Top Hedge Fund News Wrap: 10/8-10/12/12

Hedge Funds Rally But Investors Still Cutting Back. Funds gained 1.79% in September according to the Barclay Hedge Fund Index, helping to make up the gap between their performance and the S&P 500, making a killing with investments in the US mortgage-backed bond markets. Still, Reuters reports that investor redemptions continue, with a third month of net outflows this year.

Blackstone Gives Money to PDT Partners Plus Something Much More Precious. Blackstone is no stranger to giving large sums to managers, but with Peter Muller, they’re giving him something much more valuable: Trust. Blackstone is reportedly investing $500 million in Muller’s PDT Partners. Blackstone has been known to hand managers large sums to work with but they usually take a stake in the company, they haven’t taken a stake of PDT. The PDT unit started as part of Morgan Stanley and is being spun off into its own stand-alone hedge fund to comply with the Volcker rule which limits banks’ ability to invest in hedge funds. Muller is planning to launch a second fund in January with $1.5 billion.

Goldman Lobbies Against Volcker Rule. The Volcker rule limits banks’ ability to invest in hedge funds. At least, ordinary banks. But Goldman Sachs is no ordinary bank. According to reports, Goldman is not sanguine about the rule, nor are they convinced that it is “set in stone”. According to multiple reports, Goldman is trying to lobby regulators into exempting credit funds, which are part of their merchant-banking unit, from the rule.

News in Brief

Apollo Global Management and Oaktree Capital Group ready to reject Nine Entertainment restructuring proposal.

Octavian Advisors says it’s shutting down due to tough market conditions.

Winston Capital Management LLC earned $564 million in fees last year with a 65% surge in assets under management.

Bank of Nova Scotia, Canada’s 3rd largest bank is looking to expand derivative services for hedge funds.

How To Do Social. We briefly covered hedge fund managers who invested in Facebook’s IPO a few weeks ago and their subsequent drubbing. Jason Mudrick, on the other hand, knows how to do social. He bought Realogy bonds at 58 cents to the dollar when the company was near bankruptcy. Now, with the company filing an IPO worth $1.08 billion at $27 a share, he’s made a fair share. Now that’s a result to update your status with.