DETROIT (AP) -- Highland Capital Management LP proposed a refinancing plan worth up to $4.7 billion to Delphi Corp.'s board on Thursday, competing with a plan already accepted by the nation's largest auto parts maker earlier this week.

On Monday Delphi said an investor group led by Appaloosa Management LP and Cerberus Capital Management LP would spend as much as $3.4 billion to help the company out of bankruptcy protection.

In a letter to Delphi's board, Dallas, Texas-based Highland Capital, a hedge fund that owns 8.9 percent of Delphi, said it opposed the earlier plan and outlined its own proposal.

Delphi spokesman Lindsey Williams said the company had no immediate comment.

Appaloosa and Cerberus didn't immediately return messages seeking comment.

Troy-based Delphi filed for bankruptcy protection in October 2005.

http://biz.yahoo.com/ap/061221/delphi_bankruptcy.html?.v=10

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Dec. 27 (Bloomberg) -- The yen confounded forecasters by falling this year and may do the same in 2007 as money managers take advantage of Japan's near-zero percent interest rates to finance investments in bonds from the U.K. to New Zealand.

Analysts at only four of 15 firms surveyed by Bloomberg at the end of last year predicted the yen would fall in 2006. Instead, it dropped almost 12 percent against the euro, about 15 percent versus the British pound and 1.2 percent compared with the U.S. dollar.

Traders probably will continue to use the so-called carry trade, borrowing in yen and using the money to buy higher- yielding securities. Ten-year U.K. notes yield 3.13 percentage points more than Japanese bonds with the same maturity, up from 2.53 percentage points at the start of the year.

``Interest rate differentials rule the roost,'' said Sudesh Mariappa, who oversees $70 billion at Pacific Investment Management Co. in Newport Beach, California, a unit of Munich- based Allianz AG. ``You didn't get that narrowing of interest rate differentials in Japan while you did see increases in the U.K. and Europe.''

While Bank of Japan Governor Toshihiko Fukui raised rates in July for the first time in almost six years to 0.25 percent, the European Central Bank boosted its main benchmark six times in the past year to 3.5 percent and the Bank of England increased borrowing costs twice to 5 percent. In the U.S., the Federal Reserve ended 17 increases to the target for overnight loans between banks in June at 5.25 percent.

The yen fell 0.3 percent against the dollar yesterday in New York to 119.15, the lowest in two months. The euro rose 0.2 percent to 156.04 yen, near a record high.
http://www.bloomberg.com/apps/news?pid=20601087&sid=aO83HLgpvQLA&refer=home
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By Seth Lubove

Jan. 9 (Bloomberg) -- When news broke that Benjamin Waisbren had been fired as Hollywood frontman for Stark Investments, moviedom shuddered.

Hedge fund managers such as St. Francis, Wisconsin-based Stark have become piggy banks for the U.S. film industry. Since 2005, these funds and private equity investors have committed $4.5 billion to movies, betting the box office can beat the markets.

Movie industry bible Variety called Waisbren's abrupt exit in May a ``bellwether'' for the future of fast money in Hollywood. A former bankruptcy lawyer who led equity creditor committees for America West Airlines Inc. and WorldCom Inc., Waisbren, 49, had convinced his bosses at Stark that Hollywood could be structured like any other investment, albeit with more glitz.

Stark, which manages $9.4 billion, ended up getting soaked by ``Poseidon,'' the 2006 remake of ``The Poseidon Adventure,'' which sank at the box office. Stark executives declined to comment for this story.

Today, Waisbren is trying to pick up the pieces, juggling deals he says will revive his Hollywood career. Stark has placed its future in show business in the hands of Ryan Kavanaugh, one of the pre-eminent middlemen between hedge funds and Hollywood. And hedge funds and private equity firms are still piling in.

Tom Cruise Deal

In November, Metro-Goldwyn-Mayer Inc. announced a deal with actor Tom Cruise and his producing partner Paula Wagner to run MGM's United Artists unit. MGM is controlled by Providence Equity Partners Inc., Texas Pacific Group and industry partners Comcast Corp. and Sony Corp. of America.

``What Hollywood looks at is how you survive the bumps,'' Waisbren says.

Waisbren isn't the first out-of-towner to be chewed up by Hollywood -- and he won't be the last. These days, outside investors cover as much as a third of Hollywood production expenses. That bill amounts to as much as $2.5 billion annually, according to Jessica Reif Cohen, a media and entertainment industry analyst at Merrill Lynch & Co. Movie investments can provide median returns of more than 20 percent if they're leveraged with borrowed money, Reif Cohen says.

``There's money to be made, and there's money to be lost,'' says Amir Malin, who gained fame in Hollywood when his Artisan Entertainment, now owned by Lions Gate Entertainment Corp., acquired ``The Blair Witch Project'' and turned it into a $248.6 million global box office hit.

Opaque Industry

Malin, now managing principal of Qualia Capital LLC, a New York-based media and entertainment investment firm, says Hollywood investors want transparency and, for the most part, they aren't getting it. ``It's no coincidence that many investors have been hammered on these types of investments,'' he says.

Waisbren learned the harsh lesson that success in Hollywood is as much about luck as financial analysis. While some of the movies financed by the $264 million he invested on behalf of Stark for a six-picture deal at Warner Bros. Entertainment Inc. -- on top of several million more at producer Initial Entertainment Group -- may turn out to be hits, Waisbren won't be able to share in that success. Warner Bros.'s ``We Are Marshall'' was in 10th place last weekend at U.S. and Canadian movie theaters, taking in $5.1 million, according to box-office tracker Media By Numbers LLC.

Relentless to the point of badgering, Waisbren says he can be a difficult person when others don't share his vision. He says a personality conflict with his masters at Stark ultimately led to his downfall.

``I may not be the easiest guy to get along with in the world,'' he says during a series of almost daily phone calls and e-mail exchanges. ``I make a lousy lap dog.''

Even the people Waisbren says would vouch for his character, almost all of whom asked to remain anonymous, say he can be persistent to a fault.

http://www.bloomberg.com/apps/news?pid=20601109&sid=aHrn6xFdRBGk&refer=exclusive

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Jan. 22 (Bloomberg) -- Anyone who followed the advice of Goldman Sachs Group Inc. last year and invested $10 million in the Goldman Sachs Commodity Index would have lost 15 percent, or $1.5 million.

Like so many of Wall Street's best and brightest, Goldman, the biggest securities firm by market value, says it wasn't wrong, just early, and to expect an 8.1 percent return in 2007.

``The long-term secular story is very much intact,'' Jeff Currie, global head of commodities research at New York-based Goldman, told customers in London earlier this month. That's the same outlook provided 13 months ago by Arun Assumall, the firm's London-based head of commodities sales.

Like Goldman, Deutsche Bank AG isn't discouraging anyone from doubling down in what increasingly looks like a bear market. Germany's largest bank in September said oil will trade between $60 and $70 a barrel this year, well above the $49.90 fetched last week. Barclays Capital, the securities unit of the U.K.'s No. 3 bank, said four months ago crude won't drop below $60.

As losses mount in copper, oil and sugar, these firms say the 20 percent plunge in commodities, as measured by the Reuters/Jefferies CRB Index, since May offers a chance to buy before demand from China and India causes a rebound. History shows otherwise. The CRB index dropped at least 20 percent six times since 1970, and on average, fell a further 7.7 percent before bottoming.
http://www.bloomberg.com/apps/news?pid=20601109&sid=aWzeLjJpZTPA&refer=exclusive

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Feb. 5 (Bloomberg) -- Red Kite Metals, part of a $1 billion hedge fund run by RK Capital Management LLP, lost about 30 percent in January as metals prices tumbled, said two investors in the fund.

The slump followed a 9.4 percent decline in copper last month, said one of the investors, who declined to be identified because details of the fund's performance are confidential. David Lilley, a London-based partner who on Jan. 20 said he was bullish on copper, would neither confirm nor deny the loss in an e-mail today.

RK Capital, co-founded two years ago by Michael Farmer, was one of the best-performing commodity funds in 2006 as prices for copper, zinc and related metals surged, the result of expanding economies in Asia. Copper and zinc sank on Feb. 2 on concern Red Kite investors would demand their money, forcing the hedge fund to sell contracts to raise cash and driving prices even lower.

``Size is important in commodity markets,'' said Kimberly Tara, chief executive officer of Geneva-based FourWinds Capital Management, which invests in commodity funds. ``If your assets are large in relation to the markets you trade in, you have to take big positions. Those positions then become transparent and expose you to larger risks in the market.''

Jim Rogers, who predicted the start of the commodities rally in 1999, said more hedge funds may collapse after the demise of Amaranth Advisors LLC last year.

`Huge Ramifications'

``I don't know who has got what positions and in what, but I know when some of them start blowing up, it's going to have huge ramifications,'' Rogers, the chairman of Beeland Interests Inc., told journalists at a briefing in Sydney today.

Farmer, 62, was previously joint chief executive of MG Plc, formerly the world's largest copper-trading company. Farmer didn't respond to an e-mail seeking comment today. The Wall Street Journal reported Feb. 2 that Red Kite asked investors to give more notice before they withdraw from the fund.

``If investors accept a much-longer redemption period, it wouldn't be a problem,'' Robin Bhar, a London-based analyst at UBS AG, said today by phone.

Copper prices on the London Metal Exchange declined for a sixth consecutive month in January as global inventories increased of the metal, used in wires and pipes.

Money managers have been buying longer-dated metals futures on the London Metal Exchange, expecting rising returns, Bhar said. LME copper trades as far as 63 months forward.

Prices of copper for deliveries in 2010, which are well- bought by funds according to Bhar, have fallen in the past three months. The contract for delivery in December 2010 dropped 23 percent to $3,845 a ton as of today, from $5,020 in November. The same contract was at $3,230 a year ago.

http://www.bloomberg.com/apps/news?pid=20601085&sid=acjifkuc1wqM&refer=europe

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Feb 8 (Bloomberg) -- Fortress Investment Group LLC, a New York-based hedge-fund and private-equity firm, plans to raise as much as $750 million in the first initial public offering by a U.S. manager of alternative assets.

Investors will own 10 percent of Fortress after the IPO, the company said today in a regulatory filing. The sale values Fortress, which oversees $26 billion, at as much as $7.5 billion, and will expose it to the kind of public scrutiny that private investment firms usually avoid.

Fortress was founded as a private-equity firm in 1998 by Wesley Edens, Robert Kauffman and Randal Nardone, who came from Swiss bank UBS AG and New York-based BlackRock Financial Management Inc. It expanded into hedge funds, real estate and debt, and assets more than doubled since March 2005. No comparable U.S. firms have gone public, though others may now follow Fortress's lead.

``There are few firms who have taken this alternative area, broadly defined, and expressed it in so many ways,'' said John Casey, chairman of Casey, Quirk and Associates LLC, a Darien, Connecticut-based investment-consulting firm. ``Running these businesses is complex.''

Fortress said having publicly traded shares would help it compensate employees, raise capital and provide currency for future acquisitions. Proceeds will help it start funds to invest in infrastructure, real estate and structured debt, and to ``selectively diversify our business,'' Fortress said in its filing with the U.S. Securities and Exchange Commission.

http://www.bloomberg.com/apps/news?pid=newsarchive&sid=acCwk.8CASo0

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February 12 – Financial Times (Stacy-Marie Ishmael): “Funds continue to pour into the fund of hedge funds industry in spite of slowing investment performance, a survey has found. The industry grew by 29 per cent last year, drawing in $183,000m of assets from retail and institutional investors, according to InvestHedge… The growth was more than double the 13 per cent growth of 2005… The survey identified 142 ‘billion dollar’ funds, up 30 per cent from 135 in 2005. Of these, 21 funds of funds have more than $10bn in assets under management.”

February 15 – Financial Times (James Mackintosh): “Convertible arb has returned from the dead. Two years after investors abandoned one of the pillars of the traditional hedge fund portfolio, convertible bond arbitrage is once again attracting interest - and billions of dollars of new money. Hedge funds specialising in convertible bonds produced their best performance since 2000 last year, returning as much as the previous three years combined. According to the Credit Suisse/Tremont hedge fund index, convertible arbitrage was the fourth-best performing strategy, producing an average return of 14.3 per cent…. A survey by Deutsche Bank last month found ‘convert arb’ has moved from the least-liked strategy among investors to the fourth most popular in the space of 18 months. The bank predicts a 12 per cent jump in assets this year as investors such as funds of funds, wealthy individuals and institutions return to the style.”
http://www.prudentbear.com/creditbubblebulletin.asp

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Feb. 21 (Bloomberg) -- Copper in New York jumped 2.5 percent as renewed demand by hedge funds for metals, energy and grains drove commodity prices up to the highest since late December.

The Reuters/Jefferies CRB Index of 19 commodities rose as much as 2 percent, led by silver, gold, gasoline and crude oil. Raw-material prices rallied for four-straight years before slumping 7.4 percent in 2006 as global economic growth slowed. Copper has climbed every year since 2002 and reached a record $4.40 a pound in May, partly on investor demand.

``The funds are going back to the commodity scene,'' said Ron Goodis, director of Equidex Brokerage Group Inc. in Closter, New Jersey. ``People want to own commodities and tangible assets. The funds have not thrown in the towel yet.''

http://www.bloomberg.com/apps/news?pid=20602013&sid=aPdgzko6.lyw&refer=commodity_futures

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WASHINGTON (AP) -- The Bush administration and top financial regulators pledged increased vigilance over hedge funds Thursday but stopped short of proposing any new regulations to control the trillion-dollar industry.

Instead, the President's Working Group composed of administration officials and various market regulators put forward a set of guidelines they said would enhance information about the largely secretive investment pools.

"These guidelines should serve as a foundation to enhance vigilance and market discipline further, which will strengthen investor protection and guard against systemic risk," Treasury Secretary Henry M. Paulson, the head of the working group, said in a statement.

The working group, which was formed after the stock market crash of 1987, is composed of the Treasury secretary and the heads of the Federal Reserve, the Securities and Exchange Commission and the Commodity Futures Trading Commission.

Paulson said the group believed that the government's policies toward hedge funds should be governed by a consistent set of principles "that set out a uniform approach to specific policy objectives."

The guidelines stressed the need to boost information so that market participants would have an accurate and timely assessment on which to base investment decisions.

http://biz.yahoo.com/ap/070222/hedge_funds.html?.v=6

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February 20 – Financial Times (Saskia Scholtes): “Investors in mortgage-backed bonds and other complex debt products could be left nursing substantial losses as troubles grow in the risky US subprime mortgage market. But the investment banks that fuelled the craze of lending to borrowers with weak credit histories look like they are escaping relatively unscathed. Amid increasingly ominous signs of a shakeout in the subprime mortgage industry, investors in securities backed by these risky mortgages have seen the value of their holdings slide this year. Risk premiums - or the spreads over government bonds - on the lowest-rated cash securities have risen by up to 400 basis points, while the cost of insuring such deals against losses through the derivatives market has doubled. The problem for investors who bought last year’s crop of high-risk mortgage originations was that, after several years of booming house price appreciation, the US housing market last year hit a wall. In response, mortgage lenders - financed by the Wall Street banks that can sell this debt into capital markets - relaxed their standards to prop up sagging origination volumes, lending to ever-riskier borrowers on ever more favourable terms. Last year, 38 per cent of new subprime mortgages were for 100 per cent of the value of the home. ‘Years ago, the banks had to live with what they underwrote, so if they got too aggressive they had to bear the consequences,’ says David Hendler, analyst at CreditSights. ‘Now the worst losses will be held by a handful of hedge funds who thought they knew better.’”

http://www.prudentbear.com/creditbubblebulletin.asp

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has risen about 2 percent on the day. We'll see how this affects the carry trade and if it is in the size people say it is.

http://mauberly.blogspot.com/

The writer notes the hundreds of billions in carry trade transactions as though it is fact.

http://buttonwood1792.blogspot.com/2007/02/yen-and-carry-trade_06.html

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March 12 (Bloomberg) -- Magnetar Capital LLC, the hedge- fund firm started by Citadel Investment Group LLC veteran Alec Litowitz, gained 2.8 percent last month, helped by bets that subprime-mortgage lenders would stumble.

Magnetar's flagship fund returned 6.4 percent through February, the Evanston, Illinois-based firm said last week in an update to investors. The $3 billion multistrategy fund, which had about 17 percent of its capital in subprime-related investments, profited when mortgage defaults increased, according to an investor.

http://www.bloomberg.com/apps/news?pid=20601103&refer=news&sid=alr1QSauOkbQ

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March 14 (Bloomberg) -- The Chicago Board Options Exchange SPX Volatility Index was volatile itself today.

The VIX Index, a gauge designed to measure expected stock market swings, climbed to a nine-month high after U.S. stocks dropped to the lowest since November. The VIX subsequently fell as stocks erased their losses to close higher for the fourth time in five days.

Today's movement in the VIX wasn't simply a reflection of the ups and downs of the market -- it showed investors are becoming increasingly uncertain about the future direction of stocks. The VIX measures what investors are willing to pay for options that may protect against declines in shares.

``People are getting more confident about their bearish bets right now,'' said Adam Katz, chief executive officer of MS Howells & Co., an institutional brokerage in Scottsdale, Arizona. ``During the downdraft today, it was the first time that I started to see some panic.''

The VIX rose as much as 17 percent to 21.25 today, the highest level since June 14. The volatility gauge later slid as much as 7.6 percent, and was down 4.7 percent as of 5:15 p.m. in New York.

The measure jumped as much as 91 percent since a sell-off in China sparked a global equity rout on Feb. 27. It fell to a 13-year low in December and has declined every year since 2002.
http://www.bloomberg.com/apps/news?pid=20601084&sid=aKg6VUrGh.z8&refer=stocks

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March 15 – Financial Times (Gillian Tett): “The cost of buying protection against a default by some investment banks rose yesterday amid growing nervousness about risks in some big financial groups. The rise means the debt derivatives are trading at levels normally associated with companies holding credit ratings close to junk - even though investment banks’ ratings are more secure. The pattern comes at a time when the sector is enjoying strong earnings…The deterioration in sentiment in the derivatives market has partly arisen because of problems in the US subprime sector. More broadly, there is concern that a factor behind the rise in earnings is that some investment banks are taking big proprietary risks - a tactic that may backfire if markets become more turbulent.”

http://www.prudentbear.com/creditbubblebulletin.asp

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Mr Sarkozy also said that a second topic for European debate would be “moralising” the region’s model of financial capitalism. Taking hedge funds as an example of undesirable speculation, he attacked “these aggressive funds ... that buy up a company, sell it off in pieces, sack 25 per cent of the staff in the meantime, collect 25 per cent profit and create zero wealth.” He added: “I don’t want a speculative capitalism. I want a capitalism that creates riches.”

http://www.thestatesmanonline.com/pages/news_detail.php?newsid=2991&section=2

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LONDON, April 2 (Reuters) - Hedge funds are expecting many U.S. assets to fall in value, shorting stocks, short-term bonds and the dollar, data from investment bank Merrill Lynch showed on Monday.

Long-term U.S. Treasuries are an exception, with a large number of hedge funds taking a long position.

Merrill calculations, drawn from disclosures in the U.S. futures markets, showed record short equity positions in both the Nasdaq 100 and Russell 2000 indexes. Hedge funds were also shorting the S&P 500 over the past week.

"(Hedge funds) are still a source of liquidity for the equity markets," Merrill wrote in a note, adding that there was a potential notional buying power of about $48.9 billion in the market as a result.

link 1

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April 9 (Bloomberg) -- Corn investors are gleeful about the first bear market in two years.

Goldman Sachs Group Inc. predicts a rebound that will turn $10 million into $18.15 million by the time Iowa farmers harvest their crop in October. Krom River Partners LLP and the Mother Earth Investment AG fund are so certain a recovery is imminent they're buying corn during the current rout.

``You're going to need as much corn in the ground as possible to fill demand for ethanol,'' said Krom River's Christopher Brodie in London, who has traded commodities for 20 years. He bought corn for his hedge fund on April 2, the second straight day the Chicago Board of Trade imposed trading limits to prevent prices from collapsing.

Brokers and traders at the Board of Trade are betting $60 billion in futures and options on whether farmers can reap the record harvest needed for ethanol, corn syrup, livestock feed and breakfast cereal. Last year's U.S. corn crop was worth $33.8 billion, the most ever.

Farmers in corn-growing countries, led by the U.S. and China, benefited as the crop climbed by more than 34 percent on futures exchanges in the last six months. The gain happened so fast that Mexico capped tortilla prices and the Chinese government restricted ethanol production to slow inflation.

U.S. growers intend to plant 90.5 million acres of corn this year, up from 78.3 million in 2006, the U.S. Department of Agriculture said March 30. The three-day rout that followed caused corn to plunge 12 percent on the CBOT to $3.4625 a bushel for May delivery.

Corn has increased the value of the CBOT, where the grain first traded in 1851. Two bidders, the Chicago Mercantile Exchange and Intercontinental Exchange Inc., are locked in a battle to acquire the Board of Trade for $10 billion.
http://www.bloomberg.com/apps/news?pid=20601103&refer=us&sid=a7oahvTjlVd0

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By James Altucher
Stockpickr.com
George Soros, next to Warren Buffett, is probably the greatest investor ever. His hedge fund, started in 1969, has returned on average over 26% per year. He's probably best known for "breaking the Bank of England" in 1992 when he bet massively against the English pound and ended up making $1 billion on what is now known in England as "Black Wednesday."

http://biz.yahoo.com/special/invest040907_article1.html

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April 16 (Bloomberg) -- Philippe Bonnefoy's Cedar Partners Ltd. hedge fund group is selling its division that invests in other hedge funds to Erste Bank AG, Austria's largest lender, to concentrate on a new fund that the firm recently started.

Geneva-based Cedar Partners, which looks after $650 million in investments, will sell its so-called funds of hedge funds business to Erste, executives at both the bank and the firm said in telephone interviews. The transaction, whose value wasn't disclosed, will be formally announced later today.
http://www.bloomberg.com/apps/news?pid=newsarchive&sid=az0q7.WhADOA

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annual return as of Mar 31- 11.57%
stdev- 7.59%
ytd return- 3.34
march return- 1.24%

from Tremont

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The four-year rally in U.S. utility stocks may be about to burn out.

Power producers, the best-performing stocks over the past 12 months, last week led the Standard & Poor's 500 Index to its highest since September 2000. Purchases by hedge funds such as Caxton Associates LLC and SAC Capital Advisors LLC, combined with $173.4 billion in utility takeovers this year, helped fuel the rally.

The record pace of mergers and acquisitions is obscuring a drop in dividend yields on shares of U.S. gas, electric and water utilities to 2.86 percent, near the lowest ever, according to data compiled by Bloomberg.

The average yield for power companies worldwide last month fell below both U.S. and European interest rates for the first time since September 2001. Some investors are taking notice: firms overseeing about $12.3 trillion were net sellers of utility stocks in April, State Street Corp. says.

``It's late in the game for utilities,'' said Jean-Marie Eveillard, who runs the $21.1 billion First Eagle Global Fund in New York. ``We have no particular interest in that industry.''

http://www.bloomberg.com/apps/news?pid=20601109&sid=aTlj2JTj8usI&refer=exclusive

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April 26 (Bloomberg) -- Three salespeople surround a speakerphone in a glass-fronted store across from the main New York Public Library on Fifth Avenue, talking with counterparts in Chicago and Toronto. In the lobby, flat-panel TVs run a loop of commercials for commodity investments.

Here, wedged among discount electronics retailers and mobile phone vendors, is what former Vienna cop and college dropout Christian Baha says is the next wave of investing: a company called Superfund that's hawking hedge fund-style funds to the masses.

Baha has starred in his own commercials and sponsors U.S. skier Bode Miller and the American Ballet Theatre. In the fall, he rubbed shoulders with ``Desperate Housewives'' actor Teri Hatcher and model Claudia Schiffer at the Women's World Awards in New York, a program that Superfund backs and former Soviet President Mikhail Gorbachev heads.

``If hedge funds are good for the rich, they are good for everyone,'' Baha says.

Baha spent four years policing Vienna before starting Superfund 11 years ago in the Austrian capital. Today, Superfund has 20 funds, $1.5 billion under management and 20 offices in 16 countries.

Baha, 38, says he wants to follow the path of Charles Merrill, who started what became Merrill Lynch & Co. in 1914, or Edward C. Johnson II, who founded Fidelity Management & Research Co., the predecessor of Fidelity Investments, the world's biggest mutual fund company, in 1946.
http://www.bloomberg.com/apps/news?pid=20601109&sid=a_5cgtvQXuB0&refer=exclusive

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Quite an article in WSJ:

Timothy Geithner, president of the Federal Reserve Bank of New York, said in an interview that the torrent of money flowing into hedge funds has coincided with a troubling erosion in lending practices.

The Fed, the Securities and Exchange Commission and European regulators have spent months trying to gauge the risk by gathering information from hedge funds and Wall Street firms. They've asked the brokerage firms, among other things, how much collateral they're demanding from hedge funds when they provide financing.

Regulators concluded that Wall Street firms aren't always getting enough information from hedge funds to assess risk, and that they sometimes aren't asking for enough collateral, according to one person familiar with the matter. Regulators also found that some hedge funds, which are lightly regulated, are receiving credit with terms similar to those received by the biggest brokerage firms and banks, which are heavily regulated, this person said.

On March 27, regulators held a conference call with bankers from nine Wall Street firms to brief them on their findings, people familiar with the matter say. The regulators told them there was room for improvement on collateral requirements and on their systems for predicting how financial losses arising from the collapse of a big hedge fund or some other market disruption would ripple through the financial system, one of these people says. The regulators said they planned to dig deeper into those areas over the next two months before deciding what steps to take, if any, this person says.

Mr. Geithner, who has been deeply involved in the effort, said in the interview that regulators want to make sure that major U.S. banks and brokerage firms "can comfortably manage" a shock to the system, such as a big hedge-fund failure.

http://online.wsj.com/article/SB117789801972686591.html?mod=googlenews_wsj

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May 8 (Bloomberg) -- When the tide rushes into New York Harbor, a strange thing happens at the Gristedes supermarket on Roosevelt Island. The freezers, cash registers -- even the red neon ``Bagels'' sign -- hum with electricity from the rip coursing up the East River.

The power comes from six underwater turbines bolted to the river bottom by a little-known startup called Verdant Power LLC. Their 7-foot-long blades turn, silent and out of sight, until the flux crests. When the tide turns, the contraptions pivot 180 degrees and make juice on the ebb.

Tiny Verdant has a rich and famous partner, billionaire hedge fund manager Paul Tudor Jones. His Tudor Investment Corp. has staked $15 million on New York-based Verdant, a company with 20 employees, zero profit and one very aggressive competitor lurking just upstream.

From New York Harbor to San Francisco Bay, a new breed of green- energy entrepreneurs is warring over the tides, the next big thing in alternative power. As oil and natural gas prices climb, upstarts such as Verdant and rival Oceana Energy Co. are vying for investors' money and staking claims to America's coastal waterways.

Since 2005, the U.S. Federal Energy Regulatory Commission, which regulates the energy industry, has granted Oceana, Verdant and six other companies the exclusive right to study the tides in 22 locations, from the East River in New York to the Icy Passage in Alaska. If the companies can figure out how to make projects pay there, they'll get first dibs on federal licenses. The price of one of these potential golden tickets: $0.

http://www.bloomberg.com/apps/news?pid=20601109&sid=a3vWDlqcl6sU&refer=exclusive

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Managers are satisfied with their investment performance for the first four months of the year, with early indices reporting returns of more than 5% to the end of last month.

US investment consultant Hennessee Group said its non-investable hedge fund index was up 5.44% for the first four months while that of data provider Eurekahedge was up 5.2%. If performance continues at this rate, it will end the year in double digits, comparable with last year’s and ahead of the previous two years.
http://www.financialnews-us.com/?page=ushome&contentid=2347820858

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May 19 (Bloomberg) -- German Finance Minister Peer Steinbrueck said he's making progress to get hedge funds to accept a voluntary code of conduct to prevent financial market crises.

Finance ministers from the Group of Eight today endorsed a report that encourages the lightly regulated pools of capital to ``enhance existing sound practice benchmarks, in the areas of risk management, valuations and disclosure to investors and counterparties.'' Some of the funds have already signaled they're ready to develop rules for their own behavior, he said.

``The good news is that the hedge fund industry itself is more and more interested in quality standards, in guidelines, to take care of higher market integrity and investor protection,'' Steinbrueck said in a televised interview after the two-day meeting. ``Interests are converging.''

Steinbrueck, who chaired the gathering near Potsdam, Germany, has been pushing for a code of conduct for hedge funds as rapid growth in the $2 trillion industry stokes concern they pose a potential threat to financial stability. The U.S. and the U.K., where most hedge fund managers are based, have been resisting the move, arguing current practices are sufficient to keep an eye on the pools of capital.

Preventing Amaranth

Steinbrueck wants closer supervision to prevent more failures like last year's collapse of Amaranth Advisors LLC, which lost $6.6 billion from bets on natural gas. Hedge fund failures so far have occurred in a relatively benign market environment, he and Bundesbank President Axel Weber have said.

Germany holds the G-8's rotating presidency. In addition to the U.S. and the U.K. the club includes Russia, Canada, Italy, France and Japan. U.S. Treasury Secretary Henry Paulson's stayed away from the gathering to prepare for meetings with Chinese officials next week, sending his deputy Robert Kimmitt.

Today's G-8 communique didn't mention a code of conduct after Steinbrueck's European Union counterparts last week declined to include a reference to it in a statement. Japanese Finance Minister Koji Omi yesterday said the G-8 shouldn't place ``inappropriate regulations'' on hedge funds, adding that was a ``common view'' shared by Japan and the U.S.
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June 1 (Bloomberg) -- Eton Park Capital Management, the hedge-fund firm founded by former Goldman Sachs Group Inc. partner Eric Mindich, raised $518.5 million for a private-equity fund to invest in developing countries.

Mindich, 39, will oversee the Eton Park Emerging Markets Fund LP with Erland Karlsson, former co-head of Goldman's principal-strategies department; Edward Misrahi, previously Goldman's chief of proprietary trading and Latin America; and Dirk Donath, formerly with buyout firm Pegasus Venture Capital. The New York-based firm disclosed the fund-raising in May 15 filings with the U.S. Securities and Exchange Commission.

Emerging-markets hedge funds returned an average 8.5 percent in the first four months of this year, according to data compiled by Chicago-based Hedge Fund Research Inc. The average hedge fund rose 4.9 percent. Some managers who invest in developing regions now are targeting closely held companies.
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June 6 (Bloomberg) -- Tudor Investment Corp., the hedge-fund firm run by Paul Tudor Jones, is shutting its $550 million small- company stock fund after returns failed to meet expectations.

``We have been frustrated with the lack of viable ideas in the small-cap arena,'' James Pallotta said in a letter yesterday to investors in his Witches Rock Fund Ltd. Tudor, which oversees $17.7 billion, will refund clients' money this month, including $25.3 million of performance fees accrued since the fund opened in December 2004.

The Russell 2000 Index, a benchmark for companies with market values of less than $1 billion, is trailing the Standard & Poor's 500 Index by 0.2 percentage points this year after beating the gauge for big stocks by an average of 1.1 percentage points annually in the prior decade.

``Small-cap is already a crowded space, and it's difficult to deploy serious capital because of the capacity constraints,'' said Matthew Zorn, senior hedge-fund analyst at Commerzbank AG in New York.

The Witches Rock fund has returned almost 24 percent net of fees since inception, the 49-year-old Pallotta said in the client letter. That compares with gains of 31 percent by the S&P 500 Index and 35 percent by the Russell 2000. The fund's net return rises to 30 percent with the refunded fees.

Witches Rock's clients originally committed capital for four years ending Nov. 30, 2008. Tudor spokesman Steve Bruce declined to comment.

Hedge funds are private, largely unregulated pools of capital whose managers can buy or sell any assets and participate substantially in profits from money invested. Managers typically charge management fees of 2 percent of assets and a performance fee of 20 percent of investment gains
http://www.bloomberg.com/apps/news?pid=20601103&sid=abo6hnPg2VEw&refer=us

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http://agonist.org/20070620/bear_stearnss_attempt_to_save_hedge_funds_may_falter

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http://marketplace.publicradio.org/shows/2007/06/20/PM200706201.html

^{"There is a principle which is a bar against all information, which is proof against all argument, and which cannot fail to keep a man in everlasting ignorance. This principle is, contempt prior to examination."}

WASHINGTON (AP) -- Powerful House Democrats on Friday proposed increasing the tax burden on managers of hedge funds and private-equity firms, racheting up the debate on expanding the government's tax grip on Wall Street.

The bill came as Blackstone Group's shares leaped more than 20 percent in the private-equity titan's $4 billion initial public stock offering, the sixth-richest IPO in U.S. history.

Managers who take a share of hedge fund and private-equity fund profits pay taxes at a 15 percent rate, the rate for capital gains. The legislation would hike the rate levied on their compensation, known as "carried interest," to 35 percent, the level for income tax.

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June 22 (Bloomberg) -- Bear Stearns Cos. offered $3.2 billion in loans to bail out one of its failing hedge funds, the biggest rescue since 1998, after creditors started seizing assets and investors demanded their money back.

The High-Grade Structured Credit Strategies Fund would be provided a credit line, the New York-based firm said in a statement today. Bear Stearns is seeking to replace loans extended by banks including Citigroup Inc. and Lehman Brothers Holdings Inc.

Bear Stearns offered to salvage the fund, one of two that made bad bets on collateralized-debt obligations, after creditors including Merrill Lynch & Co. took the funds' CDOs as collateral and started selling them in auctions. An agreement with creditors would prevent a fire sale of the collateral, and help stem a plunge in prices, while potentially increasing the risk to Bear Stearns, the second-biggest underwriter of mortgage bonds.

``Bear needs to put this behind it as soon as possible,'' said Peter Goldman, who helps manage $600 million at Chicago Asset Management, including shares of Bear Stearns. ``The firm might take on some of the risk of the fund they didn't have before, but they're a bond shop and they wouldn't take on risk they shouldn't.''

The Bear Stearns fund lost about 10 percent of its value this year, while the related fund, the 10-month old High-Grade Structured Credit Strategies Enhanced Leverage Fund, lost about 20 percent, according to people familiar with the matter. Both funds are run by Ralph Cioffi, 51, a senior managing director.

Enhanced Leverage fund was more leveraged, meaning it had borrowed more relative to its assets. Talks with creditors to that fund are also underway, Bear Stearns said...

Margin Calls

The funds received ``high levels'' of margin calls from creditors in the past few weeks and had trouble selling enough assets to keep running, Bear Stearns said in the statement.

``The uncertainty in the marketplace surrounding these funds has made an orderly deleveraging difficult,'' James Cayne, chief executive officer of Bear Stearns, said in the statement. ``By providing the facility we believe we will stabilize financing, reduce uncertainty in the marketplace and allow for an orderly process.''

Creditors extended $9 billion to the funds which made bets of more than $11 billion, a person familiar with the situation said. Lenders include Merrill, Lehman, JPMorgan Chase & Co., Goldman Sachs Group Inc., Citigroup and Cantor Fitzgerald LP, all in New York. Bank of America Corp., based in Charlotte, North Carolina, Barclays Plc in London and Frankfurt-based Deutsche Bank AG were the other lenders.

Taking Collateral

The funds speculated in highly rated CDOs -- securities backed by bonds, loans, derivatives and other CDOs -- that were hurt in March and April as defaults on subprime mortgages to people with poor or limited credit histories increased. The fund also lost on opposite bets against home-loan bonds, which backed many of its CDOs.

As the funds faltered, Merrill sought to protect itself by seizing the assets that were used as collateral for its loans.

Cantor Fitzgerald also took collateral from its credit lines and sold the remaining securities in an auction yesterday, spokesman Robert Hubbell said in a telephone interview.

JPMorgan offered some securities for sale before withdrawing its plan. Lehman also put some securities up for sale, according to a person with knowledge of the situation.

Lehman spokesman Randy Whitestone declined to comment as did Adam Castellani, a spokesman for JPMorgan.

Fastest-Growing

Bear Stearns Chief Financial Officer Sam Molinaro, said the firm's line of credit, known as a repurchase agreement, is ``adequately secured.'' On a conference call, Molinaro declined to comment on the market value of the assets that are backing the credit line.

``The numbers are so fluid,'' he said. ``I'd prefer not to do that.'' Prices for the CDOs the funds held have fallen on concern that they assets will still be dumped on the market, Molinaro said on the call.

``Clearly when we have a situation like this, it puts a lot of pressure on asset values and spreads in the market place,'' Molinaro said. ``That's obviously happening.''

Investors from hedge funds to pension funds and foreign banks have snapped up CDOs as a new way to invest in debt, making it the fastest-growing market and pushing the amount outstanding to more than $1 trillion.

`What You Don't See'

CDOs trade infrequently and holders rarely have comparable sales to use when valuing the securities on their books. Forced sales may have required investors to write down those values, potentially causing billions of dollars of losses.

``The problem is not what we see happening, but what we don't see,'' said Joseph Mason, associate professor of finance at Drexel University in Philadelphia and co-author of an 84-page study this year on the CDO market. ``We don't know the price of these assets. We don't know which banks are exposed to this sector. These conditions are the classic conditions for financial crises across history.''

The bailout of the fund would be the largest since Long-Term Capital Management LP, which received $3.5 billion from 14 lenders in 1998. The Greenwich, Connecticut-based fund, run by John Meriwether, lost $4.6 billion.

In the case of Long-Term Capital, lenders agreed to take equity stakes in the fund after New York Federal Reserve President William McDonough called the heads of the firms together. They then sold assets over time to limit the impact of its collapse.

Bear Stearns's proposal doesn't involve taking equity. Instead, the firm would become a lender to the fund, its loan secured by the assets of the fund.

Drexel Burnham

Bankers and money managers bundle securities into a CDO, dividing it into pieces with credit ratings as high as AAA. The riskiest parts have no rating because they are first in line for any losses. Investors in this so-called equity portion expect to generate returns of more than 10 percent.

The first CDOs were created at now-defunct Drexel Burnham Lambert Inc. in 1987. Sales reached $503 billion in 2006, a fivefold increase in three years. More than half of those issued last year contained mortgages made to people with poor credit, little loan history, or high debt, according to Moody's Investors Service.

CDOs may have lost as much as $25 billion because of subprime defaults, Lehman Brothers analysts estimated in April.

Fitch Ratings warned today for the first time that it probably will downgrade some securities from CDOs containing bonds from 2006 of subprime second mortgages, the class of home loans that have been ``experiencing the greatest stress.'' Standard & Poor's cut ratings on 45 bonds backed by subprime second mortgages.

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LONDON (AP) -- GLG Partners LP, one of Europe's largest hedge funds, said Monday it is selling itself in a $3.4 billion reverse takeover (2.5 billion euros) that will give it access to the U.S. stock market.

Under the terms of the deal with Freedom Acquisition Holdings Inc., the combined company will be named GLG Partners Inc. and will trade on the New York Stock Exchange. GLG, which is not currently traded, may also seek a listing in Europe.

"This strategic transaction is an important step in building GLG's global business, affording us the opportunity to increase brand awareness and expand in major targeted markets," said Noam Gottesman, co-chief executive of GLG.

New York-based Freedom Acquisition is a "blank check" company, an investment vehicle that allows the parent company to raise money for acquisitions by listing on the stock exchange. Such companies reveal acquisitions after putting shares on the market.

Shares of Freedom Acquisition jumped nearly 15 percent, or $1.55, to $12 at the open of trading Monday.

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June 25 (Bloomberg) -- Bear Stearns Cos. is getting a taste of its own medicine.

It was Bear Stearns, the biggest broker to hedge funds, that nine years ago declined to join 14 other investment banks in the bailout of Long-Term Capital Management LP. Then last week, as New York-based Bear Stearns pleaded for help to rescue two of its hedge funds teetering on the brink of collapse, many of the same firms refused to come to its aid.

Merrill Lynch & Co., which pumped $300 million into LTCM, said no and seized $850 million of bonds held as collateral for loans it had made to the funds. Lehman Brothers Holdings Inc., JPMorgan Chase & Co. and Cantor Fitzgerald LP also pulled out, leaving Bear Stearns to sort through the wreckage of bad bets on subprime mortgage bonds and collateralized debt obligations.

``There is a good analogy to Long-Term Capital,'' said Anthony Sanders, a former director of mortgage-bond research at Deutsche Bank AG who starts next month as a professor of finance and real estate at Arizona State University's W.P. Carey School of Business in Tempe, Arizona. ``They were all friends with Bear Stearns when they thought the spreads were huge. Now that the market has turned, Bear's standing there like the lone grizzly.''

Without assistance from his Wall Street peers, Bear Stearns Chief Executive Officer James E. ``Jimmy'' Cayne, 73, was forced to salvage the healthier of the two funds, putting $3.2 billion of the firm's capital at risk in the biggest bailout since LTCM. Bear Stearns may dissolve the second fund after more than $600 million of investors' money dwindled to less than $200 million.

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NEW YORK (AP) -- Investors following the near-collapse of two hedge funds managed by Bear Stearns Cos. might be a little bit like a homeowner watching the house down the block catch fire.

It is far enough away to think there's no immediate threat -- but you still need to care about what the embers could do to your own roof. The worry is the same on Wall Street, where bankers are anxiously watching to see if the hemorrhaging at Bear Stearns will spread elsewhere...

Indeed, pension funds and other endowments had about $1 of every $10 sunk into alternative investments last year, such as hedge funds and private-equity funds, according to consulting firm Greenwich Associates. Similarly, large hedge funds get about 24 percent of their investments from endowments, foundations, and pension funds.

That might not sound much until you put it in perspective -- hedge funds manage about $1.5 trillion of assets, if not more, analysts said. And that has given the matter a sense of urgency for Wall Street's top players.

James Cayne, the longtime chairman and chief executive of Bear Stearns, is trying to stem the losses at the nation's fifth-largest investment bank. He has scrambled to salvage the two hedge funds, which were dragged down by investments tied to subprime mortgage debt.

He plans to pump in $1.6 billion to revive the healthier of the two funds. Cayne said the firm does not expect to rescue the second fund, where investors' money has been cut by more than half.

The bailout by Bear Stearns is one of the largest such moves since Wall Street's investment banks bailed out Long-Term Capital Management in 1998 to avoid a collapse of the broader financial markets.

It is not alone in facing risk from its own hedge fund portfolio, either. Major financial institutions like Goldman Sachs Group Inc., JPMorgan Chase & Co., and Citigroup Inc. also manage tens of billions of dollars in hedge funds, according to Moody's Investors Service...

http://biz.yahoo.com/ap/070626/bear_stearns_funds.html?.v=6

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June 29 (Bloomberg) -- Bear Stearns Cos., battered by the near-collapse of two hedge funds that forced the firm to put up $1.6 billion for a bailout, ousted the head of its asset- management division.

Jeffrey Lane, a vice chairman at Lehman Brothers Holdings Inc., will become the chief executive officer at Bear Stearns Asset Management, replacing Richard Marin, the New York-based firm said in a statement today. Lane, 65, has spent four decades on Wall Street and was CEO of Neuberger Berman Inc. until 2003, when Lehman bought the mutual fund company for $3.2 billion.

Chief Executive Officer James E. ``Jimmy'' Cayne is shaking up asset management after bad bets on bonds backed by subprime mortgages led to losses at the two funds and margin calls by rival banks. Investors, concerned that the bailout and collateral damage to the firm's mortgage business would hurt earnings, drove Bear Stearns shares down to the lowest since September.

``We'll dig our way out and emerge stronger,'' Lane said in an interview. ``None of us in this industry can get away unscathed forever. The great ones overcome the problems and move forward.''

Marin, 53, will remain at Bear Stearns as an adviser. Prior to joining the asset-management unit as CEO in 2003, Marin spent 23 years with Bankers Trust Corp. and subsequently became chairman of Deutsche Bank Asset Management.

Shares of Bear Stearns fell $4, or 2.8 percent, to $140 in composite trading on the New York Stock Exchange. They're down 14 percent for the year, the worst performance in the 12-member Amex Securities Broker/Dealer Index.
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July 5 (Bloomberg) -- Democratic presidential candidate John Edwards embraced the idea of raising taxes on the managers of private-equity firms and hedge funds.

Edwards, who has made economic fairness a central issue of his campaign for the Democratic nomination, said he would announce within 10 days his position on a House bill that would force fund managers to pay taxes as high as 35 percent on their share of profits instead of the 15 percent capital-gains rate most pay now.

``It's not a big secret that I believe there's some unfairness in the tax code, and I think some of that unfairness applies to hedge funds and hedge-fund managers,'' Edwards, a former senator from North Carolina, said in an interview with Bloomberg Television's ``Political Capital with Al Hunt,'' scheduled to air today.

Edwards, 54, who has worked for New York-based hedge fund firm Fortress Financial Group LLC, is the first Democrat running for president to signal support for the legislation. Among Republicans, former New York Mayor Rudolph Giuliani has said he opposes raising the managers' taxes.

Hedge funds and private-equity firms have poured millions of dollars into lawmakers' campaign coffers. About two-thirds of campaign donations from employees of the biggest hedge funds and buyout firms last year went to Democrats, Federal Election Commission records show. Edwards received $182,250 in campaign contributions from employees of Fortress in the first quarter, making the hedge fund his biggest financial backer.

Edwards, who has called for rolling back President George W. Bush's tax cuts on the wealthy, wouldn't be pinned down on whether he supports proposals to dramatically increase the capital-gains rate, which was lowered from 20 percent to 15 percent in 2003.

``You have to do it in a way and establish a rate that doesn't cause capital to flee America,'' he said. ``We don't want the capital to go elsewhere.''

He said he's still studying the issue, though he agrees in principle with billionaire investor Warren Buffett -- the chairman of Omaha, Nebraska-based Berkshire Hathaway Inc. -- who said June 26 that the rich ``should not be taxed at a lower rate than the people who serve you at the deli.''

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July 6 (Bloomberg) -- Omega Advisors Inc., the $6 billion hedge fund run by Leon Cooperman, will pay $500,000 to resolve a U.S. bribery investigation into its investment of more than $100 million in Azerbaijan with Czech financier Viktor Kozeny.

Prosecutors in New York agreed not to charge New York-based Omega, following the 2004 guilty plea of a former executive, Clayton Lewis, who admitted conspiring to bribe Azeri leaders. Omega admitted no wrongdoing while it ``acknowledges responsibility'' for Lewis's conduct, the agreement says.

The non-prosecution accord stems from a criminal case pending in New York against Kozeny, who is accused of paying millions of dollars in bribes to Azeri leaders in 1998 as part of a failed attempt to win control of the state-run oil company in the Central Asian republic. Investors in the deal included Omega, American International Group Inc. and Columbia University.

``The saga relating to Omega's 1998 investment in the privatization program in Azerbaijan has come to an end,'' Cooperman said today in a letter to Omega investors. ``We were shocked and dismayed at Lewis's betrayal of the trust placed in him.''

Lewis is cooperating in the U.S. case against Kozeny, who is in the Bahamas fighting extradition to New York. Omega has sued Lewis in federal court in Manhattan, claiming he failed to disclose the bribes to his superiors.

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hedge fund index is up 8.7% YTD as of 6/30/07

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July 18 (Bloomberg) -- Bear Stearns Cos. told investors in its two failed hedge funds that they will get little if any money back after ``unprecedented declines'' in the value of AAA rated securities used to bet on subprime mortgages.

Estimates show there is ``effectively no value left'' in the High-Grade Structured Credit Strategies Enhanced Leverage Fund and ``very little value left'' in the High-Grade Structured Credit Strategies Fund, Bear Stearns said in a two-page letter. The second fund still has ``sufficient assets'' to cover the $1.4 billion it owes Bear Stearns, which as creditor gets paid back first, according to the letter, obtained yesterday by Bloomberg News from a person involved in the matter.

``This is a watershed,'' said Sean Egan, managing director of Egan-Jones Ratings Co. in Haverford, Pennsylvania. ``A leading player, which has honed a reputation as a sage investor in mortgage securities, has faltered. It begs the question of how other market participants have fared.''

Bear Stearns provided the second fund with $1.6 billion of emergency funding last month in the biggest hedge fund bailout since the collapse of Long-Term Capital Management LP in 1998. The losses investors now face underscore the severity of the shakeout in the market for collateralized debt obligations, or CDOs, investment vehicles that repackage bonds, loans, derivatives and other CDOs into new securities.

The risk of owning corporate bonds soared to the highest in two years in Europe and rose in the U.S., credit-default swap prices show. Shares of Bear Stearns fell $3.73 to $136.18 in early New York Stock Exchange trading. Bear Stearns spokeswoman Elizabeth Ventura declined to comment.
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July 19 (Bloomberg) -- Man Group Plc raised $2.92 billion from the initial share sale of its MF Global brokerage unit, less than planned, after the failure of two Bear Stearns Cos. hedge funds heightened concern about the industry's prospects.

Man sold 97.4 million shares of Hamilton, Bermuda-based MF Global in the U.S. yesterday at $30 apiece, the company said in a statement, raising about $900 million less than it sought. MF Global, which handles trades in futures, options and other derivatives on and off exchanges, had set a price range of $36 to $39 a share in a July 6 filing.

Bear Stearns yesterday told investors in the two hedge funds that they'll get little if any money back after a plunge in the value of securities used to bet on subprime mortgages. The losses rattled financial markets and sent shares of 11 of the 12 stocks in the Amex Securities Broker/Dealer Index down. Merrill Lynch & Co., the world's largest brokerage firm, dropped 3.3 percent and Morgan Stanley fell 2.8 percent.

The businesses of futures brokers ``may have peaked and revenue growth will be decelerating,'' said Alain Tchibozo, an analyst at ING Wholesale Banking in Paris.

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July 24 (Bloomberg) -- Basis Capital Fund Management Ltd. hired Blackstone Group LP to negotiate with banks after the Australian hedge fund firm suffered losses on the rout in the U.S. subprime mortgage market.

Blackstone, already helping Bear Stearns Cos. rescue two hedge funds, will advise Basis Capital ``to prevent adverse pricing and selling of assets,'' the Sydney-based firm said in a statement today. Basis Capital's Aust-Rim Opportunity Fund and Yield Alpha Fund lost 9 and 14 percent respectively in June.

The losses at the funds, which recorded average annual returns of 12 percent and 15.5 percent for the past five years, underscores the global impact of the subprime shakeout. Federal Reserve Chairman Ben S. Bernanke said July 19 there will be ``significant financial losses'' in the subprime sector, pointing to estimates as high as $100 billion.

``The fallout from subprime is likely to impact most asset classes and investment strategies over the next couple of years because the ratings agencies completely goofed up,'' said Peter Douglas, the principal and founder of Singapore-based hedge fund research firm GFIA Pte. ``Basis Capital is viewed as a bellwether and exemplary industry citizens.''
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July 26 (Bloomberg) -- Absolute Capital Group Ltd., an Australian hedge fund that invests in collateralized debt obligations, suspended withdrawals from two of its funds after forecasting losses amid a rout in U.S. subprime mortgages.

The firm froze its Yield Strategies Fund and Yield Strategies Fund NZD, which together have about A$200 million ($177 million) under management, Chief Investment Officer Bill Entwistle said in an interview today. The Sydney-based company is 50 percent owned by ABN Amro Holding NV's Australian unit

Absolute Capital, which says it doesn't invest in the riskiest portion of CDOs, is suffering from the widening impact of delinquencies on U.S. home loans to people with poor credit. Basis Capital Fund Management Ltd., another Australian hedge fund battered in the North American market, has hired Blackstone Group LP to negotiate with bankers to help it limit losses.

``Because of the contagion from subprime, all of the credit sectors are re-pricing,'' Sydney-based Entwistle said. ``There are lots of sellers and no buyers, the market has to settle down before we can get some clarity.''

The Yield Strategies Fund returned 6.4 percent the past year while the Yield Strategies Fund NZD, which started in May, gained 0.2 percent to June 30.

Australia's hedge fund industry has been rocked by losses at Basis Capital, which has said the value of its Yield Alpha Fund may plunge more than 50 percent if its assets are sold at distressed prices. Sydney-based Mariner Bridge Investments Ltd. on July 20 wrote down the value of its U.S. residential mortgage-backed securities.

http://www.bloomberg.com/apps/news?pid=20601080&sid=a.bEdGBFUUjM&refer=asia

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Aug. 1 (Bloomberg) -- The yen jumped against the euro and the dollar as hedge fund losses and a slump in stocks prompted investors to cut investments paid for by loans in Japan.

Traders pared so-called carry trades, pushing up the yen versus the 16 most-active currencies. The Australian and New Zealand dollars, whose high interest rates are a magnet to investors, were among the biggest decliners against the yen. Asian and European equities also dropped on speculation of further fund losses tied to U.S. subprime mortgages.

``The financial community has been complacent on risk and we have to reconsider our view,'' said Pierre Lequeux, head of currency management at ABN Amro Asset Management, which oversees $1 billion in foreign exchange. ``This is just the beginning, there's more to come. People are already unwinding carry trade positions.''

The yen earlier touched 160.50 per euro, the strongest since April 24, before trading at 160.74 at 9:18 a.m. in London from 162.30 late in New York yesterday. It climbed to 117.82 per dollar from 118.61, strengthening beyond 118 for the first time since April 19. The yen advanced 2.7 percent last month versus the euro, the most since February 2006, and 3.8 percent against the dollar, the biggest increase since October 2004.

Macquarie Bank Ltd., Australia's largest securities firm, announced losses in funds that invest in high-yield debt, causing the yen to extend gains versus the dollar to 5 percent in the past six weeks.

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