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BRIEF
By KELLy BiT

Bloomberg

News, aNalysis aNd CommeNtary

Hedge Funds

02.21.12

www.bloombergbriefs.com

2011s Best Performers Gained on Fixed-Income Trades

Managers who corFund mAnAGer reTurn rectly timed trades in a variety of fixed-income Haidar Jupiter Fund llC said Haidar 53.5 securities had the top-performing hedge Fort Global diversified Program yves Balcer 40.0 funds in 2011, according to Bloomberg data. Niagara Friedberg legacy Fund 39.8 albert d. Friedberg The funds, picked from those that Quantedge Global Fund 32.9 leow Kah shin reported full year performance to Bloomberg 25.2 maxQ Fund limited George Papamarkakis and limited to vehicles with assets of $50 Source: Bloomberg For full listings see Performance Snapshot, page 10 million or more, made money by trading in European sovereign debt, non-agency mortgage bonds and short-dated debt. haidar capital management llcs $140 million Haidar Jupiter Fund climbed 53 percent last year, making it the best-performing fund with $50 million or more that reports performance to Bloomberg. The returns came from short-term tactical trading in European sovereign bond markets, according to said haidar, president and chief executive officer of the New york-based firm. The fund found a profitable move when in the middle of 2011 it shifted its strategy from a hedged sovereign-debt play, in which it would buy an italian bond and sell a Spanish bond, to shorting italian and Spanish debt around the times when governments would issue bonds. We shifted away from running more symmetrical positions, to running slightly more on the short side, Haidar said in a telephone interview. At the same time we might buy the italian bond, we might sell a Spanish bond -- they tended to be pretty correlated; one would hedge the other. Starting around the middle of the year, those correlations started to break down. Once that happened, Haidar would short both countries bonds and cover our positions around the supply events. The fund also made money by shorting the euro against the Japanese yen and in other currency trades, Haidar said.
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best-performing hedge funds, 2011 all strategies

performance snapshot: best of 2011 The five best-performing funds in long/short equity, global macro, fixed-income arbitrage, distressed and CTA/managed futures strategies. page 10 bridgewater sells $250 million stake Texas Teacher Retirement System approved the acquisition of $250 million-worth of equity in Ray Dalios firm. page 3 paulson predicts greek default John Paulson expects a Greek default to lead to the disintegration of the euro zone. page 6 from the minutes Highlights from minutes of public pension and endowment meetings. page 4 13f forensics: google inc. Hedge funds added almost $3.9 billion-worth of Google shares. page 7 market calls, revisited How Daniel Arbesss stock picks have turned out a year later. page 6 commodities Hedge funds boost bullish bets to the highest level in almost five months. page 5 over the hedge Paul Tudor Joness Everglades Foundation, Bruce Kovners donation to Mitt Romney. page 9 calendar pages 12-13 spotlight SLJ Macro Partners Founder Stephen Jen on why the current equities rally wont last. page 14

new mAndATes
InsTITuTIon employes retirement system of texas Finandir AllocATIon $358 million in up to eight funds in 2012 $500,000 per fund to start seArch sPecIFIcs erP introduced its hedge fund/absolute return program dec. 2, through which it will invest a total of up to $3 billion by 2015. French multi-family office seeks long/short equities funds (global or region-specific) and one global macro manager. long/short strategy may not be levered more than 30 percent. amsterdam-based wealth adviser searches for currency and global macro funds. mAnAGer requIremenTs tBd. see from the minutes for more information. Five-year track record. at least $100 million in the fund. $40 million aUm, two-year track record preferred.

de Veste asset management

Up to $65 million total

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2011s Best Performers

continued from previous page

saye capital management lp, the $65 million Manhattan Beach, California-based mortgage- and asset-based securities hedge fund run by Jeff saye, climbed 21 percent last year in its Spectrum Fund by finding undervalued senior non-agency prime, Alt-A and subprime mortgages. it was identifying collateral pools that offer value misperceived or not perceived by the market place, Saye said. This type of relative-value strategy should continue to be profitable this year; even as the non-agency mortgage market faces the challenges of delinquencies and foreclosures, many bonds can be oversold, which creates opportunities to find value, Saye said. t.a. mckay & co., the $200 million New york-based distressed debt hedge fund run by thomas mckay, gained 13 percent in its Simplon Fund last year because of a position in navigator holdings plc and by focusing on short-dated senior and secured debt and holding higher amounts of cash that usual, according to andrew lipman, head of marketing. Navigator Holdings, the Castletown, isle of Man-based energy transportation company that is the funds largest position, surged 74 percent last year. investors bet on its intermediate- and long-term growth potential, Lipman said. The fund also kept about 20 percent of its portfolio in Said Haidar cash, higher than the usual range of anywhere from zero to 10 or 15 percent at a given time, Lipman said in a telephone interview. it began deploying some of the cash in November to senior bonds or bank debt, he said. Overall, one position did very well, most of the others did okay, and we managed to avoid any material losses, Lipman said. We had an outlook going into the year that credit yields were low and you werent getting paid a lot to take risk. That told us we should keep more cash. The biggest part of the bell curve of our portfolio is bonds or bank debt that are senior, not highly levered and where theres not much interest-rate risk. Fixed-income managers should continue to outperform equity managers for years, according to shalabh garg, chief investment officer at nomura global alpha llc, whose NGA Capital Feeder Fund, a fixed-income arbitrage strategy, climbed 16 percent last year. Bouts of volatility are making it hard for hedge funds to capture the move, Garg said of equity managers. The Sharpe ratio of fixed-income returns have been improving, partly as a result of accommodative monetary policy worldwide but also as search for stable yield. Most fixed-income managers have been beneficiaries of that trend. We think this is likely to continue for several years to come. Lipman said his firm has a similar outlook on 2012 as it had last year and does not expect its strategy to change materially for the time being. Haidar is currently moderately positioned for a risk-on period until the summer and likes U.S. inflation-linked bonds, which look inexpensive, he said. The Fed with an inflation target of essentially 2.3 percent on CPi makes inflationlinked bonds look a little cheap in the U.S., Haidar said. He expects bonds will perform well until the governments next round of quantitative easing, which may occur in April, he said. Haidar founded his namesake firm in 1997. Before that, he was director and head of research in fixed income proprietary trading at Credit Suisse First Boston. in 2007, Haidar and two firms he controls agreed to pay $4.6 million to settle U.S. Securities and Exchange Commission claims they made mutual-fund trades that can hurt other investors. They neither admitted nor denied wrongdoing. The case stems from a U.S. regulatory crackdown, starting in 2003, on trading abuses in the mutual-fund industry. Market timing, while not illegal per se, exploits inefficiencies in pricing and can increase transaction costs borne by long-term investors.

quoTe oF The week

It seems likely that the pressure to keep the euro together becomes too great and it ultimately falls apart.
John Paulson in a 100-page letter to investors. See story, page 6.

bloomberg brief hedge funds newsletter Ted Merz executive editor [email protected] 212-617-2309 bloomberg news Larry Edelman managing editor [email protected] 617-210-4621 hedge funds Nathaniel E. Baker editors [email protected] 212-617-2741 Melissa Karsh [email protected] 212-617-4557 reporter Kelly Bit [email protected] 212-617-1097 contributing Katherine Burton reporters [email protected] 212-617-2335 Saijel Kishan [email protected] 212-617-6662 contributing Matthew Kelly data editors [email protected] 609-279-5064 Anibal Arrascue [email protected] 609-279-5084 newsletter Nick Ferris business manager [email protected] 212-617-6975 advertising [email protected] 212-617-6975 reprints & Lori Husted permissions [email protected] 717-505-9701 To subscribe via the Bloomberg Terminal type BRIEF <GO> or on the web at www.bloombergbriefs.com. 2012 Bloomberg LP. All rights reserved. This newsletter and its contents may not be forwarded or redistributed without the prior consent of Bloomberg. Please contact our reprints and permissions group listed above for more information.

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Fund Focus
ray dalios Bridgewater Associates sells $250 million stake to Texas Teachers
By DAviD MiLDENBERG AND SAiJEL KiSHAN

bridgewater associates lp, the worlds biggest hedge fund by assets, agreed to sell a $250 million equity stake to texas teacher retirement system as the firm diversifies ownership from its founder. Texas Teacher voted at a meeting on Feb. 16 to approve the transaction, said ted melina raab, senior legislative agent for the Texas American Federation of Teachers in Austin, who was at the meeting. The system is the states largest public pension. Bridgewater, based in Westport, Connecticut, said in a letter to clients that it sold a small stake of non-voting stock in July to an institutional investor and longtime partner as part of a 10-year ownership transition plan. ray dalios firm said it is entering into Ray Dalio similar non-voting arrangements

with two additional investors it didnt identify. Over the past two years Dalio started sharing his role as chief executive officer with greg Jensen, david mccormick and eileen murray before relinquishing that position in July when he became mentor. Dalio, 62, retained his chief investment officer role, which he has shared with bob prince since 1986. in the client letter, the firm said that in recent years Dalio and his family trusts had sold about 20 percent of their Bridgewater shares to more than a dozen key employees, including Prince and Jensen. Our hope is that most of the companys ownership will be transitioned in this way over the next 10 years, with Ray and his family trusts maintaining ownership interests of between 10 and 20

percent, according to the note. The $104.3 billion Texas fund represents 1.3 million teachers and their dependents in the second-most populous state. The fund is the 23rd largest public pension in the world, Harris said during the Feb. 16 meeting. Britt Harris, chief investment officer for Texas Teacher, and Howard Goldman, a spokesman for the pension, didnt return phone calls and e-mails seeking comment on the news that was reported yesterday by Pensions & investments. Harris was CEO of Bridgewater from November 2004 through June 2005 after working as president of verizon investment Management Co. Dalio said Harris had difficulty with Bridgewaters culture, noting theres no doubt that you can talk about the culture, but living it is something different, according to a June 2005 story in Pensions & investments magazine. Dalio called Harris a superstar with an absolutely fabulous character.

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The wIre
mAndATes
de Veste searches for currency, Global macro Funds
de veste asset management, the Amsterdam-based wealth adviser focused on alternatives that has 100 million euros ($131.9 million) in assets, is searching for currency and global macro funds for about $13 million to $65 million in allocations. We think there can be major shifts in the near future between the separate economies, valeer venmook, hedge fund analyst at De veste, said in a telephone interview. That has an effect on currencies more than ever. While the firm is not targeting a specific number of funds, it usually adds four a year, venmook said. it normally deploys between about $660,000 and $1.3 million in initial allocations. De veste prefers that managers have a minimum amount of $40 million to $65 million in assets. it sometimes invests in managers with less, venmook added. De veste also prefers that a fund show at least a two-year track record. The firm favors liquid strategies and managers that invest in their funds, he said.

From The mInuTes

At its Dec. 2 meeting, the employees retirement system of texas introduced its hedge fund/absolute return program, through which it will invest up to $3 billion by 2015. The plan had been in the works since 2008 when its board first approved a 5 percent allocation to the asset class. Objectives are a risk-free rate plus 400 basis points to provide diversification, low beta and equity-like returns with bond-like risks, which will take the form of an internally-managed custom fund of funds. Albourne America helped the fund define an allocation method where it will split investments between relative value, event-driven, long/short equity, tactical/ directional and opportunistic strategies. ERS anticipates a three-year implementation program with a portfolio of 15 to 25 funds. This year, ERS plans to invest $358 million in up to eight funds.
http://bit.ly/xFc72v

Kelly Bit

Fm Global, hartford said to Increase hedge Fund Allocations

Policyholder-owned insurer fm global plans to boost the allocation to hedge funds in its $10.5 billion portfolio this year, after the bets didnt really deliver too well in 2011, said paul lafleche, the companys senior vice president of investments. The funds provide diversification and historically had attractive returns, he said. FM Global currently holds about 2 percent of its portfolio in hedge funds, an amount thats been edging higher and will climb in 2012, said LaFleche. The strategies within the portfolio are selected by asset managers at morgan stanley and goldman sachs group inc., he said. Last years slump raised the questions, Are these absolute-return vehicles? Have they outlived their usefulness? said LaFleche. The very volatile, whipsaw conditions are what caused hedge funds to produce almost nothing last year. So i think you can get those upper single-digit returns, and id much rather put some money there than in fixed-income. hartford financial services group inc. has been using proceeds from some maturing bonds to boost hedge fund bets. Hartford, based in the Connecticut city of the same name, had $824 million in the funds as of Sept. 30, compared with $435 million three months earlier, according to the most recent regulatory filings. gregory mcgreevey, the insurers former chief investment officer, said in September that the company was looking to invest in funds that had low correlations with the broad fixed-income and equity markets. The insurer added staff to allocate the investments, targeting discretionary macro funds as well as long-short credit and equity funds, he said at the time.

The texas county & district retirement system committed $175 million to Graham Capital Managements Global investment Fund Ltd and $130 million to Asian Century Quest LP on Feb. 1. it was the countys second and third hedge fund allocations this year. On Jan. 1 it committed $200 million to Highfields Capital Management LP. These investments followed about 40 different hedge fund allocations in 2011:
http://bit.ly/z8Tqsh

Noah Buhayar

The new mexico educational retirement board is scheduled to approve an allocation to ice Canyon LLC, the subsidiary of Canyon Capital Advisors, at its investment committee meeting this Thursday. The ice Canyon Strategic income Fund stands to win an opportunistic credit allocation.
http://bit.ly/xe86mM

on The moVe
Alphabet hires scott saiers of uBs for head Trader Position
alphabet management llc, the New york-based hedge fund that uses options to bet on the volatility of stocks and other assets, hired scott saiers as head trader. Saiers, who is the younger brother of Alphabet Chief investment Officer nelson saiers, was previously employed by ubs ag as a managing director, heading the U.S. equity linked trading desk. Prior to that he spent five years on the Zurich-based firms equity proprietary desk and worked as a market maker on its derivatives desk. The 34-year-old trader received his bachelors degree in economics from the University of virginia before
continued on next page

The oklahoma police pension and retirement system was scheduled to hear an update on its search for a long/ short equity fund of funds manager at its Feb. 15 meeting. The board would take appropriate action as deemed necessary. Jason Pulos of Asset Consulting Group LLC said his firm was evaluating 34 RFPs at the Jan. 2 meeting.
http://1.usa.gov/wHG9MD

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Brief exclusives

continued from previous page

joining the North American operations of UBS, where he worked for 11 years. Hell be the main guy to oversee the execution of my strategy, Nelson Saiers, who joined Alphabet from deutsche bank ag in July 2010, said in a phone interview yesterday. Because all traders report to me now, it was imperative to have a right-hand man with strong managerial skills and who had traded different assets. Alphabet, which has $650 million under management and 32 employees, gained 2.6 percent last year amid record stock market price swings, according to a letter to investors obtained by Bloomberg News, compared with an average loss of 8.3 percent for equity hedge funds, according to Chicago-based hedge fund research inc. The firm returned 4 percent in January. Alphabet, which was started by Jason adler in October 2007 with $11 million, bet that the spread on volatility levels for stocks and other assets worldwide are too wide.

commodITIes
hedge funds boost bullish wagers to five-month high
By DEBARATi ROy

Nikolaj Gammeltoft and Jeff Kearns

solus hires ex-deutsche Bank distressed Trading heads

solus alternative asset management lp hired scott martin and c.J. lanktree, former co-heads of distressed products at deutsche bank ag, as the $2.5 billion New york-based hedge fund aims to increase its credit-related investments. We are seeing an increasing number of opportunities across various credit strategies, including investments in late stage bankruptcy claims, Lanktree said in a statement. These investments can provide uncorrelated, low volatility returns with significant downside protection. Martin and Lanktree, former Deutsche Bank managing directors, will join Solus on March 1 as portfolio managers and report to christopher pucillo, the firms president and chief investment officer, according to the statement. Martin joined Deutsche Bank as a distressed-investment analyst in 1995 and later became a trader. Lanktree began his career at Salomon Smith Barney Holdings inc. as an investment banking analyst in telecommunications and media in 2001. He joined Deutsche Bank in 2003 as a distressed-investment analyst before becoming a trader. The two were named co-heads of the firms distressed products group in 2009. Solus, which was founded in 2007 when the hedge fund strategies group of stanfield capital partners llc spun out, specializes in event- and credit-related strategies, according to the statement.

Kelly Bit

lAunches
ex-morgan stanleys roy seeks up to $1 Billion for Fund
ranodeb roy, morgan stanleys former head of fixed income for Asia-Pacific, is raising as much as $1 billion for a hedge fund focused on interest rates, credit and foreign exchange. rv capital management pvt., which Roy is setting up with vickram mangalgiri, a former adviser at pacific investment management co., will start trading in April or May and plans to manage $500 million to $1 billion once its fully funded, Roy said in an interview in Singapore last week. He declined to say when the target may be reached. Roy and Mangalgiri hired rajesh mahadevan, previously head of interest rate and foreign exchange structuring in South Asia for bnp paribas sa, as head of trading strategy, and will set up a research team in india, bringing total staff to as many as 10 in the first phase. Roy recently returned from a trip to the U.S. and Europe, where he marketed the fund to investors including family offices, funds-of-funds and endowments, he said, without giving details.

Hedge funds increased commodity bets to the highest in almost five months on signs that a rescue plan for Greece and faster U.S. growth will buoy demand as supplies shrink for everything from soybeans to copper. Money managers boosted net-long position across 18 U.S. futures and options by 2.9 percent to 956,313 contracts in the week ended Feb. 14, the most since Sept. 20, government data show. Soybean wagers jumped 29 percent to a five-month high. Silver holdings rose for a seventh straight week, the longest advance in almost three years. Sixteen of the raw materials tracked by S&P advanced last week, led by cocoas 8.5 percent gain. Natural gas climbed 8.4 percent, and cattle prices rose 3.2 percent, touching a record. Supplies of copper will trail demand by 376,000 metric tons this year, Barclays Capital said in a report on Feb. 16. Consumption will outpace production for tin and palladium, the bank said. Copper for three-month delivery in London gained 0.7 percent to $8,235.50 a ton today. Shortages are also forecast for soybeans, coffee and cocoa, Rabobank international said in its latest monthly outlook report from January. Wagers on higher crude-oil prices jumped 14 percent to 233,889 contracts, the government said. Thats the highest since May. A measure of 11 U.S. farm goods showed speculators lowered bullish bets in agricultural commodities by 0.4 percent to 453,637 contracts, CFTC data show. Declines were led by cotton. The gauge is still up 66 percent this year. Bets on higher cattle prices climbed 2.2 percent to 88,091 contracts, the highest since mid-November.

Sanat Vallikappen

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mArkeT cAlls
Paulson says Greece may default, spurring euro Breakup
paulson & co., the $23 billion hedge fund whose founder John paulson is seeking to recover from record losses last year, said Greece may need an unprecedented 90 billion euros ($117 billion) to meet funding requirements. We believe a Greek payment default could be a greater shock to the system than Lehmans failure, immediately causing global economies to contract and markets to decline, Paulson estimated in a year-end letter sent to clients this month, a copy of which was obtained by Bloomberg News. The euro is structurally flawed and will likely eventually unravel, it said. it seems likely that the pressure to keep the euro together becomes too great and it ultimately falls apart, Paulson said in the 100-page letter. The firm said its biggest concern are European banks, which have borrowed more than their U.S. counterparts and dont have enough equity to withstand a credit crisis.

mArkeT cAlls, reVIsITed

daniel arbess, who runs the Xerion strategy for perella weinberg partners last february said chemical companies that do not use oil-based feedstock were attractive. arbess named lyondellbasell industries nv (lYb), solutia inc. (soa) and rockwood holdings inc. (roc) as specific examples and separately said delta air lines inc. (dal) was very attractive (bloomberg brief: hedge funds, march 1, 2011). LyondellBasell and Solutia saw their stock prices rise through early May before starting descents that bottomed on October 3. Rockwood Holdings, trading around $46 at the time of Arbesss statement, peaked at $61.12 on July 22 before it, too plummeted, to a 52-week low of $31.79 per share, also on Oct. 3. Solutia bottomed at $11.91 that day, less than half its level of last February. Last month, the company agreed to be acquired by Eastman Chemical Co. for $27.65 per share in cash and stock, a premium of more than $4.65 from the time of Arbesss statement. LyondellBasell surpassed its high of last May on February 13 when it hit $46 per share, $18 higher than when Arbess made his call. Delta and Rockwood have yet to reclaim their highs from last year. The Atlanta-based airline reached its 2011 peak at $13 per share on Jan. 7. its stock dropped below $10 on June 1, a level it would not reclaim until Jan. 25. Last week it was trading around $11 per share, virtually equal to when Arbess made his statement.
LYB ROC SOA DAL 13 12 11 10

John Paulson

Saijel Kishan

kyle Bass remains Bullish on rmBs, citing dislocation

hayman capital management lps kyle bass sees a dislocation between credit fundamentals and prices for asset-backed securities, including mortgages. We believe that regulatory changes, rating downgrades and continued bank deleveraging have caused a dislocation between credit fundamentals and prices for many asset-backed securities, Hayman Capital said in marketing documents for a residential mortgage-backed securities fund.

Jody Shenn and Saijel Kishan

odds Favor dramatic, sharp reversals: Beaconcrest

After lower volatility and decreased correlations drove Januarys rally in U.S. stocks, the market may be preparing to reverse course, according to beaconcrest capital management. The odds are still there for dramatic, sharp reversals after patient, trending gains, the Boston-based long/short equity fund said in its January commentary letter, a copy of which was obtained by Bloomberg. Just because you stumbled into a clearing does not mean youre out of the woods. For now, fundamentals are driving returns and kevin divney, who manages the fund, expects this to continue in the near term regardless of market direction.

Nathaniel E. Baker

cavenagh capitals lee says dim sum Bonds not Attractive

lee ka shao, the Singapore-based chief investment officer at cavenagh capital, is not interested in so-called Dim Sum bonds, denominated in yuan and issued in Hong Kong. im not a buyer of Dim Sum bonds, Lee said at a conference in Singapore. if youre using it as a shrewd way to bet on the currency, its the wrong way. you see a lot of the issuers are not good investment-grade issuers in the first place. The key for market participants like myself is the 3 percent annualized appreciation of the yuan, he said. Given that some stocks can rally 10 percent in one day, forget it. its not something im interested in. Cavenagh was set up by former morgan stanley and dbs holdings ltd. managers in 2009.

Nathaniel E. Baker

60

LYB, SOA,ROC Prices

50 40 30

DAL Stock Price

9
8

20
10 Feb-11 Source: Bloomberg

7 6 May-11 Aug-11 Nov-11 Feb-12

Lilian Karunungan

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13F ForensIcs: GooGle Inc.

Hedge funds added almost $3.9 billionworth of google inc. shares on aggregate in the fourth quarter, more than any other company, according to Bloomberg data. One hundred and forty-three hedge funds added the Mountain view, California-based companys stock during the period, compared to 107 that reduced their stakes. More than $10.5 billion-worth of Google stock, or 6.4 percent of its outstanding shares, was held by hedge funds on Dec. 31, compared to $6.6 billion-worth on Sept. 30. This made Google the secondmost popular hedge fund stock behind apple inc. lansdowne partners lp added 760,000 shares during the quarter, second-most among all institutional shareholders behind toronto dominion bank, which added 796,000. tiger global management llc added 725,400, the fourthmost among all institutional shareholders. The largest divestiture, of 305,000 shares, was by two sigma investments llc.

largest hedge fund shareholders as of december 30

holder lone Pine Capital llC Coatue management llC lansdowne Partners lP tiger Global management llC d.e. shaw & Co. steadfast Capital management llC atalanta sosnoff Capital llC Blue ridge Capital llC scout Capital management llC Vinik asset management Kensico Capital management eminence Capital llC Columbus Circle investors Brave warrior Capital inc. * $millions VAlue VAlue AmounT on dec. on FeB. held 30* 17* 1,347,297 778,871 760,952 725,409 669,768 604,431 549,409 500,000 485,000 379,500 322,600 315,080 305,234 299,084 870 503 491 469 433 390 355 323 313 245 208 204 197 193 815 471 460 439 405 365 332 302 293 229.5 195 191 185 181 lATesT chAnGe (shAres) 408,909 322,738 760,952 660,259 234,543 166,063 -96,838 29,500 485,000 193,000 0 -43,331 305,234 9,129 lATesT PercenTAGe chAnGe oF (PercenT) PorTFolIo 44 71 1013 54 38 -15 6 103 0 -12 3 6.4 17.9 8.7 8.4 1.9 13.8 5.6 6.1 12.3 4.9 7.1 6.9 1.6 15.7

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reGulATory/comPlIAnce
eu ministers Adopt cds curbs in short-sale law
European Union finance ministers adopted a short-selling law that includes an optional ban on naked credit-default swaps tied to sovereign debt. The legislation, which would also curb so-called naked short selling of stocks and government bonds, was approved at a meeting in Brussels today. Todays decision marks the final stage in the adoption of the law, which was also approved in November by lawmakers in the European Parliament.

citi to allow managers to own part of cca unit

By DONAL GRiFFiN, KATHERiNE BURTON AND ANTHONy EFFiNGER

Jim Brunsden

Volcker said to lobby sec chairman Personally on rule

Former Federal Reserve chairman paul volcker met in person with U.S. Securities and Exchange Commission Chairman mary schapiro last week to discuss the proposed ban on proprietary trading named for him, according to a person familiar with the meeting. volcker met with Schapiro in her office to discuss the proposed rule on Feb. 15, said the person, who declined to be identified because the meeting hasnt yet been made public. The two also discussed volckers views on money-market funds and international accounting standards, the person said. volcker didnt immediately respond to a telephone call requesting comment. The ban on proprietary trading, proposed by volcker when he served as an economic adviser to President Barack Obama, was among the most prominent provisions in the 2010 Dodd-Frank Acts overhaul of Wall Street rules. The rule, which was issued in draft form in October, is scheduled to take effect in July. A public comment period on the proposal closed Feb. 13.

Jesse Hamilton

u.k. Insider-Trading suspects said to Face FsA decision

Seven people arrested by Britains financial regulator as part of its highest-profile insidertrading investigation may learn next month whether theyll be charged, two people familiar with the probe said. The suspects were arrested nearly two years ago by Britains Financial Services Authority and included employees who worked for moore capital management llc. The suspects must report to police stations in London on March 26 to discover if theyre being prosecuted, said the people, who declined to be identified because they werent authorized to discuss the case. The investigation is codenamed Tabernula, Latin for little tavern, and is probing whether the men engaged in the front-running of block trades. investigators are seeking to determine if the suspects profited by using knowledge of upcoming securities sales, generally on behalf of a corporate client. Not all of the suspects will necessarily be charged next month and some final decisions may be delayed, according to one of the people.

Lindsay Fortado

ex-sandisk official Tied to u.s. Insider Trading Probe

Ex-sandisk corp. executive donald barnetson pleaded guilty to passing nonpublic information to hedge fund consultant John kinnucan in the U.S.s five-year crackdown on insider trading by fund managers, expert-networking consultants and employees of publicly-traded companies. Barnetson revealed his role in the conspiracy last week at a plea hearing in Manhattan federal court. in Portland, Oregon, Kinnucan, an analyst who gained national attention for refusing to cooperate with the FBi, was ordered held without bail on charges he passed and received illegal tips. The next hearing is set for tomorrow.

citigroup inc. will let managers of its hedge funds own part of the business ahead of rules that limit shareholders cash in the unit, Chief Operating Officer John havens said. Employees in the Citi Capital Advisors division, or CCA, will get a significant stake in managing the funds, Havens said in an interview. This will increase, he said, as Citigroup withdraws its own money and attracts outside investors to comply with the volcker rule. Our competitors are an owneroperated model, Havens said during an interview in his 39th-floor corner office at Citigroups Greenwich Street building in Manhattan. it was always in the plans but you have to actually have a business that youre comfortable with to go do it. Havens and Chief Executive Officer vikram pandit, 55, are seeking to replace the companys cash in CCA with funds from outsiders as regulators draft the volcker rules final language. Were trying to create a clientcentric, alternative asset-management business, and this is the final stage of putting that in place, Havens said. Clients like independent asset managers. Former morgan stanley executives Jonathan dorfman and James obrien run CCA, which managed $18.2 billion in private-equity and hedge funds, Citi said in August. The bank had at least $5 billion in the funds, a person familiar with the matter said in May. if the firm wanted to keep $5 billion with CCA and comply with the volcker rules 3 percent cap, the funds would have to contain $161.7 billion from outside investors, or 69 percent more than the banks current market value. Citi didnt provide details about how it would divest its ownership of CCA.

Patricia Hurtado and Bob Van Voris

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oVer The hedGe

paul tudor Jones was at the Breakers Hotel in Palm Beach, Florida, on Friday night for seventh annual benefit for the Everglades Foundation. Jones, chairman of the foundation, joined highbridge capital management llcs glenn dubin, Mario Gabelli, Kenneth Langone, Joe Perella and Jack Nicklaus. The event for 900 guests raised $2.1 million to protect two million acres in south Florida. After dinner and a live auction, Dave Matthews performed.
Amanda Gordon

bruce kovner, co-founder of the New york-based caxton associates lp, gave $500,000 to Restore Our Future, a U.S. political action committee supporting Republican presidential candidate Mitt Romney. david tepper of appaloosa management lp gave the organization $375,000 last month. The group also got $250,000 from Julian robertson, co-founder of tiger management llc.

President Barack Obama returns to New york on March 1 for his first campaign fundraiser with investment bankers and hedge fund managers since asking Congress in his 2013 budget to increase taxes on the wealthy. The $35,800-perperson dinner at ABC Kitchen, the first of the evenings four fundraising events, is being hosted by many of Obamas top Wall Street donors, according to a person familiar with the matter. Sponsors include blair w. effron, partner and co-founder of centerview partners llp; marc lasry, managing partner and founder of avenue capital group;and mark gallogly, a managing principal of Centerbridge Partners. omega advisors inc. Founder leon cooperman and his wife, Toby, have named the Jewish Community Foundation of Metrowest, New Jersey the owners of their $20 million life insurance policy,

according to the New Jersey Jewish News website. The gift is believed to be the largest single contribution ever received by the foundation, the story said. The gift comes from the Cooperman Family Foundation.

Nathaniel E. Baker

Hans Nichols and Jeffrey McCracken

hedge funds cares 14th annual benefit, to be held at New yorks Cipriani 42nd Street on March 1, comes at a time when the industrys reputation has endured a number of shocks, much in the same way that it had when the charity hosted its first event in 1998 in the wake of Long Term Capital Management, according to a statement from the organization. As a result, this year Hedge Funds Care is emphasizing that funds improve their reputation through charity work, it said. Joe Torre, the former manager of the New york yankees, will receive the Hedge Funds Care Founders Award at next weeks gala. He is only the third recipient.
Nathaniel E. Baker

Greg Giroux and Jonathan D. Salant

LATIN AMERICA INVESTING CONFERENCE

Apr 26, 2012
NEW WORLD STAGES NEW YORK, NY

The Bloomberg Latin America Investing Conference will give global investors an in-depth look at investment opportunities throughout Latin America. Topics will include currencies, ination, stock markets, real estate investing and strategies for participating in this dynamic part of the world. With Rodrigo Vergara, Governor, Central Bank of Chile, among other notable speakers. To register go to bloomberglink.com/latam.

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PerFormAnce snAPshoT: BesT oF 2011

A look at some of last years best-performing hedge funds that report to Bloomberg data. Only funds in the five strategies below with $50 million or more in assets and which reported performance through Dec. 31 were included. For questions please contact Anibal Arrascue at [email protected]

long/short equities
FIrm Frigate Ventures lP Varus Capital management Cayman ltd evergreen Capital Partners Pty ltd Center Coast Capital advisors lP Zimmer lucas Partners llC Fund anson investments master Fund lP Varus Fund-eUr Fees australian equities return Fund-a Center Coast Capital Partners lP ZlP Fund lP mAnAGer Bruce winson team-managed tim Hannon dan tutcher stuart Zimmer IncePTIon 7/1/2007 5/1/2010 5/3/2010 8/31/2007 11/1/1999 2011 reTurn 23.7 20.7 18.0 16.2 16.2 2010 reTurn 23.4 N.a. N.a. 22.5 5.3

global macro
FIrm Haidar Capital management llC Friedberg mercantile Group ltd Quantedge Capital Pte ltd North asset management llP titan Capital Group iii lP Fund Haidar Jupiter Fund llC Niagara Friedberg Funds-Niagara legacy Class B Quantedge Global Fund maxQ Fund limited-a Usd Global return Fund offshore ltd (Class ar)-absolute return strategy mAnAGer said Haidar albert d Friedberg leow Kah shin George Papamarkakis russell H abrams IncePTIon 8/31/2000 7/8/2005 10/2/2006 11/29/2002 3/1/2003 2011 reTurn 53.5 39.8 32.9 25.2 21.9 2010 reTurn 28.1 10.1 82.4 -7.5 -40.7

distressed
FIrm ta mcKay & Co inc deltec asset management llC FrontFour Capital Group llC Gso Capital Partners lP man investments aG Fund simplon Partners lP deltec special situations Partners lP FrontFour Capital Partners lP Gso special situations overseas Fund ltd man Prospect mountain ltd mAnAGer thomas a mcKay Peter Coolidge david a lorber team-managed alok makhija IncePTIon 7/1/1990 1/1/2003 12/29/2006 8/1/2005 4/1/2010 2011 reTurn 12.8 12.0 8.6 8.0 5.3 2010 reTurn 24.1 20.0 32.5 17.8 N.a.

fixed-income arbitrage
FIrm Nordic asset management Fondsmaeglerselskab a/s saye Capital management lP Nomura Global alpha llC Barnegat Fund management inc Concordia advisors llC Fund midgard Fixed income Fund ltd spectrum Fund lP NGa Capital Feeder Fund ltd-i Barnegat investments limited-Class B Concordia municipal opportunities Fund iii lP mAnAGer C. lindstrom lage Jeff saye shalabh Garg Bob treue Christopher dillon IncePTIon 9/1/2009 1/1/2003 7/1/2008 1/1/2001 3/31/2006 2011 reTurn 22.5 21.0 15.7 11.1 10.1 2010 reTurn 20.7 72.8 42.1 15.8 -3.6

cta/managed futures
FIrm Fort lP Fort lP Henderson alternative investment advisor ltd inCentive asset management ltd arrowhawk Capital Partners liquid markets llC Fund Fort Global diversified Program Fort Global Contrarian Program Henderson agricultural Fund ltd-sV Usd inCentive Funds Cayman sPC-CommCentive segregated Portfolio-B arrowhawk Commodity stategies ltd mAnAGer yves Balcer yves Balcer ian Bowler rene Braginsky Jennifer Fan IncePTIon 10/31/1993 10/30/2002 9/1/2010 1/25/2010 9/1/2009 2011 reTurn 40.0 28.7 22.0 21.2 15.4 2010 reTurn 34.5 27.8 N.a. N.a. 5.0

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hedGe Funds Added To BloomBerG ThIs week

The following hedge funds were added to Bloombergs database this week. Access the Hedge Fund Database Portal by typing HFND <GO> on your Bloomberg Terminal. To view U.S. hedge fund managers, users must fill out an Accredited investor Form (Option 13).
TIcker adriGoH ss arCHiCG Us BCmHyiU id BloomBerG Id BBG002N4rCV1 BBG002N4ZB71 BBG0019sssN9 Fund mAnAGer GoraN torNee miCHael CaPoNiti team maNaGed daVid sUNG JeFFrey e GUNdlaCH mAnAGemenT comPAny adrigo asset managment aB archimedes Fund management llC BCm & Partners llP Betzwood Capital Partners lP doubleline Capital lP innocap investment management inc innocap investment management inc Kalo Capital management llC lampe Conway & Co llC msr investments llC muskoka Capital management llC renaissance technologies llC renaissance technologies llC renaissance technologies llC saliba Portfolio management llC sciens Group Fund services ltd seedling Capital llC spinner asset management llC twin tree Capital management llC sTrATeGy long Bias eq multi-strategy Global macro eq Fdmntl mkt Neut Fi directional Cta/mgd Futures Global macro long/short eq distressed sec Cta/mgd Futures long/short eq eq statistical arb eq statistical arb Global macro mortgage Backed arb multi-strategy long/short eq eq Fdmntl mkt Neut Global macro mAnAGer locATIon sweden U.s. U.s. U.s. U.s. U.s. Canada U.s. U.s. U.s. U.s. U.s. U.s. U.s. U.s. Guernsey U.s. U.s. U.s. IncePTIon dATe 12/1/2006 1/1/2012 5/1/2005 4/1/2009 9/1/2010 10/1/2010 2/16/2012 10/1/2010 10/1/1999 9/1/2009 5/1/2010 1/1/2011 1/1/2011 10/1/2007 9/1/2010 2/29/2012 1/1/2012 1/1/2009 2/1/2011 AdmInIsTrATor wahlstedt sageryd Financial services aB Piedmont Fund services inc trinity Fund administration ltd michael J liccar & Co Bank of New york mellon Hedgeserv ltd Hedgeserv ltd BGt Fund administration trident Fund services BVi ltd msr investments llC HedgeCount llC Bank of New york mellon Bank of New york mellon Bank of New york mellon woodfield Fund administration llC HsBC securities services Guernsey ltd Gravity Financial llC milestone management services llC ss&C technologies inc

BetZwlP Us BBG002N0X2w3 dloPilP Us iNNlPPF mV BBG002N70y81

BBG0019VGwZ3 team maNaGed team maNaGed steVeN d FriedmaN steVeN GeorGe lamPe miCHael s rUlle Jr sCott NireNBersKi team maNaGed team maNaGed team maNaGed JoHN saliBa team maNaGed CHristiNe yoUNGBlood daVid reale

iNNomeG mV BBG002N6tJP6 KaloCaP Us lCCaPlP Us BBG002N749V6 BBG002B9C9Z2

msrQdPr Us BBG002N0Z1H0 mUsKoKa Us BBG002N6yCJ2 reNeiBB BH reNieBB Us reNiFFa Us dyNaiNV Us PoliKaP GU seedGro Us CloVstr Us BBG002N70Q33 BBG002N70Kr0 BBG002N709d0 BBG0019srGN6 BBG002N55J47 BBG002N11ZX2 BBG002N517t0

twNtrCP Us BBG002B2rw80 miCHael Presley

For Web News on Hedge Managers on Bloomberg click {STNI HEDGEMANAGERSWEB <go>}
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cAlendAr
dATe Feb. 28

To submit an event email [email protected]

eVenT moma's david rockefeller award luncheon FX-invest europe GarP's 13th annual risk management Convention informa's UCits for Hedge, mutual & investment Fund managers asiaHedge Forum 2012 100 women in Hedge Funds dinner and Fundraiser BNP Paribas's investor education series: "opportunity Knocking: european distressed" CFa institute's investing in emerging markets 14th annual New york Hedge Funds Care open your Heart to the Children Benefit 13th annual Hedge Funds world middle east argyle executive Forum's 2012 research and Portfolio manager membership Breakfast Bloomberg's starting a Hedge Fund? direct access Partners' Cap intro event Hedge Fund association investor intelligence symposium merlin securities' dallas marketing seminar Hedge Funds Care indoor triathlon CBoe's 28th annual risk management Conference Bloomberg Precious metals Conference 37th annual international Futures industry Conference Florida alternative investment association's inaugural meeting of the americas

FeATurInG Honoring stanley druckenmiller martin schlegel, swiss National Bank; Pierre lequeux, aviva investors; Paul Chappell, C-View. aaron Brown, aQr; attilio meucci, Kepos Capital; Craig Broderick, Goldman sachs. rhodri mason, man investments; Jerome lussan, laven Partners. Joe Zhou, ortus Capital; max Gottschalk, Gottex; Ken stemme, larch lane. to benefit skillForce. moderated panel with hedge fund managers on the current opportunities in the distressed space. (repeats march 2 in washington, dC) stephen Jen, slJ macro Partners; donald lindsey, George washington University. to honor Joe torre, former New york yankees manager. Jeff tarrant, Protege; daniel Booth, saudi aramco; abbas Hashimi, Qatar Family office. topics of discussion include european banking crisis, emerging markets. moderator Phillip Chapple, KB associates, to host six panel discussions. investor roundtable session. Keynote by sheryl mejia on developing a marketing message. Closed-door manager marketing seminar and investor panel teams of three compete in 1,000 meter row, stationary bike ride and 2 mile treadmill run. Pav sethi, Gladius; som dasgupta, linden advisers; markok Kolanovic, JPmorgan. James rickards, tangent Capital; Jeffrey Christian, CPm Group. "Nine hundred of the top names and faces in the industry." one-on-one meetings between "institutional allocators and best-of-breed hedge fund managers, matched via investor mandates."

locATIon New york (exact location provided to attendees) radisson Blu, Zurich marriott marquis, New york the radisson martinique, New york Jw marriott Hotel, Hong Kong Hm tower of london New york (exact location provided to attendees) New york marriott downtown Cipriani 42nd street, New york Jumeirah Beach Hotel, dubai New york (exact location provided to attendees) Bloomberg office, london New york (exact location provided to attendees) Proskauer rose office, New york dallas (exact location provided to attendees) Columbia University, New york Hyatt regency Coconut Point, Bonita springs, Fla. rubin museum of art, New york Boca raton resort & Club, Boca raton, Fla. Biltmore Hotel, Coral Gables, Florida

conTAcT / reGIsTrATIon Paul Jackson, [email protected]

Feb. 28 Feb. 28-29 Feb. 28-29 Feb. 29 Feb. 29 march 1, 3:30pm march 1-2 march 1 march 5-8 march 6 march 7 march 7 march 7, 5pm march 8 march 10 march 11-13 march 13 march 13-16 march 18-20

www.fxinvesteurope.com www.garp.org www.informaglobalevents.com www.hedgefundintelligence.com www.100womeninhedgefunds.org www.bnpparibasspcapintro.com www.cfainstitute.org [email protected], +1 212-991-9600 x342, www.hedgefundscare.org www.terrapinn.com www.argyleforum.com http://bloom.bg/yaB3ig andrew saunders, [email protected] www.thehfa.org simone sobel, [email protected] Jen schutten, [email protected] www.cboermc.com/index.cfm www.bloomberglink.com/metals www.futuresindustry.org/boca-2012.asp Fund managers should email pitchbook, ddQ, monthly and quarterly letters, firm aum to [email protected] by Feb. 24.
continued on next page

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calendar

continued from previous page

dATe

eVenT

FeATurInG dean Curnutt, macro risk advisors. andrew rabinowitz, marathon asset management; davide serra, algebris; Guy spier; aquamarine Capital. Keynote by seth Klarman, Baupost Group. walter schindler, sail Capital Partners; Frank Barbarino, NePC. tim wong, man aHl; Joseph Burns, Pulse Capital; Jerome teiletche, lonbard odider. exclusive event celebrating funds and funds of funds that outperformed their peers. academic conference. organization was founded by swiss economists in 1986.

locATIon New york (exact location provided to attendees) Villa Kennedy, Frankfurt Boston Harbor Hotel Park Hyatt aviara, Carlsbad, California the Grange st. Paul's, london london (exact location provided to attendees) siX swiss exchange, Zurich

conTAcT / reGIsTrATIon www.newyorkhedgefundroundtable.org

New york Hedge Fund roundtable's march 22 Hedging systemic risk with equity derivatives: Perspective and techniques march 22 Bloomberg sovereign debt Conference

www.bloomberglink.com/frankfurt

100 women in Hedge Funds stanford march 23 PaCs Conference: a New era of alpha & altruism march 26-27 march 27-29 march 29 imN's 10th annual alternative investments summit Cta world Congress europe HFmweek's sixth annual european Performance awards 2012 15th annual Conference of the swiss society for Financial market research

www.100womeninhedgefunds.org

www.imn.org

www.terrapinn.com

www.hfmweek.com

march 30

www.fmpm.org/conference

STARTING A HEDGE FUND? ALL YOU NEED TO KNOW

Bloomberg invites you to join us for our latest event dedicated to the hedge fund start-up. This full day event targets the next generation of hedge fund managers and explains how to seed, set up and start a successful hedge fund. Our Moderator will be Philip Chapple, KB Associates, who will host six panel debates throughout the day covering the full start up phase of a new fund: Prime Brokerage panel Accountancy & Advisory panel Fund Administration panel Compliance panel Legal panel Seeding & Investors

Wednesday, 7 March 2012 | 09:00 - 17:30

VENUE Bloomberg L.P. City Gate House 39-45 Finsbury Square London EC2A 1PQ RSVP BU SEMR 569538 <GO> on the terminal, email [email protected], or call Global Customer Support on +44 207 330 7500

2012 Bloomberg L.P. All rights reserved. 47512025 0212

>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
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sPoTlIGhT
stephen Jen on when and how the current equities rally might end
stephen Jen, managing partner and founder of London-based slJ macro partners, spoke to Bloombergs Nathaniel Baker about his views on the markets and why he thinks the current equities rally will run its course later this year.

pullbacks could be shallow. Q: does that mean the whole risk on/ risk off dichotomy is off? a: No, on the contrary. i think the tensions between risk-on and risk-off could elevate later this year. The LTRO has bought time for the European banks but has not dealt with the over-leveraged and under-capitalized nature of the entire European banking system. Greece has demonstrated that it is unwilling and unable to carry out needed reforms. A disorderly default by Greece seems probable sooner or later. The LTRO has truncated the left tail for Europe for the time being. But the mean of the distribution will remain low and weak. At the same time, China continues to slow. The latest data suggest that growth may be weaker than the Q4 GDP suggests. Q: so you dont think this rally is going to last? a: i dont think this is going to last. i dont know when the turning point will be, but i believe it is going to come from economic data that will surprise on the downside. My focus right now is on China and other emerging markets economies. Q: is that where we might see a catalyst for a downturn? a: Mainly from emerging markets. The part of world, in terms of data, that has

Q: lets talk about your views on the markets. You were short euro/long u.s.? a: Until the first part of January that was our posture, but we realized that global liquidity is such a powerful force especially after the FOMC meeting that this is to be respected, that investors shouldnt stand in the way of this tsunami of liquidity. Q: so how have you changed your views? a: We try to be flexible. We still think the global economy is going to experience very difficult moments this year, especially in emerging markets. But its only February; early in the year. We need to be sure we respect the uncertainty and the timing of the potential changes in the global activities numbers. Last year was a good example. it was a year of two halves; the first part of the year and the second part were completely different in character. Not just in terms of GDP but also how the markets traded and were correlated. We could see a replay of that this year. We see the GDP sharpe ratio the ratio of expected GDP growth to its volatility to remain inferior from where it was in the past. This should also suppress the Sharpe ratio of the underlying portfolios. Q: okay a: To a large extent, the Feds stance on QE3 will play an important role in both the direction and timing of changes in market trends. Q: it sounds like youre sitting on cash then, rather than taking specific bets? a: We are cautiously positive on risk for the time being, but are fully aware that the global economy could easily experience a setback. We suspect some macro hedge funds may have the same posture. The lack of full positioning on risk assets point to a possibility that this risk rally could potentially last a bit longer and the

not been a determining factor for risk assets. They havent driven the markets either way. Downside surprises should come from there. Chinas activity data for January was remarkably weak in terms of trade, electricity usage, money growth, housing prices and rent. While a good part of this weakness may reflect the calendar effect associated with Chinese New years, it is possible that part of it reflects a genuine economic slowdown. Specifically, about half of Chinas real GDP growth comes from investment and more than a quarter of that is construction. if the housing market remains weak and construction slows, there will be consequences for GDP, and the Beijing policy makers will be compelled to react. The corresponding changes in the composition of demand growth will in turn have consequences for other countries. Q: speaking of which, where does the u.s. stand in all of this? a: The dovish bias of the Fed is remarkable and QE3 will dictate the tone. Datawise, there have indeed been encouraging signs of a recovery in the U.S. manufacturing sector. The labor market also seems to be in recovery. However, the speed of economic growth will not likely exceed trend growth. Therefore it is not clear that the U.S. economy, if it indeed only grows at trend, will be strong enough to lift the rest of the world.

Age: 46 college/university/Grad school(s): Ph.D. in economics from the Massachusetts Institute of Technology. B.S. in electrical engineering (Summa cum laude), University of California, Irvine. Professional Background: Economist at IMF (1992-1996); Global head of currency research at Morgan Stanley (1997-2009); managing director of macro and currencies at Bluegold Capital (2009-2011); founder of SLJ Macro Partners (since 2011) Family: Wife and two children. hometown: Born in Taipei, Taiwan. current residence: London

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