Thursday, 17 Apr 2014 | 12:47 PM ET

Hedge funds get clobbered by 'diabolical' market

Trader on the floor of the New York Stock Exchange.
Getty Images
Trader on the floor of the New York Stock Exchange.

A particularly volatile streak in the technology sector and setbacks in other growth stocks are creating the least hospitable market conditions for equity-focused hedge funds in at least a year and a half, say market participants, creating sizable losses in a matter of days.

Since the beginning of April, large hedge funds such as Viking Global Investors, Maverick Capital and Lone Pine Capital have stumbled likely in part due to losses on their tech positions, people familiar with the matter said. Overall, the average stock-focused fund fell 1.23 percent in the first week of April, according to report from Bank of America Merrill Lynch.

"The past two weeks for hedge funds have been diabolical," said one stock-fund manager who has been struck by the sharp intraday swings in both the Nasdaq Composite Index and the iShares Russell 2000 small-stock index, which have fallen by a respective 2.6 percent and 3.2 percent in April so far. Monday, April 7, on which the Nasdaq's gyrations were especially pointed, he added, "was one of the worst days for hedge funds since 2008."

Read MoreMarch tech lossesburn hedge funds

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  Wednesday, 16 Apr 2014 | 2:43 PM ET

Carlyle's Africa fund is getting huge interest

Posted By: Lawrence Delevingne
Africa rises for investors
CNBC.com Enterprise Reporter Lawrence Delevingne discusses how the private equity industry views Africa.

Here's further proof that serious international investors are warming to Africa: The Carlyle Group announced Wednesday that it had raised $698 million for its dedicated continental fund, nearly $200 million above its initial target.

The firm initially sought $500 million for the Carlyle Sub-Saharan Africa Fund when it launched in March 2012. The firm's Africa operations are based out of Johannesburg, South Africa and Lagos, Nigeria, and its investments focus on buyouts and minority investments in goods, logistics, financial services, agribusiness and energy.

"We are optimistic about prospects for investing in Sub-Saharan Africa," David Rubenstein, co-founder and co-CEO of Carlyle, said in a statement announcing closing the fund to new capital. "The region has been the fastest growing developing market in the world outside of China, and we have a strong, experienced, local team in the region. We are very pleased with investor interest in this strategy."

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  Wednesday, 16 Apr 2014 | 8:02 AM ET

Morning six-pack: What we're reading Wednesday

Posted By: Jeff Cox
Characters from the game Candy Crush on the floor of the New York Stock Exchange, in honor of the mobile gaming company King holding its initial public offering at the NYSE on March 26, 2014 in New York City.
Getty Images
Characters from the game Candy Crush on the floor of the New York Stock Exchange, in honor of the mobile gaming company King holding its initial public offering at the NYSE on March 26, 2014 in New York City.

Happy Wednesday. We now return to our regularly scheduled program of spring.

The big gaming news is that Tencent Holdings and King Digital are teaming to bring "Candy Crush" to China, assuring a hard landing there. (Wall Street Journal)

Changes to census questions will make it impossible to gauge the effects of Obamacare accurately, which you might imagine has some folks pretty steamed. (New York Post)

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  Tuesday, 15 Apr 2014 | 3:34 PM ET

Ackman gives $17M to Harvard to study behavior

Posted By: Lawrence Delevingne
Bill Ackman
Scott Eelis | Bloomberg | Getty Images
Bill Ackman

Bill Ackman wants the world to have a better understanding of why people act the way they do.

Harvard University announced Monday that The Pershing Square Foundation, founded by hedge fund manager Ackman and his wife, Karen, who are both alums, awarded the school $17 million to establish three endowed professorships and establish a $5 million research venture fund for Harvard faculty and students, according to a university press release.

The Ackmans' funding will go toward Harvard's Foundations of Human Behavior Initiative. Its goal is to "drive transformative insights about the psychological, social, economic, and biological mechanisms that influence human behavior, and then help translate that new knowledge into mechanisms for improving human well-being across the world," according a statement by the school.

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  Tuesday, 15 Apr 2014 | 2:41 PM ET

Is this a bubble market? Here's one way to tell

Posted By: Jeff Cox
Market's in bubble territory when ...
CNBC's Jeff Cox discusses some of the signs to look out for in order to tell if the market is in a bubble.

Major market averages may not have much further to fall before indicating that something considerably worse is in store.

Technical analysis is putting key stock indicators near what Walter Zimmerman, chief market technician at United-ICAP, calls the "must-hold" levels—areas that have not been violated since the March 2009 lows that kicked off the heretofore powerful bull market run.

For the S&P 500, that line in the sand happens at the 1,785 level—just about 2 percent from trading levels at midday Tuesday.

For the Nasdaq, which is receiving more attention since it has suffered the steeper declines and is near a correction drop of 10 percent, the level is around 3,830—about 3.5 percent from the current mark.

Break those points, and Zimmerman warns that a highly uncomfortable time lies ahead for bullish investors.

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  Tuesday, 15 Apr 2014 | 1:17 PM ET

Outlook for pensions is pretty awful: Bridgewater

Posted By: Lawrence Delevingne
Pension funds & return reality
CNBC enterprise reporter Lawrence Delevingne breaks down how many public pension funds overestimate annual returns.

Here's a scary retirement prediction: 85 percent of public pensions could fail in 30 years.

That's according to the largest hedge fund firm in the world, Bridgewater Associates, which runs $150 billion for pensions and other institutions like endowments and foundations.

Public pensions have just $3 trillion in assets to cover liabilities that will balloon to $10 trillion in future decades, Bridgewater said in a client note last week obtained by USA Today.

To make up the difference, the firm said pensions will need to earn about 9 percent per year on their investments. But Bridgewater estimates pension funds are more likely to make 4 percent. If that's true, the vast majority—85 percent—of retirement systems will run out of money because they will continue to pay out more than they take in.

The report comes as pensions wrestle with what rates of return to assume given their implications on future financial health.

The city of Detroit, for example, has reportedly agreed to increase its pensions' projected return to 6.75 percent on its pension funds, up from 6.25 percent and 6.5 percent, according to a separate USA Today report. The change is part of ongoing pension cut negotiations for the city to exit bankruptcy.

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  Tuesday, 15 Apr 2014 | 9:19 AM ET

Morning six-pack: What we're reading Tuesday

Posted By: Jeff Cox
Protesters call for tax increases on the wealthy.
Adam Jeffery | CNBC
Protesters call for tax increases on the wealthy.

Happy Tuesday. We interrupt our regularly scheduled springtime to bring you ... snow?

Fear not: Even if there are flurries forecast for parts of the Northeast, economists are getting optimistic that the real winter chill has begun to fade. (HeraldNet)

Even in liberal California, most residents there are saying that taxes are just way too high. (Breitbart)

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  Monday, 14 Apr 2014 | 10:38 PM ET

Hedge fund Balestra to lose two of three key execs

Posted By: Lawrence Delevingne
James Melcher, Balestra Capital
Jin Lee | Bloomberg | Getty Images
James Melcher, Balestra Capital

Balestra Capital, the hedge fund firm founded by James Melcher in 1979, is set to lose two senior leaders.

Norman Cerk and Matthew Luckett have decided to resign from the firm on June 30, according to an investor letter obtained by CNBC.com Monday evening.

Cerk and Luckett are co-portfolio managers of Balestra's flagship hedge fund. Cerk joined Balestra in 1997 and is head trader. Luckett joined in 2004 and is responsible for portfolio strategy, research and risk, according to the firm's website.

"Over the last few months, it became increasingly clear that we need a single voice and vision regarding the future of the Firm and the portfolio management of Balestra Capital Partners," the letter said. Melcher will resume serving as the sole portfolio manager for the fund. Balestra managed $1.64 billion as of Jan. 1, according to a regulatory filing.

A spokeswoman for Balestra did not immediately respond to a request for comment.

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  Monday, 14 Apr 2014 | 2:28 PM ET

Longtime Barclays executive to depart

Posted By: Lawrence Delevingne
Adam Jeffery | CNBC

A senior investment banker at Barclays is set to leave following a combined 17 years at the bank and the one it acquired, Lehman Brothers.

Larry Wieseneck, now head of global distribution and structuring at Barclays, will depart in June to "pursue other interests," according to an internal memo sent to employees today that was obtained by CNBC.com.

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  Monday, 14 Apr 2014 | 6:00 AM ET

Private equity unloads BRICs, targets new regions

Posted By: Lawrence Delevingne
Bangkok, Thailand.
Piriya Photography | Moment Open | Getty Images
Bangkok, Thailand.

Private equity investors have long looked to four large emerging markets for big returns: Brazil, Russia, India, and China. But the BRICs today don't quite fit the fast-growth that Goldman Sachs strategist Jim O'Neill described in the 2001 paper that coined the widely used acronym.

With each BRIC economy in some sort of trouble, private equity firms are increasingly putting their investment dollars to work in other less-developed markets—especially Southeast Asia and Sub-Saharan Africa—in hopes of better returns.

Money invested in non-BRIC emerging markets increased 18 percent in 2013, reaching a five-year high of $11 billion and representing 44 percent of total capital invested in emerging markets, according to a recent study by the Emerging Markets Private Equity Association. At the same time, total capital invested in the BRICs declined 20 percent between 2012 and 2013 and was 38 percent lower than in 2011.

"Investors are certainly looking beyond the BRICs, acknowledging that consumer driven growth is accelerating most in these new markets," said Aly Jeddy, partner at The Abraaj Group, a global private equity firm that runs $7.5 billion across more than 20 sector and country-specific funds. "Investors are increasingly as wary of BRICs hype as they are weary of the unattractive returns many of the funds in these markets have delivered."

To be sure, the BRICs are still a force. China, India and Brazil alone still accounted for more than 50 percent of total capital invested in emerging markets and more than 30 percent of all funds raised, according to the same EMPEA report. But the recent pullback in all funds raised from investors for emerging markets—from $45 billion in 2012 to $36 billion in 2013—was largely a result of fewer funds raised targeting China, India and Brazil.

No region has gotten more money outside the BRICs than Southeast Asia.

In 2013, fund managers invested a five-year high of $2.2 billion and raised $2.9 billion for the region, a six-year high. In 2011, so-called emerging Asia countries like Indonesia, Malaysia, the Philippines, Thailand and Vietnam received just 7 percent of emerging market private equity investment. That increased to 17 percent in 2012, and 23 percent in 2013.

»Read more

About NetNet

  • NetNet is where you'll find the low-down and the high jinks of Wall Street. It's the place for insider stories, trader gossip, and tales of the foibles of the moneyed crowd and the culture of finance.Wall Street news and commentary served fresh all day long.


  • Jeff Cox is finance editor for CNBC.com.

  • Lawrence Develingne

    Lawrence Delevingne is the ‘Big Money’ enterprise reporter for CNBC.com and NetNet.

  • Stephanie Landsman is one of the producers of CNBC's 5pm ET show "Fast Money."

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