All GLG News Analyses Filed Under: Corporate Treasury & Finance

Nitish GroverPrincipal, OwnerNitish Grover and Associates

Hedge Fund Regulation - A Clarion Call

December 13, 2006

Analysis of:SEC To Take Fresh Look At Hedge Fund Rules | www.ft.com

The  amount  of  public  pension  fund  money  invested  in  hedge  funds  is  what  is  giving  regulators  a  reason  to  regulate  hedge  funds.

The  thinking  appears  to  be  to  up  the  limit  which  investors  must  invest  in  order  to  use  the  hedge  fund  vehicle  or  else  have  some  sort  of  a  legislated  anti  fraud  provision. Either  of  the  two  would  give  the  SEC  more  teeth  into  regulation.

This  analysis  takes  a  look  at  the  proposals  doing  the  rounds  and  why  the  area  should  be  left  to  regulate  itself.

Nitish GroverPrincipal, OwnerNitish Grover and Associates

Hedge Funds - Systemic Risk Containment and a Look at Some Views of the US Fed

December 11, 2006

Analysis of:FRB Testimony - The Role of Hedge Funds in The Capital Market | www.federalreserve.gov

The  importance  of  hedge  funds  in  the  economy  is  well  known. Hedge  funds  are  seen  as  a  vital  part  of  the functioning of  the  financial  systems. As  per  the  referred  testimony  it  was  the  activities  and  products  of  hedge  funds  which  have  reduced  volatility  in  currency  and  securities  markets.

At  the  same  time  the  level  of  leveraging  - direct  and  indirect - of  these  funds  needs  to  be  carefully  watched  and monitored. This  monitoring  is  presently  being  done  in  a  indirect  way  by looking  at  the  mirroring  of  hedge  fund  transactions  through  their  counterparty  transactions.

In  this  analysis  I  look  at  the   changing  situation  and  why  this  monitoring  will  ultimately  shift  to  direct  monitoring  - possibly  first  through  a self  regulatory  mechanism  and  subsequently  directly  through  a  regulator.

Harnath SithamrajuConsultantHarnath Sithamraju

Algorithmic path as an investment trading strategy to optimise performance.

December 11, 2006

Analysis of:UBS, Goldman Threaten NYSE, Nasdaq With Rival Stock Markets | www.bloomberg.com

1.Lower transaction costs, liquidity and increasing need for predictive investment strategy to drive use of algorithmic trading .

2.Keep it secret, keep it simple - the mantra of the large institutional investors.

Nitish GroverPrincipal, OwnerNitish Grover and Associates

Hedge Funds - The Cautionary Signals

December 8, 2006

Analysis of:Culturally, Hedge Funds Go Public | www.nytimes.com

The  referred  article  is  nothing  serious  and  yet  to  my  view  raises  serious  concerns  about  the  hedge  fund  industry.

When  books like  Hedge  Funds  for  Dummies  start  getting  published  and  hedge  fund  costumes  are  available  it  reminds  me  of  stock  market  bursts.

The  notion  that  there  is  money  to  be  made  for  nothing  in  any  area  attracts  the  wrong  kind  of  managers - risk  taking  without  risk  evaluation.

The  collapse  of  Amaranth  is  a  starting  danger  beacon  in  this  direction.

George PughPresidentGeorge Pugh & Co

LBOs Suits and Elections

December 8, 2006

Analysis of:Investors Sue 13 Private Equity Firms | www.cfo.com

"No matter whether the Constitution follows the flag or not, the Supreme Court follows the election returns."
-Peter Finley Dunne

LBO’s and their creators have been the object of perhaps envious scrutiny as long as these deals have been done. Similar complaints have been at new deals where private equity funds buy control, then upstream dividends, and resell the target at a profit (hopefully). This particular suit involves the former rather than the latter, though the attack rhetoric is generally much the same.

On November 13, 2006, an investor group filed a class-action lawsuit against 13 private equity firms for bid-rigging which deprived the investors of the target company the full economic value for their holding. Justice has launched an informal investigation into alleged collusion covering LBOs. Bloomberg provides a more complete story at: http://www.bloomberg.com/apps/news?pid=newsarchive&sid=aKTQ50WmoW6w

What actually happened was that the suit, was specifically referenced to the HCA LBO.

Further the 20-page complaint doesn't provide any details on how the firms allegedly fixed prices.

The following describes the issues raised and whether they are particularly valid.

Are you a trader? Start reorienting your Career

December 8, 2006

Analysis by: GLG Expert Contributor

Analysis of:UBS, Goldman Threaten NYSE, Nasdaq With Rival Stock Markets | www.bloomberg.com

Future of traders
Stock Exchange evolution
Event Stream Processing Technology
Scientists in the Market

Different reports, different numbers…but the bottom line doesn’t change, private investment is on the rise

December 7, 2006

Analysis by: GLG Expert Contributor

Analysis of:Over There: Private-Equity Sets Sail - Private-equity investment has doubled domestically, but increasingly, U.S. firms are bringing their deals to Europe. | www.cfo.com

Depending on the article you read, private investment is either slightly up from a year ago or significantly on the rise. Depending on the statistics quoted, investments into the private sector are increasing over last quarter and year. Most articles I’ve come across are selective in their analysis, either referring only to the IPO or focused on a few market sectors. This article, however, appears to approach their study on a broader range of investment types- M&A, IPO, overseas, equity, and VC investments. While this article points towards a wide range of investment types, it neglects domestic concentration and does not discuss industry focus.

AFTER A GOOD LANDING, VUELING’S TAKE OFF ON THE STOCK MARKET WAS STILL BETTER

December 7, 2006

Analysis by: GLG Expert Contributor

Analysis of:Spain regulator approves Vueling IPO | today.reuters.com

The successful launching of the VUELING’s IPO on the Spanish stock market –the second airline, after Iberia Airlines, publicly trading its shares- deserved a favorable attention from foreign and domestic institutional investors.

The low cost carrier (LCC) success has closely been scrutinized by other Spanish LCCs which, during the coming year, may follow the same path, provided the stock market goes on enjoying favorable winds.   

One bad apple does not spoil the applecart

December 6, 2006

Analysis by: GLG Expert Contributor

Analysis of:Investors Sue 13 Private Equity Firms | www.cfo.com

As with Enron and Worldcom, there will be companies trying to skirt ethical standards to make a buck. I’m not saying that this particular case has merit, but it won’t surprise me if something along these lines doesn’t get settled in the near future. But before we rush to judgment or run for the hills because another investment vehicle has turned sour, let’s look at the situation.

Nitish GroverPrincipal, OwnerNitish Grover and Associates

Hedge Funds - Financial Disintermediation - Citadel - A Look into Hedge Fund Operating Costs

December 4, 2006

Analysis of:Citadel Trading Costs Hit $5.5billion | www.ft.com

Hedge  Funds  want  public  money. Financial  disintermediation is  changing  tack  and  the  intermediary  is  changing  from  banks  and  mutual  funds  to  hedge  funds.

Citadel  has  filed  a  prospectus  to  raise  $2bn  in  debt  for  its  operations. As  a  result  it  has  also  given  a  peek  to  its  operating  costs  and  leverage  position.

What  is  relevant  in  the present  scenario  is:
1. Hedge  Funds  want  public  money
2. They  are  willing  to  disclose  hitherto  confidential  information
3. Hedge  fund  regulation  can  be  expected  to  become  a  reality  soon

Whether  hedge  funds  continue  to  earn  the  same  high  level  of  risk  is  anybody's  guess,  but  the  cloak  of  invisibility  is  surely  disappearing.

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