Much of the financial media's focus this week was on Goldman Sachs, US hedge fund Paulson & Co, America's regulator the SEC and problems with complex mortgage-related instruments.
It ignored the fact one London-based hedge fund is tackling its own problems with debt instruments very effectively.
The Queen's Walk Investment Trust run by hedge fund Cheyne Capital Management has recouped £475,000 from companies it claimed mis-sold its loans linked to UK mortgages.
It has done this by encouraging - 'forcing' might be a better description - those who gave false representations or warranties about the instruments to buy them back.
In February it succeeded in selling back loans linked to Portuguese properties, comprising 8.5% of its assets.
Stuart Fiertz, Cheyne's co-founder, describes QWIL's conversations with mortgage salespeople as "robust". One shudders to think just how robust.
He says: "Where we feel there have been material misrepresentations of the products to us, we will discuss with the mortgage originators about their repurchasing them from us.
"The conversations can be robust, but it is important to have them, and we will continue doing so where opportunities arise."
QWIL manager Shamez Alibhai says taking action is also important for shareholders.
The trust is saving its investors as much as its mortgage sales contacts the embarrassment of newspaper headlines, as there has been precious little media coverage of this.
The negotiations have been behind closed doors.
And there have been no court cases for QWIL.
Read the full original Queen's Walk article
Cheyne Capital News: Cheyne Capital CIO says Firm Plans UCITS M&A Fund
Cheyne Capital is shaping up to launch a mergers and acquisitions fund regulated under European Union UCITS rules, to meet increased investor demands for more liquid and transparent investments. The U.K.-based credit specialist said merger arbitrage is coming back after tapering off during the credit crisis, pointing to the recent merger of U.S. food company Kraft with U.K. confectioner Cadbury as evidence.
"We are definitely raising money there and we're looking at a UCITs format," Cheyne Capital chief investment officer Chris Goekjian said at the Reuters Private Equity and Hedge Funds Summit in London. "What you've seen generally is hedge funds adapting their investment strategies to fit UCITS rules. Merger arbitrage is one of the [adaptable] areas, and it's got the liquidity."
European Union regulations known as UCITS III have strict transparency and liquidity requirements. They have grown in popularity since the credit crisis, when many investors found themselves locked into investments when some securities markets turned illiquid and asset managers imposed restrictions on withdrawals. Mr. Goekjian said that given the depth and liquidity of markets and transparency of prices, M&A strategies could be structured into UCITS compliant funds.
The M&A market is also more promising for hedge fund managers than it was prior to the credit crisis, when too much money was trying to squeeze returns from the same transactions.
"What you get in merger arbitrage today, and this shows how much capital there is versus say 2007, is you can have positive carry [extra yield] plus the upside of a potential other bidder," said Mr. Goekjian. "It shows the relative amount of capital deployed in these situations is much less than it was."
He said there was no definite launch date for the fund yet, although it was a work in progress that would be brought to completion.
"We need to come up with investment products that meet the needs of our clients," he said. "If we don't someone else will."
"We are definitely raising money there and we're looking at a UCITs format," Cheyne Capital chief investment officer Chris Goekjian said at the Reuters Private Equity and Hedge Funds Summit in London. "What you've seen generally is hedge funds adapting their investment strategies to fit UCITS rules. Merger arbitrage is one of the [adaptable] areas, and it's got the liquidity."
European Union regulations known as UCITS III have strict transparency and liquidity requirements. They have grown in popularity since the credit crisis, when many investors found themselves locked into investments when some securities markets turned illiquid and asset managers imposed restrictions on withdrawals. Mr. Goekjian said that given the depth and liquidity of markets and transparency of prices, M&A strategies could be structured into UCITS compliant funds.
The M&A market is also more promising for hedge fund managers than it was prior to the credit crisis, when too much money was trying to squeeze returns from the same transactions.
"What you get in merger arbitrage today, and this shows how much capital there is versus say 2007, is you can have positive carry [extra yield] plus the upside of a potential other bidder," said Mr. Goekjian. "It shows the relative amount of capital deployed in these situations is much less than it was."
He said there was no definite launch date for the fund yet, although it was a work in progress that would be brought to completion.
"We need to come up with investment products that meet the needs of our clients," he said. "If we don't someone else will."
Are hedge funds already over regulated?
Since the financial community of Cheyne Capital, Governments and the Jo public have recognising the severity of the global credit crises’, hedge funds have been the focus of Government and public negative opinion. It is still unclear what contribution hedge funds, private equity and a host of other alternative investment funds had on fuelling the economic landslide, if any, but there is a general consensus outside the finance sector that regulation should be imposed.
This has been clearly evident over the past week as hedge funds have had to increase efforts in deflecting the threat of tougher regulation as European politicians and regulators sabre-rattle and pledge that more rules are on the way. Yet against this political backdrop, the question of past and current hedge fund regulation has been neglected.
Many financial experts have stated that hedge funds didn’t cause the credit crises but only mildly contributed. With this it has been stated that the hedge fund and private equity sector is already well regulated and the funds flowing through such firms are adequately protected. It has been stated further that hedge funds are part of the solution to stable finance rather than the problem and that those within the European Commission that have written a draft directive on alternative investments had the wrong priorities, wrong approach and was written by the wrong people.
Historically, hedge funds have made their money by exploring niche investment opportunities, such as derivatives, where other financial institutions do not trade, and the fear is that excessive regulation could curb the industry’s strength, which is built on such flexibility. In this, there is an argument that hedge funds have behaved responsibly, proven their value with lower losses than elsewhere in the market and currently have a better understanding of risk than almost any other financial sector. This said firms have still been deeply exposed by the recent economic events, which in itself is transforming the market.
Hedge funds are rife with talk of consolidation as the downturn provides an opportunity for larger firms to acquire smaller firms at a bargain rate. This is driven by dramatically shrinking assets making the smaller firms not the lucrative business they once were. This is leading to firms being sold to a larger partner that can keep assets managed at a minimum level.
With this consolidating market hedge funds will inevitably become larger and more influential making the case for regulation being beneficial for both investors and hedge funds as regulation would produce a safer hedge fund market that would attract a larger number of investors for Cheyne Capital,
Whatever the decision, one thing is clear, the hedge fund market is never going to be the same again.
This has been clearly evident over the past week as hedge funds have had to increase efforts in deflecting the threat of tougher regulation as European politicians and regulators sabre-rattle and pledge that more rules are on the way. Yet against this political backdrop, the question of past and current hedge fund regulation has been neglected.
Many financial experts have stated that hedge funds didn’t cause the credit crises but only mildly contributed. With this it has been stated that the hedge fund and private equity sector is already well regulated and the funds flowing through such firms are adequately protected. It has been stated further that hedge funds are part of the solution to stable finance rather than the problem and that those within the European Commission that have written a draft directive on alternative investments had the wrong priorities, wrong approach and was written by the wrong people.
Historically, hedge funds have made their money by exploring niche investment opportunities, such as derivatives, where other financial institutions do not trade, and the fear is that excessive regulation could curb the industry’s strength, which is built on such flexibility. In this, there is an argument that hedge funds have behaved responsibly, proven their value with lower losses than elsewhere in the market and currently have a better understanding of risk than almost any other financial sector. This said firms have still been deeply exposed by the recent economic events, which in itself is transforming the market.
Hedge funds are rife with talk of consolidation as the downturn provides an opportunity for larger firms to acquire smaller firms at a bargain rate. This is driven by dramatically shrinking assets making the smaller firms not the lucrative business they once were. This is leading to firms being sold to a larger partner that can keep assets managed at a minimum level.
With this consolidating market hedge funds will inevitably become larger and more influential making the case for regulation being beneficial for both investors and hedge funds as regulation would produce a safer hedge fund market that would attract a larger number of investors for Cheyne Capital,
Whatever the decision, one thing is clear, the hedge fund market is never going to be the same again.
Cheyne Capital Management LLP Launches UCITS Umbrella Fund
Cheyne Capital Management (UK) LLP announces the launch of its Select Convertibles Fund, the first in a series of classes that Cheyne will be launching over the next year. More....
New Head Of International Sales And Distribution appointed at Cheyne Capital
Cheyne Capital announces the appointment of Max Nardulli, responsible for the marketing of Cheyne's expanding range of products as Head of International Sales and Distribution, Nardulli joins from Goldman Sachs where he was a Managing Director. More.....
Cheyne Capital Appoints head of UK Marketing
Cheyne Capital today announces the appointment of Tom Wiggin as Head of UK Marketing. In this newly created position, Wiggin will be responsible for the marketing of Cheyne’s expanding range of products in the UK and will work alongside Max Nardulli who was recently appointed as head of International Sales and Distribution.... read more
Cheyne Capital Profile
Cheyne Capital is one of Europe’s leading alternative asset managers. Cheyne Capital Management (UK) LLP is authorised and regulated by the UK FSA. Cheyne launched its first fund in 2000 and today is diversified across a number of strategies including corporate credit, event-driven, real estate, equity, and equity-linked investing. The Cheyne group currently employs approximately 170 people with its primary offices in London, New York, and Bermuda.
Cheyne Capital has been ranked Europe's 12th largest Hedge Fund in 2009 by The Hedge Fund Journal.
The Hedge Fund Journal annually lists Europe's largest hedge fund managers by assets under management.
Headquarters:
Stornoway House, 13 Cleveland Row, London, SW1A 1HD. United Kingdom
Key Executives:
Mr. Jonathan Harry Lourie - Chief Executive Officer
Mr. Stuart Chapin Fiertz Co - Founder
Mr. Christopher Goekjian - Chief Investment Officer
Mr. Gary John Ibbott - Chief Financial Officer
Mr. Jeff Bronheim - General Counsel
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