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New Hedge Funds Slated to Appear in the Coming Year

According to hedge fund research firm Pivotal Path, 2024 is poised to witness the launch of 40 high-profile hedge funds by former portfolio managers from major investment firms. Veterans from several notable firms are initiating their ventures, aiming to leverage their past successes in the investment arena.

Industry insiders have said that this year’s figure will surpass the 26 launches from last year, suggesting a growing trend of seasoned executives seeking independence. The new funds will focus on a range of areas, including technology media, healthcare, and industrials.

The industry’s consolidation and the need for a strong pedigree are making it increasingly challenging for new entrants to attract investor interest. Despite a slight dip in investor appetite for early-stage launches, the demand for credit funds is rising, due to the high interest rates affecting the bond market. New funds like Parliament Holdings and Confido Capital are set to focus on credit investments, with aims to capitalize on distressed opportunities and multi-sector fixed income strategies, respectively.

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Unpredictable Gas Prices

Investors in London are more pessimistic about U.S. natural gas prices than they’ve been since the early days of the COVID-19 pandemic. Although prices are at the lowest they’ve been since natural gas futures began trading in 1990, the experts have been betting that prices will drop even further. Recently, hedge funds and other financial players sold off a huge amount of natural gas in anticipation of falling prices.

Despite these low prices, stakeholders have failed to predict when prices would start to rebound. Prices continue to fall, partly due to mild weather from El Niño reducing the need for heating gas. With gas supplies remaining high in North America and Europe, investors face the risk of losing money unless there’s a clear sign supplies are dwindling.

Despite this bad news, shareholders are feeling more optimistic about oil. In one week, they bought a significant amount of oil futures, reversing their previous sales. This buying spree happened across various oil markets, suggesting a growing confidence in the oil sector.

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Gambino to Depart Eisler Capital

Sean Gambino is set to depart from Eisler Capital less than two years after joining the $4 billion multi-strategy firm. Gambino, who joined Eisler in mid-2022, is transitioning to establish his own management venture. His move contrasts with the trend of investors shuttering smaller firms to unite with larger multi-strategy funds, enticed by significant payouts and diminished compliance and technology challenges.

Previously overseeing Heron Bay Capital in Stamford, Connecticut, for seven years, Gambino brings experience from roles at Schonfeld, BGC, and Schottenfeld. While details about his new fund remain limited, it is confirmed that Eisler will provide support to the nascent venture.

Despite losing a portfolio manager in the early months of 2024, Eisler’s team has substantially expanded, boasting 60 portfolio teams—an increase of 50% since the beginning of 2023. Operating from 10 offices across Europe and the U.S., Eisler achieved a 9.8% return in 2023.

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Hedge Fund Executive Explores the Deep Sea

Anthony Clake, a 43-year-old executive at Marshall Wace in London, has been identified as a significant player in the world of deep-sea exploration for sunken treasures. According to a Bloomberg Businessweek investigation, Clake does not dive into the ocean depths, but he has invested in and overseen sophisticated operations that use cutting-edge technology to locate lost riches resting on the ocean floor.

As an executive at Marshall Wace, a major hedge fund managing around $62 billion in assets, Clake has been instrumental in funding treasure-hunting endeavors. He funds the use of advanced equipment, such as marine robots capable of descending to depths up to 6,000 meters, and a high-tech sonar system used for generating detailed 3D maps of the seabed. Clake’s successful ventures include the discovery of the SS Coloradan, an American steamer carrying gold precipitate sunk by a German U-boat near South Africa, and a sunken ship off the coast of West Africa containing 50 tons of silver coins. Such findings often lead to secrecy, and the melting down and selling of the recovered coins, accompanied by non-disclosure agreements for all involved.

Clake’s earnings from these ventures remain undisclosed. He said, “I don’t do it for a living, I find it interesting to use technology to solve problems under the sea.”

Sizer to Launch New Fund

Freddie Sizer, the former head of European physical gas trading at Freepoint Commodities LLC, has left the firm to launch a gas and power hedge fund. Sizer aims to begin fundraising later this year, with plans to debut the fund in 2025.

Sizer’s career in natural gas trading included stints at BKW AG and Vattenfall before his three-year tenure at Freepoint’s Zug office. His decision to resign aligns with a broader trend among commodities traders, who are moving towards establishing independent hedge funds amidst market volatility fueled by the transition from fossil fuels, weather-induced supply constraints, and geopolitical events.

Europe’s gas market has seen significant price fluctuations following Russia’s invasion of Ukraine, prompting increased activity from hedge funds. Despite a recent easing in price volatility, the market is expected to remain unstable until alternative supply sources fully compensate for the loss of Russian gas in 2026. Many hedge funds have responded by expanding their focus on European gas trading.

Weiss Closes After Nearly 50 Years in Business

After nearly five decades of operation, Weiss Multi-Strategy Advisers LLC has announced its closure. This New York-based hedge fund was established in 1978 by George Weiss. The decision to shut its doors was articulated by Weiss in a heartfelt letter to clients and partners. It marks the end of a significant chapter in investment management. “Every journey has twists and turns, and after careful consideration of various factors and circumstances, I have arrived at the difficult decision to conclude this journey.”

At 81, George Weiss has overseen the careful winding down of the majority of client portfolios. The firm has been known for deploying diverse investment strategies through multiple teams. In leaner years it has displayed remarkable resilience and the ability to navigate market fluctuations. As of 2023, Weiss Multi-Strategy Advisers managed $3.1 billion and reported a 6% gain.

Weiss has long been a notable player in the hedge fund industry. The fund’s closure is reflective of a broader trend in the hedge fund sector, where investor interest has been generally receding, particularly for multi-strategy funds.

The Growth of Cat Bonds

In 2023, hedge funds experienced never-before-seen profits in the volatile debt market, particularly through catastrophe bonds (cat bonds). Cat bonds outperformed other high-risk fixed-income securities by delivering a 20% return, which is significantly greater than the 13% of high-yield US corporate bonds and the 4% of US Treasuries. This success has not attracted hedge funds as well as mainstream investors. Some institutions are now considering small allocations to diversify their portfolios.

Cat bonds were designed to protect the insurance industry from large-scale losses by transferring the risk to investors. Their recent resurgence can be attributed to an increase in weather-related events and the impact of inflation which makes it expensive to rebuild after a natural disaster.

Significant returns and the diversification benefits of cat bonds have drawn attention from mainstream institutional investors and wealth-management platforms, leading to an expansion in the cat bond market. The market reached about $100 billion by the end of the third quarter of 2023.

Investment in cat bonds, however, remains a niche market, with high risks and potential for losses when disasters trigger payment clauses. Yet, the current market trajectory and the possibility of continued returns suggest a growing interest in this strategy.

GCW Global Customised Wealth LLP and Collwick Capital Form Strategic Alliance

GCW Global Customised Wealth LLP (“GCW”) and Collwick Capital, LLC (“Collwick”) have officially solidified a strategic relationship, marking a significant move in fostering closer collaboration between the two financial entities.

The agreement entails GCW’s involvement in Collwick’s hedge fund investment program, allowing access to GCW’s proprietary analytical tools that specialize in risk assessment and ongoing investment performance evaluation.

Beyond this collaboration, both firms aim to synchronize efforts on various investment initiatives and projects beneficial to their interests. Notably, the partnership will see John Wickham, co-founder of Collwick, joining GCW’s Investment Committee.

Operating across London, California, and New York, GCW provides comprehensive wealth management services globally. Collwick, headquartered in Charlotte, North Carolina, specializes in hedge fund investment programs catering to qualified individuals and institutions.

David Bizer, Managing Partner and co-founder at GCW, expressed optimism about the collaboration’s potential, emphasizing the benefits it could bring to clients by leveraging Collwick’s expertise in hedge fund research. Meanwhile, John Wickham highlighted the opportunity for Collwick to gain insights from GCW’s proprietary performance software.

Siggi Thorkelsson, Managing Partner and co-founder at GCW, emphasized the collaborative potential for evaluating global investment opportunities resulting from the alliance with Collwick.

The alliance between GCW and Collwick signifies a strategic partnership aimed at maximizing investment potential and exploring avenues for mutual growth within the global financial landscape.

AI will not cause Hedge Funds to Cut Employees

As AI takes the world by storm, many in the financial industry are concerned for their jobs.

A survey of employees in the banking and insurance world revealed that nearly 75% believe that AI is a threat to their jobs. 33% anticipate AI related layoffs of 30% in the next three years. 

Gary Collier, Chief Technology Officer of Man Group, issued a reassuring message to the Financial Times, “At least in the next five-10 years I don’t expect big technology job cuts due to the AI boom… People should not be scared of AI. If anything, we are planning to expand our team and are looking for software developers and engineers in particular to build our next generation of technology products,”.

Rather than cutting jobs due to the increased capabilities of AI, Collier maintains that the finance industry will continue to hire innovative individuals who can use AI to discover the next big things.

Collier explained, “The number of ideas that the firms have and their desire to build products based on AI technology are greater than the available pool of talent…the new AI talent is adding value to the firms and helping them build innovative products.”

Steve Cohen Shares Optimism at Investors Conference

At the Robin Hood Investors Conference, Steve Cohen, founder of Point72 Asset Management and owner of the New York Mets, expressed optimism that the U.S. economy will experience robust growth in 2024.  Although the market suffered a brief and relatively mild “fake scare” recession this year, Cohen believes the economy will rebound swiftly, leading the Federal Reserve to raise interest rates more than expected, thereby fueling a 3% to 5% stock market rally.

Cohen also discussed the potential of artificial intelligence in his firm, expressing confidence in harnessing it for value creation.

Notably, some of his hedge-fund peers have voiced concerns about the U.S. economy. Some fear an economic slowdown beyond what data indicates, and others predict a double-digit stock selloff preceding a recession.

Data from the Commerce Department indicated a 4.9% third-quarter GDP growth, surpassing economist expectations. However, other indicators, corporate earnings reports, and the Fed’s Beige Book of anecdotal business owner attestations have raised concerns about the economic outlook. Cohen’s optimism at the conference provides a contrasting perspective in the world of finance.