Hedge Funds: Top News for the Week of October 5, 2012

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More Prop Traders Flee To Hedges. The exodus of high-profile proprietary traders away from brokers continues, as bonuses at those institutions pale relative to hedge funds. The most recent departures are Ex-Goldman Sachs traders Rishi Chadda and Cyrus Pouraghabagher, who will start the New York-based Kingsguard Advisors LP on Nov. 1. Ex-Deutsche Bank credit trader Antoine Cornut is starting his own hedge fund as well. Like most good traders, they seem to be taking a contrarian view on when to break into the hedge fund game, as the industry posted another disappointing month of returns, at just .47%, well below the S&P for the same period.

No Pain (Trades) for Hedge Funds. Speaking about returns relative to the S&P, we reported a few weeks ago that Hedge Funds might have to engage in “pain trades” – buying into a market that has already popped to chase returns – but that is turning out not to be the case, with many funds avoiding the high-flying equity market. To be sure, with lower unemployment numbers driving the market up still further this morning – perhaps in a the sign that the economic recovery is starting to take root – funds could be left even further behind.

JOBS Helps the Brand Savvy. Money managers with both traditional and alternative asset management arms will be the biggest beneficiaries of the Jobs act. As you’ll recall, the poorly named Jumpstart our Business Startup act (which doesn’t actually create any jobs) lifted the ban on hedge fund advertising. However, firms like Blackrock, which are already savvy in the world of marketing and brand building, will be taking the lead on marketing alternative products. Although BusinessWeek seemed surprised at this development, it will come as no surprise to marketers that most businesses will have a massive head-start on marketing relative to hedge funds, where secrecy and exclusivity has formerly been the go-to marketing tools.

News in Brief

Carlyle Group buys Vermillion Asset Management LLC. Carlyle expands into the commodities market by adding on $2.2 billion in assets with the purchase of Vermillion.

IndexIQ launches another hedge fund ETF.

Louis Dreyfus and JP Morgan to sell energy trading venture

Hedge Funds to Argentina: All Your Navies Belongs to Us. Post-2001 default, Argentina is still facing creditors who want their money back, one of whom is billionaire hedge fund manager Paul Singer. Rather than wait in line with other creditors, he decided to take action, seizing an Argentinian Navy vessel, blocking it as it attempted to exit port. Although it is merely a triple-mast frigate used for training purposes, we think that Singer might be on to something here. Not only has he come up with the innovation of sending repo men to grab military equipment from sovereign states that have fallen behind on their bills, but he also has the opportunity of living the dream of so many asset managers: Building a private army, forming a sovereign state, and achieving total world domination. Keep going, Paul, and if you ever get James Bond strapped down to a table, for goodness sake, skip the monologue and just cut him in half with the laser, already.