US$100 million invested in global hedge funds, and has investment teams in Sydney and New York. John Shin, CIO for ARM, will be appointed to the SGI Board as a non-executive director.

Meanwhile, SGI will seek shareholder approval to undertake an off-market buyback of approximately 26-30 percent of current issued capital.    SGI has a market capitalisation of $49 million and a 24 percent share price discount to NTA.

I was asked to comment for this article from Bloomberg News…

“Ex-Goldman Traders’ Hedge Fund Shuts in Sydney as Macro Strategy Falters”

High volatility of the sort we’ve seen in many markets lately doesn’t seem to suit certain types of funds.

More thoughts about the current state of the industry and markets in the upcoming issue of the “Australian Hedge” newsletter.

Media Super last year began investigating local hedge funds with a view to allocate around $130 million. (see Australian Hedge, Sept 2010).   Jon Glass, CIO with Media Super, recently told I&T News the super fund is searching for another alternatives manager.  Glass is being assisted by Jenni Harding from Harbridge Investment Partnerships, and by its asset consultant Frontier Investment Consulting.

The Cayman structured fund, with an Australian unit trust feeder, has fees of 1.5/15 with high-water mark. Deutsche Bank is prime broker and Citco is administrator. The Fund is managed by Chris Baker and Darko Kuzmanovic, both previously joint managers of Colonial First State’s absolute return resources portfolio.

Caledonia was established in 1992 to manage the equity portfolio interests of the owners and managers of the business, together with their families.  Mark Nelson, the Executive Chairman and Director of Research, and Will Vicars, CIO, are the principals.

The firm currently manages $2 billion for more than four hundred investors in a range of predominantly long-only global and Australian equity and private equity investments.  Earlier this year, it launched a long/short China-centric equity hedge fund which currently has US$88 million in AUM.

See http://www.austrade.gov.au/Publication/default.aspx (scroll down to 17/08/11 report)

Written by David Chin, Managing Director of BasisPoint, the report’s highlights include;

• The US$33 billion in assets managed by Australian hedge fund managers is marginally smaller than Hong Kong’s $38 billion, but larger than Singapore’s and Japan’s hedge fund assets combined.
• Investment strategies deployed in global markets account for nearly 85 percent of all Australian hedge fund assets.

Platinum is Australia’s largest hedge fund with $16.9 billion AUM, followed by Kaiser Trading Group with $2.3 billion, and Boronia with $1.7 billion.

Highlights:

• Its allocation to alternative assets climbed to $13.8 billion (18.6 percent of total assets) compared to $11.9 billion (16.3 percent) as at 31 March 2011.
• This flow of $1.9 billion into alternatives was the largest amongst all asset classes within the Future Fund’s portfolio in the past quarter.
• Alternatives are now the third largest asset class, beaten only by Global Equities –Developed Markets, (21.3 percent of all assets) and Debt Securities (19.4 percent).
• The Future Fund returned 12.4 percent for the year (excluding the Fund’s Telstra holding) and 5.2 percent pa over the past five years.