Tag Archives: fund

UPDATE 3-Third Avenue parts with CEO soon after collapse of junk bond fund -WSJ

The collapse of Third Avenue’s Focused Credit Fund jolted Wall Street and renewed worries about the difficulty of trading securities on the U.S. bond marketplace. New York-primarily based Third Avenue is a relatively modest investment manager with fund assets that totaled $ ten billion at the beginning of the year.

A security guard at Third Avenue’s headquarters said on Sunday that Barse had been let go and was not allowed back in the creating, the Wall Street Journal reported.

A Third Avenue representative declined to comment. Barse did not respond to calls. His function e mail bounced back with the message “undeliverable”.

Third Avenue’s Focused Credit Fund was overwhelmed with heavy losses and surging investor net withdrawals, forcing Barse to abruptly liquidate the fund and block redemptions.

The redemptions and losses more than the previous year cut the size of the Third Avenue Focused Credit Fund to $ 789 million from almost $ three billion. Run by Tom Lapointe, the fund bet on distressed situations, such as the bankruptcy-related claims of Lehman Brothers. In a letter to investors last year, Lapointe, who could not immediately be reached for comment, stated distressed assets in his portfolio had been not necessarily illiquid or hard to trade.

The fund’s collapse is a blow to the reputation of Third Avenue Founder Marty Whitman, regarded the dean of American vulture investing. He hired Barse in 1991 to oversee the firm’s operations so he could spend much more time pursuing his own investment techniques.

Whitman could not be reached for comment.

The blow-up of the Focused Credit Fund was the most significant mutual fund failure considering that the economic crisis. The fund’s collapse shows the dangers of loading up on risky assets that are tough to trade even in excellent instances.

Just before Barse, 53, joined Third Avenue, he worked as a bankruptcy attorney defending the rights of creditors. He had been CEO of Third Avenue because 2003.

Whitman was a leader in a strategy that includes bets on the outcomes of businesses going via bankruptcy and other distressed conditions. The 91-year-old’s book titled “Distress Investing” distills decades of understanding about the ins and outs of bankruptcy restructuring.

In 2002, Affiliated Managers Group Inc purchased a majority equity stake in Third Avenue, with the remaining portion held by a broad group of workers that incorporated Whitman and Barse. Third Avenue, nonetheless, continued to operate autonomously from AMG, which holds stakes in a quantity of boutique asset management firms. AMG could not quickly be reached for comment.

(Reporting by Sam Forgione, Tim McLaughlin and Ross Kerber editing by Grant McCool)

Year’s greatest fund focuses on shorting “poorly made” ETFs

NEW YORK In a year that is shaping up to be the worst for hedge funds considering that at least 2011, one particular small-known lengthy-short mutual fund manager is beating some of Wall Street’s most significant names at their personal game.

David Miller, 35, is undertaking so largely by utilizing possibilities to short leveraged exchange traded funds which are ETFs that offer two or 3 instances the every day positive or negative return of an index and which have become increasingly well-known among hedge funds and other traders as the broad U.S. marketplace has flatlined. Leveraged ETFs have observed inflows of $ 9.five billion this year, according to Lipper information.

In what might be a cautionary tale for investors who have been drawn to leveraged funds, Miller’s $ 155.six million Catalyst Macro Technique fund, has posted returns of practically 47 % over the last year by focusing on their flaws. That functionality makes Miller’s fund the best performer among all actively-managed equity funds tracked by Morningstar this year, and practically 20 percentage points higher than the next-ideal performing fund.

The average hedge fund, by comparison, gained 1.1 % more than the identical time, the lowest return because the average loss of 5.4 percent in 2011, according to BarclayHedge.

At the heart of Miller’s technique is a bet against what he calls “structurally flawed” ETFs. He has a list of roughly 100 such ETFs, nearly all of them leveraged, that he utilizes as the basis for his trades.

Miller’s base case is that most leveraged ETFs are poorly made since the nature of compounding wipes out their gains over time.

An investor who puts $ one hundred into a two-instances leveraged fund realizes a gain of 20 % if the index it tracks goes up ten percent in 1 day. However if the exact same index goes down 9.1 % the next day to fall back to its beginning point, the same investor who had $ 120 will comprehend a loss of 18.2 % – or $ 21.84 – and be left with just $ 98.16.

Miller uses options to hedge his holdings, focusing on producing bets that an ETF will have choppy trading rather than sprinting off in any path, a approach that he says limits his losses.

For example, he has a net quick position on both an ETF that provides a triple good return of an index of Russian stocks and one that offers a triple adverse return of the same index based on the notion that Russian stocks have a tendency to be volatile.

Indeed, each funds are down this year considerably, while their underlying index, the Marketplace Vectors Russia ETF index, is up 22 %. The bullish fund down 27.6 percent even though the bearish fund is down 66.9 percent.

To be confident, the strategy is not foolproof and carries dangers of its personal, including high trading expenses incurred from frequent options trading and the threat that a leveraged ETF goes on a prolonged run beyond Miller’s strike price tag, leaving him on the hook for theoretically limitless losses.

At the same time, the U.S. Securities Exchange Commission proposed a rule on Friday that would force ETFs to limit their derivatives exposure, potentially forcing most leveraged ETFs to shut down [L1N1401IW]. In that case, Miller said he would be forced to pivot his possibilities technique to focusing on “inconsistencies” in the futures marketplace for commodities.

So far, Miller has been able to hedge away most of his losses. He has a net short position on the ProShares Ultra VIX Short-Term Futures ETF, a fund that returns two times the everyday performance of the S&P VIX Quick-Term Futures index.

The fund shot up much more than 11 percent on December 9 of this year. However Miller is prepared to appear previous such every day losses and focus on the lengthy-term tendency of leveraged ETFs to “decay,” he mentioned. The same fund he has a net brief position on, for instance, has a 78 % decline for the year to date.

Fund experts say that Miller’s approach of employing choices to quick leveraged ETFs is unique, but does not have a long enough track record to be judged as something a lot more than a fluke.

“This is quite uncommon to locate any fund that is using this as part of their approach,” said Todd Rosenbluth, director of mutual fund research at S&P Capital IQ.

At the identical time, Miller’s quick track record is its personal danger, he stated. His method “has worked out excellently this year for this fund, but it really is still only 1 year of performance,” he added.

Miller, meanwhile, says that he has such a lengthy list of what he calls poorly thought-out ETFs that he feels no want to hope that the fund market keeps introducing a lot more of them.

“There are so several terribly developed products out there already,” he says.

(Reporting by David Randall, with extra reporting by Saquib Ahmned editing by Linda Stern)

U.S. hedge fund partners at startup Livia split prior to they even begin – sources

NEW YORK Sara Tirschwell and Dan Kamensky lined up everything to launch a productive hedge fund, only to understand they could not function together, two individuals familiar with the matter told Reuters.

The pair decided on an amicable departure from their planned joint-venture, New York-based Livia Capital Partners, according to one particular of the men and women. Kamensky will relaunch the fund management organization on Jan. 4 as Marble Ridge Capital, the person mentioned. Marble Ridge will have the same five-individual group, minus Tirschwell, and it will practice the identical “distressed” approach, investing in the stocks and bonds of financially troubled companies.

On paper Livia seemed effectively positioned in a highly competitive market place. Tirschwell and Kamensky had honed their skills as senior distressed investment experts at $ 25 billion Davidson Kempner Capital Management and $ 18 billion Paulson & Co., respectively

Aurora Investment Management, which locations funds in hedge funds, had agreed to give them $ 175 million to support launch, according to one of the people.

And Tirschwell’s position as lead portfolio manager of the firm appeared to position it for investor capital reserved for ladies and minorities, who are drastically underrepresented in the hedge fund market.

Livia, legally launched in February, was set to start trading in December. Aurora has suspended its seed deal, according to the two sources. Aurora declined to comment.

A considerable portion of the consumers who had signed on with Livia are transferring their assets to Marble Ridge, according to the person. The firm will initially be closed to further capital but Kamensky expects to raise yet another $ 200 million in the future.

Tirschwell and Kamensky have known each and every other for years but in no way worked at the exact same organization.

Kamensky was a partner at Paulson who worked on distressed investing from 2009 till February this year. He was component of a team that made winning bankruptcy-associated investments, such as Lehman Brothers Holdings and Residential Capital, according to a third particular person familiar with his background. Just before Paulson, Kamensky worked at Barclays Capital and Lehman Brothers.

Tirschwell’s plans have been unclear and she did not respond to requests for comment. Prior to her decade at Davidson Kempner, she led or helped lead bank loan trading at Imperial Capital and NationsBanc Montgomery, which became Bank of America Securities.

(Reporting by Lawrence Delevingne Editing by Lisa Shumaker)

UPDATE 1-Institutional investors can be game changers on climate – Swedish fund

(Adds background, fund manager quotes)

By Bate Felix

PARIS Dec 7 Momentum among institutional investors to divest from carbon-intensive organizations is choosing up, creating them prospective game changers in curbing emissions, the head of a Swedish state pension fund stated on Monday.

His comments at a enterprise forum on the sidelines of the UN climate summit in Paris came as a quantity of huge pension funds mentioned they had been actively searching for to get into renewable power or firms that minimize their climate danger, and in some situations are operating with governments to promote green spending.

“Institutional investors as the universal owners of corporations, and as the biggest pool of capital, are entering the game,” mentioned Mats Andersson, chief executive officer of the Swedish national government pension fund AP4, which has 276 billion ($ 32 billion) under management.

One more fund, AP2, said last week it had divested from coal-fired power utilities.

Such investors “have also began to rid their big core and mainstream investment portfolios of the risks linked to climate alter and, in distinct, the dangers linked with the transition to a low-carbon economy,” Andersson told the forum.

Saker Nusseibeh, CEO of Hermes Investment Management with 29.5 billion pounds ($ 44 billion) beneath management and 146.six billion under advice, said “sensible money” in the investment community was going green.

“We are underweight fossil fuels, we are underweight on organizations with a high carbon footprint,” Nusseibeh told Reuters.

Torben Moger Pedersen, who heads PensionDanmark with a total asset base of $ 25 billion, stated the group had significantly increased its exposure to wind, biomass and solar energy over the last five years. “It is 10 percent of our total asset base,” he told Reuters.

Also in Paris on Monday, two institutional investors, German insurer Allianz SE and ABP, a pension fund for Dutch government and education sector workers, jointly stated they will join a group of investors who have pledged to fight climate adjust through their investments.

Launched final year, the group known as Portfolio Decarbonization Coalition (PDC) now includes 25 institutional investor at the moment overseeing the gradual “decarbonisation” of assets below management worth $ 600 billion.

“Climate change needs quickly and collective action and continued commitment for decades to come,” Oliver Baete, CEO of Allianz, said.

($ 1 = 8.5232 Swedish crowns)

(Editing by David Holmes)