Morning Coffee: Are Hedge Funds Becoming Endangered?

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If it seems like a hedge fund closes every day, they don’t. They’re actually closing at a much faster rate than that.

More than 400 individual hedge funds were shuttered during the first half of 2012, a 14% increase from a year earlier, according to Hedge Fund Research. Several big names have closed recently.

Three well-known European funds – Edoma Partners, Ridley Park Capital and OMG Capital – announced plans last month to return investor capital, according to The Wall Street Journal. A host of U.S. funds, including Grant Capital, Weintraub Capital Management and Kleinheinz Capital Partners, have also begun the process of cutting bait.

And just yesterday, Diamondback Capital Management, which once managed nearly $6 billion in assets, announced it will cease operations after receiving redemption requests for 26% of its assets under management.

Fund managers are having difficulty adjusting to the new post-recession reality, one dominated by less activity and more regulations, one analyst told the Journal.

Not everyone is struggling though. Funds like Bridgewater Associates and D.E. Shaw have had impressive years to date, and are methodically adding to their staff. Quant funds are finding particular success attracting assets and increasing headcount, eFinancialCareers reported.

But the most perilous time for hedge funds is surely still to come. The impending fiscal cliff, and the high likelihood of tax increases for the wealthy, stand as major impediments to future hedge fund growth.

Read the Economist and Run a Central Bank (eFinancialCareers)

When it comes to finding a high-profile role, it’s all about who you know. Or maybe it’s all about what you read.

Hidden Losses (Financial Times)

Former Deutsche Bank employees told the Securities and Exchange Commission that the German bank hid billions of dollars of losses during the financial crisis. Deutsche Bank vehemently denies the allegations, but an investigation is underway.

Growth Mode (WSJ)

Standard Chartered will likely need to pay an additional $330 million to settle charges that it hid billions worth of transactions with the Iranians. Still, the bank, which has been hiring aggressively over the last two years, considers itself "firmly in growth mode.”

Lawsuit Settled (Bloomberg)

Former BlackRock fund manager Michael Lipsky has settled his lawsuit with the firm. Lipsky alleged that BlackRock withheld investment results of funds that he managed.

Axe Falling on Cash Equities (Financial News)

Citi plans to cut $250 million from its securities and banking division as part of its cost-reduction plan. Roughly 600 million bankers and traders – along with 1,300 back office staff – are set to be cut in the U.S., Europe and Asia.

Five Ways to Pick the Right MBA (eFinancialCareers)

Schools want to find graduates who match their culture, and at the end of the day, this is as crucial to their future as it is to your own.

New Roles (WSJ)

JP Morgan has named two current execs – Cindy Armine and Shannon Warren – co-chief control officers. The pair will work to help navigate the bank through impending regulatory requirements.

Fresh Comp System (Reuters)

Beginning next year, Morgan Stanley brokers will receive bonuses for growing assets and loans. The percentage advisors receive for the amount of revenue they generate will be reduced.

Buzz Around the Office

Help, I’m Robbing a House! (MSN)

A Texas burglar called 911 after the homeowner whom he was trying to rob followed him outside with a gun. The burglar was promptly arrested.

List of the Day: Hearing Crickets

If you sent in a job application and haven’t heard back, it may be a “you” problem. Here’s what you may have done wrong.

  1. You didn’t read the job description carefully.
  2. Your online presence is lousy.
  3. You didn’t reach out to the manager directly.

(Source: AOL Jobs)

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