The largest Madoff

A somewhat belated post, but the largest entity that had exposure to the know very famous financier Bernard Madoff was indeed one of Scandinavian Banks, Nordea, that invested through Fairfield Sentry (that charged investors a management and a performance fee for funnelling cash to Mr. Madoff). The total loss seems to be around 50-60 million USD. In total, this seems to end up the Swedish Madoff exposure at somewhere less than a 100 million USD. Large or not large, it is not good, not to have done a proper due diligence on the underlying funds, or even worse, claiming to have an investment mandate while allocating to another fond of funds and purely acting as a marketing agent.

One More Madoff

The smaller Swedish insurance company, "Svenska Handelsforsakringar" also reported a smaller loss to Madoff in the range of less than a million USD.

Whitebeam's Madoff Exposure

Whitebeam also got caught with the currently jailed broker Madoff, ultimately suffering a total loss in the same fund, Defender Ltd. Seems like the Defender guys had a pretty strong marketing presence in Sweden as they also managed to get money from the former Icelandic bank Kaupthing in two fund of funds (Katla and Krafla). Total loss there is currently unknown.

Swedish Madoff Exposures

Seems like things are moving in the Swedish fund-of-funds sector where several funds have been caught in the Madoff debacle. Although disclosing rather late, it seems as if Indecaps "Guide 2" fund had a 7% allocation to the fraudulent manager. In total the exposure was rather modest with 20-30 mn USD in exposure. The exposure is claimed to have been through a fund called "Defender Limited", question is who it defended.

The Final Margin Call?

It seems as if the SocGen driven liquidation on January 18, managed to take out the remains of what once was Kullberg & Spiik (the Explora and Edge funds was closed down by the Swedish FSA one and half year ago). It is reported that a couple of the investment clubs managed by one the managers suffered losses on that day and had to liquidate positions at a significant loss. DI reports a 50% loss. It is also reported that Mr. Spiik has gone underground and is hard to reach. The webpage seems to be mostly empty. One investor is also reported to have filed a complaint against the manager.

Risk-Reward Closed for new subscriptions

The Swedish rocket scientists at Systematisk Fonder have decided to close the fund Risk Reward for new subscriptions since the fund reached the pre-defined asset under management target of more than 50 M SEK. The fund recoreded a 10%+ gain in January. They are also launching a new fund, called Covered Call, that trades Nordic stocks and options.

Consepio - Turning around!

Consepio, (a.ka. Pecunia) delivered a strong January with an estimated return of 14.6% catching a large part of chaotic stock market development in January. After two struggling years, the fund is still in a drawdown though.

Consepio - Turning around?

Looks as if Consepio managed to pick up the pennies that everyone was throwing to the bears in November. With the prevailing "difficult" markets for Long dominated hedge funds, Consepio managed to pick up some 5% in November. The fund is down 10% ytd after betting on market corrections for some time, lets see how it handles this one! It is as hard being a hedge fund managers as being a perma bear... not an easy business.

Healthinvest

After a dashing run in the three first months for the recently launched Swedish Long/Short equity fund, Health Invest, the fund has encountered difficult market circumstances and is currently down 30.8% since inception after getting battered up in the equity markets. The fund re-opened in August 2007 after seeing assets falling below 1200 Mio Sek and will remain upon until they reach 1400 Mio Sek. A fair guess that it would take some time to do so, given the recent track-record. Perhaps running an asset management business outside their former employers was more difficult than previously anticipated.

Pecunia goes Consepio

Pecunia throws in the towel and decides to change the name to Consepio. "The name Pecunia has at several occasions been mixed up with companies with the same name. To avoid confusion the name is changed to Consepio. " Assuming that the name change should again put the focus of the fund manager back to earning money. The fund is down some 8% ytd, let's see if the name change can take fund to break-even levels for the next 12-months.

Brummer belives that the Stock Market is still cheap

The founder of Brummer and Partners, Patrik Brummer states in an interview with DI.se that he believes that the European stock markets still are fundamentally cheap. Among other things he also states the the market has become more competitive and is harder to generate outstanding returns today as there is higher competition for the same opportunities. Risk taken has also been lower, partially as an effect of lower opportunities and larger size of the funds.

Kullberg & Spiik vs FI - the battle goes on

The juridical fight between Kullberg and Spiik moves on, DI and HedgeNordic reports that the have managed to assemble some 500 retail investors in their continued fight against the Swedish Financial Regulators (Finansinspektionen). The first round in the court is to take place on Monday, it will sure be an interesting fight where among other a former senior employee of the regulator have joined the K&S side.

Kullberg & Spiik vs FI

The regulatory actions against the Swedish equity hedge fund Kullberg & Spiik receives heavy criticism from the former lawyer of the Swedish Financial Authorities. This is most likely an event that will end up in the courtroom. If K&S is acquitted, then there may be a very odd situation, where the regulators have taken away a profitable business from the partners of the firm. Lets see where this ends up.

Currency Trading and Hedge Funds

DI.se, one of my favourite sources for news, reports that only three Swedish hedge funds takes currency positions. This is very likely to be a clear underestimation of the true number of hedge funds that trade in the currency market. One additional fund would for instance be GMM Alpha that is a specialist currency trader (although with low assets). In the Swedish Hedge Fund league, Pecuinia is on the bottom with a double digit loss while Radar is on top with some 30%+ year-to-date (end of October 2006).

Bergsgård Petersson Goes Global

HedgeNordic reports that Bergsgård Petersson is to launch a Global Macro fund investing in currencies, fixed income and commodities. The fund will not be managed by the small-cap due, but by Pekka Kääntä, a former writer for the Swedish newspaper Affärsvärlden. Perhaps in line with the experience of the founds of Bergsgård and Petersson with a background in the stock-picking press. Let us see if Mr Kääntä is able to transform paper trading into real returns. It is also reported that Bergsgård Petersson is to expand its fund offering with additional new launches in the comming quarters.

Brummer closing Racepoint

AFV reports that Brummer and Partners have to close yet another fund, the American based hedge fund, RacePoint, which did not succeed in either attracting capital or generating returns. For hedge funds, this is probably the single most common reasons for why a fund closes, it fails to attract capital and the fund sponsors runs out of patience.

The Swedish Central Bank on Hedge Funds

Lars Nyberg, of the Riksbank (Central Bank of Sweden) recently gave a speech on hedge funds for the CFA society of Sweden. The layout of the speech is relatively traditionally, beginning with the history of hedge funds (a la Jones), but later continuous into the LTCM and Amaranth stories where he compares the market impact and differences between them. Correctly, he makes the comment, that banks, in the normal case is much more leveraged than hedge funds. Banks falls under his mandate, it is much more important to focus on that kind of systematic risk, rather than focusing on the individual risk certain hedge funds may have. In aggregate, at least the Swedish ones are much much smaller than the exposure that the banks carry. The conclusion is actually excellent, where he, contrary from many other regulators, wants to improve the monitoring and regulations for banks rather than for hedge funds. Neither are hedge funds a threat to the economy as a whole. This spells well for the Swedish markets.

Sardus

AFV reports that Prior & Nilsson have bought a fair chunk out of the Swedish food producer Sardus. With the entry (?) of P&N, three different hedge funds now control more than 17% of the Sardus' capital. In addition to P&N, Case Asset Management and Tala Investment LP own capitals. Lets see if the stock pickers are right about Sardus or if it will continue to fall. YTD Sardus is down some twenty percent.

Pecunia - Pia Rudengren Joins

DI.se reports that Pia Rudengren has joined the L/S Equity Fund Pecunia. She will be joining a fund that has encountered some difficulties, with a double digit negative result (-10.4% as of end October). The founder of the Fund, Peter Edwall, will according to the same article, resign in the beginning of February next year, leaving the fund in the hands of Ragnild Wiborg. Given the management shift, the board has also decided to open up the fund for new investors, let us see if there is capacity left in the fund or if this is a move to enhance cashflows for the management.

Trouble at Brummer?

Brummer & Partners, the Swedish hedge fund giant, seems to have run into a spell of weak performance. After the closure of the Fixed Income Fund Latitude, the internal FOF Helios have delivered a negative result of 0.9% YTD. The shining stars this year is Zenith, Manticore and Avenir with results above the risk free rate. The table is from AFV.se and Brummer & Partners.

Will write a text on Swedish hedge fund failures someday, and will make sure to include Latitude as an example. But is good to see that the failure of Latitude did not totally bring down the performance of the Helios fund, which invest in other Brummer funds.

Sandell - an ex Swedish fund manager

Reuters report that SEC are preparing to bring charges against Sandell Asset Management, run by Thomas Sandell (with a Swedish background). Sandell manages around 7 billion USD. Charges are related to naked short selling...

New L/S Equity

According to DI.se a new L/S startup fund has been set up by an ex-Carnegie employee. Starting capital is low, around 2 mio USD (20 SEK). Will probably enjoy some great returns in the beginning due to the small size, but the small cap focus is likely to be a limiting factor in the long run. Especially given the difficulties of implementing large short positions in small illiquid companies.

The name of the fund is HealthInvest Global Long/Short Fund.

Didner & Gerge

DI.se reports that the former star performing fund Didner & Gerge have run into a spell of weak performance, ranking in the bottom among peers. On the question if it harder to have good performance when the fund grows larger they say: "There might be a such component...".

Of course there is a size/return component...

Weavering / FI

Apparently Weavering Capital, the 'hedge fund' that bought Stockholm Fondkommission, has received a warning from the Swedish Financial Authorities to increase their capital base. This has most likely nothing to do with fund itself, but is related to the brokerage.

For more info see: http://www.fi.se/upload/20_Publicerat/40_FIsanktioner/2006/weavering.pdf