Editor’s Letter – July 2013

Issue 87

Originally published in the July 2013 issue

In this issue we lead with The Hedge Fund Journal’s 50 Leading Women in Hedge Funds survey, in its third incarnation, and sponsored by EY for a second time. Whilst the stature of, and testimonials for, some of the women has ensured their place in all three surveys, this year the fifty contains thirty-three new names that did not feature in earlier surveys. Newcomers include Teresa Heitsenrether, who heads up the largest US prime brokerage, J.P. Morgan, Eileen Murray, who is both co-COO and co-President of the world’s largest hedge fund manager, Bridgewater, and two ladies from CQS, Soraya Chabarek, Head of European Sales and Karyn Geringer, Principal and Head of Marketing (Americas). These and other leading women will be profiled in more detail in future issues of The Hedge Fund Journal.

One conference marking its tenth anniversary is Bartt Kellerman’s Battle of the Quants. This stimulating conference has lived, breathed and debated high frequency and algorithmic trading, the flash crash and the twitter hoax – and showcased many top performing quantitative hedge funds. In this issue we travel through the history of the event and also provide brief teaser tasters of the six funds that presented at the London Battle in June. From its beginnings in New York the event has spread its wings to London, Tokyo, Hong Kong, and Singapore, with the Shanghai Battle making its debut this November. One of the panels at this year’s London Battle was extremely excited about the liberalisation of China’s capital markets, where abundant retail investor liquidity and the ability to short single stocks create a compelling opportunity set for hedge funds.

Milan-based Kairos pioneered the concept of a UCITS compliant fund of hedge funds, and the three founders share with us the ingredients of their philosophy and process. Kairos sets great store by its gruelling schedule of global meetings with smaller and early stage funds – but these need not spring from smaller or early stage management companies. The guiding star for the Kairos business model is aligning its own interests with those of investors.

Japan veterans Arcus Investment have some of the longest running track records of any Japanese hedge fund, and were also early tooffer their investors a Luxembourg UCITS fund structure. Arcus continues to believe that Japanese equity markets offer deep value opportunities, as well as inefficiently priced shares creating relative value opportunities. In this issue we talk to Robert Macrae, Peter Tasker, Mark Pearson and Nick Brooks of Arcus.  

Ferox Capital have been active in convertibles at least as long as Arcus have been covering Japan, and Ferox similarly remains confident about identifying mispriced convertible bonds that can, for instance, contain very cheap sources of optionality. Ferox make the case for convertible bonds in this issue.  

Lawyers such as Akin Gump, and Maples and Calder, are well versed in navigating hedge funds through the intricacies of the AIFMD regulations that take effect this month, and indeed the Dodd Frank rules that are still in the process of being interpreted and implemented. It seems that Luxembourg and Ireland may have been quickest to transpose the AIFMD laws into their own national statutes, but within a year all EU member states will be forced to follow suit.

Rod Sparks