Favorite Hedge Fund Trade Turning Sour in U.S. Media Slump
Hedge funds may be cooling on once hot media stocks, reports Bloomberg. Following a drop of 8.2 percent in two days in the 15-company Standard & Poors 500 Media Index, the gains may be gone after posting annualized returns of more than 33 percent since 2009. Hedge funds are retreating.
A lot of these funds are speculating on deals, theyre investors playing the spread and not fundamentals, Alpha Theory Advisors president Benjamin Dunn told Bloomberg. A few of these names are down big, he said, and you got some pile-on effect with the smaller ones as well.
Hedge Fund Losses From Commodity Slump Sparking Investor Exodus
When even Cargill Inc., the worlds largest grain trader, decides to liquidate its own hedge fund, thats a sign that commodity speculators are in trouble.
Hedge funds focused on raw materials lost money on average in the first half, the Newedge Commodity Trading Index shows. Diminishing investor demand spurred Cargill’s Black River Asset Management unit to shut its commodities fund last month. Others enduring redemptions include Armajaro Asset Management LLP, which closed one of its funds, Carlyle Group LP’s Vermillion Asset Management and Krom River Trading AG.
While hedge funds are designed to make money in both bull and bear markets, managers have a bias toward wagering on rising prices and thats left them vulnerable in this years slump, said Donald Steinbrugge, managing partner of Agecroft Partners.
No one wants to catch a falling knife, and demand for commodity-oriented hedge funds is very low, said Steinbrugge.
Loeb Sees Energy Credit Opportunity, Builds Short Stock Bets
Hedge fund manager Dan Loeb said hes looking for opportunities in energy-related debt after oil prices resumed their decline. Energy is presenting some very interesting opportunities in credit right now, Loeb said in an earnings call Third Point Reinsurance Ltd., the reinsurer where he oversees investments. So we are looking at that.
Loeb said he has mostly steered clear of energy recently, sidestepping a second plunge in oil prices that hurt investors who were suckered in. He said in February that money managers raising funds to capitalize on energy distress might be disappointed.
Markets have been volatile since then. Oil prices have fallen by 25 percent since the end of June, wiping out a second- quarter rally.
Were looking for it to form a bottom, and energy wont be permanently at this level, he said. We dont have meaningful exposure right now.
Prudential to buy Deutsche Bank asset-manager unit in India
The Indian unit had average assets under management of more than $3 billion in the second quarter, Newark-based Prudential said but didn’t disclose terms.
Prudential has been seeking to bolster its investment-management business to boost fee income, adding talent from firms including Goldman Sachs Group and BlackRock. The insurer hired David Hunt from McKinsey & Co. in 2011 to run the operation, and he helped build assets under management to more than $940 billion from about $580 billion.
“Deutsche Bank’s highly respected investment and client service teams complement the strong team we already have in place to serve new and existing clients, as we continue to build our business across India,” Hunt, chief executive officer of Prudential Investment Management.
Selling the asset-management unit to Prudential fits the strategy of “focusing on our core businesses where we can achieve a leadership position,” said the CEO of Deutsche Bank Group India. “We remain absolutely committed to further investment and development of our business here.”
