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Main News

 

The Short View: Moral hazard -- [at FT Investor]
By John Authers, MarketWatch
7/23/2007 11:40:20 AM

 

Borrowing Trouble 
Bear Stearns sends out a "Dear Valued Client" letter. Whatever happened to the summer doldrums?
http://online.barrons.com/article/SB118462832136368193.html?mod=djem_bwr

 

Hedge Fund Returns - Illusion or Fact?

Posted on July 15, 2007 by Susan Mangiero

 

 

By PR Newswire7/19/2007 1:46:00 PM By PR Newswire7/19/2007 1:46:00 PM By PR Newswire7/19/2007 1:46:00 PM

SUBPRIME WOES HIT B'KLYN: http://www.nypost.com/seven/07222007/business/subprime_woes_hit_bklyn_business_paul_tharp.htm
By PAUL THARP
Alex Boxill, a retired CUNY executive living in Canarsie, is having his life turned upside down because of a subprime mortgage. The 65-year-old and his wife - who have pretty good credit scores - claim they were duped into a junk mortgage with an adjustable rate when they were hit with some...

The Next Takeover Targets?
7.19.07, 6:00 AM ET - Robert Maltbie
Ten ugly ducklings that private equity firms may love to own.

Copper Gains on Speculation Global Growth to Increase Demand
Bloomberg - USA
China's economy in the second quarter expanded at the fastest pace in 12 years, the statistics bureau said in Beijing today. Federal Reserve Chairman Ben S. ...
See all stories on this topic

Fund managers flag up derivatives risks
Fund managers believe lack of understanding by clients about derivatives, the rapid growth of credit default swaps and collateralised debt obligations, and the potential for mis-selling by investment banks of complex structured products are the biggest risks facing the derivatives markets, according to a survey compiled for Financial News.
http://mail2.efnmail.co.uk/r/308655/MTk4MTI1OjE0NTk2/

 

JP Morgan heads hedge fund league
JP Morgan Asset Management has become the largest hedge fund manager in the world, proving that global distributors can buy into the sector and win.
http://mail2.efnmail.co.uk/r/308659/MTk4MTI1OjE0NTk2/

 

Abu Dhabi launches second investment unit
Abu Dhabi has launched a second investment vehicle to complement its investment authority and is hiring staff, including a head of private equity and managers.
http://mail2.efnmail.co.uk/r/308669/MTk4MTI1OjE0NTk2/

 

Risk appetite on the rise
Correlation is every asset allocation fund's worst nightmare. Jeff Knight, who runs $17bn (?12.3bn) in asset allocation funds at Boston-based Putnam Investments, knows this well. He believes the record liquidity levels have led to an expansion in investors' risk appetites.
http://mail2.efnmail.co.uk/r/308611/MTk4MTI1OjE0NTk2/

 

Asset managers highlight operational obstacles
Asset managers are increasingly aware that operational shortcomings are holding back their use of derivatives, according to a survey on derivatives in fund management by Financial News and Euronext.liffe.
http://mail2.efnmail.co.uk/r/308615/MTk4MTI1OjE0NTk2/

 

Yen Trades Near Record Low Versus Euro as Carry Trades Increase
Bloomberg - USA
Federal Reserve Chairman Ben S. Bernanke yesterday told the Senate Banking Committee the yen is a ``market determined exchange rate,'' which is the ``way to ...
See all stories on this topic

 

Australian banks count exposure to ailing hedge fund
Mon, 23 Jul 2007, 06:09
Reuters

The funds management arms of some of Australia's biggest banks are scrambling to assess more than AUD300 million (USD264 million) in exposures to troubled local hedge fund Basis Capital, which has lost heavily in bets gone wrong in the US subprime crisis. The wealth management units of banks including Commonwealth Bank of Australia Ltd. (CBA.AX) and Westpac Banking Corp (WBC.AX) offered the Basis Capital funds to retail investors through a variety of investment platforms, the banks said on Monday.

 

CANADA - A strong domestic currency harmed pension fund returns in the second quarter of 2007, according to RBC Dexia Investor Services.

 

Growth in credit derivatives precipitates settlement problems

 

 

Vanishing vigilantes

 

Alternative Assets At Top Firms Soar 40%
Alternative assets at the top 300 U.S. money management firms as ranked by Institutional Investor soared 39.81% last year, more than double the rate of growth from the year before.

 

NEW YORK — Bear Stearns Asset Management, engulfed in recent weeks by issues surrounding two faltering hedge funds, is now set to part with one of its top traditional equity managers and more than a...

 

MarketWatch First Take: China shows it's not worried about a credit-market blow-up
By MarketWatch 
7/23/2007 7:02:00 AM

 

Turmoil in the credit markets -- [at FT.com]
FT.com
7/23/2007 8:20:29 AM

 

The Federal Reserve, the Office of the Comptroller of the Currency, the Office of Thrift Supervision and the Federal Deposit Insurance Corporation reached an agreement last week regarding the implementation of Basel II in the United States.

Full Story...

 

Hedge funds are significant players in the U.S. capital markets, but differ from other market participants in important ways such as their use of a wide range of complex trading strategies and instruments, leverage, opacity to outsiders, and their compensation structure.

Full Story...

 

UK Awaits Retail Access To FoHFs
Financial Times - Monday July 23, 09:47 BST

 

Institutional Investors Still Heading For HFs
Institutional Investor - Monday July 23, 09:39 BST

 

Vranos Hedge Seeks $750 Mln For Subprime
Reuters - Monday July 23, 08:03 BST

 

The latest trend in business methodology is management by data. The trick seems to be to gain advantage by analyzing today's problems while looking creatively for tomorrow's opportunities.
http://online.wsj.com/articles/in_the_lead?mod=djemtct

 

Kat Cool on Edhec Replication Evaluation

LONDON (HedgeWorld.com)—A recently published paper from Edhec Risk and Asset Management Research, part of the Nice, France-based Edhec business schools, raises a number of interesting questions about the ability of recently developed techniques to passively replicate hedge fund returns. ......

 

In Turkish Vote, Ruling Party Wins By Wide Margin
ISTANBUL, July 23 -- Voters on Sunday overwhelmingly returned to power a political party that brought a mix of mild Islam and intense economic development to governing Turkey, rebuking the secular military whose challenge led to the early election.
(By Ellen Knickmeyer, The Washington Post)

 

Trouble in Hedgefundistan: "Its gonna get a lot worse
The Market Oracle - London,UK
Does that mean that the entire hedge fund empire--which is built on a foundation of dodgy loans and quicksand---may be headed for the crapper? ...
See all stories on this topic

 

The Hedge-Fund 'Clones'
Wall Street Journal - USA
Merrill Lynch says its Factor Model clone should deliver the full, after-fee returns of the average hedge fund, as tracked by the HFRI Fund Weighted ...
See all stories on this topic

 

 

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Yield Curve Corner

 

BOND REPORT Treasuries fall as investors remove safe-haven bid
MarketWatch - USA
Treasuries rallied last week after Federal Reserve Chairman Ben Bernanke suggested that inflation would ebb and that the slumping housing market would ...
See all stories on this topic

 

Bernanke: Fed Acting on Abusive Loans
Forbes - NY,USA
By JEANNINE AVERSA 07.19.07, 5:35 PM ET Federal Reserve Chairman Ben Bernanke offered fresh assurances on Thursday that regulators are taking steps to ...
See all stories on this topic

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Natural Disaster Corner

 

Climate Prediction  http://www.nws.noaa.gov/predictions.php

World Meterological Organization http://severe.worldweather.org/

Tornadoes: http://www.disastercenter.com/tornado.htm

Great Sat Pictures of events: http://www.osei.noaa.gov/Events/Current/FSHSusnw204_G11.jpg

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Iranian Situation

 

Watch "The Most Wanted Man in Iran"

 

A Formula for Evading Penalties in Nuclear Watchdog’s Deal with Tehran
DEBKAfile Exclusive Report
14 July:  Although it is full of holes, the deal struck with the UN nuclear watchdog for visits to Natanz and the Araq heavy water reactor is a diplomatic breakthrough for Tehran. It arms the sanctions opponents in the UN Security Council with arguments to hold off a third round of punitive measures against Iran for refusing to abandon uranium enrichment. Tehran has won an uninterrupted space up until December 2007 for its last stretch on the road to its objective with immunity against further sanctions or a US or Israeli military attack. On June 22, Iranian interior minister Mostafa Pourmohammadi announced that Iran has stocked more than 100 kg of enriched uranium and 150 kg of uranium gas. Our sources point out that 500 kg of enriched uranium of a relatively low grade would be sufficient for building a single nuclear bomb. According to intelligence experts keeping close tabs on the program, Iran has accumulated enough enriched uranium for 2 or 3 nuclear bombs under cover of years of diplomatic haggling with the West. IN FULL

 

IRAN/SYRIA:  Iranian President Mahmoud Ahmadinejad and Syrian
President Bashar al Assad did not sign a secret arms deal after
meeting July 19 in Damascus, an Iranian Foreign Ministry spokesman
said, contradicting earlier reports. The Saudi-funded and
London-based newspaper Al Asharq Al Awsat reported July 21 that
Iran had inked a deal to provide money for arms purchases if Syria
did not make peace with Israel; the report also said that Iran
offered to fund the purchase of 400 Russian tanks and 24 Russian
warplanes, as well as other military equipment.

 

Each Wore a Tiny Trench Coat
Washington Post July 20, 2007
*************************
According to the Iranian newspaper
Resalat, "A few weeks ago, 14
squirrels equipped with espionage
systems of foreign intelligence
services were captured by [Iranian]
intelligence forces along the
country's borders. These trained
squirrels, each of which weighed
just over 700 grams, were released
on the borders of the country for
intelligence and...
http://www.kurzweilai.net/email/newsRedirect.html?newsID=7048&m=29780

 

 

Chinese missiles smuggled through Iran into Iraq: US
AFP via Yahoo! News Sun, 22 Jul 2007 6:48 AM PDT
The US military on Sunday said its troops had found Chinese-made missiles which they believe were smuggled into Iraq by groups in Iran in order to arm groups fighting US-led forces.

 

Potter fans in Iran join global frenzy over wizard's fate
AFP via Yahoo! News Sat, 21 Jul 2007 11:53 AM PDT
Harry Potter fans in Iran will have to wait weeks for a Farsi translation of the series finale, but an elite group of English-speaking readers in the Islamic republic still joined the worldwide frenzy over the teenage wizard's fate early on Saturday.

 

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Avian Flu

 

Avian influenza  (Epidemic and Pandemic Alert and Response (EPR))
Avian influenza (Western Pacific Region)
Influenza and avian influenza (European Region)

Avian influenza (Fact Sheet)

Q&A: Avian influenza: am I at risk?

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Plansponsor.com

 

ALTERNATIVE "REALITIES."  Even though hedge fund returns have fallen
short of the broad U.S. stock market in three of the last four years,
reports Chicago-based Hedge Fund Research, demand from institutions,
through direct investment and funds of hedge funds, is running strong.
 Hedge funds do not have a lock, though, on returns that are
uncorrelated with other markets. Traditional managers, in efforts to
hang on to their institutional client base, have been rolling out new
products that compete with hedge funds, with less investment mystery
and much lower fees.  MORE at
http://newsmail.plansponsor.com/cgi-bin1/DM/y/eBT540Tt3fc0CBD0ImIH0E5

 

Missing vital e-mails while on the road now tops a list of worries for
business travelers in the U.K., cited by two-thirds of some 511
respondents to a BT Openzone poll.  Also on the list: traffic
problems, drained cell phone batteries, IT breakdowns - and the
decidedly untechnical problem of finding a stain on their tie when
meeting clients.

ON THIS DAY:  In 1715, the first lighthouse in America was authorized
for construction at Little Brewster Island, Massachusetts.  In 1829,
William Austin Burt of Mount Vernon, Michigan, patented the
typographer (the first typewriter).  In 1904, Charles E. Menches
invented the ice cream cone during the Louisiana Purchase Exposition
in St. Louis, Missouri.

MONDAY MUSING:  Why do hot dogs come in packages of 10 - and hot dog
buns in packages of eight?

_________________________________________________________________________

Opalesque’s Corner

 

- Editor's Note
- Barclays could suffer $400m loss in Bear funds, Australian banks count exposure to ailing hedge fund, Deutsche Bank declines comment on relation to struggling Australian hedge fund, UK, U.S. hedge funds report 7.3% and 8.2% losses, Federal Reserve Bank of St Louis president: Subprime investors `got just what they deserved`, Subprime market faces further setbacks as up to 45% could fail when adjustable-rate home loans will be reset over next 1.5yrs, Wall Street CEOs see `no clear signs` of crisis as subprime woes intensify, affect corporate financings, Junk bonds and leveraged loans affected, Hedge funds opt to be lenders of last resort: `We won`t just fall off a cliff, AIMA Australia: Hedge fund industry healthy and thriving, link between hedge funds and fallen property companies `misleading`, NZ Absolute Return Association: Direct investment in hedge funds is not for retail investor
- Opalesque Exclusive: French hedge fund allocations up to EUR 26.5bln, UK awaits retail access to funds of hedge funds
- Party is far fromover for alternative funds in spite of woes for listings, `stream of listed vehicles` expected to flow after summer break, Third Point fund`s shares fall in London after IPO, after hours up again, Rivals take on Goldman trading platform as 144A share issues to become increasingly popular way for alternative asset managers to raise permanent capital, Knight Capital lands Citadel Derivatives as direct investor in Direct Edge ECN, seeks to grow consortium
- Michael Vranos seeks $750m for shares in new entity dedicated to subprime by private placement
- Hedge fund assets said to stand at $3.5trillion as previous numbers exclude self-administered funds
- Sacramento County gives 10% to PE and opportunistic strategies, hedge FoFs at 5%, Northern Ireland searches two unconstrained or high alpha managers, More searches: Emerging Market Debt Managers, Large Cap Growth Fund, Global Fixed Income, more
- Opalesque Exclusive: Former Bank of America global head of equity derivatives and finance to launch multi-strategy hedge fund
- Soros veteran Segerberg to launch activist fund, Stenham fund eyes global water industry, Armajaro to set up hedge fund trading coffee, cocoa, Sempra Metals opens internal hedge fund, Lippey leaves Trigram, BSAM systematic equity chief leaving to set up own firm, Bear to invest, Intrepid shuts down its healthcare fund, Black Pearl Capital launches hedge fund for MENA region
- Survey: Growing institutional investments to continue dominate hedge fund investments, single manager allocations to rise
- Report: By 2010 U.S. share of global hedge fund assets to shrink from 60.8% to 32.1%
- Citi`s revenues from alternative investments soar 77% to $1.03bln
- How private equity deals, stiff competition mess up shorters` games, how will 130/30 fare?
- PwC pays $22.5m to settle Lauer case, big lesson for HF investors: Check which office of a household-name auditor is doing the work, Lake Shore files emergency motion to thaw assets
- Fine wine investors push up prices, Lafite now unaffordable for many traditional wine collectors as index rises 42% YTD
- IMF Working Paper: Volatility and Jump Risk Premia in Emerging Market Bonds
- French fund warns on internet-style bubble in renewable energy stocks
- Investors bet on new dawn for Zimbabwe: Instutions, hedge funds with `broader appetite for African risk` as continent is seen where Asia was 30 years ago
- CESR issues guidelines on classification of hedge fund indices
- RAB to set up three new hedge funds, RAB bullish after strong half, profits jump 58%,  Merrill`s EMEA head Paul Tucker to join Egerton Capital
- AIMA UK welcomes HMRC revised statement of practice on Investment Manager Exemption
- ABP may reduce its exposure to oil, Goldman, others: $100 oil may be months away, not years
- Deutsche opens Singapore trading desk to provide secondary market pricing and liquidity for FX, commodity products
- HK fund management industry booms, assets up 36%
- Opalesque Exclusive: Futures Industry Association Japan decries opportunity lost, outlines roadmap to regain status and influence of market place, structural and `changes of attitude` required
- Activist News: American activist builds secret $1bln UBS stake, Citadel more active on corporate turnaround and buyout circuit, ABN Amro CEO favors Barclays offer over RBS, concedes RBS appears set to win, RBS began talks with ABN 23 months ago, ABN presses Barclays to raise bid, Barclays could get Asian infusion for ABN bid, Barclays with `no comment` on reports nearing stake sale to China/Singapore firms
- News Briefs: Neal, Grassley content with Robin Hood change, Prince Al Waleed Bin Talal`s Kingdom Holding IPO largely oversubscribed despite clerics` warnings
- ...And finally: Do fish suffer from exposure to Uriah Heep?
- Logon: http://www.opalesque.com/main.php?act=archive

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Misc. Items of Interest

 

Man to battle machine in poker
matchup
MSNBC July 21, 2007
*************************
Poker champion Phil Laak has a good
chance of winning when he sits down
this week to play 2,000 hands of
Texas Hold'em -- against a computer.
It may be the last chance he gets.
Computers have gotten a lot better
at poker in recent years; they're
good enough now to challenge top
professionals like Laak, who won the
World Poker Tour invitational...
http://www.kurzweilai.net/email/newsRedirect.html?newsID=7044&m=29780

 

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Funnies, Facts, Quotes, etc….

 

trenchant TREN-chunt, adjective:

1. Characterized by or full of force and vigor; as, "a trenchant analysis."
2. Caustic; biting; severe; as, "trenchant criticism."
3. Distinct; clear-cut; clearly or sharply defined.

1997:  Slobodan Miloševic became president of the Federal Republic of Yugoslavia (comprising Serbia and Montenegro) after serving as president of Serbia from 1989.

1970:  Sultan Sa'id ibn Taymur of Oman was overthrown by his son, Qabus ibn Sa'id, in a palace coup.

1945:  Marshal Philippe Pétain of France went on trial for treason during World War II.

1844:  Attilio and Emilio Bandiera were executed along with nine others following a failed revolt against Austrian rule in Italy.

685:  John V was consecrated pope, succeeding St. Benedict II.

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Conference, Courses, Books, Papers

 

Great Research Sites:

 

Merrill Lynch research Link to full report including important disclosures see example

 

John Mauldin’s Weekly Analysis

 

James Altucher’s Website:

 

Other useful sites:

 

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Index Corner

 

The CSFB/Tremont Hedge Fund Index www.hedgeindex.com.

The Cogent Dynamic Averages http://www.cogenthedge.com/home/inv_strategy.asphttp://www.cogenthedge.com/home/inv_strategy.asp

The Dow Jones Indices: http://www.djhedgefundindexes.com/index.cfm?event=viewPremiumContent (free registration)

HFRX Indices https://www.hedgefundresearch.com/hfrx_reg/index.php?fuse=login&1170880431

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Regulatory Info

 

 

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Disclaimer

 

The information contained in this document does not constitute an offer or solicitation to sell any security or other type of vehicles to or by anyone in any jurisdictions, nor should it be regarded as a contractual document. Under no circumstances should the information provided on this document be considered as financial advice, or as a sufficient basis on which to make investment decisions. The information contained herein has been gathered by Investor DNA, LLC from sources deemed reliable as of the date of publication, but no warranty of accuracy or completeness is given. Investor DNA, LLC is not responsible for and provides no guarantee with respect to any of the information provided herein or through the use of any hypertext link. Past results are no indication of future performance. All information in this newsletter is for educational and informational purposes and does not constitute investment, legal, tax or accounting advice. All materials are the property of the respective publishers, as referenced by header and appropriate hypertext links.