Opalesque

Benedicte Gravrand, Opalesque London:

Some funds of hedge funds (FoHFs) and due diligence (DD) providers have had to review their methodology since the beginning of the credit crunch and the subsequent uncovering of frauds such as Madoff’s. Opalesque spoke to several industry players about their approach. Our conversations are presented in a Q&A format – as are DD forms.

Most of the FoHFs interviewed for this series said they had not re-organised their DD resources – they had been doing it right all along – although one said that “meaningful evolutions were implemented in the second half of 2008.” Although no new risk areas have been introduced since last year, all managers t………………….

For full article :  http://www.opalesque.com/56048/The_evolution_of_due_diligence_Part_5048.html

One of U.S. Treasury Secretary Timothy Geithner’s initiative, called the Public-Private Investment Program, or PPIP, has lost momentum, reported the Wall Street Journal on Monday, as big banks are worried about having to sell at fire-sale prices while small banks fear they would be shut out. Potential buyers balk at the risk of doing business with the government, concerned that politicians might demonize them for making big profits (coverage).

On March 23, 2009, the FDIC, the Federal Reserve and the U.S. Treasury announced the Public-Private Investment Program for Legacy Assets – which is designed to provide liquidity for toxic assets on the balance sheets of financial institutions. It is part of the Troubled Asset Relief Program (TARP) as implemented by Geithner. The major stock market indexes in the U.S. rallied on the day of the announcement.

PPIP has two parts, addressing both the legacy loans (which has since been postponed) and legacy securities (which is apparently still going ahead). The funds are meant to come from TARP monies, private investors, and from loans from the Federal Reserve’s Term Asset Lending Facility (TALF).

Large banks, which had positive revenues in Q1-2009 (some say partly due to the relaxation of the mark-to-market rules of FAS 157) and managed to raise significant capital through sales and share offerings, do not seem overly keen on participating.

Earlier this month, BlackRock, Franklin Templeton Investments, Invesco, PIMCO and Western Asset Management were reportedly among the candidates to run funds for the legacy securities portion of the PPIP. Blackrock last month claimed in a release: “the PPIP is one of the most important initiatives recently launched by the government and one that should, over time, help stabilize the banking system.” Bloomberg.com has just confirmed that the Treasury Department was set to name 8 to 10 asset managers for the PPIP this week . Once the asset managers have signed deals with Treasury, they each will be expected to raise at least $500m of private capital within 12 weeks.

Read full article here: http://www.opalesque.com/53173/New_York_Roundtable_HF_managers_are_afraid173.html

The full 33 page Opalesque NY Roundtable can be downloaded here for free (select Roundtable subscription):  http://www.opalesque.com/RT/RoundtableNY2009.html

The dismal performance of hedge funds in 2008 left many investors shocked as their hedge fund investments proved to be much more correlated to the markets (and to their other investments) than they had previously thought possible. Because of this, investors are likely to conduct more extensive due diligence to determine if their hedge fund investments are providing true diversification going forward.

Full Story : http://www.opalesque.com/52885/Kellner_DiLeo_launches_new_fund_focusing_on885.html

In Part One of this series on hedge fund administrators, we questioned if third party administrators had become a necessity in today’s hedge fund industry . In Part Two of this series we will take a look at the legal accountability hedge fund administrators may or may not have in the case of hedge fund fraud.

Full Story : http://www.opalesque.com/52883/Part_Two_Investors_may_demand883.html

By the Opalesque Team: Greenwoods Asset Management, a China equity fund house based in Hong Kong, reported that its Golden China Fund, an equity Long/short fund focusing exclusively on China equities (H, B, and A shares, and ADRs) using bottom-up stock picking through thorough fundamental research, had returned 52.15% YTD (as of May 28, 2009, before fees), vs. 24.67% for the H-share index and 23.02% for the MSCI China Free Index. The fund has annualised 32.25% from July-04 to May-09.

Full Story:  http://www.opalesque.com/52557/Greenwoods_Better_than_expected_PMI_indicates_economic557.html