Hedge Fund Panel Report: Morgan Stanley Breakers Conference ~ market folly

Wednesday, February 3, 2010

Hedge Fund Panel Report: Morgan Stanley Breakers Conference

Today we are delighted to begin a series of posts detailing the recent hedge fund panels that took place at the Morgan Stanley Breakers Conference on January 25th & 26th, 2010. This is an introductory post that outlines the key takeaways from the event and then progresses to separate summaries regarding the specific hedge fund manager panels.

In terms of outlook from the various hedge fund managers, many are bearish. While they don't deny opportunities still exist, they are concerned about macro factors and the massive equity gains we've already seen. They note that shorting was extremely difficult in 2009 as almost all their shorts went up. This was compared to the environment in 2003 where things were very similar.

Moving forward, managers think 2010 will require a lot of patience but will provide ample opportunities to generate alpha, contrary to 2008 and 2009 where beta drove most of the returns. Many hedgies think 2010 will be like 2004, a stockpicker's market. Hedge fund managers are anticipating a lot of mergers and acquisitions going forward and see the event-driven strategy as very attractive. Specifically focusing on credit, they think the easy money has been made. The majority of hedgies felt that mid-cap restructurings would be the most attractive area. Instead of seeing the credit cycle as 'over,' they think it has merely been extended since many companies have extended their debt.

In the alternative investment industry in general, there is less competition as there are few hedge funds and less capital competing with hedge fund managers. They are also seeing a trend of investors investing directly in hedge funds, bypassing fund of funds and that additional layer of fees. Many believe that large hedge fund firms have more difficulties ahead as they have to manage investor demand and regulations, but they see room for smaller firms to blossom as they have less to worry about and can focus on investing. Regulation was a big concern for many and they could see managers leaving the industry if it becomes too onerous to run a hedge fund, instead opting to manage their own capital.

This conference was absolutely loaded with big-name hedgies in the following panels:

The Case for Global Equities in 2010: What Should Investors Expect? Panelists included:

  • Roberto Mignone (Bridger Management)
  • Clint Carlson (Carlson Capital)
  • Larry Robbins (Glenview Capital)
  • Pierre Lagrange (GLG Partners)
  • Lee Ainslie (Maverick Capital)

The Art of Multi-Disciplinary Investing: Is There Alpha in Asset Allocation? Panelists included:
  • Eric Mindich (Eton Park Capital)
  • Glenn Dubin (Highbridge Capital)
  • Jonathon S. Jacobson (Highfields Capital)
  • Daniel Och (Och-Ziff Capital Management)
  • Dinakar Singh (TPG-Axon Capital)

Credit Opportunities in the Current Environment: Where Do We Go From Here? Panelists included:
  • Kevin Ulrich (Anchorage Advisors)
  • Marc Lasry (Avenue Capital Group)
  • Kenneth Eberts (Goldman Sachs)
  • Jeffrey A. Altman (Owel Creek Asset Management)

The Global Investment Landscape in 2010. Panelists included:
  • Stanley Druckenmiller (Duquesne Capital)
  • Paul Singer (Elliott Management)
  • Marko Dimitrijevic (Everest Capital)

First up (in a separate post): the long/short equity panel.

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