SEC boss warns hedge funds risk disaster
May 14, 2005
By Nancy Kercheval in Washington
http://www.smh.com.au/news/Business/SEC-boss-warns-hedge-funds-risk-disaster/2005/05/13/1115843369895.html
Pressure on hedge fund managers to deliver market-beating returns may lead to "disaster" and supports the need for more regulation, US Securities and Exchange Commission chairman William Donaldson said. "If history is any guide, it is just this sort of pressure that can lead otherwise well-intentioned professionals to pursue practices that can ultimately result in disaster for the investors that they serve," Mr Donaldson said in prepared remarks for a Foundation Financial Officers Group meeting in Washington. Last October, the SEC ordered most hedge fund managers to register with it and undergo inspections and reviews of their book-keeping. It expects about 1000 funds to sign up by 2006. Mr Donaldson has pushed for more oversight as the popularity of hedge funds, a market he estimated at $US1 trillion ($1.3 trillion), attracts smaller investors. Mr Donaldson said he was concerned about the "crowding of hedge funds into similar investment strategies and the difficulty that this implies for hedge fund managers eager to post market-beating returns".GLG Partners told investors its $US3.5 billion convertible-bond fund fell 5.2 per cent, Vega Asset Management said five funds had suffered losses ranging from 1 to 5 per cent, and Man Group reported a key fund fell 3.1 per cent, The Wall Street Journal reported. Hedge funds "have sophisticated models, a sense of their limits and market experience", Robert Merton, a Nobel Prize-winning economist and co-founder of hedge fund Long-Term Capital Management, said in an interview in New York. Concern about hedge-fund investments intensified last week when Standard & Poor's cut its credit ratings on General Motors and Ford to junk-bond status. "These can be very volatile times," said John Gaine, president of Managed Funds Association, which lobbies for 800 hedge funds. "The downgrading of GM is a historic event. I don't know if it will rise to Russia's default of its debt; I hope it doesn't. But in terms of real facts, I don't know that anything's really happened." Mr Donaldson had forecast disaster in the industry before, Mr Gaine said. "That's a theme he consistently has been sounding for years." Phillip Goldstein, a portfolio manager for Opportunity Partners LP, filed a lawsuit challenging the SEC's authority to regulate hedge funds. "There's no evidence of anything amiss with hedge funds," he said. "The SEC seems to be desperate to get hedge funds under its authority by any means." Mr Goldstein said he believed the authority to regulate needed to come from Congress. The new SEC registration rule, to take effect in 2006, requires managers running hedge funds with at least 15 US clients and $US30 million in assets to register as an investment adviser with the SEC. Advisers must give the agency such information as their names, addresses and how much money they manage. Hedge funds, which typically require investors to have a net worth of at least $US1 million, bet on falling as well as rising securities prices and often use leverage, or borrowed money, to boost returns.
Slow Pengana will try two-tier hedges
May 14, 2005
By Lisa Murray
http://www.smh.com.au/news/Business/Slow-Pengana-will-try-twotier-hedges/2005/05/13/1115843369886.html
It's been a dramatic year for the Malcolm Turnbull-backed listed investment company Pengana Managers. After just scraping in enough cash to get its float away last July, the company lost the support of high-profile investor and substantial shareholder Robert Whyte within three months. It has since been dogged by a falling share price and poor investment returns from some of its hedge fund managers, forcing it to announce a major corporate restructure on Friday, in a bid to turn the company around. Pengana Holdings chief executive Russel Pillemer said the company would close two of its hedge funds, and give more money to the funds that had performed well. It will also give Pengana Managers a free kick by allocating it a 20 per cent stake in Pengana Absolute Return Real Estate Fund (PARREF), which has grown almost 18 per cent since it was created last August. "We are hoping that will make a big difference," Mr Pillemer said on Friday. Shares in Pengana Managers jumped 3c to 80c, still well below their issue price of $1.Pengana's float attracted publicity, with rumoured interest from high-profile investors such as former Hoyts CEO Peter Ivany and Allco's David Coe. Its backers had hoped to raise $100 million but managed to fall over the line with just over the minimum of $30 million. Its business model is complicated. Pengana Managers invests in four Australian unit trusts which act as feeder funds for four hedge funds in the Cayman Islands. It has bought stakes in the managers of the four trusts. But the performance of the hedge funds has been disappointing and only one manager, Cape Leeuwin, is on track for the 10 per cent to 15 per cent annual returns Pengana said it would target.The company said on Friday it would split the hedge fund managers into "tier 1" and "tier 2" managers. Money will be taken away from the underperforming managers and allocated to tier 1 managers Cape Leeuwin and PARREF. Mr Pillemer said while he was disappointed in the performance, it had been a "difficult time" for hedge fund managers."We need to constantly evolve so that we can deliver value to shareholders," he said. Pengana's net asset backing was 95c per share when it listed but poor returns have eroded it to 91c a share.The Turnbulls and Wallace Absolute Return fund are Pengana Managers' biggest shareholders.
Pengana Managers not doing too well
By Lisa Murray
July 25, 2005
A year ago Malcolm Turnbull's Pengana Managers was still basking in the glory of a respectable stockmarket listing under difficult conditions. While the fund only managed to rustle up less than one-third of the $100 million it had set out to raise, it gained the backing of high-profile investors including Robert Whyte, David Coe and Peter Ivany. And it was one of only a few listed investment companies trading above its issue price. But things went downhill quickly. Whyte is gone, Pengana has been forced to sack some of its underperforming managers and, now at 72c is trading at a 21 per cent discount to its net tangible assets of 91c a share. Investment performance figures released on Friday show just what a dismal year it has been for the hedge fund incubator. Pengana Managers reported a positive return for just five of the last 12 months. In June, its underlying investment portfolio rose 0.4 per cent, compared to the 4 per cent rally in the benchmark ASX 200 index. And in the six months to June 30, the portfolio was down almost 3 per cent, compared to a 5.5 per cent gain for the ASX 200 index. Pengana's management team is optimistic a significant corporate restructure, announced in May, will generate results for the fund over the next 12 months. "From July 1 Pengana Managers has allocated the bulk of its assets to its more proven managers (Tier 1) while maintaining reduced allocations to new or developing managers (Tier 2)," the company said in the June investor report. The so-called "Tier 1 managers" include Cape Leeuwin, which is a long-short fund investing in the top 100 companies on the Australian Stock Exchange, and new addition, Pengana Absolute Real Estate Fund. Cape Leeuwin reported an investment return of 1 per cent in June and was up more than 3 per cent in the first six months of the year. While its results look poor compared to the ASX 200 index, Pengana notes in the report that Cape Leeuwin has outperformed the Global Hedge Fund Index, produced by Hedge Fund Research. "The Australian stockmarket surprised on the upside once again despite over 150 profit warnings and a slowing domestic economy," Pengana said, noting that Cape Leeuwin "long" positions added more value than its "short" positions. Pengana Capital was founded by Mr Turnbull and three other investors in early 2003. It set up Pengana Managers to raise seed capital for new or recently formed hedge fund managers and support them with risk management and marketing support, listing the fund in July last year. But investors shied away from committing money to a fund which supports managers without a proven track record. The Turnbulls and Wallace Absolute Return Fund are Pengana Managers' biggest shareholders.
nabInvest takes stake in Pengana Capital
Thursday, 1 May 2008
https://www.nab.com.au/about-us/media/media-releases-2008/nabinvest-takes-stake-in-pengana-capital
National Australia Bank’s direct investment management business, nabInvest, today announced its second fund manager partnership, taking a significant minority stake in diversified fund manager Pengana Holdings Pty Limited (PHPL). The majority of the company will continue to be owned by management, fund managers and directors. Pengana Capital, the operating subsidiary of PHPL, has approximately $2 billion in funds under management and currently offers a diverse range of market leading funds across several asset classes. Pengana Capital will continue to be run as a stand-alone, independent business led by CEO Russel Pillemer. Russel Pillemer, CEO of Pengana Capital said "with nabInvest as a strategic investor we are well placed to embark on our next phase of growth and continue to develop innovative new products." "We are looking forward to expanding our market presence and offering our funds to new clients through the National Australia Bank," Mr Pillemer said. Garry Mulcahy, CEO of nabInvest, said Pengana Capital was an attractive investment opportunity because it is a quality investment business with a proven business model. "Pengana’s success is linked to its ability to identify investment opportunities across a range of asset classes and attract best-in-class managers to capitalise on these opportunities," Mr Mulcahy said. "A partnership with nabInvest will strengthen this capability and will support the ongoing development of new investment offers for both wholesale and retail clients." George Frazis, NAB Group Executive General Manager, Development & New Business, said "this investment is an example of NAB’s focus on identifying quality growth opportunities and leveraging our expertise in wealth management." National Australia Bank launched nabInvest in November 2007 to build in house asset management capability and take substantial equity stakes in boutique investment firms. This is nabInvest’s second investment, the first being Northward Capital, launched in November 2007. The consideration of the transaction is not material for NAB. Pengana was advised by Lexicon Partners in this transaction.
For further information, please contact:
Stacey Mitchell Manager, Media Relations, nabInvest National Australia Bank Limited T 02 9966 3035 M 0400 305 446
Sally Robards or Melanie Spence evolution media for Pengana T (02) 8969 6077
Down to Plan C as meltdown burns Malcolm's mate
November 7, 2008 Michael West
//www.smh.com.au/business/down-to-plan-c-as-meltdown-burns-malcolms-mate-20081106-5jcu.html
Malcolm Turnbull's long-standing friend and business associate, Russell Pillemer, is in eleventh-hour negotiations to save his financial planning empire, Centric Wealth, after the private equity firm CHAMP pulled a planned capital raising. Late last year, in the dying months of the bull market, Pillemer and his brother, Michael, who is Centric's chief executive, were looking to float the group for $300million. A CHAMP capital injection was Plan B. Now it's down to Plan C. In a quick-fire auction started last week, Pillemer and his adviser, Goldman Sachs JBWere, called for bids for Centric to be in this Monday. CHAMP was to have underwritten a $100million rights issue but without a rescue deal, Centric's coffers are running low. According to its latest accounts it has $3million in cash left, and $160million in debt, of which $15million is due to be repaid to Westpac by the end of next month. That $15million is part of a $38million facility that matures in March. Pillemer helped the Liberal Party leader's move into federal politics by rallying the South African vote in the Sydney seat of Wentworth. With Pillemer's help, Turnbull got the numbers to defeat the incumbent, Peter King Turnbull and Pillemer worked together at Goldman Sachs at the time of the FAI transaction - advising FAI on its sale to HIH - and latterly at the funds management operation Pengana. Turnbull's wife, Lucy, was on the board of Centric until 2006. Like the floundering financial planning group Storm Financial, Centric has a leverage problem. Unlike Storm, however, Centric's leverage lies in the parent company, not in its client base. Its underlying businesses are in good shape, or as good as can be expected in a financial market meltdown. Centric is an "aggregation play". It had made more than 35 financial planning acquisitions since 2002 and had attempted to float late last year but never got to prospectus stage. Conditions for raising capital deteriorated quickly early this year but by September Centric appeared to have pulled a rabbit out of the hat when CHAMPagreed to underwrite a $100million non-renounceable rights issue to stabilise the Centric balance sheet. The rights issue reflected an enterprise value of $190million. CHAMP got the wobbles, however, during the market carnage last month and is understood to have used a "market out-clause" to pull the offer. This left Centric in the unenviable predicament of having to call for offers via Goldman Sachs JBWere. The story appears to be a rosy one, on the face of it. Centric's earnings before interest and tax were $19million last year and the group is forecasting 20 per cent growth, or EBIT of $25 million, this year. However, Centric is carrying bank debt of $69million as part of overall debt of $159.5million. On its latest accounts, net assets are $6.4 million, including $161.5million in goodwill arising from the planners acquisitions.
Pengana closes property securities fund - The fund manager closes its Australian property fund while launching another property fund in Asia.
Monday, 18 May 2009
By Christine St Anne
http://www.investordaily.com.au/go-to-investorweekly/28653-pengana-closes-property-securities-fund
Pengana Capital has closed its property securities fund and has developed an Asian long-short real estate securities fund as part of a real estate securities strategy revamp. It is very difficult to provide diversification and add value for investors in Pengana's existing Australian Property Securities Fund, Pengana chief executive Russel Pillemer said. He said diversification was difficult to achieve because of issues within the Australian property market such as concentration, strong correlation with equities and the long deleveraging process. The top five stocks in the Australian real estate sector now account for about 83 per cent of that sector, according to Pillemer. In contrast, he said the Asian region offers strong prospects for economic growth and Pengana sees real estate investing as an important part of that process. "The Pengana real estate team is developing a dedicated Asia Pacific real estate fund with the ability to opportunistically short stocks," Pillemer said. "Pengana believes that now is the time to develop a dedicated Asia Pacific listed real estate strategy to capitalise on the growth opportunities in this region." The firm set up an Asian business in July 2007, hiring former Perennial managers to manage an Asian special events fund.The Asian long-short property fund will be managed by the existing team at Pengana, led by portfolio managers Tim Shaw and Diane Lin.