Wednesday 14 December 2011

Applying Level I - Hedge Funds

LOS 74 of the CFA Level I Curriculum discusses several components of the Alternative Investments. Hedge funds are emerging funds in this regard. The following news pick of Bloomberg (source provided at bottom) discusses Hedge Funds and their prevailing situation after the European Crisis. 

Ex-Moore Trader Leslie to Liquidate $1.6B Hedge Fund

James Caird Asset Management LP, the London-based firm run by former Moore Capital Management LLC trader Tim Leslie, plans to liquidate a $1.6 billion credit hedge fund after eight years.
“I have been frustrated by our performance during the current year,” Leslie wrote today in a client letter, a copy of which was obtained by Bloomberg News. He said he plans to start giving money back to investors in the JCAM Global Fund in January.
The JCAM fund lost 8.9 percent for 2011 through November, according to a person familiar with the matter, who asked not to be identified because the information is private. Hedge funds have lost an average 3.8 percent this year, according to data compiled by Bloomberg.
Leslie joins an increasing number of money managers who’ve shuttered hedge funds in recent months after Europe’s debt crisis roiled markets and limited investment opportunities. The number of funds liquidating in the third quarter rose to 213, the worst three-month period for the industry since the first quarter of 2010, according to Chicago-based Hedge Fund Research. In the second quarter, 191 hedge funds shut.
Leslie attributed the losses to “poor liquidity and the unfolding crisis in financial markets.” He said the lack of market liquidity is “structural” and not something that will go away any time soon. As a result, he plans to start a smaller hedge fund with a “narrower trading focus,” according to the letter.

New Hedge Fund

The new fund will start next year and be managed by Robert Miller, who has worked with Leslie since 2003, according to the letter. Leslie seeks to raise $500 million for the new fund and cap assets at about that level, the person said.
Leslie wasn’t available to comment, according to a spokesman for James Caird.
Leslie started the JCAM Global fund in 2003 while trading for Moore, the New York-based firm founded by Louis M. Bacon. He left Moore in 2008 and continued managing the JCAM fund at his new firm. Moore is an investor in the JCAM fund.
James Caird also manages two other hedge funds, the $150 million Vintage II fund and the $70 million Mortgage Opportunities fund. The firm will continue running those two funds, the person said.

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