Video: TradingScreen Top Hedge Fund News Wrap – 09.17.12 to 09.21.12

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Top News

Hedge Funds: Not Guilty! In an absolutely non-stunning statement of the obvious, a study done by Rand Corp. says that hedge funds aren’t the ones to blame for the mortgage-lead financial meltdown of 2008 and beyond. The study laid the blame at the feet of credit rating agencies, which had rated sub-prime mortgage packages too highly, and it was, in many cases, hedge funds which recognized the situation, betting against the mortgages and helping alert regulators to the problem, just in the nick of too late. Wall Street Journal

We Find You Not Guilty – The Sentence Is Death! So, why are we covering this study, you ask? Like the White Stripes say: I told you once before but it bears repeating now, as the UN issued a report asking governments to have regulators intervene in the commodities markets to avoid major volatility… much in the way central banks do with currencies. And who are the culprits causing these huge fluctuations according to the report? Those evil hedge funds.  Reuters

Slick Sliding Away. Well, let’s be honest, hedge funds are contributing to some of the volatility that we’re seeing in commodities. Hedge Funds seem to be doubling down on oil and commodities on the back on assumptions about higher inflation following the recent FOMC actions last week. Hedge funds may have been burned again as oil took its biggest took its biggest hit in more than three months, originally thought to be a flash-crash because of its severity, but ultimately determined to be technical selling. This came after economic results continued to disappoint, undermining an inflation-lead spike in commodities prices. So far, reporting on all the indices of broader hedge fund performance has continued to lag the broader market. With oil and other commodities caught between the risk of a continued economic slide, and a recovery on the back of global quantitative easing by central banks, it’s probably still too early to tell which way these bets will go.

Sentence Commuted For Lock-ups, Lower Fees. Finally a short but very interesting editorial in the Journal from Richard Barley on whether hedge funds can survive as-in in a world where central banks are calling the shots, and moving markets in ways that are seemingly contrary to the fundamentals of the underlying assets traded in them. His prediction, lower performance fees in exchange for longer lock-up periods. Wall Street Journal

Other News In Brief

Franklin Resources, parent company of Franklin Templeton, buys majority stake in world’s 7th largest hedge fund of funds, K2 Advisors Holdings LLC . This will allow K2 to buy out TA Asoociates’ equity stake in the company.

Hermes Focus Asset Management has agreed to be sold to RWC Partners.

Forbes has assembled the list of America’s 400 richest individuals. Hedge Fund managers were a mere 8 percent, while aesthetically challenged yet strangely charismatic marketers for financial technology companies comprise zero percent again this year. Very disappointing.

Photo credits in order of appearance: Ponzi_Unit, Vectorportal, XcBiker, Vectorportal, and Carsten Schertzer