Main News

 

Hedge funds face new threat as investors bail
First, banks started pulling hedge fund credit lines and demanding greater security against loans. Hedge funds were forced to sell assets and incur heavy losses. Now, investors are pulling out of the hedge funds, increasing the risk of more fire sales of assets to raise capital to meet withdrawals. Financial Times (03 Apr.)

 

A Road Not Taken by Lenders
New York Times - United States
By GRETCHEN MORGENSON WE’VE all heard a great deal in recent months about the greedy borrowers who caused the subprime mortgage calamity. ...

 

SEC sues British hedge fund, chief exec for alleged fraud
The Star Fri, 04 Apr 2008 4:22 PM PDT
NEW YORK: US securities regulators sued a London-based hedge fund and its chief executive on Thursday, alleging they schemed to defraud mutual funds and shareholders in the United States.

 

Are Hedge Fund Managers Really Seeking Alpha?
Seeking Alpha - New York,NY,USA
Given the choice between falling fees and higher alpha, on the one hand, or rising fees and lower alpha, on the other, hedge-fund managers will always go ...
See all stories on this topic

 

Hedge fund Clarium takes 9.9 pct hit in March-note
Reuters - USA
Clarium's negative returns came amid what experts say is a general slump in hedge fund returns in March, in tandem with stock and bond markets worldwide. ...
See all stories on this topic

 

Managers liquidating $5 bln of distressed securities
Reuters - USA
Hartshore CDO I, a $1.0 billion deal priced in March 2007, underwritten by UBS and managed by Zais Group, is also slated for liquidation on April 8th. ...

 

Structured Finance
22 Ratings Lowered On Five U.S. CDO Of ABS Deals; $5.188 Billion In Issuance Affected
We lowered our ratings on 22 tranches from five U.S. cash flow and hybrid collateralized debt obligation (CDO) transactions. The downgraded tranches have a total issuance amount of $5.188 billion. The CDO downgrades reflect a number of factors, including credit deterioration and recent negative rating actions on U.S. subprime residential mortgage-backed securities.
To learn more, click or copy and paste the URL below:
http://standardandpoors.rsys1.net/servlet/cc6?kHiQABDRQUVsLgHxhilpuHQJhuV2VSW

 

Five former Bear managers named in top JP Morgan line-up
Five Bear Stearns bankers have been named among the 25 top managers running JP Morgan's investment banking business, in the first senior reshuffle since the smaller bank agreed to be taken over by its larger rival last month.
http://mail2.efnmail.co.uk/r/353209/MTk4MTI1OjE2OTAx/

 

Goldman Fund of Funds May Offer More Shares
Wall Street Journal - USA
By MARGOT PATRICK LONDON -- Goldman Sachs Dynamic Opportunities Ltd., a London-listed fund of hedge funds run by a unit of Goldman Sachs Group Inc., ...

 

Fears of recession and increased volatility have led to the return of strategic overwriting strategies – the selling of call options to gain extra yield. The strategy, which was popular at the start of the decade, had all but disappeared amid the low volatility and rising markets of the past few years. But a plunge in equity markets at the start of the year, combined with high implied volatilities, has convinced some sell-side houses to recommend the strategy to clients looking for yield. “More and more people are happy to bet against the market trading very strongly and, with current levels of volatility, investors are quite happy to cap their upside if it means they can raise some premium to outperform the downside,” said Cyril Levy Marchall, head of equity derivatives flow trading at JP Morgan in London.
Call selling gains popularity

 

The Reverse Ripple Theory of Metropolitan Home Price Corrections

by John Wake

 

 

Credit derivatives show unexpected strength. Despite heavy cynicism from credit analysts, a recent rally in credit derivatives isn't slowing. The iTraxx Crossover index, which measures the cost of protecting 50 risky European companies' debt, fell 30 BP to 480, its first visit below 500 since the beginning of February. Financials are down 77 BP from a March 17 peak; non-financials are down 49 BP.

 

Per capita recession: We're there. Merrill's chief North American economist David Rosenberg notes that with U.S. population growth of 1-1.5%/year, any GDP growth less than that means contraction. The per-capita recession began in Q4 2007, when GDP was 0.6%.

 

The next subprime? Scary thought from IBM's (IBM) top data security expert: Just as many financial services firms failed to see the writing on the wall before the subprime meltdown, and its ripple effect on the overall U.S. economy, IT teams won't be able to sufficiently secure their information unless they become far more proactive in assessing risk. "With the lending sector, risk was not priced into the market appropriately until August of 2007, and those markets were not acting efficiently before then -- they weren't able to accurately predict the risk of companies like Bear Stearns (BSC) until it was far too late," Steven Adler said. "Every market is an arbitrator of fear and greed, an d information about risk is what we all use to make educated decisions. We need new data governance standards to help companies engage in smarter risk calculation, modeling, forecasting, and analysis on a much more systemic basis."

 

Banking Breadline: The Discount Window

by Andrew Horowitz

 

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Yield Curve Corner

 

WALL STREET DAILY  By RANDALL W. FORSYTH
Bearing Down on the Fed's Balance Sheet The central bank's own assets shed more light on the crisis that Congressional hearings.
http://online.barrons.com/article/SB120723146995186391.html?mod=djemBF

 

Bernanke sees '08 rebound
Los Angeles Times - CA,USA
Susan Walsh / AP Federal Reserve Chairman Ben S. Bernanke prepares to testify this morning before Congress' Joint Economic Committee. ...

 

A new name for Bernanke: Hero
Los Angeles Times - CA,USA
Like the widening gap between Fed Chairman Ben Bernanke (pictured) and the Bush administration. Like the elephant not in the room at the Bear Stearns ...

 

US Economy: Employers Cut Most Workers Since 2003 (Update6)
Bloomberg - USA
Officials signaled increasing concern about the economy and credit markets this week, with Chairman Ben S. Bernanke saying for the first time the US may ...

 

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Natural Disaster Corner

 

Climate Prediction  http://www.nws.noaa.gov/predictions.php

World Meterological Organization http://severe.worldweather.org/

Tornadoes: http://www.disastercenter.com/tornado.htm

Great Sat Pictures of events:

 

3 quakes hit Iran overnight
Payvand Iran News Fri, 04 Apr 2008 10:01 AM PDT
Three quakes with magnitudes ranging between 3.6 and 4 degrees on the open-ended richter scale shook different parts of Iran, suburbs of a city in a northwestern province, an island in the southern region, and a town in the southeastern areas, from late Thursday to early Friday morning, IRNA reported from Tehran.

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Iranian Situation and Other Man Made Disasters

 

 

Officials confirm Iran's role in truce
AP via Yahoo! News Sat, 05 Apr 2008 12:23 PM PDT
Officials in Iran confirmed for the first time Saturday that the country played an important role in brokering a recent truce between the Iraqi government and anti-American Shiite cleric Muqtada al-Sadr.

 

Iran denies rumors finance minister to quit
Reuters via Yahoo! News Sat, 05 Apr 2008 1:35 AM PDT
Iran's government denied on Saturday speculation the finance minister would be replaced, three weeks after an election brought in a parliament that is expected to be more critical of the country's economic policies.

 

Official: Iran capable to hold world RoboCup tournament
Islamic Republic News Agency Fri, 04 Apr 2008 8:40 AM PDT
Iran - RoboCup Deputy head of World Federation of RoboCup said here Friday that Iran is capable to hold world RoboCup tournament.

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Opalesque’s Corner

 

- Commodities Special: Opalesque Exclusive: Commodities:  The next perfect storm?, Lehman: speculative demand enhancing commodities prices, CFTC says oils price not driven by speculation, Dow Jones-AIG Commodity Index: Commodities stumble through volatile March,  Danger lurks in `safe` metals
- Opalesque Exclusive: Update on Brevan Howard`s new India fund and new listed feeder fund
- Fund launches: Radcliffe Group readying volatility arbitrage fund, SPQR Capital delays opening of credit hedge fund, person says
- Goldman pulls plug on AQR account, Goldman Sachs` FoHFs may sell more shares
- Performance: Opalesque Exclusive: Harry Kat`s FundCreator update says performance in line with expectations
- Assets: TrimTabs / BarclayHedge: Hedge funds bring in $21.3 bln in February, New cloud on horizon for hedge funds as investors are abandoning them
- Pentagon Capital Update: SEC sues Pentagon over mutual fund trades
- Fund Profile: Balestra not on cloud nine
- WexTrust Capital announces name change for its Wexford funds
- Indices: All six Dow Jones Hedge Fund Strategy benchmarks posted negative returns in March, MSCI Hedge Invest Index down 2.86% in March, Credit Suisse/Tremont launches LEA Index which unites Latin America, EEMEA  and Asia high growth potential
- Bear Stearns Update: Regulators and bankers defend Bear Stearns rescue, SEC chairman Cox: Bear lost more than $10bln in a day last month, Interview with Jamie Dimon (video), Bernanke on JPMorgan-Bear Stearns (video)
- Credit Crunch Update: UBS` ex-president pushes for a breakup through activist-shareholder campaign, Fitch downgrades UBS to `AA-`, outlook remains negative, Canadian debt holders may sell votes to hedge funds, lawyer says, BoE: Credit conditions set to tighten further
- FT Comment: The financial fairytale of Goldilocks and the credit bears
- People: Highland appoints Gary Mendelsohn as managing director and senior portfolio manager, Gottex hires new senior MD based in Boston
- Other Voices: Carbon trading is good for the environment and for investors
- Peter Fusaro`s Carbon Footprint Exchange LLC launches its online carbon offset site
- Institutions: State Street retained by BP pension trustees to service GBP14bln ($27.7bln) in assets, Mercer`s Beenen to promote alternative strategies, Zurich International Life adds 130/30, currency funds to investment platform
- Regulators: Fed may keep an eye on excessive leverage in its new role, Lawmakers consider regulating credit default swaps, DFSA launches Islamic finance initiative with Hong Kong, EU to cooperate and beef up financial supervision
- Europe: Hermitage Capital alleges fraud and theft involving Russian Interior Ministry, SocGen Update:
SocGen reorganizes debt, currency, commodity division, Kerviel lawyer says has not sued SocGen, Northern Rock Update: Rock shares row risks damaging City
- Asia: Study: China investment boom masks governance risks
- Australasia: Soul-searching on short-selling: Investors turn to a familiar scapegoat as stock slump hits home, Scaremongering in Australia
- News Briefs: 100 Women in Hedge Funds` board of directors names beneficiary of its annual Gala, Alternatives `All-Stars` play hoops for NY charity, Timber fund announces joint venture, to invest up to $150m in Eastern Europe, US Futures Exchange contract aims to facilitate Indian equity exposure,  Fund aimed at Cuba investment grows, plans LSE listing, World Bank sees emerging market investment plunge in 2009
- And Finally. Man steals guitar by placing it in pants - how else?
- Logon: http://www.opalesque.com/index.php?act=archive

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Misc. Items of Interest

 

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Funnies, Facts, Quotes, etc….

 

importunate im-POR-chuh-nit, adjective:

Troublesomely urgent; overly persistent in request or demand; unreasonably solicitous.

 

camarilla kam-uh-RIL-uh; -REE-yuh, noun:

A group of secret and often scheming advisers, as of a king; a cabal or clique.

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Conference, Courses, Books, Papers

 

Great Research Sites:

 

Merrill Lynch research Link to full report including important disclosures see example

 

John Mauldin’s Weekly Analysis

 

James Altucher’s Website:

 

Other useful sites:

 

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Index Corner

 

The CSFB/Tremont Hedge Fund Index www.hedgeindex.com.

The Cogent Dynamic Averages http://www.cogenthedge.com/home/inv_strategy.asphttp://www.cogenthedge.com/home/inv_strategy.asp

The Dow Jones Indices: http://www.djhedgefundindexes.com/index.cfm?event=viewPremiumContent (free registration)

HFRX Indices https://www.hedgefundresearch.com/hfrx_reg/index.php?fuse=login&1170880431

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Regulatory Info

 

 

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Disclaimer

 

The information contained in this document does not constitute an offer or solicitation to sell any security or other type of vehicles to or by anyone in any jurisdictions, nor should it be regarded as a contractual document. Under no circumstances should the information provided on this document be considered as financial advice, or as a sufficient basis on which to make investment decisions. The information contained herein has been gathered by Investor DNA, LLC from sources deemed reliable as of the date of publication, but no warranty of accuracy or completeness is given. Investor DNA, LLC is not responsible for and provides no guarantee with respect to any of the information provided herein or through the use of any hypertext link. Past results are no indication of future performance. All information in this newsletter is for educational and informational purposes and does not constitute investment, legal, tax or accounting advice. All materials are the property of the respective publishers, as referenced by header and appropriate hypertext links.