Hedge Crunch Financial

Several energy hedge funds in Europe to surrender after withdrawal from investor capital.  The surrender came from at least six hedge funds (4 in May and 2 in June). The hedge funds manged more than 158,000,000 U.S. dollars together.

The funds had declining commodity prices and failed to resolve their bets after the investors withdrew large amounts of money. Worldwide energy fell to 19 percent between May and June. This is opposed to the growth according to a study from JP Morgan Chase apparent that points to industry growth during the same period of plus 0.9 percent.

There has been a major pull back , ” said Fredrik Adolfson, a fund manager at Adapto Energy Fund . ” I cannot remember a period when so many Hedge funds in this respect have thrown towel,” added Fraser McKenzie, head of analysis at 47 Degrees North Capital Management, a fund with investments in the energy sector.

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.

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.

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.

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 has  to say about the current economic trend.

Laurus-Valens, the New York based investment advisory firm, announced the launch of the Valens Yen Fund. Valens, which currently oversees approximately $1.6 bln in assets and runs a variety of funds, launched the yen fund with assets of 1 bln JPY.

The Fund has been designed specifically in response to Japanese investor interest in the Valens investment strategy and it will provide qualified Japanese investors with access to a mirror image of the Laurus Offshore Fund, with minimal currency exchange risk. “Our yen denominated fund provides our Japanese investors with access to investments in U.S. micro cap and late stage private companies and makes their investments more stable for them, as they won’t be susceptible to the value of the dollar sinking or spiking at any time,” said Dennis Pollack, Partner and Senior Managing Director.

By; Kirsten Bischoff, Opalesque New York:

Dennis Pollack, partner and senior managing director at Laurus-Valens, an investment management firm specializing in investments in small and micro cap companies, announced that Jay Drezner has joined Laurus-Valens as a senior investment analyst. Mr. Drezner has an extensive 9 year background in the finance and investment banking industry.

“I am truly pleased that Jay will be a part of our team. Jay’s background in both domestic and international investment banking will offer Laurus-Valens new insight and opportunities as we seek sound and profitable investments for our portfolio,” said Dennis Pollack.

Mr. Drezner will be responsible at a senior level for analyzing, structuring and executing new transactions as well as working with existing Laurus-Valens portfolio investments to maximize value and return potential. Prior to joining Laurus-Valens, Mr. Drezner spent nine years at Credit Suisse Securities (USA) LLC, most recently as a director in the Leveraged Finance Group where he covered companies in the aerospace and defense, satellite services, and air transportation sectors and executed a broad variety of leveraged finance transactions.

Prior to moving to the Leveraged Finance Group, Mr. Drezner was in the Buyside Insights Group at Credit Suisse, where he worked with corporate clients in the consumer products, business services and mid-cap industrials space to enhance equity values through the use of value-based management consulting techniques. Other roles Mr. Drezner had at Credit Suisse included serving as a vice president in Credit Suisse’s Australian investment banking operation, covering media and telecommunications companies, and two years as an Associate in Credit Suisse’s New York office in the Media & Telecom coverage group. Mr. Drezner began his professional career in the early 1990’s with D’Arcy Masius Benton & Bowles, Inc., an advertising agency, as an assistant media director handling major corporate consumer product clients. “I am thrilled to join Laurus-Valens and look forward to the challenges ahead. I am eager to work with such a knowledgeable and esteemed group of finance and investment professionals,” said Mr. Drezner.

Mr. Drezner holds a BA in Psychology from Cornell University and an MBA in Finance from Columbia Business School.

Laurus-Valens, a New York-based firm specializing in hedge funds that make private investments in publicly traded small and microcap stocks has hired a managing director from A.G. Edwards.

These private transactions typically give the Laurus funds warrants for the right to purchase stock at a discount to market prices. The funds seek double digit returns with lower volatility than the broader markets.

Dennis Pollack, senior managing director of Laurus-Valens, said Thursday that veteran investment banker Kendall Raine has joined the firm as a partner and senior managing director.

“Kendall‘s background will offer Laurus-Valens new insight and opportunities during this volatile time in the market,” said Pollack.

Raine, who will oversee a variety of strategic and capital markets initiatives, joins from A. G. Edwards, where he was managing director in the investment banking department. At A.G. Edwards, he was responsible for more than 100 advisory and capital markets transactions for business development, mortgage, and consumer finance companies, private equity firms and other specialty finance companies.

Prior to Edwards, Raine worked for Bear Stearns as associate director responsible for investment banking relationships with Midwest depository institutions. Before that, he was chief executive officer of Los Angeles-based United Pacific Bank and senior executive to the banks’ parent company.  Raine began his banking career as a calling officer in the Asia division of Chemical Bank.

Laurus-Valens, one of the nation’s largest investors in penny stocks, has approximately $1.7 billion in assets under management.  Laurus invests in private investment in public equity, or Pipes, a financing vehicle for small, cash-strapped companies. Hedge funds use Pipes to buy shares at a discounted price and can quickly resell them.

Last March, Laurus Capital Management LLC launched Valens Fund to invest in publicly traded small and micro-cap companies seeking cost effective growth capital.

Laurus-Valens, a New York-based firm specializing in hedge funds that make private investments in publicly traded small and microcap stocks has hired a managing director from A.G. Edwards.
These private transactions typically give the Laurus funds warrants for the right to purchase stock at a discount to market prices. The funds seek double digit returns with lower volatility than the broader markets.
Dennis Pollack, senior managing director of Laurus-Valens, said Thursday that veteran investment banker Kendall Raine has joined the firm as a partner and senior managing director.
“Kendall’s background will offer Laurus-Valens new insight and opportunities during this volatile time in the market,” said Pollack.
Raine, who will oversee a variety of strategic and capital markets initiatives, joins from A. G. Edwards, where he was managing director in the investment banking department. At A.G. Edwards, he was responsible for more than 100 advisory and capital markets transactions for business development, mortgage, and consumer finance companies, private equity firms and other specialty finance companies.
Prior to Edwards, Raine worked for Bear Stearns as associate director responsible for investment banking relationships with Midwest depository institutions. Before that, he was chief executive officer of Los Angeles-based United Pacific Bank and senior executive to the banks’ parent company. Raine began his banking career as a calling officer in the Asia division of Chemical Bank.
Laurus-Valens, one of the nation’s largest investors in penny stocks, has approximately $1.7 billion in assets under management. Laurus invests in private investment in public equity, or Pipes, a financing vehicle for small, cash-strapped companies. Hedge funds use Pipes to buy shares at a discounted price and can quickly resell them.
Last March, Laurus Capital Management LLC launched Valens Fund to invest in publicly traded small and micro-cap companies seeking cost effective growth capital.

By Natasha Gural, Editor