Cleaves Securities AS’ Post

How hedge funds would trade Red Sea supply disruptions - https://lnkd.in/dSzg3uyw #cruiseindustry #maritime #maritimenews #maritimeindustry #ship #shipnews #maritimelogistics #cruise #cruiseship

"The best hedge fund strategy of 2023 was a bet on insurance-linked securities (of which catastrophe bonds are the dominant sub-category), which generated over 14%, according to Preqin, a consultancy that provides data on the alternative asset management industry. Preqin’s benchmark return for the industry — across strategies — was 8%. That compares with a 19.7% gain in the Swiss Re Global Cat Bond Performance Index Total Return. Cat bond issuance has been turbo-charged by concern about extreme weather events fueled by climate change, and by decades-high inflation that’s added to the cost of rebuilding after natural disasters." #climaterisk https://lnkd.in/eWRs6JA5

"HEDGE FUNDS" A "hedge fund" is a limited partnership comprising private investors whose capital is pooled and managed by professional fund managers. These managers employ a diverse array of strategies, including leverage and the trading of non-traditional assets, to achieve superior investment returns. Investments in hedge funds are generally considered high-risk and subject to market volatility. A fundamental requirement for participation in a hedge fund is a high minimum investment or substantial net worth. One notable hedge fund from the past was "Long-Term Capital Management (LTCM)". This fund was established in 1994 and was managed by Nobel Prize-winning economists and prominent Wall Street traders. By 1998, LTCM had successfully attracted approximately $3.5 billion in investor capital. The fund's primary strategy involved convergence trades, capitalizing on arbitrage opportunities between securities. LTCM held a significant position in Russian government bonds. When Russia defaulted in 1998, the fund experienced a major collapse, prompting the U.S. government to intervene and arrange a bailout. #Finance #Economics #hedgefunds

Bobby Jain’s new hedge fund, Jain Global LLC, is tapping talent from commodity trading houses and committing a chunk of the money it’s raising for a major push into raw materials — including in the physical market, earmarking 15-20% of its $5 billion. Launching in July, the fund will start with commodity derivatives before moving into physical transactions. This initiative aims to emulate Citadel’s success in building commodity-trading businesses with physical market exposure. Jain Global is assembling a strong team for this push, led by former Macquarie Group veteran David Hochberg. The team includes experts like Paul Smith and Christian Allen from Hartree Partners LP for North American gas, Herb Petry from Sumitomo Corp.'s Pacific Summit Energy, Dominic Magnabosco from Citigroup for North American power, Jason Greenberg from BlueCrest Capital Management for European gas, Anurag Nema from BNP Paribas for metals in Asia, and Amir Ravan, a precious metals specialist from BlueCrest. The fund's strategy reflects a broader trend of investors returning to raw materials, driven by supply disruptions, geopolitical tensions, and a need to hedge against prolonged inflation. The focus will initially be on gas and power markets in North America and Europe, areas ripe with opportunities due to renewable energy growth and Europe's increased LNG imports. Additionally, Sopong Kim, formerly of Hartree and an expert in risk management, will join to handle the complexities of physical commodity trading.

The "Offshore China Fund Awards 2023" list was officially announced at the Four Seasons Hotel in Hong Kong on 21st March 2024. Prudence Multi-Strategy SPC-Credit SP won the first place in the "Best Credit Hedge Fund (3 Years)" category. As a credit strategy fund focusing on Chinese assets, Prudence Multi-Strategy SPC-Credit SP fully leverages its multi-strategy strength to capture structural investment opportunities in the market, pursuing steady progress and seeking absolute returns while adhering to a long-term investment philosophy.   The "Offshore China Fund Award 2023" is a collaborative effort between the Hong Kong Chinese Asset Management Association (HKCAMA) and Bloomberg, aimed to recognize Chinese funds that demonstrates outstanding performance in the offshore market. This esteemed award has been held for nine consecutive years, establishing itself as one of the most prestigious awards in the offshore market. The selection criteria for this award rely on data compiled and provided by Bloomberg, acknowledging Prudence Multi-Strategy SPC-Credit SP's consistent performance in delivering long-term, stable returns for institutional investors and high-net-worth clientele.

Two interesting hedge fund stories caught my eye. First was how hedge funds can operate in some of the fascinating areas of the investment world, such as locating shipwrecks via this chap, the best shipwreck hunter in the world. This ship has a fascinating story - was the Titanic of India when it sank and tells you the sheer amount of bullion transfer that happened in the Indian Ocean over multiple centuries - it dwarfs the Columbian bullion exchange between the New World and Spain. The second story relates to what happens when you don't have a very firm grasp on costs, don't control your staff and have a ruthless approach to risk management. This basic tenet has been responsible for blowing up so many funds that you cannot imagine. A cult of personality at the top means nobody challenges you. Not the Board, not your CFO, not your COO/CRO and I guess the CIO ain't gonna peep. The Head of Trading will be cheering you on. I quote, "Interviews with about two dozen people familiar with Weiss and court documents depict a collapse caused not by a disastrous trade, but rather years of high spending that the firm failed to rein in even as assets fell and performance faltered. George Weiss, 81, and Chief Investment Officer Jordi Visser, 57, ran the $2.3 billion firm with the glitz of larger multistrategy rivals, but without the discipline, the ruthlessness to cut losing traders or the ability to push more costs onto investors." Lessons to be learnt.

"Hedge funds are one of the building blocks of a well-diversified #investment portfolio to reduce #market volatility. This hopefully indicates that #hedge funds in South Africa are increasingly being accepted as an important investment tool in mitigating market #volatility," says Hayden Reinders, convenor of the ASISA Hedge Funds Standing Committee, and Head of Business Development for the Prescient Fund Services. #southafrica #markets #risk #riskmanagement #riskmitigation #marketvolatility #hedgefunds

Catastrophe bond funds were a bright spot in the alternative UCITS investment fund space in 2023, as cat bond funds expanded strongly at a time when the wider UCITS segment experienced approximately $38 billion in outflows, according to Kepler Absolute Hedge.

The trend continues as: "Freddie Sizer, who led European physical gas trading at Freepoint Commodities, has left the commodities trading company to set up his own hedge fund firm focused on gas and power investments.... Last month, Tristan Almada left Singapore-headquartered commodity trading firm Trafigura, where he was a Derivatives Trader, to launch his own commodities-focused hedge fund firm, Almada Capital, in Geneva. Last year, David MacDonald left Millennium, where he was a Senior Portfolio Manager, to start Aegeri Capital, a commodities-focused investment management firm." #commoditytrading #commoditymarkets #gastrading

The hedge fund strategy linked to insurance-linked securities, particularly catastrophe bonds (cat bonds), emerged as the top performer in 2023, drawing significant attention from mainstream investors. Firms like Fermat Capital Management, LLC, and Tenax Capital recorded their highest returns, leveraging cat bonds to hedge against losses from natural disasters. However, the risk assessment models for these bonds are becoming increasingly complex due to the growing property concentration in disaster-prone areas and the rise of secondary perils such as severe thunderstorms, which are not consistently accounted for in current models. The challenge is compounded by the changing nature of climate-related risks, with secondary perils causing more frequent but less predictable losses compared to traditional, large-scale natural disasters. This shift has led to a reevaluation of investment strategies, with some investors moving away from bonds exposed to these secondary risks. Despite the complexities, the cat bond market reached an all-time high in 2023, with $16 billion in issuance, highlighting its attractiveness amid rising concerns about climate change and natural disasters. This evolving landscape indicates a crucial period for the cat bond market, as investors navigate the delicate balance between seeking high returns and managing the nuanced risks associated with climate change and secondary perils. https://lnkd.in/g532TME7