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Friday
Dec. 23, 2016
Dec. 23, 2016
Due to the holidays, the next edition will be published on Friday, Jan. 6, 2017.
European Funds on Track for Most Outflows Since 2008: EurekahedgeBy Melissa KarshFor European hedge funds, 2016 was the year investors brought redemptions back.
Investors pulled about $7.1 billion from hedge funds focused on Europe in November, bringing year-to-date redemptions to $16.6 billion, the most since 2008, according to Eurekahedge. That puts 2016 on track to be the first year to see net outflows since 2012 when investors pulled $5.2 billion.
November was also the seventh consecutive month of outflows for funds focused on the region this year, Eurekahedge said. The last time European hedge funds saw more consecutive monthly outflows was the eight months between May and December in 2011. In 2014, the region saw six months of consecutive outflows between July and December.
The outflows come after investor allocations to the region last year increased by 110 percent from 2014, to $40.5 billion, Eurekahedge said at the time. In 2015, the European hedge fund sector also saw the strongest asset growth among regional mandates.
European managers are down 1.3 percent this year through November, while hedge funds on average gained 3.5 percent in that period, Eurekahedge said.
For 2016, "European mandates have recorded the steepest decline in assets among all regional hedge funds, and performance-driven losses have piled on top of the investor redemptions we have seen," Mohammad Hassan, head analyst at Eurekahedge, said via e-mail Dec. 22. "Close to half the reporting funds are in the red for the year, the highest proportion
recorded in the last five years, with nearly a quarter down 5 percent for the year."
The "size matters" thesis for investors isstarting to come under scrutiny, according
to Hassan, as the larger billion-dollar funds have seen the bulk of redemptions in 2016. The sub-billion dollar funds, including those in Europe, have recorded net growth, he said.
In This Issue:Returns: Jabre Capital Partners’s fund that focuses on EMEA 5 percent this gainsmonth through Dec. 15
Alfred Berg's Market Calls:Maria Granlund says Icelandic
are now resilient banksenough to be attractive
The Regional Focus: U.K.remains the hedge fund capital of Europe. Will Brexit change that?
TT Market Calls, Revisited: International's Vikram Kumar isn't put off by the in fallTomTom's share price
Returns in Brief
November Marks Seventh Consecutive Month of Outflows
European funds saw the most net outflows in November among the five regions tracked by Eurekahedge, which includes North America, Latin America, Japan and Asian excluding Japan.
European Funds See Outflows for First Time Since 2012
Hedge Funds Europe 2 Dec. 23, 2016
Returns in Brief
A look at Europe-based and Europe-focused hedge fund performance. Funds in the charts not mentioned in the accompanying text on these pages were reported in other issues of the Brief or in Bloomberg News stories. For questions, e-mail [email protected].
Jabre Capital Partners’s $300 million
fund that focuses on Europe, the Middle East and Africa gained 5 percent this month through Dec. 15, profiting from its Russian bets, according to the fund’s portfolio manager . Returns Carl Tohmefor the year rose to 6.5 percent, he said.
The JABCAP EMEA Fund, which invests across assets classes and focuses on equity and debt securities, gained 1.4 percent in November and 1.7 percent in the first 11 months of the year, according to an investor letter seen by Bloomberg Briefs. The fund’s largest regional exposure is in Russia, and its
biggest equity exposure is in oil and gas stocks, the document said. Bets on Russian oil company Rosneft and Sberbank, Russia’s biggest bank, contributed to the gains, Tohme said. "I still expect Russia to outperform other emerging markets in 2017," he said, pointing to "expectations of a more friendly U.S. administration and potentially a lifting of the sanctions which would take time."
The JABCAP Global Balanced Fund, which focuses on large-cap stocks and investment-grade debt instruments, is down 18.4 percent this year through
November, according to a separate investor letter seen by Bloomberg Briefs. The fund gained 7.2 percent last month, in part due to bets on Bank of America Corp., Hess Corp. and Wynn Macaus Ltd., the letter said. During November, the fund increased its exposure to industrials, energy, financials and materials, which rallied in the second half of the month, the letter said.
Philippe Jabre, founder and chief investment officer for the $1.3 billion Geneva-based firm, declined to comment on the Global Balanced Fund.
— Hema Parmar, Saijel Kishan and Nishant
Kumar
Continued on next page…
November Returns
*Returns through Nov. 25
Year-to-Date Returns Through Nov. 30
*Returns through Nov. 25 **Returns from June to Nov. 30
Hedge Funds Europe 3 Dec. 23, 2016
Continued from previous page...
Returns in Brief…
Verrazzano Capital SAS, the $1.2 billion Paris-based fund run by Guillaume
, lost 6.9 percent in its Europe-Rambourgfocused long-short equity fund this year through November, according to an investor document seen by Bloomberg Briefs. The $271 million Verrazzano European Focus Fund declined 1.5 percent in November, the document said. The biggest loss in November came from long bets on German advertising services company Stroer AG, the letter said. Wagers on Telecom Italia SpA and french builder Eiffage SA also hurt performance. The $79 million Verrazzano European Opportunities Fund fell 1 percent last month, bringing losses for the year to 4.1 percent, according to a separate document seen by Bloomberg Briefs. Bets on cigarettes maker Imperial Brands Plc, Vodafone Group Plc and Telecom Italia detracted from the equity fund’s performance last month, the letter said. The firm declined to comment.
— Hema Parmar and Saijel Kishan
Deepak Gulati’s Argentiere Fund declined about 2 percent in November, bringing year-to-date losses to 6.8 percent, according to a performance document seen by Bloomberg Briefs. "While November marked the continuation of what has been a frustrating year for the fund, the mispricing we now see in volatility creates a very compelling opportunity set, and our conviction levels in owning volatility at these levels have rarely been higher," it said in the document. Zug, Switzerland-based Argentiere Capital AG, which manages $1.5 billion, was started by Gulati and a team of former colleagues from JPMorgan Chase & Co. in 2013 with about $300 million. An e-mail and telephone call seeking comment weren't returned.
— Melissa Karsh and Nishant Kumar
Tell AG’s Swiss Hedge Twintrade fund rose 1 percent in November to bring year-to-date returns to 6.6 percent, according
to an investor letter seen by Bloomberg Briefs. The UCITs fund, which runs a long-short equity strategy, is managed by
and Pedro Cameron Andreas Zehnder.“As is standard procedure with binary events (Brexit, U.S. elections, Italian referendum), we kept our positions very small on polling day,” the letter said. “We managed to make gains from sector rotations in the days that followed and were extremely active in intraday trading in particular, but Europe once again ran out of steam after just a few days.” Last year, the fund rose 4.1 percent. In 2017, "we expect markets to be susceptible to political and other binary events once again," Cameron said in an e-mail on Dec. 22. "Therefore, we will continue to implement our disciplined, focused and flexible trading approach which enabled us to successfully navigate a tumultuous and challenging 2016 with a very low risk profile."
— Darshini Shah
Outlook
Odey Sees ‘Mindless’ Investing Driving Out Skilled Fund ManagersBy Nishant Kumar and Macarena MunozCrispin Odey, whose flagship hedge fund is on course to record its worst year since starting more than two decades ago, said money managers specializing in picking stocks and bonds are being driven out by “mindless” passive investing.
“This has been a difficult year for active managers,” Odey said in his November newsletter to investors, which has been seen by Bloomberg News. “Passive investing has taken money which typically would have been in the bond market and deposited it in the equity market.”
Investors unhappy with the cost and performance of active
funds are increasingly shifting to index- and exchange-traded funds. They pulled $67 billion from active mutual funds while adding $70.6 billion to passive funds in November, the most in both cases this year, data compiled by Morningstar Inc. show.
A spokesman for London-based , Odey Asset Managementwhich oversees about $8 billion, didn’t reply to an e-mail seeking comment.
In 2017 “central bankers will have to respond to what their governments are doing fiscally, rather than bolstering asset prices with low interest rates,” Odey wrote in the newsletter. “There could be trouble ahead.”
Market Calls
Hedge Funds Europe 4 Dec. 23, 2016
Market Calls
Iceland’s regenerated banks have successfully restructured following their 2008 collapse and are now resilient enough to be an attractive bet, according to , a crossover bond Maria Granlundfund manager who oversees 1.58 billion kroner ($182 million) worth of investments at .Alfred Berg
"Icelandic banks are very solid," Granlund said in an interview in Oslo on Dec. 20. "They have a very strong balance sheet."
The Norwegian fund has a 6-7 percent exposure to Iceland and a positive outlook for the country’s economy, which has been expanding at a ferocious pace thanks to record tourist arrivals and a surge in foreign investments as the country relaxes its capital controls. The momentum will help the banking system improve its credit rating, the argument goes.
Although "Iceland’s credit rating has been upgraded in several stages over the past year," it still puts a damper on the bank’s ratings, since "banks generally cannot have a stronger rating than the country" they operate in, the 46-year-old said. Once the country is upgraded, "the banks will follow."
Overly-exposed and hammered by the meltdown in global financial markets, Iceland’s three biggest banks imploded in 2008 and pulled the rug from the economy. The bankruptcies also caused an international outcry. Nearly 350,000 private savers in the U.K. and the Netherlands found themselves at risk of losing billions of euros, leading to the so-called Icesave dispute, while U.S. hedge funds with billions of dollars trapped in the north Atlantic island are still today engaged in legal warfare with local authorities.
Still, investor confidence has been partially restored, not least thanks to the state’s tight control over financial institutions.
S&P now gives Islandsbanki, the state-created successor to Glitnir, one of the three banks that failed in 2008, a BBB rating with a positive outlook.
Islandsbanki also happens to be one of Granlund’s largest bets. She also has
Bets on Icelandic Banks Are On for Alfred Berg
Market Calls, Revisited
Last December, , a money manager with London-based Vikram Kumar TT , said he was long Dutch company TomTom. The navigation International
technology provider will benefit since maps are "critical" to the auto industry, Kumar said at the Dec. 3, 2015 Sohn Investment Conference in London.
Since then, TomTom has fallen about 28 percent, while the Stoxx Europe 600 Index fell about 3 percent. TT International still holds the stock, which it bought in the third quarter of 2013 when it was trading at about 5 euros, Kumar said in a Dec. 21 telephone interview. "It’s one of our biggest positions," he said. "The short-term market is still focused around [TomTom’s] hardware business, but people are ignoring the value of the mapping assets and how critical it will be in autonomous driving." The firm still holds its initial price target of 18 euros, Kumar said. The stock closed at about 8.32 euros on Dec. 22.
Kumar is planning to TT International to start his own firm, Kuvari Partners, leavewhich will next year acquire management of the TT Long-Short Focus Fund.
— Hema Parmar
smaller bets on Landsbankinn and Arion Bank, Iceland’s two other reincarnated banks.
Armed with a Nordic mandate, Granlund straddles the line between investment grade and high yield bond markets, seeking returns by trying to anticipate upgrades.
"The credit spread tightening that occurs when a company is being upgraded from high yield to investment grade is significant, and may give several percentage points in gains," she said.
Unconstrained by other’s requirements of only investing in publicly rated companies, she also like to "play with" the differences between shadow and public rating.
"Unrated companies have a slightly higher credit margin, slightly less liquid,
but you can still buy very fine companies giving a small pick-up and a little extra return," she said.
She’s currently on a 5 percent annual return, well above her 4 percent target.
Granlund sees market volatility going into 2017; says she’ll remain underweight on energy companies until further oil price rises materialize; and is beginning to reduce her investments in Swedish real estate, which she expects will slow "gradually" as interest rates creep up again.
Looking ahead, the fund manager hopes to see more bond issues in 2017 as the market is currently closed. "I believe there are high yield deals on the way, especially in Sweden and Finland, but less so in Norway."
— Sveinung Sleire
Regional Focus: U.K.
Click on chart for a live version or run on the Bloomberg terminal.G #HF.BRIEF 65
Hedge Funds Europe 5 Dec. 23, 2016
Regional Focus: U.K.
Hedge Fund Giants Said to Line Up for U.K.'s Biggest Asset SaleBy Alastair MarshThe British government selected and CarVal Investors LLC
to enter a second round of bidding Elliott Management Corp.for its largest-ever disposal of U.K. financial assets, according to two people familiar with the process.
The U.S. hedge funds are among as many as eight companies seeking to purchase as much as 15.7 billion pounds ($19.4 billion) of mortgages from a lender rescued by the government during the financial crisis, said the people. Blackstone Group LP and Cerberus Capital Management LP are also on the shortlist, people familiar with the matter said on Friday.
The sale of Bradford & Bingley’s loans will exceed the previous record of 13 billion pounds of Northern Rock mortgages sold to Cerberus in November last year. Chancellor of the Exchequer Philip Hammond, who restarted the disposal process in October after halting it following the nation’s June 23 vote to leave the
European Union, is looking to dispose of bailed-out banking assets stuck on the U.K.’s books since the crisis.
Officials at CarVal and Elliott declined to comment on their firms’ involvement in the bidding process. A spokesman for U.K. Asset Resolution Ltd., the body that has managed Britain’s fully nationalized banks since the crisis, declined to comment on which investors were shortlisted.
The U.K.’s biggest banks are preparing to help back investors seeking to buy the assets. That’s in part because it could save them hundreds of millions of pounds in annual contributions to the Financial Services Compensation Scheme deposit-protection program. The lenders have collectively paid more than 2 billion pounds to the FSCS since 2009 to cover interest on a loan that funded the 2008 rescue of Bradford & Bingley, according to data on the agency’s website.
U.K. Remains Hedge Fund Capital in Europe; Brexit Could Change ThatBy Nishant KumarThe U.K. remains the hedge fund capital of Europe and is home to 20 percent of the world’s hedge funds in 2016 as compared to 18 percent in 2010.
However, Britain’s decision to leave the European Union has some money managers and investors worried. Six percent of hedge funds are considering moving operations outside U.K., compared with 3 percent in July, according to a survey by data provider Preqin.
Calendar
Twenty Percent of Hedge Funds Have Head Offices in U.K.
Hedge Funds Europe 6 Dec. 23, 2016
DATE ORGANIZER EVENT SPEAKERS/ATTENDEES OF NOTE LOCATION
Jan. 16-17, 2017
LSE LSE SU Alternative Investments Conference
Harlan Zimmerman, Cevian Capital; , Point72; , Matthew Granade Ewan KirkGAM; Marshall Wace; Hayman Capital; Paul Marshall, Kyle Bass, Luke
Man Group; Lansdowne.Ellis, Stuart Roden, London
Jan. 30-31, 2017
EQDerivativesEurope EQD 2017: The Volatility & Alternative Risk Premia Forum
Matthew Sargaison, Man AHL; Argentière Capital; Deepak Gulati, David Henderson Global; Pine River, Elms, Chris Rodarte, Sarah Dahan,
BlueMountain.
Hotel Arts Barcelona
Jan. 31, 2017
informa Hedge Fund Operational ForumPhillip Chapple,Monterone Partners; , CapeView Capital; Irfan Richard HaasYunus, Citi Private Bank.
London
Feb. 1-2, 2017
OpalEuropean Family Office Winter Symposium 2017
One-on-one meetings. London
March 7, 2017
Markets Group Switzerland Institutional Investor ForumFeyza Akbiyik, Heineken Switzerland; , City of Zurich; Jurg Tobler Carlo
, CERN Pension Fund; , Mercer Private Markets. Farina Ralph AerniZurich
March 8-9, 2017
CFP International Fund Management 2017Elinor Murray, Henderson Global; Charles Goodman, Edmond de Rothschild; Vanessa Field, Principal Global Investors.
London
March 15, 2017
Markets Group Private Wealth Switzerland ForumMaximilian Kunkel, UBS; , Banque Privee Edmond de Gilles PrinceRothschild; Jan Van Bueren, Union Bancaire Privee; Jay Oberai, Synergy Asset Management.
Geneva
March 21, 2017
Markets Group Private Wealth UK ForumPer Wimmer, Wimmer Family Office; , MASECO Private Josh MatthewsWealth; , Blue Family Office. Christian Armbruester
London
April 25-26, 2017
WBR TradeTech Europe 2017Alison Hollingshead, Man Group; Millennium; GLG Tom Ungi, Erik Koenig,Partners; L&G Investments; Goldman Ed Wicks, Christian Morgenstern,Sachs AM.
Paris
May 7-9, 2017
Context Summits Context Summits Europe 2017 One-on-one meetings. Barcelona
May 8-12, 2017
informaGlobal Derivatives Trading & Risk Management
To be released. Barcelona
May 9-10. 2017
Prestel & Partner Family Office Forum To be released.Wiesbaden, Germany
May 15-17, 2017
marcus evansEuropean Pensions & Investments Summit 2017
To be released. Switzerland
DISCLAIMER: The information on this page was compiled by Bloomberg from multiple sources, public and private, and is deemed to be accurate, but not definitive or exhaustive. Questions about events should be addressed to the event organizer.
Bloomberg Briefs: Hedge Funds Europe
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