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The Morning Brief: Keeping an Eye on the Hedge Fund Scorekeepers

Talk about a shocker. Jes Staley, once said to be on a short list to replace JPMorgan Chase CEO Jamie Dimon, has left the banking giant to join BlueMountain Capital Management as a Managing Partner.

Staley, who served as CEO of JPMorgan's investment banking division, will focus on cultivating relationships and developing new strategies at the firm, which has $12 billion in assets and is focused on the global credit and equity derivatives markets. BlueMountain is led by CEO Andrew Feldstein and CIO Stephen Siderow.

The two firms are no strangers. Prior to co-founding BlueMountain in 2003, Feldstein spent more than a decade at JPMorgan, and Blue Mountain was on the other side of JPMorgan's infamous, losing "whale" derivative hedge in 2012 and reportedly helped JPMorgan unwind some of its losing synthetic credit derivatives positions. Meanwhile, Feldstein said BlueMountain's flagship hedge fund was up more than 10 percent in 2012.


One of the intriguing rituals of quarter-end and year-end is seeing the hedge fund performance and asset flow numbers reported by each of the scorekeepers.

For example, BarclayHedge and TrimTabs Investment Research jointly said the hedge fund industry scooped up a net $4.7 billion in November after experiencing a new outflow of $10.3 billion in October. They base their numbers on data from 2,935 funds. However, they do not provide any December data yet.

HFR said its Weighted Composite Index gained 1.3 percent in December, bring the full year gain to 6.2 percent. It also said that at year-end, total industry assets stood at $2.2 trillion. However, while the total number of single-manager hedge funds surged to a record level of 7,867 funds at the end of the third quarter, the total number of Funds of Hedge Funds (FOF) fell to fewer than 1,900, the fewest number since the first quarter of 2005.

Another firm, eVestment, said hedge funds generated, on average, a 7.3 percent return in 2012. Many strategies returned close to 10 percent, it added, led by credit, volatility and emerging markets. It also noted that credit fund assets under management exceeded equity fund assets for the first time on record. In addition, the firm counted $40 billion of investor flows through November, nearly double last year's full year total.


Sears' announcement that Eddie Lampert is taking over as CEO did not play well on Wall Street on Tuesday. Shares of the embattled retailer, whose same-store sales have declined just about every quarter since the hedge fund billionaire took over the reeling discounter, plunged 6.4 percent, to $40.16. The investment bank Credit Suisse Securities lamented in a research note to clients that Lou D'Ambrosio is retiring as CEO to attend to family health matters. "From a business perspective, we believe that Lou had added value, particularly in working with Ron Boire in developing the Sears Shop Your Way program and his departure is a loss to the corporation," it wrote in the report. This said, the report stressed there is only one person who makes the big decisions from the divisions to dispose of, the capital expenditures budget, stores to sell. "And that person is Mr. Lampert," it added. "Giving him an additional title does not change that reality, and in our opinion, does not change the direction of the company."


London-based MAN Group has made several management changes at its GLG unit. According to a press release issued by the firm, Jamil Baz and Sudi Mariappa will lead the overall macro and fixed income platform; Kumaran Damodaran has been hired from PIMCO as a portfolio manager focusing on emerging markets; Brian Pinto, formerly of the World Bank, joins as senior macro-economist specializing in emerging markets; and Richard Bateson is now senior quantitative analyst.

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