Frost forms on 130/30 growth

April 28, 2006

From Pensions & Investments:
Demand for 130/30 equity strategies — one of the hottest institutional products in history — declined sharply in the six-month period ended March 31, with most of asset gains picked up by fundamental managers.

JPMorgan Asset Management, New York, the largest fundamental 130/30 manager, and the third largest manager of so-called active extension strategies overall, accounted for 45% of the $12 billion in growth during that time period. The firm's active extension assets grew 161% to $8.6 billion, up from $3.3 billion six months earlier.

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China Long/Shorts Still Learning to Short

April 26, 2006

From Black Enterprise:
Emerging markets investors are a demanding set, even if their hedge fund manager is doing what he or she is paid to do. If the index is up 50% and the manager achieved 30%, they grumble that their fund has underperformed the index, and begin to fantasize about what they might have achieved with a leveraged manager. When the index then tanks 30% and their manager is down 10%, they will wonder out loud what happened to the absolute returns they were supposed to be getting.

Clearly, leveraged managers can give investors enhanced upside; but they can tank spectacularly on the downside if there is a sharp correction, especially if the market suddenly turns illiquid and spreads widen unexpectedly, making an exit complex. This is common during corrections in emerging markets, which thus tend to see sharper drawdowns than more developed markets. This is true even for markets as large and apparently liquid as China, whose strong run- up from 2006 until October 2007 had attracted large inflows of both domestic and foreign investment.

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Energy Hedge Fund Goes Long (And Short)

April 22, 2006

From FINalternatives:
Electranet Capital, a San Francisco commodity shop, has launched its maiden hedge fund, a long/short public equity portfolio.

Electranet Fund I will seek opportunities arising from developments in energy efficiency, storage and management, as well as electric infrastructure, according to John Morris, chief investment officer.

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Long on shortcomings

April 20, 2006

From MarketWatch:
Mutual fund companies come up with "new ideas" all the time, but most don't gain any traction.

So when Fidelity Investments joined the latest trend earlier this month and opened a "130/30" fund, it signaled that the newest fad in funds had gone big time.

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New Index Takes Different Spin On 130/30 Portfolios

March 31, 2006

From IndexUniverse.com:
Dow Jones has come out with a new index that puts its own twist on the popular 130/30 investing strategy used by hedge funds.

The Dow Jones U.S. RBP Indexes bases its strategy for picking the stocks it should short and take long positions on based on a two-part methodology developed by Transparent Value.

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Texada Pushes Long/Short Equity Fund

March 26, 2006

From FINalternatives:
Jackson, Wyo.-based Texada Capital is ramping up marketing for its 10-month old global equity long/short hedge fund.

The $11 million Nashuk Partners fund launched last June and is down 1.2% year-to-date, according to Christopher Dean, member.

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Maybe a Long/Short Approach Is the Answer...

March 17, 2006

From Seeking Alpha:
A day does not go by that I get one of two questions over email regarding the paper I published:

1. Have you considered going all-in to the positions on a buy signal?
2. Have you considered a long-short version of the model?

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Threadneedle launches Asian Crescendo hedge fund

March 17, 2006

From Citywire:
Threadneedle Investments has added an Asian hedge fund to is nine-strong Crescendo range.

The Threadneedle Asia Crescendo fund will utilise the group’s power in Asian equities with its knowledge of running equity long-short portfolios.

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Long and short gold equity ideas

March 10, 2006

From Financial Times:
With gold prices still well within reach of the quadruple-digit mark at around US$960 per ounce, and both small and large cap gold stocks doing well in recent months, investors are still searching for the best way to play bullion.

Wellington West has run a quantitative analysis screen to identify the best and worst-performing gold stocks, and has produced a long/short portfolio of potential candidates. The firm’s model has six categories: valuation, profitability/balance sheet, growth, momentum, beta and analyst revisions.

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Scipion Preps Pan Africa Long/Short Fund

March 7, 2006

From FINalternatives:
London- and Geneva-based Scipion Capital next month will launch the Scipion Alpha Seeker Fund, a pan-Africa long/short equity offering.

The fund, which will exclude South Africa and Egypt, will employ a top-down approach to find companies in the mobile telecommunications, brewing and cement sectors, as well as, indirectly, banks benefiting from the increased cash flow of the first three sectors mentioned, according to fund documents. Within the above-mentioned sectors, the fund favors large-cap companies offering daily liquidity.

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Fidelity introduces FAST range to UK market

March 3, 2006

From Investment Week:
Fidelity introduces FAST range to UK marketFidelity International has unveiled a pair of sophisticated long/short funds that aim to provide additional alpha for investors.

FAST Europe and FAST Japan add synthetic shorts, pair trades and covered call options to a long-only portfolio.

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130/30 is popular new option

March 1, 2006

From Financial Post:
Mention a 130/30 fund -- as we did this week with the news JP Morgan had signed up its first pension fund, which agreed to ante up US$100-million -- and what follows is the news that at least five other providers are also offering the same product. The 130/30 strategies -- in effect where the manager is 130% long a basket of stocks and 30% short a different basket -- "is where the alternative manager can pitch the core [mandate] into the core because it uses the benchmark and it's where managers bring all their portfolio construction skills," said Chris Guthrie, co-founder of Hillsdale Investment Management, which has had a Canadian 130/30 fund for about five years.

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Torrey Pines Launches Asia Long/Short Equity Fund

February 14, 2006

From FINalternatives:
San Diego-based Torrey Pines Capital Management, the $510 million global long/short equity manager, last month opened up its new Torrey Pines Asia Fund to investors after three months of trading with internal capital.

The $10 million Asia-only long/short fund returned 4.71% net for the fourth quarter and was up an estimated 1.3% net last month.

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Hulse fund comes up short

February 12, 2006

From Citywire:
James Hulse believes his new climate change fund’s long-short investment strategy will give it the edge in the sector.

PCE Investors has launched the Cumulus Climate Fund with Hulse at its helm in a bid to profit from the financial impact of climate change.

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Separate the Wheat from the Chaff in Long-Short Land

January 24, 2006

From Yahoo! Finance:
The past year was nothing if not volatile. The S&P 500 Index gained 5.5% last year, but thanks to the subprime mortgage debacle and the crippling credit crisis, its annual standard deviation of returns was near 10%, making 2007 bumpier than any of the calendar years since 2003. Given the ups and downs, it's not too surprising that funds offering protection from the fits and starts have attracted more attention. In particular, long-short funds, or funds that can buy stocks or bet against them by selling them short, have intrigued investors. Many of them employ strategies formerly used only by hedge funds and aim to provide a smoother ride than the broad market.

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State Street Global Advisors Launches 130/30 Mutual Fund

January 24, 2006

From Yahoo! Finance:
State Street Global Advisors (SSgAa), the investment management arm of State Street Corporation (NYSE: STT - News) and the largest institutional fund manager in the world¹, today announced the launch of the SSgA Core Edge Equity Fund, a long-short (130/30) mutual fund that seeks to achieve long-term capital appreciation over the course of an economic cycle.

The SSgA Core Edge Equity Fund will invest its assets, including proceeds received from short sales of securities, primarily in large and medium-capitalization securities; the underlying valuation or business fundamentals of which indicates prospects for growth. The equities that the fund owns should equal as much as 130 percent of the fund’s net asset value at any given time. The fund plans to short sell the securities of companies with apparent deteriorating business fundamentals and/or valuations. The replacement cost of all securities sold short should equal approximately 30 percent of the fund’s net asset value at any time.

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Long/Short Has Best Year In Four, Hennessee Says

January 10, 2006

From FINalternatives:
Hedge funds broadly outperformed the broader markets in 2007, according to year-end figures from the Hennessee Group.

Overall, the average hedge fund added 11.64% last year, with the Standard & Poor’s 500 rising 4.9%. The Hennessee Index outpaced the S&P500 by the widest margin in five years.

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New index to measure long, short positions in US equities markets launched - S&P

January 9, 2006

From Forbes:
Standard & Poor's said it has launched a new index, S&P 500 Inverse Index, to measure the performance of long and short positions in the US equities market.

The ratings agency said the index will give investors the inverse performance of the S&P 500, representing a short position in the stock market barometer.

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Long-short funds

December 27, 2006

From FinancialNews-US.com:
A handful of “long-short” funds, designed to hold up well in a down market, are in the red this year, even as the Dow Jones Industrial Average is up 8.7% and Standard & Poor's 500 stock index is up 5.6%.

The worst performer, Forward Long/Short Credit Analysis fund - which invests in primarily low-quality municipal and corporate bonds - is down 17% year-to-date, research firm Morningstar said.

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Last Atlantis Launches 130/30 Strategy

December 24, 2006

From FINalternatives:
Alternative investment firm Last Atlantis Capital Management has launched a 130/30 strategy that aims to yield consistent, low volatility returns over various market conditions.

Assets allocated to long positions within the new vehicle, LACM Long/Short Equity, are equally distributed among the baskets and stocks in each basket. Short positions represent 30% of the portfolio’s overall value with funds from the short sales equally allocated to long positions to maintain diversification.

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Volatile markets give quants a rough ride

December 17, 2006

From FinancialNews-US.com:
Long-only quantitative funds, which use computer models to make investment decisions rather than relying on human judgment, seem to have recovered from the setbacks encountered in August. However, consultants and fund managers warn of a rougher ride ahead in markets that are more volatile and less rational.

One equity fund manager who employs a fundamental process, but with a quant screen, said: “Quantitative processes are okay in markets that steadily rise or steadily fall, but choppy conditions make it tough.”

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Poll finds pension funds sceptical towards 130/30 strategies

December 17, 2006

From AsianInvestor.net:
A recent polling of Hong Kong-based institutional investors by Watson Wyatt revealed interest in non-traditional equity strategies, but a rejection of 130/30 and other so-called active extension strategies.

Watson Wyatt’s consultants each selected an equity strategy to ‘pitch’ clients, who then voted their preferences. Long/short (18% of respondents) and long-term long-only (also 18%) strategies proved popular for alternatives, although traditional passive (23%) and traditional active (23%) maintained their popularity. Support for beta prime strategies (ie using fundamental or wealth-weighted indices) was lukewarm, selected by 13% of respondents.

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Race to support 130/30 funds begins

December 11, 2006

From FinancialNews-US.com:
The arrival of 130/30 funds has caused a rush of activity among custodians, investment banks and fund administrators looking to provide back office and administration support for these new investment strategies.

Fund managers in Europe and the US have started to embrace 130/30 funds, which allow them to short-sell up to 30% of their portfolios, and use the proceeds to buy an extra 30% long, while maintaining a full market exposure. However, for many long-only fund managers, the ability to go short to help generate better returns is raising questions over their front and back office capabilities, and piling the pressure on custodians and administrators to respond.

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Equity managers report biggest losses in five years

December 10, 2006

From MarketWatch:
Equity hedge fund managers reported their biggest losses in almost five years last month as stock markets swooned, industry tracker Hennessee Group LLC said on Monday.

The Hennessee Hedge Fund Index fell 1.58% in November, leaving it up 11.94% so far this year. Long/short equity managers tracked by the firm lost 1.56% on average. The Standard & Poor's 500 index dropped more than 4% last month, leaving it up 4.45% in 2007.

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Henderson launches long/short property fund

November 29, 2006

From Investment Week:
Hendersons’ Patrick Sumner will look to Eastern and Central European markets to generate most alpha for his Horizon Pan European Property Equities Alpha Plus fund.

The highly concentrated best ideas portfolio which comes to the market on 3 December, will seek capital growth by investing in property equities throughout Europe.

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Funds get traditional with long/short equity

November 26, 2006

From Pensions & Investments:
Pension funds, endowments and foundations are rethinking how they employ long/short equity strategies within their actively managed equity portfolios.

The mind shift is occurring as a growing number of fund executives are making their active equity portfolios more opportunistic, relaxing money manager constraints and allowing them to generate alpha where they can.

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S&P launches 130/30 index

November 23, 2006

From Structured Products:
Standard and Poor’s has launched of the S&P 500 130/30 Strategy Index, which is designed to measure the performance of an investment strategy that establishes 30% over and underweight positions relative to the S&P 500.

The index, the first offering by an index provider in the 130/30 strategy space, is rebalanced quarterly. The rebalancing comprises a core 100% long position in the S&P 500, 1% overweight positions in the 30 S&P 500 constituent stocks (long basket), and 1% underweight positions in 30 S&P 500 constituent stocks (short basket). The index employs a rules-driven framework that leverages qualitative and quantitative factors to arrive at the long and short baskets.

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QIC awards $80m long/short mandate

November 19, 2006

From The Financial Standard:
Queensland-based investment group QIC has granted an $80 million US equity long/short mandate to Californian based, Aletheia Research and Management (Aletheia), following the termination of its contract with Legg Mason.

Greg Clarke, senior portfolio manager at QIC, said they felt Aletheia was a “better fit” than Legg Mason for the QIC portfolio.

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Trinium Closes One Hedge Fund, Preps Another

November 16, 2006

From FINalternatives:
When one door closes, another opens, or so goes the cliché. New York-based Trinium Capital Management, a long/short equity shop founded last July, is trying to prove the old saw, closing its Trinium Fund because of the departure of partner Chris Harvey. In its place, the firm is readying a more fundamental long/short offering for a January launch, securing a commitment from a “substantial” seed investor to the tune of more than $15 million, according to sources with knowledge of the situation.

Sources said Harvey, Trinium’s former chief strategist and risk officer, left the firm on Oct. 31 for State Street Bank, resulting in the decision to shutter his hedge fund, which managed under $10 million at the time of closing. “Trinium had no performance issues, it did well,” a source close to the firm said.

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Morley long-short fund shuts after eight months

November 12, 2006

From Fund Strategy:
Morley has closed its UK Equity Long Short fund and James Follows, its manager, has left the group. According to the group, Follows's role became redundant with the fund's closure and the departure of Ian Lancaster last month to Gulf Finance House Asset Management.

Follows and Lancaster joined Morley in June 2006 from Progressive Alternative Investments, where they managed the £8.5m Elite MoneyGuru Income with Growth unit trust. This fund was transferred to Morley from Progressive and renamed Norwich Union UK Income Opportunities.

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Marshall Wace to launch Top open-ended fund

November 9, 2006

From Citywire:
London-based long/short equity house Marshall Wace is planning to launch an open-ended Ucits III version of its Amsterdam-listed hedge fund MW Tops.

The company’s strategy is to take the best five stock picks, both long and short, from 77 brokerage houses across Europe and process the results through its quantitative screen before investing.

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Thames River to launch long/short property fund

November 9, 2006

From Investment Week:
Thames River Capital is to launch a pan-European property hedge fund that will be able to take long and short positions on real estate securities.

The Thames River Longstone fund, to be run by Marcus Phayre-Mudge and Christian Roos, will target a net return of 12-15% and will launch on 30 November 2007.

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Madrid Firm Launches Onshore European L/S Hedge Fund

November 1, 2006

From FINalternatives:
Madrid-based Auriga Securities has launched the Sleipnir Fund, a quantitative European long/short equity fund and one of the first Spanish onshore single-manager funds.

According to Pedro Urbina, CEO of Auriga, the fund will take a purely quantitative and systematic approach to investing in European companies in different sectors “with the aim of gaining positive returns in all type of market environments.”

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Maintaining fixed short position may be a mistake in 130/30s

October 29, 2006

From InvestmentNews:
Quantitative investment strategies that maintain consistent long and short exposures, commonly known as 130/30s, are hot.

New research, however, suggests that it may be a mistake to maintain a fixed short position.

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Are 130/30 funds such a bright idea?

October 23, 2006

From IFAonline.co.uk:
The 130/30 phenomenon has certainly arrived and judging by the media hype, investors should be clamouring to cash in the new strategy.

Threadneedle, UBS and JP Morgan are among the investment houses to launch or announce upcoming 130/30 ventures, but Chelsea Financial Services managing director Darius McDermott has warned advisers to be cautious when approaching this "new fad”.

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UBS to launch UK long/short fund

October 22, 2006

From Investment Week:
Matthew Cox is to manage UBS’s second foray into the long/short market with a UK-focussed launch planned early next year.

Cox has been running a 100-stock model portfolio since December 2006 using 40-70 long positions and 30-50 shorts and the fund can range between 110/10 to 140/40.

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Ex-Lansdowne Pro Preps L/S Fund

October 15, 2006

From Institutional Investor:
Ross Turner, formerly an equity partner at prominent London firm Lansdowne Partners, is preparing to launch a European equity hedge fund at his start-up firm, Pelham Capital Management. The Pelham Long/Short Fund will launch Nov. 1, said Turner. He is aiming to raise $500 million in the short term before hard-closing the fund, he added.

The fund will invest in 20-25 small-, mid- and large-cap stocks, most of which will be Continental European. Reflecting Turner’s focus at Lansdowne, it will not invest in financials but will otherwise have no specific sector limitations. Turner said the fund will be offered in three illiquid share classes: 2/20 fees will be charged on a class with a one-year lock-up, while fee discounts will be offered on three- and five-year classes. The fund will hold core positions for two to five years, said Turner, in justification of the lock-ups. The fund will have a $1 million investment minimum.

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MD Sass-Macquarie Seeds Asian Long/Short Fund

October 11, 2006

From FINalternatives:
Hong Kong-based brothers Otto and Dio Wong have left their secure jobs at bulge bracket banks and are striking out on their own with a new hedge fund firm. The pair recently founded Three Kingdoms Capital and, with backing from private equity fund MD Sass-Macquarie Financial Strategies, they are gearing up to launch a concentrated long/short strategy early next year.

“This is a very talented group of portfolio managers and they’ve been managing family money for years with very strong records,” said a source with knowledge of the deal. “The strategy is a concentrated long/short equity portfolio focused in Asia, largely in China, Taiwan and Hong Kong. Their portfolio has somewhere in the range of 10 securities so it is very concentrated with high convictions.”

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Credit Suisse and AlphaSimplex Launch the Industry's First 130/30 Index

October 1, 2006

From Live-PR.com:
Credit Suisse and AlphaSimplex Group have launched the industry's first family of benchmarks developed specifically for 130/30 managers. Until now, 130/30 managers have benchmarked performance against traditional long-only indices, which are not designed to capture the long-short nature of 130/30 type activities. The new 130/30 indices will help the investment community more precisely measure and manage the exposures, and benchmark the performance, of their invested assets.

The "Credit Suisse 130/30 Index" family, developed by Credit Suisse in collaboration with AlphaSimplex Group's risk analytics division, will feature both an Investable index and a Look-Ahead index, and will cover a full range of investment styles, market capitalizations and geographies. The indices will be computed on a daily basis, and the calculation methodology will be transparent and replicable. Both Credit Suisse and AlphaSimplex will offer synthetic exposures and customized solutions related to the Investable indices to their respective institutional and other clients.

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Funds eye long-short strategy

October 1, 2006

From The Globe and Mail:
Several Canadian money managers are now aggressively marketing an investment strategy dubbed "hedge fund light" to institutional folks.

And it won't be long before retail investors will be able to buy closed-end or mutual funds using the so-called 130/30 long-short strategy that is becoming popular in the United States, industry players say.

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The long and the short of JANA

September 25, 2006

From The Financial Standard:
Lonsec has upgraded its “investment grade” rating on JANA’s long/short funds to “recommended” due to the group’s well-resourced and highly experienced research team led by long-time JANA executive John Coombe and new head of Australian equities Aidan Geysen.

The JANA global share long/short trust and Australian share long/short trust are multi-manager funds that provide retail investors access to three quant-style long/short managers. Named ‘Rainmaker’s Best New Investment Product of the Year’, the fund gives retail investors access to JANA’s institutional fund manager research.

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The summer bloodbath: Not a quant problem; just a problem

September 25, 2006

From FT Alphaville:
What went wrong? After a summer of quantitative pain, Amir Khandani and Andrew Lo have tested the theory that hedge funds have grown and proliferated to the point where in rushing for the exit from commonly held positions, they collide - and in some cases just knock each other out.

The authors of the MIT paper, ‘What happened to the quants in August 2007?’, call their findings “tentative” - based on indirect evidence and modelling of a “simplistic” long-short strategy - but suggest that the decisive factor behind the pain of the quants wasn’t quantitative at all.

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Morningstar Introduces Family of Commodity Futures Indexes

September 17, 2006

From CNNMoney.com:
Morningstar, Inc. , a leading provider of independent investment research, today introduced five fully collateralized commodity futures indexes-the Morningstar Long/Short, Long/Flat, Short/Flat, Long-Only, and Short-Only Commodity Indexes. Based on a transparent, rules-based momentum methodology, the new family of indexes employs different strategic combinations of long futures, short futures, and cash (referred to as flat positions). These indexes are designed for investors seeking appropriate benchmarks for commodities and can support the creation of passive investment products that may serve as alternatives to active commodity investing.

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Arrow Launches Canadian Long/Short Funds

September 14, 2006

From FINalternatives:
Toronto fund of funds shop Arrow Hedge Partners has launched a pair of single-manager funds to invest in the Canadian small and mid-cap markets via different shades of long/short strategies.

The JC Clark Opportunities Funds’ concentrated fund has a contrarian bent, while the Arrow Roundtable Fund’s approach, which includes a long bias and limited use of leverage, builds its portfolio around a core of catalyst-driven investment ideas while deploying the remainder against specific themes.

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The Long and the Short of 130/30s

August 29, 2006

From On Wall Street:
Popular for a while among institutional investors and selectively available to wealthy clients through separately managed accounts (SMAs), 130/30 portfolios have had little exposure to less affluent retail investors in the past. But that's changing. Now quantitative equity fund managers are looking to get a piece of this action, pitching this strategy-basically a leveraged bet on the managers' stock-picking skills-to mutual fund investors.

The 130/30 concept starts with a long-only portfolio tied to a benchmark. The manager ranks the benchmark components from best to worst and then sells short a basket of losers equal to 30% of the portfolio's value. The proceeds finance an extra 30% of long positions in the favored stocks, so the net market exposure remains 100% (hence the funds' name).

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Beware Misuse Of Funds That Short

August 23, 2006

From CNNMoney.com:
Fund firms are rolling out more mutual funds that short. But investors should beware of what they can and cannot do.

Several firms have rolled out so-called 130/30 funds. Their nickname comes from the fact that, on average, 30% of their assets are borrowed and/or shorted. They reinvest borrowed money in long positions.

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UBS Ponders Global Long/Short

August 10, 2006

From InstitutionalInvestor.com:
UBS Global Asset Management will consider launching a mutual fund using a global 130/30 strategy that is still in the works. Scott Bondurant, head of long/short offerings, said that UBS plans to launch an institutional global 130/30 strategy in the first half of 2008. He said there are "excellent prospects" for a global 130/30 mutual fund to follow.

Bondurant said that UBS's stock-picking method enables the firm to run 130/30s. He said that UBS, a fundamental manager, has been evaluating overvalued stocks for 25 years. That data can now be used to short, he said.

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130/30 Equity Funds

August 7, 2006

From About.com:
There's a new and increasingly popular fund in town called the 130/30 Fund. Any time a fund type includes numbers in its name, an explanation is definitely required. Let me explain what 130/30 funds are, how they work, and what 130/30 funds are currently available.

130/30 Funds Explained

The 130/30 Fund is considered a Long-Short Equity Fund, meaning it goes both long and short at the same time. The "130" portion stands for 130% exposure to its long portfolio and the "30" portion stands for 30% exposure to its short portfolio.

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Traditional managers look beyond 130/30 strategic vision

July 26, 2006

From FinancialNews-US.com:
A growing number of traditional managers are encroaching on hedge fund turf. They are particularly keen to market short-extension strategies that go 30% short and 130% long. But some want to travel further along the hedge fund convergence trail; they want to move towards 140/40 and beyond.

Boutique fund manager Dalton Strategic Partnership wants do away with the requirement to hold to a full net market exposure. Under European Union regulations governing investment products, anything between a 200% market exposure and 0% is permitted. Dalton wants to move in this direction. Magnus Spence, a partner at Dalton, said: “Very few people seem to have picked up on these rules. We are looking at this area actively.”

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ProfitScore Launches Multi-Manager, Long/Short Product

July 24, 2006

From FINalternatives:
Boise, Idaho-based ProfitScore Capital Management is hoping that the second time is a charm for its latest hedge fund offering. The firm recently developed a quantitative multi-manager equity long/short product and is currently shopping it to hedge fund investors. So far, the firm has landed a $30 million institutional client and aims to attract some $200 million in assets by year-end.

ProfitScore launched the new offering, Unified Hedge Account, in February after pulling the plug on its four-year-old hedge fund, the ProfitScore Quantum fund, because of administrative difficulties, according to founder John McClure.

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The long, short and dim views

July 19, 2006

From The Sydney Morning Herald:
When the road is long, it's probably best that there's a toll involved somewhere.

WHAT happens when you dig for long-term value?

You come up with some short-term clunkers.

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Why I'm A Long/Short Bull, 130/30 Bear

July 17, 2006

From SeekingAlpha:
I'm a long/short bull and a 130/30 bear. Why? Long/short investing gives managers the best opportunity to generate alpha and manage volatility without being constrained by an index. 130/30 funds, conversely, place artificial parameters around both gross and net exposure and lack the intellectual purity of their more flexible long/short cousins.

There were two stories in yesterday's Financial Times that highlighted each of my deeply-held views; this must have been a gift in anticipation of my blogiversary today.

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Fund manager challenges playing the long game to avoid potential risk

July 11, 2006

From Financial Times:
Andrew Kelly, the co-manager of the UK equity long/short fund at the Edinburgh-based Cartesian Capital investment boutique, said that many hedge fund managers have been focused on "their long book" and "struggle to generate alpha in flat or falling markets", calling on investors to challenge the practice.

Kelly suggests that investors "have been lulled into a false sense of security by the bull market, which has cloaked managers’ inability to make money from shorting", flagging up the, "strong correlation between the performance of many hedge funds and the mid cap index", where he said hedge funds make most of their long plays.

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First 130/30 fund from UBS takes in £30m

July 9, 2006

From Fund Strategy:
UBS Global Asset Management's 130/30 US Equity fund accumulated assets approaching £30m when the offer period for the fund closed on Friday last week. Managed by Tom Digenan, the long/short hybrid fund began investing this week.

Peter Beckett, head of UK retail marketing at UBS, says the group is delighted with the amount raised. "We believe 130/30 funds will become popular in the UK retail market and we are proud to be one of the first companies to bring these products to market."

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Deutsche launches structured long/short fund

June 29, 2006

From AsianInvestor.net:
Deutsche Bank is launching a structured product that offers investors a long/short strategy married with the bank's proprietary equity valuation model, known as Croci (short for cash return on capital invested).

The open-ended fund is being offered in Singapore and will give investors direct exposure to the Croci Alpha Pairs Sectors index, which uses the Croci model to identify the cheapest and most expensive stocks across a variety of sectors. In all, the index is long/short in 70 pairs of stocks drawn from the US, Europe and Japan, and is rebalanced on a monthly basis.

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Former Dresdner Trader Launches Long/Short Fund

June 22, 2006

From FINalternatives:
Patrick D’Angelo, a former U.S. equity prop trader for Dresdner Investment Bank, this month launched Hyerdale Capital, a market neutral long/short equity fund that has a short-term holding period of between two weeks and two months.

“It’s not one of these buy and hold type funds,” said D’Angelo. “It’s all fundamentally driven and technically backed. Seventy five percent of the portfolio is focused on large-cap stocks with the balance in micro- to mid-cap stocks. This portfolio is always dollar neutral and if anything I take a small short bias on a beta basis.”

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Challenger to launch long-short fund

June 5, 2006

From InvestorDaily:
 Challenger Financial Services has said it plans to roll out a global equities long-short fund to Australian investors towards the end of this year or early 2008.

The news comes after a successful start to the year for Challenger, which has scored $1.2 billion worth of investment mandates from six investors for the quarter to June 2007.

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The Do-It-Yourself Market-Neutral Portfolio

June 4, 2006

From SeekingAlpha:
The hedge fund business has been growing rapidly in recent years—with no end in sight. Wealthy investors are seeking alternative investments to meet their needs and hedge fund managers have an array of tools and strategies at their disposal. One of the core strategies employed by hedge funds is what is called market-neutral investing. A market-neutral portfolio is designed to deliver returns that are not impacted by the movements of the broader market. This does not mean that a market-neutral approach is low risk, however. Goldman Sachs' (GS) largest hedge fund employs market-neutral strategies and has attributed their very poor recent performance partly to this approach.

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Managers scoring big with 130/30 returns

May 28, 2006

From Pensions & Investments:
While only a handful of managers have run 130/30 strategies for more than two years — and only one or two for more than five years — the early returns are strong.

Despite short track records and the lack of readily available information for evaluating strategy and performance, 130/30 managers said they are encountering strong institutional investor interest and are busy differentiating their approaches.

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Mellon goes long/short

May 21, 2006

From InvestorDaily:
Mellon Global Investments has joined a long list of funds managers tapping into institutional demand for long/short equities funds.

The firm has launched the Mellon Australian Equity Long/Short Trust, which is aimed at Australia's institutional market.

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UBS launches long/short absolute return

May 11, 2006

From MoneyManagement.com.au:
The launch of the UBS Absolute Return Series 1 Fund makes UBS one of the latest global fund managers to offer a fund that takes different positions within the same asset class to provide both upside and downside returns and smooth volatility.

Targeting a return rate equal to inflation plus 6 per cent, the fund comprises US large cap equities (79 per cent), bonds (14 per cent) and cash/hedge offsets (7 per cent), with a derivative overlay.

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Russell Expands Use of Limited Long/Short Strategy in Mutual Funds

May 8, 2006

From BusinessWire:
Russell Investment Group is expanding its use of limited long/short strategies in its Quantitative Equity and Equity Q mutual funds. This strategy, which changes the existing assignment of Aronson+Johnson+Ortiz to a 130/30 strategy, is intended to provide upside return potential without significantly increasing risk at the total fund level. A limited long/short strategy allows money managers more freedom to apply their stock selection skills and thereby attempt to maximize the value of their insights regarding both stocks they consider will outperform and those that they consider will under perform.

“As financial professionals seek investment innovations for clients, they want to maintain a holistic view – evaluating quality, managing risk and assessing the impact on the total portfolio,” said Tim Noonan, managing director, Russell Investment Group. “While there are a multitude of standalone alternative products available, it can be difficult and time consuming for financial professionals to comprehensively evaluate these new strategies and then build them into existing client portfolios. Russell objectively finds who we believe are some of the best practitioners of these innovative strategies and then incorporates them into our existing mutual fund format, giving financial professionals who work with Russell a streamlined and accessible approach that they can easily leverage on behalf of their investors.”

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Wessex Makes A Splash With New Water Hedge Fund

May 3, 2006

From FINalternatives:
U.K.-based Wessex Asset Management is taking a dive into the water sector. The firm began trading in its Wessex Global Water Fund, an equity long/short vehicle, in January, with some $13 million in assets. It has since doubled in size, and returned an estimated 3.5% through March.

Tim Weir, Wessex’s CEO and investment director, says he looks to capitalize on the increasing demand for water worldwide. “I think this sector is going to have a lot of money spent on it in the next decade, and that’s fairly obvious whether you’re looking at India, China, the U.S. or Western Europe,” he says. “Urbanization, economic growth and population growth is significantly increasing the demand for water and the supply side has got to respond, and that means money. The infrastructure in most of Asia doesn’t really exist and the infrastructure in Western Europe and North America is about 100 years old.”

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Galloway Offers Brazilian Multi-Manager Hedge Fund

May 2, 2006

From FINalternatives:
Sao Paolo, Brazil-based Galloway Emerging Markets has begun trading in its Galloway Brazilian Multi Manager Equity Fund, an equity long/short and long-only fund of funds focused on the Brazilian equity market. In its first four months, the fund is up some 12.7%, with about US$1.1 million in assets under management.

Galloway said the fund is intended to capitalize on Brazil’s favorable growth and liquidity compared to other Latin American countries. “For example, looking at the political side, we can not compare Brazil to Venezuela, Bolivia, Equator or Argentina,” the firm said. “In those countries, there is a high possible risk of populism. On the other hand, Brazil has been in a convergence route for the past 12 years with orthodox fiscal policy, growing foreign trade and floating exchange rate.”

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Apax Founder Plans $1B Long/Short Real Estate Fund

April 23, 2006

From FINalternatives:
With many predicting a big turn south for the real estate market, a trio of private equity veterans is putting together a hedge fund to profit from a downturn.

Apax Partners founder Ronald Cohen, George Kountouris, the former head of Deutsche Bank’s real-estate p.e. group, and Nigel King, the former Salomon real estate chief, have founded Portland Capital. The new fund won regulatory approval in January, Financial News reports, and the founders are now in talks with potential investors, hoping to raise between £200 million (US$400 million) and £500 million (US$1 billion). In addition to the £30 million (US$60 million) committed by Cohen, Kountouris and King, the fund has already won the backing of Nathaniel Rothschild and Harry Solomon, the former CEO of foods group Hillsdown. Portland is aiming primarily for family offices and high net-worth investors, according to Financial News.

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INVESCO Launches Three Directional Long-Short (130/30) Strategies

April 16, 2006

From PR Newswire:
INVESCO's Global Structured Products Group has recently been awarded mandates to fund three different directional long-short products. The new strategies are designed to help clients gain additional alpha through the controlled use of shorting within their long-only portfolio. The team-managed portfolios will benefit from the group's more than 14 years experience in shorting equities, dating from the inception of its market neutral equity strategy in 1992.

"These offerings are in direct response to our plan sponsors' needs and demands for higher alpha tied to the efficient use of capital," said Russ Kamp, CEO of INVESCO's Global Structured Products Group. "We are excited about making these strategies available to clients who are seeking enhanced alpha strategies while preserving the strong risk control normally associated with our stock selection strategies. These strategies are a natural bridge between our long-only portfolios and our market neutral capabilities which have been in use for 23 and 14 years, respectively."

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LRG Readies Small Cap Long/Short Hedge Fund

April 11, 2006

From FINalternatives:
FINalternatives has learned that LRG Capital Group, the investment manager for BayStar Capital Funds, is gearing up to launch the BayStar Capital Special Opportunities Fund. The equity long/short hedge fund will invest in small- and micro- capitalization technology, life sciences, media and communications publicly traded companies.

Evan Kraus, partner, confirmed the firm’s new offering but declined to comment further on the launch.

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Janus Adviser Long/Short Fund Surpasses $50 Million in Assets under Management

April 9, 2006

From BusinessWire:
Janus Capital Group Inc. (NYSE: JNS) today announced that Janus Adviser Long/Short Fund (JSLSX) has surpassed its initial capital threshold goal of $50 million in assets under management. The fund, which is sold though financial intermediaries and to certain institutional investors, was introduced to investors in August 2006 as Janus’ first alternative asset product. Janus Adviser Long/Short Fund is co-managed by David Decker, Dan Kozlowski and Dan Riff, each of whom has responsibility for a specific portion of the portfolio.

According to David Decker, the ability to utilize both long and short instruments aims to provide clients with access to the full articulation of Janus’ deep fundamental research. “We’re looking for businesses where we see a strong disconnect between the intrinsic value of the company and its current share price,” said Decker.

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Four Long-Short Funds that Defied the Recent Downturn

April 5, 2006

From Morningstar:
Many investors understandably associate long-short mutual funds with hedge funds, which they believe to have supercharged returns. It's true that some hedge funds combine long portfolios and short portfolios and that some hedge funds have knockout returns. But investors would be better off understanding the differences between the varying risk/reward profiles of long-short funds and their long-only peers. The key point is that, due to their structure, almost all long-short funds have lower potential long-term rewards than long-only funds, but long-short funds also should have lower potential risk.

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Case Western Eyes European Long/Short Manager

January 15, 2006

From FINalternatives:
Cleveland-based Case Western Reserve University’s $1.65 billion endowment, which is looking for a European hedge fund for diversification, has found a candidate and is performing due diligence on the unnamed manager, according to Jason Hart, director of marketable investments.

Hart said the candidate is a long/short equity manager with over $500 million in assets under management. The endowment is in the midst of conducting due diligence on the manager, according to Hart, who declined to specify how much may be allocated to the fund. However, he did say that the endowment is “very close” to reaching its 18% target allocation for hedge funds.

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Some managers reap tall returns with long-short strategies

January 13, 2006

From StarTribune.com:
Few mutual funds can take short positions on stocks. Even funds that try to profit if share prices decline typically face restrictions on how much leverage they can take. But some fund managers who can sell short are borrowing a page from their less-regulated hedge fund counterparts.

The amount of money going into dedicated long-short mutual funds has doubled in the past year to nearly $6.3 billion in net assets, according to Lipper.

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The Long and Short of Playing Both Sides

January 11, 2006

From MSNBC:
If you're looking for a convenient way to own stocks, mutual funds and exchange-traded funds are an excellent choice. Whether you want to buy the whole market with a fund such as Vanguard Total Market ETF (AMEX: VTI) or focus in on particular sectors with funds such as Energy Select SPDR (AMEX: XLE) or iShares Emerging Markets (AMEX: EEM), you'll almost certainly find what you're looking for.

Yet no matter what sectors your mutual fund or ETF focuses on, nearly all stock funds are subject to overall market risk. If the broader stock market falls in value, then it's extremely likely that your fund's price will decline as well. While some stocks are less correlated with the overall market, it's still difficult to put together a portfolio of stocks that will perform completely independently of the stock market as a whole.

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ThomasLloyd Launches a Long-Short Equity Fund to be Managed by Charles White and Advised by Hugh Johnson and Johnson Illington Advisors LLC

January 10, 2006

From PR Newswire:
ThomasLloyd Global Asset Management (Americas) LLC announced today that it has launched a new long- short mutual fund that will focus on US equities.

The ThomasLloyd Long-Short Equity Fund will combine a disciplined traditional approach to financial market analysis with modern portfolio techniques. The fund will have the flexibility to invest where the manager believes the best opportunities are and will not be constrained by industry, market capitalization or style boxes. The fund will be managed by Charles White. Hugh Johnson and Johnson Illington Advisors (JIA), an asset management company, will serve as advisors to the fund. The fund will strive to distinguish itself by integrating the traditional methods of managing assets developed by Mr. Johnson and JIA with Mr. White's experience investing in US equities using modern investments, such as ETFs. The fund will employ leverage and will initiate short positions as the manager believes are opportune.

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Martin Currie Readies Long/Short Global Energy Fund

December 21, 2006

From FINalternatives:
U.K-based Martin Currie Investment Management is gearing up to launch a long/short global energy fund on March 1, 2007.

The new vehicle, the Martin Currie ARF - Global Energy Fund, is a carve-out of the firm’s US$540 million Global Resources long/short strategy, which has returned 15.88% year-to-date. 

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CalPERS Selects Five Long/Short Equity Managers

December 19, 2006

From FINalternatives:
The California Public Employees' Retirement System has chosen five global equity long/short managers from its “spring-fed” pool to help manage stocks that are currently in its passively managed index fund. The managers within the pool are allowed to short-sell up to 35% of their total allocations and then go up to 135% on the long side.

The firms picked by CalPERS include: Analytic Investors; First Quadrant; Goldman Sachs Asset Management; Quantitative Management Associates and State Street Global Advisors. CalPERS will reallocate assets from its passively managed index fund accounts to pool managers as early as the first quarter of 2007.

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Long/Short Managers Savor October Gains

November 8, 2006

From Black Enterprise:
Equity long/short managers took October's stock market boost and ran with it, posting a 2.94% increase for the month, as measured by the Dow Jones Hedge Fund Indexes.

It was another welcome victory for long/short, which endured three successive months of sizeable losses over the summer before a 1.77% gain in August put it on the road to recovery. The journey isn't over, however: Last month, long/short managers gained only 0.19%, and the strategy's 5.27% year-to-date return remains the lowest among the six categories tracked by Dow Jones.

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A Long/Short ETF Portfolio For Emerging Markets

November 7, 2006

From SeekingAlpha:
Some people complain about the proliferation of exchange traded funds. But the more we have the better, I believe. Investors can then put more ideas into action.

Take, for example, the construction of a long-short portfolio across emerging stock markets. The basic idea: short countries with weak fundamentals and go long countries with strong fundamentals (i.e. set up a “hedge-fund” approach that is neutral with respect to the overall direction of emerging stock markets).

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Redwood Asset Management Launches The Redwood Long/Short Fund

October 16, 2006

From Market Wire:
Redwood Asset Management is pleased to announce the Launch of the Redwood Long/Short Fund (RAM103). The fund will be managed by Andrew McCreath, President and CEO of Waterfall Investments Inc. Mr. McCreath is a highly respected investment professional in Canada with over 21 years in the investment industry. Prior to starting Waterfall, he was a founder of Synergy Asset Management where he managed the flagship Synergy Canadian Growth Fund, achieving a top quartile ranking. Synergy was acquired by CI Funds in 2003. Andrew has extensive experience within the brokerage community and the investment management business, having worked at Lawrence and Company, Gordon Capital and Burns Fry Ltd. Currently, Mr. McCreath manages the Redwood Long/Short Conservative Fund (RAM104) and has returned 8.64% year to date.

Mr. McCreath holds the Chartered Financial Analyst designation and is a licensed portfolio manager. He has an Honors BBA (Finance) and MBA (Economics) from York University.

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Long-short funds risky, inconsistent

October 16, 2006

From Delaware Online:
Lipper and Morningstar, the mutual fund trackers, have added long-short funds to their ever-growing fund classifications. The long-short designation bears some explanation. In Wall Street parlance, when you buy a stock, you're taking a long position. You're betting that the stock's price will rise.

But you can also bet that a stock will go down, by taking a short position. Let's say you think that IBM is overpriced and that its stock will tumble.

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Long-short funds are risky business

October 13, 2006

From The Montgomery Advertiser:
The human race has come a long way from the days of chipping flints and drinking from coconut husks. Nowadays, we have marvels like Ginsu knives and Styrofoam soup tureens.

But all great inventions usually have a few bugs, at least initially. It may be decades, for example, before we have a working waterproof toaster. And it may be even longer before we have a stock mutual fund that consistently makes money in stocks that go up as well as in stocks that go down. And that's the problem with a relatively new type of investment -- long-short funds.

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The long and short of hedge funds

October 5, 2006

From MoneyWeb:
The best hedge fund managers, says Barton Biggs, “have a real obsession with the business, and … are very, very smart and very, very brave.”

Mr Biggs – a veteran hedge fund manager and former chief global strategist at Morgan Stanley – has met many great investment managers over the years. In his recent book, HedgeHogging, he describes a friend, labelled Greg, who manages a superb long/short hedge fund. Greg is tough and obsessive, eats too much, and screams at analysts who do shoddy work. “Above all,” Biggs says, “Greg doesn’t like to be wrong or lose money anytime, anywhere, anyhow, and when he does he goes nuts.”

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BluMont Capital Launches BluMont Equity Advantage Fund

October 3, 2006

From MarketWire:
BluMont Capital (TSX VENTURE: BCC) is pleased to announce that it has launched the BluMont Equity Advantage Fund. The Fund offers investors a unique opportunity to invest in funds managed by some of Canada's top equity managers, including Salida Capital, the manager of the Canada's number one fund.

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ETF Takes Long/Short Approach on Currencies

September 25, 2006

From TheStreet.com:
Last week, a new currency ETF came to market with almost no notice: the PowerShares DB G10 Currency Harvest Fund (DBV - commentary - Cramer's Take).

The fund invests in currencies of the G-10 countries: the euro, yen, Swiss franc, British pound, Norwegian krone, Swedish krona and the Canadian, Australian and New Zealand dollars, but not the greenback, because this ETF is primarily intended as a tool of diversification for U.S. investors. (My colleague Katie Benner introduced the fund last week on the Street.com.)

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DUMB LUCK INVESTOR: The Long and short of It

September 22, 2006

From Inside Futures:
Lately, I'm not much of a fan of anything. Stocks — large and small — pass! Bonds? Why bother. Real estate? That ship has sailed. Energy, gold, currencies — got a direction?

So it was with pleasant surprise that I stumbled upon the growing number of 'hedged equity funds,'or what's been more traditionally known as 'long/short funds.' Such funds, often classified within the 'alternative investment' category of investments, are finding a new niche within more mainstream markets. Though previously the domain of institutional investors looking to 'hedge' risks in both up and down market scenarios, certain funds have now been structured to address the needs of the broader retail investor audience overall.

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A Hedge Fund Managed by Landry Morin is Ranked First in its Category by the Barclay Managed Funds Report

September 13, 2006

From CNN Matthews:
In its most recent edition, the US based Barclay Managed Funds Report ranks the Landry Morin long short momentum Fund first among equity market neutral hedge funds for the 3 years ended June 30th 2006.

The Barclay Managed Funds Report ranked 125 equity market neutral funds globally between July 1st 2003 and June 30th 2006. The Landry Morin long short momentum Fund is first overall with an annual compound return of 17.83 %, compared with 15.37 % for the second ranked fund. 

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The long and short of it

September 5, 2006

From National Post:
Keith Tomlinson, director of research for Arrow Hedge Partners, recently sat down with Canaccord's Bob Thompson to discuss Arrow's Multi-Strategy Fund of Fund and the Arrow Global Long/Short Fund. In this world of aggressive growth investing, with commodities, gold, and the blood-curdling volatility in these sectors, Arrow Hedge believes these funds should provide higher net worth investors with some diversification and peace of mind for their portfolios.

Q How do you go about constructing the Arrow Multi-Strategy fund?  

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Long list of winners in short story

August 16, 2006

From The Australian:
ON the last day of July, retail giant Coles Myer gave a strategic presentation to investors, which detailed its restructuring from eight business units with 12 brands to three business units with 10 brands.

The sharemarket didn't like it, and the stock fell almost 14 per cent

That caused plenty of grimacing among the stock's investors, both retail and institutional.

But not at Melbourne-based K2 Asset Management, which had "shorted" Coles Myer.  

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The Long and Short of It

August 14, 2006

From Kiplinger's:
Ric Dillon and Chuck Bath don't just pick stocks they think will win in the market. They choose losers, too.

Dillon and Bath manage the Diamond Hill Long-Short Fund (symbol DIAMX), which sells stocks short in part of their fund. When you sell a stock short, you profit if its price falls. "Long" positions are the normal ones where you hope your stocks gain in value. The goal of a long-short fund is to cut risk and produce steady returns in all kinds of markets. So far this year, Diamond Hill has done well. The fund is up 9%, twice the average return for the long-short category. 

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Profit from markets even when they fall

July 30, 2006

From Times Online:
HEDGE funds, which aim to make money whether markets are falling or rising, used to be the preserve of institutions, but they gained popularity among individual investors during the bear market of 2000 to 2003, writes Kathryn Cooper.

The funds use a range of complex strategies to achieve their goal of “absolute” returns — making money even when the wider market is falling.

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Stock Tumult Tests Long-Short Tack

July 27, 2006

From The Wall Street Journal:
The recent stock-market turmoil is shaping up as a test of a sophisticated and fast-expanding class of mutual funds.

Often referred to as "long-short" or "market neutral" funds, they promise to protect investors when the market slides. They do it typically by engaging in short selling -- a strategy for profiting from falling prices by selling borrowed shares in hopes of later buying back an equal number of shares, at a lower price, to replace the borrowed ones.

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Long/Short Hedge Fund Strategies Lose Favor - Survey

July 6, 2006

From Easy Bourse:
Investors are pulling back their allocations to hedge funds specializing in European long/short equities strategies for the first time in at least three years, Geneva-based hedge fund advisory firm TARA Capital said Thursday.
The move comes after European stock indexes lost nearly all of their 2006 gains in May and were largely flat in June.
In a survey of hedge fund investors based in Europe, TARA Capital found that twice as many of them - 22% - plan to reduce their exposure to European hedge funds that take long and short positions in equities, with only 11% planning to increase allocations. Two-thirds of respondents said they planned to keep their allocations at the same level.

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Three managers go in Insight equity shift

July 6, 2006

From IFAOnline.co.uk:
Three fund managers are leaving Insight Investment as the firm has restructured its equity portfolio management.

Insight says it is “building on earlier successful shaping of Insight’s European and global equity teams” has split its equity fund management teams into smaller operations with greater emphasis on alpha.

As a result, fund management teams are being broken down into main three focuses - passive/enhanced index, long only alpha and long/short.

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The long and short of an asset class

June 29, 2006

From National Post:
When Derek Webb started a long/short Canadian hedge fund early in June, he said he would go long and short both Canadian stocks and income trusts.

Forensic accountant Al Rosen of Rosen & Associates in Toronto views the income trust sector as a house of cards due soon to fall. If this scenario pans out, managers such as Webb will be the first to profit on the short side, along with investors in those funds. The shakier trusts have already cut distributions and lost market value, but 2006 is shaping up as an interesting test of the asset class.

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The long and short of an asset class

June 29, 2006

From National Post:
When Derek Webb started a long/short Canadian hedge fund early in June, he said he would go long and short both Canadian stocks and income trusts.

Forensic accountant Al Rosen of Rosen & Associates in Toronto views the income trust sector as a house of cards due soon to fall. If this scenario pans out, managers such as Webb will be the first to profit on the short side, along with investors in those funds. The shakier trusts have already cut distributions and lost market value, but 2006 is shaping up as an interesting test of the asset class.

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Long-Short Funds Ride Out Market Storm

June 19, 2006

From TheStreet.com:
The long and short of the recent market tempest is that investors would have been better off in a long-short fund.

The hurricane hitting stocks over the past month has leveled nearly every category of mutual fund save bond and bear funds, which welcome such stormy skies. International, precious metal and natural resource funds have been particularly slammed after their rapid run-ups, with some falling by as much as 20%, according to fund tracker Morningstar. Meanwhile, growth funds of all sizes are down by close to double-digit percentages.

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Long/Short Equity Bruised By May Tumbles

June 9, 2006

From Black Enterprise:
Equity long/short managers in the Dow Jones Hedge Fund Indexes took it on the chin in what turned out to be a tough month for markets in general.

The strategy, which as of April was the index's top performer year-to-date, decreased by 3.53% in May, slashing its year-to-date performance to 3.76% - still in positive territory. At the end of April, equity long/short was up 7.55% year-to-date.

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Front Street Long/Short Income Fund Completes Merger With Front Street Long/Short Income Fund II

June 1, 2006

From CNN Matthews:
Front Street Capital 2004, the manager of Front Street Long/Short Income Fund ("FSLS I")(TSX:FLS.UN) and Front Street Long/Short Income Fund II ("FSLS II")(TSX:FLH.UN), has announced that it has completed its merger of FSLS I and FSLS II (the "Funds"). Each unitholder of FSLS II will receive 0.959157 units of FSLS I for each unit of FSLS II held immediately prior to the completion of the merger. This exchange ratio was calculated based on the net asset values per unit of the two Funds as at the close of business on May 31, 2006. FSLS I had a net asset value per unit of $10.4120 at the close of business on May 31, 2006, and FSLS II had a net asset value per unit of $9.9868 at the close of business on May 31, 2006.

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Year's Returns Dented, Not Reversed, By Tough Month

May 31, 2006

From Black Enterprise:
Major hedge fund sectors across the board lost heavily in the past month but not as much as market indexes, according to Merrill Lynch research. Year-to-date hedge fund returns remain significantly positive despite the down month.

The average of several diversified hedge fund indexes lost about 1% for the past month as of May 22, analyst Mary Ann Bartels showed in the Merrill Lynch report. Long/short equity lost 2.6%, macro funds lost 2.7% and managed futures 2.3%.

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Front Street Long/Short Income Fund Announces Distribution

May 23, 2006

From CNN Matthews:
Front Street Long/Short Income Fund (TSX:FLS.UN) announced today a distribution of $0.05 per unit to unitholders of record on May 31, 2006, which will be paid in full on or about June 15, 2006. The distribution payable to a unitholder will be made in cash, unless the unitholder has previously elected to reinvest such distribution in units of the Fund pursuant to the Fund's distribution reinvestment plan.

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Numeric Investors Appoints Michael Even, CFA President and Chief Executive Officer

May 5, 2006

From BusinessWire:
Numeric Investors LLC, an independent investment firm backed by TA Associates and managing more than $11.5 billion of active long-only and market-neutral equity portfolios for institutional and individual investors, today announced that Michael Even, CFA will join the firm as President and Chief Executive Officer, effective June 1. Langdon Wheeler, CFA, President and Chief Investment Officer, will continue as CIO and assume the new role of Chairman.

Mr. Even will join Numeric from Legg Mason, where he serves as Executive Vice President and Head of Institutional Asset Management. He previously served nine years with Citigroup Asset Management.

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New York Firm To Launch Long/Short Healthcare Fund

May 1, 2006

From dailyii.com:
Sio Capital Management will unveil its flagship long/short equity Sio Partners fund with an anticipated mid-May launch date. The fund will take 20-25 long positions and 10 short positions in the healthcare sector, according to Michael Castor, portfolio manager. There is no limit on the number of positions taken at one time, Castor said.

The fund will identify healthcare investments that U.S.-only funds are not targeting. It will also eye various technological, political and environmental issues surrounding healthcare, Castor said. Castor, declining to elaborate on specific investments, noted the majority of their holdings will be long-term, over a year.

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