The Morning Brief: Hedge Fund Launches Rise, But So Do Liquidations

So much for four year of underperformance, fears of the fiscal cliff, debt problems in the eurozone and growing political problems throughout the world. The number of hedge fund launches rose from 245 in the second quarter to 275 in the third quarter, according to industry tracker HFR. Altogether, 1,094 new funds got going in the most recent 12-month period. This is a tad fewer than the 1,113 total new funds started in 2011. At the same time the number of liquidations has risen slightly, to 211 in the third quarter from 192 the prior three-month period, bringing the total liquidations in the trailing 12 months to 825. This is more than the 775 funds that shut down in all of 2011.

Insurance giant AIG, a favorite holding of hedge funds, surged 5.7 percent on Tuesday, to $35.26, on news that the federal government sold its remaining shares in the company, completing the largest bailout from the 2008 financial crisis.

TPG-Axon Management turned up the heat on SandRidge Energy when it issued a letter to shareholders in an advertisement in The Oklahoman newspaper and on The Oklahoman’s website. The hedge fund also posted the ad to a website it created, www.shareholdersforsandridge.com . It called on shareholders to submit their contact information so it could be passed on to its proxy solicitor, MacKenzie Partners Inc. Meanwhile, in the past two days two law firms filed separate class action lawsuits against Sandridge, alleging that the company misrepresented the proportions of low-margin natural gas and high-margin oil contained in its Mississippian formation and that the company failed to adequately disclose mechanical issues with a rig that negatively impacted its operations.

Alistair Lumsden, chief investment officer of the $2 billion asset-backed securities unit at CQS, has left the London-based hedge fund firm. Simon Finch, the firm’s chief investment officer for credit, will now be responsible for the ABS unit.

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