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Friday’s Headlines: More Hedge Funds Choose to Call it Quits

US shutdown keeps Asia equities open for business

US shutdown keeps Asia equities open for business

The past few months have seen a record number of hedge funds choose to close shop – a difference from 2008 when investor redemptions forced closures. In an Economist article, Man Group’s Luke Ellis said, “I’ve been doing this for 15 years and I’ve never seen as many people give up as in the last three months.”

At the end of 2011, 67 percent of hedge funds were below their high-water marks and 13 percent have not earned a performance fee since 2007. A whopping 18 percent of hedge funds are more than 20 percent below their high-water marks. While many were expecting an upswing in 2011, hedge funds were down by 5.2 percent for the year. Says the magazine:

Smaller funds have been more likely to close than their larger peers. That’s partly because it used to be possible to run a hedge fund with $75m under management. Today funds need at least double that amount because administrative and compliance costs are higher than ever. Larger funds also depend less on performance fees because their management fees bring in so much cash. That risks distorting the original point of hedge funds—that they are small, limber operations which come and go often.

 

Other News:

Citi will allow its hedge fund managers to take stakes in their operations. [Bloomberg]

Ally Financial is considering selling its auto lending operations or its online bank, as an IPO seems increasingly unlikely. [Reuters]

Smaller hedge funds thrive as bigger competitors struggle. [Businessweek]

Blackstone and KKR rank No. 1 and No. 2 in private equity transactions in 2011. [Bloomberg]

Credit Suisse closed its most recent fund with commitments of $2.9 billion. [HedgeCo.net]

Carlyle will sell its $300 million stake in Taiwan’s Ta Chong Bank. [Reuters]

NYSE Euronext and the CME Group have bid for the London Metal Exchange in a $1.6 billion deal. [Financial Times]

CME of Malaysia will buy the Australian equity operations of the RBS for $50 million. [Reuters]

BofA would consider selling its network of retail branches in Texas and its American wealth management unit if forced to raise capital in a crisis. [WSJ]

Moody’s warns it may cut big banks ratings. [NY Times]

Court overturns the conviction of an ex-Goldman programmer. [DealBook]

Federal authorities arrested a notorious tech analyst on an insider trading crackdown. [NY Times]

UBS sues two ex-advisers on claims they took customer data to Wells Fargo. [Investment News]

Former Merrill head had “philosophical” differences with BofA over the emphasis on cross-selling financial products. [DealBook]

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