This content is from: Portfolio

The Morning Brief: Rousselet Says Stick to Performance Fees

A prominent European investor is calling for a major revamping of hedge fund fees. Nicolas Rousselet, head of hedge funds at Geneva-based Unigestion, is urging hedge funds to do away with management fees and charge higher performance fees, according to The Wall Street Journal. Specifically, he says, he is more comfortable with no management fee and a 25 percent share of profits, according to the report. “If [a hedge fund manager] truly believes in his ability to perform, he should take my deal,” Rousselet reportedly said.

This is not the first time Rousselet has criticized the hedge fund industry on this issue. In September he told Bloomberg he believes 90 percent of hedge fund managers were overpaid, citing, in large part the large management fees. “The philosophy of the hedge-fund industry, as it should be, is to remunerate true talent,” Rousselet told Bloomberg at the time. “Fund managers should be remunerated when they perform. They should not be remunerated for doing nothing.”

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Hong Kong-based activist hedge fund Oasis Management has taken positions in several Japanese companies. According to the Financial Times, Oasis owns 1 percent of Kyocera, a maker of diversified products, and plans to meet with management. The firm also has its eye on Canon, believing the camera and printer company should restructure, according to the report. Oasis is credited with coaxing video game maker Nintendo to develop games for smart phones.

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Blue Mountain indicated in a regulatory filing that it owned nearly 4.8 million shares of Gencorp, or 7.6 percent of the total outstanding as of December 31. In a separate filing the Blue Mountain Credit Alternatives Master Fund disclosed it owns nearly 3.4 million shares of GenCorp, or 5.4 percent of the total outstanding. This is part of the 7.56 percent stake reported by the company. These are not new positions. Rather, they are the same investments the New York hedge fund disclosed on convertible securities in its December 31 13F filing. The Securities and Exchange Commission requires holders of convertible securities to disclose positions that, if converted, would amount to at least 5 percent of a company’s common shares. The actual conversion does not actually have to take place and Blue Mountain has not done so at this point.

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The Lyxor Hedge Fund Index is up 3.5 percent year-to-date through March 24. Long-short equity led the way in the most recent week, according to a weekly research report from the managed account platform of Paris-based alternative investment firm Lyxor Asset Management. “Asian managers…have done particularly well,” it notes. “Their successful stock-picking captured the buoyant market environment on the long book without losing much on the short book. Over the recent months, we have been advocating the benefits of Asian L/S managers for diversification purposes and continue to do so.”

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