Hedge Crunch Financial

The latest hedge fund news shows that Lumix Capital AG is planning to launch an agricultural hedge fund during this quarter. Since June of 2008 the Lumix AgroDirect Fund has been incubated.  They invest in the production of soft commodities in four countries – Uruguay, Argentina, Brazil and Paraguay.

As Lumix’s managing partner, Gonzalo Fernandez Castro explained to FINalternatives, “Farming is very volatile when you talk about one plot of land. If you have 1,000 plots of land in different areas, the volatility is very much reduced.”

So far, the firm has raised $20 million US dollars of capital from both partners and seed investors.  It targets to raise $100 million for its first offering.

This is one example of interesting new hedge fund news like the news that frequently comes from companies such as the NIR Group with Corey Ribotsky and many other locations.

In an attempt to draw investment back to Southeast Asia, the six major Association of Southeast Asian Nations (ASEAN), including Thailand, Indonesia, Malaysia, Singapore, the Philippines and Brunei, have recently agreed to eliminate import duties on goods of all sorts. Such goods include cars, consumer electronics and more. This agreement comes three years earlier than was previous planned, and also includes a cut to 5% or less on tariffs for items remaining outside of the agreement. Certainly, this is good news for business leaders in Malaysia and other Southeast Asia markets such as Taek Jho Low, Harun Johar, Dr Sulaiman Mahbob and others.

Recent economic realities and difficulties have led to this drastic measure with the aim of building a larger market for these ASEAN countries. Both India and China have shown dramatic growth in foreign direct investments, while investments with Southeast Asia have been slowing. In addition, the countries of the Association of Southest Asian nations have been weakening as a result of the Multi Fibre Agreement that is scheduled to expire at the end of the year. Granting Southeast Asian countries quotas on textile and clothing exports to the U.S. and Europe, this agreement provided guaranteed jobs that will now be lost to lower paying and more efficient workers in China and similar locations.

Fearing job losses to China, the Southeast Asian leaders like Lee Kam, Taek Jho Low, and others are attempting to speed up integration and to maintain their hold on exports. As Philippine President, Gloria Macapagal Arroyo aptly noted at the meeting “We only see one way out; that is not by looking west but by looking inward.”

Back in 2006 the largest of the United States- based hedge funds’ combined assets reached the magic one trillion dollar mark. As of January 1st, 2007, the total assets held by 241 firms, each one managing at least $1 billion, were responsible for a combined asset value of $1,200 billion, or 1.2 trillion dollars.

Among those 241 funds, according to the bi-annual survey of hedge fund performance done by Absolute Return, an industry publication, the NIR Group of Roslyn, New York, showed the largest increase in asset value in terms of raw percentages, a 789% increase.

Corey Ribotsky, the managing member of the NIR Group, launched a credit opportunities fund in 2005 which went from a value of $407 million to $3.62 billion in just one year.

According to Frank Packard, the representative for Triple-A Partners Ltd, which is a provider of start-up capital for hedge funds,

“Hedge funds that are surviving and prospering will see an increase in their assets under management going forward. Hedge fund investors tend to be more long-term than month-to- month and we may be seeing some people taking money out of the equities market to invest in hedge funds.”

Eurekahedge, the Singapore-based research firm declared that the global hedge fund benchmark is up 16% so far this year, and if this trend continues then hedge funds will experience their best yearly performance since 2003. This is a great positive trend, especially considering 2008 was the worst year in history for hedge funds, due to the world-wide financial crisis.

There was a net loss of number of hedge funds, with 150 new funds begun and 150 old funds closing shop, according to Eurekahedge.

According to the research firm Eurekahedge Pte, hedge fund assets increased in the month of October by $7.8 billion, making it the sixth consecutive month in which assets did so. The gain was led by European managers in response to their regions emergence from the global recession, according to the Singapore based research firm.
Dollars flowed into hedge funds to the tune of $10.2 billion, while losses totaled $2.4 billion in October. Taken together the funds represent over 1.45 trillion dollars of assets under management.

Despite the fact that hedge funds performance was not spectacular due to the international stock market drops, the funds were still deemed attractive in investors. The Eurekahedge Hedge Fund Index actually lost 0.3% last month, putting the brakes on a seven-month long rise in value. Another index, the MSCI World Index, also fell, by 1.9% in October, putting an end to a three-month gain of 17%. Investors concerned that stocks have already outpaced the prospects for continued economic upturns drove the market downwards.

Habitat for Humanity sees as its mission bringing the dream of home ownership into the reality of hard-working families who otherwise would not be able to afford it. The New York City branch of Habitat for Humanity purchases vacant lots  for $1 from the city, and then develops them with monies which are raised in a large variety of ways, including through loans, foundation grants, state funds, sales revenues and fund-raising.

As the number of possible sites available for development decreases while the cost of their development skyrockets, Habitat for Humanity decided to enlist the help of the private sector in order to acquire a portion of the needed funding.

For the first time since its establishment in New York in 1984 Habitat is enlisting the help of a well-placed sector in the New York economic and financial world, and that is through hedge fund managers. A few years ago real estate agents helped in the effort, raising over $100,000 towards Habitat’s latest project, the Atlantic Avenue condominium development which includes 41 affordable condo units in the Ocean Hill-Brownsville section of Brooklyn.

The Brooklyn Borough president’s office has also contributed to this undertaking, along with Corey Ribotsky of the NIR Group, LaCrosse Global Fund Services,  PNC Multifamily Capital and a long list of other private sector supporters that believe that “investing in human capital contributes to the success of the hedge fund industry, and New York City.”

There are two approaches to investing in the “Green Sector”, industries and products which focus on renewable resources and other sustainable innovations. According to Corey Ribotsky of the NIR Group, you either have to be “green focused,” meaning that you just pick and choose green technology, whether it is hardware or software, or you have to look at “green infrastructure” meaning that you are investing in the actual products and/or services themselves. This can include a huge variety of industries worth investing in, including energy to cars, to “almost anything under the sun.”

Ribotsky explains that he has seen many types of investing styles, from investors with a large number of different transactions as well as investors with quite a lot of different focuses. Many of these deals that he has seen are from other investment banks or other private equity investment firms. These deals are happening with a lot of partnerships. According to Ribotsky, one of the greatest benefits that has come from this market is the co-generation of ideas.
What we are anxiously awaiting is the moment when the inevitable new influx of innovative and revolutionary technologies and services emerge so that we can be a part of it.

The past couple of years have been challenging for investors, to say the least. But proving once again that the saying, “What goes down must come up” is true , hedge funds are about to recoup all the losses they sustained in the most recent critical credit crunch of the past year and a half. Many funds are now placed in positions to earn performance fees, and the average fund only needs a mere 2% gain to reach the value it had as of June 30, 2007, which was the summit of the last boom.

If things continue as they have been going recently, by the time the end of next month rolls around, the hedge fund industry will reach above the highest level of two years ago. This comeback is due to average returns of 18.3% this year as of October 21st, almost completely counterbalancing the crushing 19% downturn which made 2008 so difficult for investors.

In an insightful and timely article written for Forbes.com, Alan Quasha of Quadrant Management expresses more than a little dismay at the state of current finances of the United States government. Quoting Thomas Jefferson, who wrote in a letter in 1802 to his Treasury Secretary, “We might hope to see the finances of the Union as clear and intelligible as a merchant’s books, so that every member of Congress and every man of any mind in the Union should be able to comprehend them, to investigate abuses and consequently to control them.” Quasha points out that Jefferson would be very disappointed indeed at the present state of affairs of the federal government.

Only with tremendous exertion could a comprehensive financial statement including income, balance sheet and cash flow report be published by our government today.

Quasha explains that the Office of Management and Budget prepares the annual budget through the executive branch, while the Congress also determines the budget through the Congressional Budget Office. But these budgets are not comprehensive since they only address cash flow which helps the government recognize whether there was a deficit or surplus.

This type of analysis is certainly useful, but it is not complete. Billions of dollars are spent each year for liabilities which, although not yet due, will be coming due in the future.
The true amount of accrued spending is hardly ever reported. This figure can only be discovered through the perusal of another document which the U.S. Treasury publishes. A hard look at this figure reveals a fact which is shocking; in addition to the fact that the real deficit is consistently underreported, the deficit is dangerously high.

Optimism has taken hold of hedge fund managers lately as the major indexes, such as the Eurekahedge Fund Index and MSCI World Index show gains in the month of July. This month’s gain continues a 5 month upward trend for hedge fund managers.

According to the Eurekhedge Index, July posted a 2.1 percent gain, while the MSCI showed a remarkable 8.4% rise. The year to date improvement comes to 12 percent for the Eurekahedge and 14 percent for MSCI.

Hedge fund managers are feeling relief to finally be leaving the difficult times of the 2008 financial markets. They are hopeful that the rest of 2009 will leave the recession behind in the dust bowl of history. Many analysts view 2008 as the worst economic downturn since the Great Depression of late 1929 and the 30’s.

We expect some of the hedge fund managers we have been covering to react to the hopeful news, and we will keep you posted as to what Gregg Hymowitz of EnTrust Capital and Corey Ribotsky of NIR Group have to say about the current economic trend.