The Hedge Fund Hot 100

Date: Monday, February 25, 2013
Author: Hedge Fund Insight

There are a lot of lists of hedge funds and hedge fund related business. Usually and appropriately for an absolute return concept, the lists are usually about absolute size. “Who is the Daddy?” tends to be the main question. Hedge Fund Insight is seeking to answer a slightly different question in compiling the first HFI Hedge Fund Hot 100.

As Hedge Fund Insight is about adding commentary and context to the bald facts about the hedge fund industry our Hot 100 is about what is moving in the industry. “What is making waves?” and “what is growing?” are key questions. The HFI Hedge Fund Hot 100 is not a ranking. So the firms and people in the nineties are not smaller or less important than those in the number range 30-to-40, with one exception. The Top 10 references the most important themes for the industry currently.

Naturally, as 80% of hedge fund selection is about a fund’s return series, the most common factor for inclusion in the Hot 100 is return, and recent return at that.  What will get investor attention is superior performance versus  the industry and against a peer group of some sort.  All humans suffer from recent experience/data bias, the compilers of the Hedge Fund Hot 100 do too. So in this list most weighting for consideration has been given to returns over a recent year – usually the calendar year of 2012, but sometimes over the last twelve months to the end of January 2013. One or three months is a more immediate time frame for assessment, but in reality those in the hedge fund industry don’t react to or in those lengths of time.

What is topical or Hot in the industry is not just hedge funds, funds of hedge funds or their managers. All sorts of businesses service hedge fund management companies and their owners.  The Hedge Fund Insight Hedge Fund Hot 100 gives some acknowledgement to service providers, mostly where the hot label can be applied where it can be justified by external verification in surveys and awards. If any service providers can be making commercial hay it should be those that get external recognition  by peers and clients. Lawyers, prime brokers and hedge fund administrators have been included on this basis.

Another means of qualification for the HFI Hedge Fund Hot 100 is through growth by M&A. Acquisition or merger can be a sign of strength or weakness in commercial positioning. Acquiring companies tend to be seen as victors, and to the extent that the new shape of group can  impact sector business models they should be included. The Hot 100 is about business momentum as much as anything else. Who is taking share in a business line can be just as important as who has the best organic growth, particularly for the more mature areas of activity of the hedge fund world.

Finally Hedge Fund Insight gives evidence in its content that it has a sense of humour, and is prepared to take a rounded view of what is relevant to those working in the hedge fund industry. The Hot 100 makes some calls on what is hot in a media sense and acknowledges the best charitable work of recent times that has been funded by hedgies.

As a first effort the Hedge Fund Hot 100 will not be as Hot as subsequent editions. Some data has been collected for the first time, so it has not been possible to identify which people or firms have the most growth, as opposed to which are the largest at one particular time. With more snapshots of data the dynamics will become clearer, and what is truly Hot will be selected

As ever with topics and coverage on Hedge Fund Insight, you the reader are allowed to disagree with what has been selected or neglected in the Hedge Fund Hot 100, and you are invited to comment and take a right or reply via the comments section below this article.

100         The JOBS Act      Passed into law in April the JOBS Act is intended to allow hedge funds to advertise, though still only sell to accredited investors. The SEC has yet to issue guidelines on how hedge fund firms should operate in this area. The best business managers of hedge funds are planning now on what kind of brand they want to build. Campaign design comes later.

99           Milltrust Platform            It’s okay, if not required, to have a robust platform with great infrastructure and a good capability to carry out marketing, but really makes a UCITS hedge fund hum is good returns. Milltrust is batting three for three.  The first three funds are a Greater China Fund, managed by Value Partners in China, a Latin American equities fund managed by Banco Itaú and a Brazil equities fund run by BTG Pactual.  They are up 19.36%, 24.86% and 18.15% since launch in June last year.

98           HFT for CTAs      CTAs have struggled for returns over the last few years. A partial solution has been to allocate more to trading in instruments other than futures, such as equities. The most common area to receive increased research and capital budgets has been high frequency trading systems.

97           Lansdowne Developed Markets Fund    The Lansdowne Developed Markets Fund may have the best read hedge fund letter in Europe, but that is not the reason the Fund is hot. Neither is the  fact that Lansdowne is the most commonly searched for hedge fund name in Europe. Stuart Roden and Pete Davies’ fund is include because of returns – the Developed Markets Fund was up 18.16% last year and up 5.1% in January.

96           Secondary Market           The market for shares in hedge funds has been around for some years, but it came into prominence after side-pocketing and gating became de rigeur in 2008/9.  Volumes traded are going up, and the number of intermediaries has grown; they include Tullett Prebon, Hedgebay,Wake2o, Gamma Finance and Morgan Stanley’s Alternative Investment Partners. There is another year left of good activity.

95           Hedge Fund Insight.org         Fast growing new hedge fund media presence. The proportion of visitors to the site that are returning has doubled since the start of this year.

94           MLIS Theorema European Equity L/S Fund            The SICAV version of the Giovanni Govi’s hedge fund had as good a three months from Nov-Jan as it could given its style – up 7.41%.

93           Going Direct         This week the Colorado Fire & Police Pension Association terminated K2 Advisors’ mandate for a commodity fund of funds. The termination is part of the pension fund’s strategy to have internal oversight over direct investments in hedge funds.

92           MKP Capital Management           The New York hedge fund manager has started off 2013 the way it finished 2012: In November the State of Wisconsin Investment Board awarded a $125 million mandate to the firm’s credit strategy MKP Opportunity. The California State Teachers’ Retirement System has allocated MKP $50m this month in its innovation portfolio, which provides a way to research managers and strategies that may be expanded upon. More to come then.

91           Robin Hood Relief Fund                The Robin Hood Foundation was started by Paul Tudor Jones to help the New York area. The concept really worked after Hurricane Sandy hit. Having raised $67.5m for Sandy relief, mostly through the 121212 concert, the Robin Hood Relief Committee has already allocated or disbursed 75% of that money and the rest will be paid out within 100 days of 121212. Top work.

90           Maverick Capital               Lee Ainslie is capitalising on his success in 2012, when his fund was up 16%, by making available to outside capital a concentrated version of the Maverick Fund. Maverick Select will be capped at $1bn.

89           Cheyne Capital Corporate Credit Team    Picking out one fund managed by the crossover corporate credit specialists would diminish the breadth of their current heat:  Creditflux shows 4 Cheyne funds:  Total Return Credit Fund (up 69% in 2012), Managed CSO Fund (up 18.8%),Cheyne Long Short Credit Fund up 26.89% and the CDO Fund up 70.94%

88           AHL Evolution    If Man Investments are going to be the comeback kings this year then this might be the source of their redemption  – the side project is up 22.1% over the last 12 months

87           Alcentra Structured Credit Opportunity Fund      BNY Mellon’s Alcentra runs the top European fixed income hedge fund – up a spectacular 44.14% in the last 12 months, and with a CAGR of 50.08% since inception

86           HedgeServ          This hedge fund administrator not only was ranked the top firm of its type overall in the Alpha Awards, it was also top rated in each category of service provision. Not bad for a 5 year old firm. Currently administers $160bn of assets

85           SEC’s Targeted Enforcement and Exam Teams    The focus of the SEC’s specialist hedge fund teams will continue to be (over)valuation of positions – the SEC teams will test the funds’ valuation methodologies. The SEC’s Aberrational Performance Inquiry is now focused on a subset of hedge fund strategies that have a high incidence of suspicious returns, according to a recent speech by the Chief of the Enforcement Division’s Asset Management Unit

84           Newedge Group              In the annual Global Custodian survey of the perceptions of prime brokers by their hedge fund clients NewEdge Group saw a good improvement to their average scores.

83           Grosvenor Capital Management               The fastest hedgie is Christina Fiduccia of Grosvenor Capital Management in Chicago. She is the only hedge fund employee or partner to rank in the all time top ten for the J.P.Morgan Challenge series of runs.

82           Finalternatives.com        The highest ranked hedge fund media property for traffic on Alexa.com is www.finalternatives.com – ranked at 187,000

81           Castlerigg Merger Arbitrage Fund             The alternative UCITS category is poorly represented in the event driven strategy. The Castlerigg Merger Arb Fund makes the case for inclusion of the strategy on its own – up 11.46% over the last 12 months.

80           Odey European Inc.        Europe’s top equity long/short fund in the last 12 months (according to BarclayHedge) is up 33.06%

79           Arcus  Investment Management              Arcus Japan Value Fund is the best performing hedge fund managed from the UK – up  48.27% in the last 12 months. Arcus also has two high ranking UCITS hedge funds – Arcus Japan Absolute Institutional Fund and Arcus Japan Relative Institutional

78           Quantitative Investment Management, LLC        Jaffray Woodriff’s Global Program “QEP” is the top performing large CTA (>$1bn) over last 12 months according to the Altegris manager rankings. The Global Program is a short-term trading strategy which is up 6.82% over the year to end Jan.

77           Brigade Capital Management     According to the P&IQ database Brigade has won more institutional hedge fund mandates recently than anyone bar BlueCrest, including a $200m allocation from the New York City Retirement Systems.

76           Cliffwater            Several of the hedge fund investment consultants to U.S. pension plans are included here. Cliffwater deserves a mention for being the arch proponents of sticking to the big hedge funds.

75           Albourne Partners           Albourne is well positioned for the evolution of institutional investors in hedge funds to direct investing, particularly in North America which constitutes nearly two-thirds of the client base. As a consequence Albourne continues to grow – adding 21 clients in the second half of last year.

74           Kayne Anderson Capital Advisors             In the recently compiled Top Commodities Equity Hedge Fund rankings Kayne Anderson Capital Advisors came top. Commodity related stocks accounted for 51% of its equity portfolio (at the end of the 3Q 2012) according to hedgetracker.com. Kayne Anderson Midstream Energy Fund, Ltd. was up 13.96% in January.

73           Man Group         Whilst not all their hedge funds have set the pace recently, Man Group are the team to beat on the streets. In the 2012 JP Morgan Challenge in London Man Group’s mens team were the top ranked team representing a hedge fund firm, just ahead of GlobeOp and Moore Europe.

72           Renaissance Technologies           Unusually for RenTech, the firm is cited for reasons other performance in the Hot 100. Its new multi-strategy Institutional Diversified Alpha Fund hoovered up an enormous $5bn last year, easily making the largest launch last year.

71           Tiger Cubs & Tech            The Top Technology, Media and Telecom Hedge Fund List is headed by three managers who learned part of their craft under Julian Robertson at Tiger Management. The three are Philippe Laffont’s Coatue Capital, Chase Coleman’s Tiger Global Management and Lee S. Ainslie’s Maverick Capital Management (source: hedgetracker.com)

70           Ironwood Capital Management           The San Francisco-based fund of funds has recently raised its public profile by making it known that it has client money in SAC, and has been in touch with investors about the position. Ironwood’s Institution Class fund of hedge funds was up over 10% last year.

69           Manny Roman      Still a coming force, the new CEO of Man Group has brought out his broom, so that Riverbank House is beginning to resemble the c-suite of No.1 Curzon Street.  Luke Ellis will become president of the company, Sanday Rattray, will become CEO of AHL, and Mark Jones and Simon White will become co-CEO of GLG and head of operations and technology respectively.

68           Hedgeweb.net        The top two ranked websites dedicated to hedge funds are both database access sites – hedgeweb.net ranks higher than eurekahedge.com for traffic according to Alexa.com

67           New Silk Road Investment           New Silk Road’s Asia Landmark Fund became one of the limited number of Asian based hedge funds to manage more than a billion Dollars this year.

66           Crude Oil Futures             Hedge fund commodity position taking is most active in crude oil futures – hedge funds are currently long 280m barrels of crude oil, and have spreads on a further 370m barrels. The FSA has specifically noted the commodities futures exposure taken by hedge funds in assessment of their systemic risk.

65           Citadel        Citadel’s rehabilitation with investors seems to be complete. After taking significant reputational hits through the gates applied to its funds in 2008-10, the Chicago hedge fund company jumped from 44th to 4th in this year’s II Alpha’s Hedge Fund Report Card poll of US investors, scoring highly for transparency, investor relations and infrastructure.

 64           The GLG European Equity Fund         Piere LaGrange’s European large cap equity UCITS hedge fund has had a good  last 12 months – up 37% – though asset gathering must be slower than GLG would like as AUM are only €60m in the L Class Fund.

63           Cevian Capital         The €6bn activist investor targeted German companies several years ago, when it opened its Zurich office.  The appointment in October of German industrialist Eckhard Cordes as a partner at the firm indicates more activity in Europe’s largest economy.

62           Brevan Howard          Alan Howard’s $39bn firm has a very American focus at the moment. Having raised a lot of institutional assets there (this month from Texas County & District Retirement System) for its flagship program and credit fund, Europe’s largest hedge fun manager has been on a hiring spree in New York, and has been marketing its Macro FX Fund.

61           Graham Capital Management LP               Ken Tropin’s firm is often on the shortlists proferred by Aksia, so benefits from that consultant’s growth. The $7.4bn hedge fund manager has been adding to capacity by expanding in London, taking staff registered with the FSA from 13 to 19 in less than a year.

60           Fir Tree Partners              Institutional flows are it, and Fir Tree Partners is one of only three major hedge fund management groups credited with having 100% of their capital coming from investing institutions (P&I). The others are  Bridgewater Associates and AQR.

59           Prisma Capital Partners        Half way through last year Prisma was one of five fund of funds groups globally to have doubled in size over five years (Rock Creek was also one of those). KKR spotted this distinction and bought Prisma in June, when it had $7.8bn in AUM – this had reached $8.5bn by year end.

58           Rock Creek Group           Wells Fargo purchased a 35% stake in fast growing fund of funds group Rock Creek to be able to offer its clients (in-house) hedge fund product, as part of its aim to double the size of its asset management business in 7 years.

57           PDT Partners      Peter Muller’s spin out from Morgan Stanley could be here because it is expanding by opening offices in London and Hong Kong. It is not. PDT Partners is hot because it already has accumulated $2.3bn in assets, and $500m of that was an early stage allocation from Blackstone. It is unprecedented for such a large allocation to come with no participation in the manager’s economics. PDT is very hot.

56           Research For Hedge Funds          The most important research for hedge funds is whatever they commission themselves, whether from stockbrokers, independent research houses, market researchers or expert networks. The focus recently has gone more to the bottom-up from the macro, as the concerns about whether we are in risk-on or risk-off have become “where can I get leverage to a particular factor bet?”, and “should I take the idiosyncratic risk in this stock?”

55           AQR Capital Management            Antti Ilmanen a senior portfolio manager in AQR’s London office has just proved his academic credentials to an unnecessary degree. He not only won the prize for best article in The Journal of Portfolio Management with “The Death of Diversification Has Been Greatly Exaggerated,” but he won the runners up prize too.

54           New York City Retirement System           The City’s five pension funds reflect the tactical shift from using funds of funds to direction allocations. The $120bn system first allocated to fund of funds Permal in 2011, and then last year allocated to five single managers. This month the city announced fresh capital commitments to new managers  Cantab Capital and Fir Tree Partners.

53           BlueCrest Capital Management             BlueCrest has won more institutional mandates in the United States in the last 12 months than any other hedge fund management group.

52           Seven Bridges Advisors LLC         Larry Cohen and Jeffrey Gittleman’s Seven Bridges Advisors was off to a flying start in 2012, its first full year, as Cohen took clients with him from  Ehrenkranz & Ehrenkranz. Whilst it is not possible to keep up the pace of asset gains of the first year the family office/endowment client base is still responding well to the new fund of funds/wealth advisory firm.

51           RMBS               Shorts in RMBS made the careers of those shorting them in 2007-9, and long positions in RMBS have powered returns for many hedge fund managers last year and this. Beneficiaries in 2012 included LibreMax Capital, Marathon Asset Management, Pine River Capital Management, Passport Capital, Kyle Bass’ Hayman Capital Management, Metacapital Management, Axonic Capital Management, Cerberus Capital Management, BTG Pactual, Citi Capital Advisors, and Tilden Park Capital Management. The best returns have been made, but there is still a bit of juice left the advocates claim.

50           CACEIS                   CACEIS, the asset servicing banking group of Crédit Agricolethe, got a leg up in the Global Custodian 17th annual Hedge Fund Administration Survey.  The firm was newly ranked as Top Rated Globally in (single manager) hedge fund administration, but was also newly Top Rated for administration of funds of hedge funds.

49           H2O Allegro Fund             This global macro fund from H2O Asset Management is one of a range of six with different time horizons/risk profiles. The Allegro Fund has a 3-4 year investment horizon and in performance terms has shot out of a cannon – in its first full 9 months of trading it was up 40.23%

48           HFR Asset Management               One of the few funds of hedge fund businesses with decent growth, HFR’s strengths in platform management and index fund management are serving it very well at the moment.

47           Magnitude Capital             There was a danger that Magnitude Capital would not be able to build on their success of 2011, when they bested most of their fund of funds competition, but in 2012 the New York firm was still nominated for multiple awards. AUM across the three big funds are up 16% from the start of 2012, reflecting positive inflows as well as competitive returns.

46           Toscafund           Johnny De La Hey’s financials long/short fund is part of entry number 20 in The Hot 100, but Tosca as a firm is cited because of the combination of De La Hey’s performance  and the comeback of the Tosca MidCap Equity Fund  - down  41% in 2011, but up 37.5% in 2012.

45           Threadneedle Specialist Investment Funds          Threadneedle had two of the range returning more than 30% over the last 12 months – the American Extended Alpha Fund managed by Stephen Moore, and Leigh Harrison’s UK Equity Alpha Income Fund. Combined the two funds have approaching a billion Euros of capital.

44           Cantab Capital Partners                   A recent winner in every dimension – winning mandates, closing a fund to new capital, opening a new fund, adding significant AUM. The firms UCITS hedge fund, the CCP Quantitative Ucits Fund was amongst the best performers in that format last year. Latest mandate win was last week’s $200m from New York City’s five pension funds.

43           BNP Paribas         The prime brokerage operation of BNP Paribas secured a global rating in the Global Custodian survey for the first time.

42           David Einhorn         What is the hedge fund manager’s name du jour? Plug the search term “hedge fund manager” into Google for recent web coverage and Greenlight Capital’s David Einhorn is the name that comes up most often. 

41           GS Global Strategic Bond Fund               GSAM has an extensive range of alternative UCITS, and this one is ranked in the middle of the risk/reward spectrum which puts the return of 13.1% over the last 12 months into a very positive light.

40           Henderson European Absolute Return Fund             It is no surprise that John Bennett is showing what a capable manager he is in long/short. Over the last year what has impressed is the steady accumulation of absolute return.

39           Coupland Cardiff Japan Alpha Fund           One of the best performers amongst UCITS hedge funds, the CC large cap Japan fund was up 47% in the last 12 months, and is up 17% in the first 6 weeks of this year.  Only €2.2m in assets.

38           Turiya Capital             More asset growth than returns for investors to date, but Davide Erro’s close to 2012 bodes well for better returns this year.

37           Meridian Capital Partners             Meridian can be said to have got over being tained by Madoff expsoure. The New York based fund of funds has not allowed last years growth in AUM to stop it out-performing its peers – the Diversified Fund was up 10% in the last 12 months and the Horizon fund just short of that.

36           MLIS Och-Ziff European Multi-Strategy Fund           Quality manager, quality platform, ability to deal, a decent sized hedge UCIT – what is not to like? Certainly not the excellent returns – up 12.53% over the last 12 months, and produced in a smooth progression like a diversified fund should do.

35           Alliance Bernstein US Thematic Fund         AB’s $123m Thematic Fund certainly benefited in the last 12 months from the demographic, or technological innovation it seeks to exploit.  Up 36% in the last 12 months, this is probably the best performing UCITS hedge fund managed by women.

34           Fortress Investment Group            Like D.E. Shaw, the website of Fortress Investment Group is much more highly ranked for web traffic than suggested by the group’s hedge fund assets under management. By assets FIG is  no.37, by activity on its web traffic it is 3rd.

33           It’s St.James’s             Its not the Grosvenor estate, it’s not the City or Canary Wharf, and it is definiteley not Baker Street. The heart of the hedge fund industry in London and therefore Europe is the St.James’s area. This has been reinforced by the traders at Brevan Howard who told their bosses that the new HQ for the firm has to be in St.James’s for lifestyle reasons.

32           Schulte Roth & Zabel          The seal on the commercial significance of the hedge fund practice at Schulte Roth came in the middle of last year when Nicholas Fagge and Kerrie Walsh were named partners in London.

31           Adage Capital Management        Adage Capital has become the best rated hedge fund management company in II’s Alpha annual poll of investors, ascending from second place in 2011. Specifically Adage was rated significantly higher than its peer group on what was ranked as the most important factor in the rating process, namely alpha generation.

30           Prusik Asian Equity Income Fund              The alternative UCITS format may have disappointed some investors with the return delivered, but not those investing in this Asia ex-Japan fund from Prusik Investment Management. This contender for equity fund of 2012 was up 38% last year.

29           J.P. Morgan            As a hedge fund administrator, J.P.Morgan went from Commended in 2011 to globally Top Rated in 2012 amongst its hedge fund clients, and also achieved the same elevation from clients in Europe and North America in the Global Custodian Hedge Fund Administration Survey.

28           SS&C Technologies          SS&C, the  financial services software and software-enabled services provider, was in expansion mode recently, gobbling up PORTIA from Thomson Reuters, and GlobeOp, the middle and back office services/risk information provider. Net income was up 22% y-o-y in the 4Q 2012.

27           State Street        Already the third largest administrator of hedge fund assets in the world, the acquisition of Goldman Sachs Fund Administration in combination with IFS makes State Street the coming force in fund administration.

26           Akin Gump Strauss Hauer & Feld              The combination of newish arrivals Tim Pearce and Ian Meade and investment fund practice co-head Prakash Mehta has put Akin Gump are on an upward trajectory, confirmed by the recommendation for commercial awareness by hedge fund clients (Partners & Chambers)

25           D.E. Shaw            The best recent multi-year turnaround of any major hedge fund firm. Two years ago hedge fund assets had fallen to $14bn, but are now back to $21bn and the firm is hiring. Oculus, its flagship macro fund, gained more than 20 percent last year.

24           GLG Market Neutral Fund            Two out of the last three years have been very good for GLG’s flagship fund, and last year’s 18.4% is attracting attention.

23           CQS        Not sitting back on his laurels Michael Hintze’s own fund, the CQS Directional Opportunities Fund made 35.86% last year and assets in the fund got to to $1.5 billion.

22           CCI Healthcare Partners Ltd.       AUM in the Fund up by a third over the last year to three-quarters of a billion dollars, after the managers at Columbus Circle Investors put in a sixth straight up year with the Fund

21           Barnegat Fund         Bob Treue’s fund was up 38.99% in the last 12 months to the end of Jan, and has increased AUM by over a third in a year. Not all investors have been put off by the leverage employed.

20           Financial Sector Specialist Hedge Funds                        The Daddy of the sector Tosca had a great 2012 (up 25%) , and William De Winton’s Lansdowne Financials Fund did very well (up  17.8%)  – both have started 2013 well, as have sector tiddlers like Moors & Mendon Master Fund (5.8% YTD after 43.8% last year), and Financial Stocks Limited Partnership up 3.5% after 24% last year.

19           US Onshore Hedge Funds            The industry started in the States, and most of the industry assets are still managed from the U.S. What may not be well known is that (U.S.) onshore hedge funds have stopped shrinking as a proportion of the industry when looking at the number of funds. 25% of the industry funds were onshore in the US in 2010, that percentage shrank to just over 22% the following year, but according to EurekaHedge data Onshore U.S. hedge funds were 22.62% of the world’s funds in 2012.

18           UK Equity Long/Short Funds                  The UK may be Europe’s largest equity market but those who specialise in it do not get full attention in the hedge fund world. These 2012 returns will help – the Henderson UK Absolute Return Fund up 34.2%, Polar Capital UK up 37.61% and the Gartmore UK Small Cap Best Ideas Fund up 28.96%.

17           Bridgewater Associates           Although already the world’s largest independent hedge fund management group, the Westport macro mavens are hot because they are launching a new fund this year – the All Weather Major Markets Fund – and not because they have become Connecticut’s largest employer.

16           BTG Pactual             Two funds in the best performers list of 2012 – the Distressed Mortgage Fund up 46%, and the flagship Global Emerging Markets and Macro Fund gaining 28.1 percent

15           WF Asia Fund            After a cracking 2012 (up 27.68%) Scobie Ward and Peter Ferry are off to a decent start this year too – up over 2 1/2 % in January.

14           Capula Investment Management             On the back of becoming an institutional favourite for hedge fund allaocations Capula has increased its professional investment staff by over 60% in 2 years.

13           Marcato Capital Management              Returns to value have been good for Richard McGuire recently – up 28.67% in 2012. Mercato has just announced that McGuire is seeking to join the Board of Lear Corporation – at least the seating should be comfortable.

12           Third Point          Look no further for who is hot amongst activists than the man with the hottest pen – Dan Loeb. Has letter writing had a better pay-off? Third Point Offshore was up 21.6% last year, with the Ultra version up a steaming  34.47%. 2013 has started well too for Third Point.

11           Titanium Capital Macro FX programme             The systematic currency programme is up over 30% in the last 12 months, and 4.5% in January.

10           Hedge Fund M&A                  Whether it is single manager or fund of hedge funds the deal flow continues into 2013. The reasons for each type to be engaged in M&A are different, but for each the dynamics that brought deals late in 2012 are still at work today, so expect more stake sales, mergers and a significant flotation by year end.

9              Not So Much the EU               The head office location of a hedge fund manager used to be a function of where the principals worked before they set up their first fund. Now taxation and regulation have more impact, and the consequences of the negative attitude of the political and executive classes of the EU is showing up via database analysis (EurekaHedge). The percentage of managers in London, Italy and Luxembourg is down, at the margin, and up in the Channel Islands, and more significantly in Switzerland. Malta may be the home du jour  for 2013.

8              Aksia           The investment consultant to pension plans facilitates the trend to going direct – for example Aksia helped New York City make its first five direct hedge fund investments last year

7              Distribution Via Hedge Fund Platforms               Never slow to miss an opportunity in distribution, Winton Capital is again at the leading edge of practice by signing up with Morgan Stanley’s FundLogic Alternatives. The UCITS compliant package has been put together through CTA specialists Equinox Fund Management.

6              Lyxor Asset Management                 The institutional investor bias towards the use of managed account structures plays into one of Lyxor’s strengths. Winning awards 7 times in 2012 for “Best Managed Account Platform” is not the reason Lyxor are hot. The breakthrough of use of managed accounts on offshore fee scales is a commercial masterstroke.

5              Blackstone Alternative Asset Management                  J. Tomilson Hill’s decision to look to buy stakes in mature single manager hedge fund businesses, as well as provide early stage capital is right of the moment. It helps if your base fund of hedge fund business is still growing too, as is the case at Blackstone.

4              Dan Och               The CEO of Och-Ziff is totemic of one side of the deeper relationship with managers sought by some investing institutions.  “Sharing the breadth of our knowledge is a natural outgrowth of what we do,” says Och. An example was the increasing closeness of OZM with the New Jersey Division of Investment which resulted in a doubling of the investors allocation. Surely the best way to express increasing depth of relationship.

3              AIFMD               The EU is the regulatory gift that keeps on giving. Service providers to hedge funds are scrambling to build reporting and risk management requirement routines to meet the demands of the Alternative Investment Fund Managers Directive.

2              Compliance Officers       With 1500 hedge fund investment advisors registering with the SEC for the first time it is certain that the industry needs more compliance resource. Some of the resource will be more time bought from compliance consultants, some part-time compliance staff will go full time, and hedge funds will have to recruit more compliance professionals.

1              Bigger is Best (again)             There is no sign yet that the trend for the hedge fund industry to concentrate is changing. Pension plan flows dominate, pension plans use consultants, consultants seldom go outside the small group of super-sized managers in the winners enclosure. Only the closure to new capital of many of these brand name hedge funds will force a change.