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Friday
June 3, 2016
www.bloombergbriefs.com

Ex-Millennium Manager’s Fund Starts With $380M Seed

BY WILL WAINEWRIGHT
What's the big hedge fund story? Hear
Marko Soldo, a former portfolio manager at Millennium Management, started
reporter Will Wainewright discuss it on
trading his new hedge fund in London on Wednesday backed with $380 million from
Bloomberg Radio here.
Brummer & Partners. Brummer is the main day-one investor in Talarium Capital’s
International Fund, which bets long and short on equities mainly in Europe, the Swedish
investor said in a statement. INSIDE
"Marko has a solid stock-picking experience and has formed a first rate team," Klaus
Gresham hires Winton Capital's
Jäntti, CEO and a portfolio manager with Brummer’s flagship multistrategy fund, said.
Babbedge as chief scientist as the firm
Soldo worked for Millennium between March 2014 and October 2015, according to
expands in London: On the Move
filings with the U.K.’s Financial Conduct Authority.
Brummer & Partners, which backed Sweden’s first hedge fund manager in 1996,
Marshall Wace says SKS Micro shares
managed 129 billion Swedish krona at the end of April, according to its website. Earlier
may triple over the next three years.
this year it said it planned to redeem investments in Canosa Capital LLP and Zenit
Pelargos Capital bets on Honda
Asset Management AB after “weak" returns.
turnaround: Market Calls
Soldo did not respond to a request for comment on how much he has raised so far.
Brummer’s backing of Talarium comes as Glen Point Capital, a hedge fund that started
TCI Fund Management backs Deutsche
trading in London last year, has raised almost $2 billion, according to two people with
Boerse's proposed takeover of London
knowledge of the matter.
Stock Exchange: Activists
That size makes the investment firm, started by former BlueBay Asset Management
money managers Neil Phillips and Jonathan Fayman, one of the largest recent hedge-
European rules on bank research seen
fund startups in Europe. It plans to stop taking money on June 1, the people said earlier
biting U.S. fund managers: Regulatory
in the week. A spokesman for Glen Point declined to comment.
Glen Point, which bets on macroeconomic trends with a focus on emerging markets,
joins a small number of hedge funds, including Rokos Capital Management and Key CONFERENCE COVERAGE
Square Group, that have been attracting new money as many peers are suffering
Some of the biggest managers trading in
outflows. Hedge-fund shutdowns outnumbered startups last year for the first time since
Asia outlined their top investment picks
2009, according to data firm Hedge Fund Research Inc., but several funds have
at this week's Sohn Conference Hong
successfully started in Europe this year. See the table below for a roundup.
— With assistance from Nishant Kumar and Katia Porzecanski
Kong 2016. For highlights, click here.
 
A Non-Exhaustive List of Reported European Launches This Year
EXPECTED
FIRM NAME PRINCIPAL(S) STRATEGY LOCATION
LAUNCH DATE
Silver Ridge Asset Management Anil Prasad, Farhang Mehregani Macro London January
Caius Capital Antonio Batista, William Douglas European credit fund London N/A
First week of
Westbeck Capital Management Will Smith Equities, betting on the rebound in oil London
June
AB Alpha Europe Long Only fund will focus
Albert Bridge Capital Andrew Dickson London 2Q 2016
on European developed-market equities
Frederic Favre, Alexandre
Alpstone Capital Macro London 2H 2016
Germak, Melanie Owen
Will trade futures and options on all
Commodities World Capital Luke Sadrian London 2H 2016
commodities
Will make long and short investments in
Sona Asset Management John Aylward   N/A   September  
European credit  
Macro, will take concentrated, long-term
N/A (see related story here) Ben Melkman New York 1Q 2017
positions
Source: Bloomberg News and Bloomberg Brief stories
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June 3, 2016 Bloomberg Brief Hedge Funds Europe 2

ON THE MOVE
Brevan Howard's Melkman Is Said to Plan Own Fund  Winton’s Babbedge Joins
Ben Melkman, a partner at hedge-fund firm Brevan Howard Asset Management,
Gresham as Chief Scientist
left the company this week to start his own fund, according to a person with knowledge Gresham Investment Management
of the matter. hired Thomas Babbedge from Winton
Melkman, who joined Brevan Howard in 2009 and is based in Geneva, is planning to Capital Management as chief scientist
start the fund in New York in the first quarter of 2017, said the person. He is seeking as the New York-based firm expands in
$400 million at the outset and plans to cap assets at $1 billion during the first year, said London.
the person. Babbedge started at Gresham on
Melkman helped oversee some assets in Brevan Howard’s main fund and was the Wednesday and will research and
senior trader for the company’s dedicated Argentina fund, which had more than $500 develop systematic futures strategies,
million under management before closing last month. It produced net returns of 18 with an emphasis on commodities
percent since opening to outside investors in January 2015. His new fund will focus on futures, according to Scott Kerson, head
macroeconomic trends and take concentrated, long-term positions. of systematic strategies at the firm.
Melkman declined to comment on the new fund, as did a spokesman for Brevan Those models will be used to underpin
Howard. new funds to be launched by Gresham,
David Bonfili, the former chief operating officer at BlackRock Inc.’s Alternative he said.
Investors group, is planning to join the firm as COO, said the person. Bonfili also Babbedge spent nine years at David
declined to comment. Harding’s quantitative hedge fund
Brevan Howard has seen its assets decline from $40 billion in 2013 to less than $20 Winton, which oversees about $34 billion
billion. The Brevan Howard Master Fund closed the first quarter down almost 1 percent of assets, as head of investment
after losing 2 percent in March, according to a company website. analytics. Before working at Winton, he
Investors have asked to pull about $1.4 billion from Brevan Howard’s main hedge was an extragalactic astrophysicist at
fund, two people with knowledge of the matter said in April, as investors flee the industry Imperial College London.
at the fastest pace since the financial crisis. Kerson joined Gresham last month and
Brevan Howard money managers Jonathan Matthews, who traded equities and will be heading the firm’s just opened
currencies, and James Fauset left the firm in January, Bloomberg reported Jan. 26, London office. The firm was founded in
citing a person with knowledge of their departures and records at the U.K.’s Financial 1992 by Henry Jarecki and focuses on
Conduct Authority. commodities, managing about $7.5
— Katia Porzecanski billion.
— Agnieszka de Sousa and Jesse Riseborough
 
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June 3, 2016 Bloomberg Brief Hedge Funds Europe 3

MARKET CALLS
Marshall Wace Says SKS
Micro Shares May Triple
SKS Microfinance Ltd. may see its
shares triple over the next three years as
the Indian industry that extends small
loans to the rural poor rebounds from a
crisis early this decade, said Amit Rajpal
of the $26 billion hedge fund firm
Marshall Wace Asset Management.
As "the fittest, strongest and most
efficient player” whose loan growth is
trumping the industry average, the
market value of the largest publicly
traded Indian micro-lender may surge to
$4 billion, from about $1.2 billion now,
Rajpal, who manages the global financial
services strategy for the firm, said
Wednesday at the 2016 Sohn
Conference Hong Kong presented by the
Karen Leung Foundation.
The Indian microfinance industry may
more than double to $20 billion in three
years as the government and central
bank attempt to give the poor in the world’
s second-most-populous country better
access to formal financing, said Rajpal.
Outstanding loans have expanded more
than 50 percent a year, recovering from a
2010 clampdown on collection practices
by the Andhra Pradesh state that shrank
the industry by about half, said Rajpal.
“For the next five years, this kind of
growth rate is sustainable just because
you are coming from a low base and
there is a big social need,” said Rajpal.
“There are a lot of positive changes that
have happened from a regulatory and
infrastructural standpoint.”
Micro-lenders in India give loans of less
than 100,000 rupees ($1,485) to people
who have limited or no access to the
formal banking system, charging interest
of more than 20 percent. More than 70
indebted farmers committed suicide in
the southern Indian state of Andhra
Pradesh in 2010, spurring the state to
cap the interest micro-lenders could
charge and bar them from coercing
borrowers to repay debt. The move
prompted companies that financed micro-
lenders to pull their lines of credit.
SKS, which is based in the Andhra
Pradesh capital of Hyderabad, was
especially hard hit. It had one-third of its
loans in the state, twice the industry
average, said Rajpal. Since then, the
Reserve Bank of India has been made
the sole regulator of micro-lenders,
stripping states of the opportunity to
meddle, said Rajpal. SKS, minority-
owned by Morgan Stanley, is the second-
largest micro-lender in the country. Its
shares have surged nearly sixfold since
plunging 85 percent in 2011. They
gained 30 percent this year through May
31.
— Bei Hu
Pelargos Bets on
Turnaround at Honda
Pelargos Capital BV, a Dutch hedge
fund manager that’s prospered by
snapping up battered stocks, is adding to
its stake in Honda Motor Co. and is
predicting that shares may double,
joining other investors placing faith in a
recovery for the besieged automaker.
“The market clearly hates Honda,” said
Michael Kretschmer, chief investment
officer of Pelargos, a manager of $237
million that was spun off from insurer
Aegon NV. “If you assume in the long run
they will go back to profitability, like they
have in the past, you can easily double
your money on Honda.”
Honda shares have dropped about 22
percent in the past six months amid
recalls of a supplier’s faulty air-bags and
are trading at 0.8 times their book value,
near the lowest in the last 20 years.
“Beaten up stocks, those with negative
price momentum and strong
underperformance, draw our attention,”
Kretschmer said. He said he may buy
more Honda shares, boosting the stake
to account for as much as 5 percent to 7
percent of the fund’s assets, from about
2 percent.
—  Kathleen Chu and Komaki Ito

ACTIVIST SITUATIONS

TCI Backs German Takeover of London Stock Exchange 

Activist investor TCI Fund Management supports Deutsche
Boerse AG's proposed takeover of London Stock Exchange
Group Plc, clarifying the motives behind the fund's purchase of a
sizable stake in the British company.
“We support it,” Christopher Hohn, the founder of TCI, told
the German magazine Der Spiegel. “The management of the
new company will be more strongly leaning towards the Anglo-
Saxon model.”
Hohn’s comments address speculation that TCI could use its
4.25 percent stake in LSE to agitate for a higher price. The
holding makes the hedge fund the sixth-largest shareholder in
LSE. In a letter to investors, Hohn said he is confident that both
managements will “bend over backwards” to get regulatory
approval for the deal, Reuters reported earlier last week.
TCI hasn’t always viewed a tie-up between Deutsche Boerse
and LSE so positively. The firm, along with another activist fund,
helped force Deutsche Boerse to drop its 2005 offer to buy LSE,
ousting the German company’s chairman and chief executive
officer in the process.
Hohn is also an investor in Volkswagen AG, which he has
slammed for what he deems excessive executive pay. In the Der
Spiegel article, Hohn also criticized the German approach to
corporate governance. If Germany fails to modernize its
corporate governance model, “the one or other German
company will become a takeover target,” he told the magazine.
    — Trista Kelley
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June 3, 2016 Bloomberg Brief Hedge Funds Europe 4

REGULATORY/COMPLIANCE

EU Bank Research Rules Seen Biting U.S. Managers  

BY ANNIE MASSA
U.S. money managers are bracing for the fallout of looming
financial regulation in Europe.
That’s according to a report by research firm Tabb Group LLC,
which found that 66 out of 100 hedge fund and asset managers
surveyed expect Europe’s vast regulatory overhaul to change
their American business, too, even if similar rules never make it
to the U.S. That’s up from 38 percent last year, according to the
report, which was released Wednesday.
The Tabb report specifically focused on the European Union’s
plans to separate research from execution spending. The EU’s
revamp of market rules known as MiFID II, expected to go into
effect in January 2018, is part of regulatory efforts to prevent
another financial crisis. The rules are designed to shift trading
onto exchanges where regulators can better track it, boost
transparency to protect individual investors and level the playing
field for professionals.
The plans will reach U.S. money managers who will have to,
among other things, provide more detailed reports on research
spending and how they choose brokers, according to the survey.
“The biggest impact that is going to bite everybody in the butt
is the reporting requirements,” said one large asset manager
quoted anonymously in the report. “It’s a real challenge to have
clean data dictionaries and, going from there, it’s getting to either
developing things internally or farming it out.”

European Commission Consults on Funds' Cross-Border Investments  

BY SILLA BRUSH
The European Commission is seeking
industry feedback on ways to encourage
cross-border investment and marketing
of investments funds in an effort to
develop a capital markets union. It is
seeking comments until Oct. 2 on ways
“to strengthen the single market passport
for cross-border investment funds.”
“At the moment, smaller fund
managers are telling us they face
challenges when trying to sell their
products in different countries,” Jonathan
Hill, the EU's commissioner for financial
services, said in a statement. “So I want
to use this consultation to flush out what
the main barriers are to funds operating
across borders, so that we can work out
how best to overcome them.”
The commission said in the
consultation that “regulatory barriers”
have hurt the
ability to market funds in the EU,
including “burdensome registration
procedures, costly and diverse marketing
requirements, inconsistent administrative
arrangements and tax obstacles.”
“There is more that can be done to
deepen the single market for funds,” it
said. “Eliminating unjustified barriers
would support fund managers to engage
more in cross-border marketing of their
funds, increase competition and choice,
and reduce costs for investors."
The commission also said that one-
third of UCITS that are marketed cross-
border are sold only in one member state
in addition to their home country.   Commission to consider removing or
Separately, the Alternative Investment
Management Association in a statement
called for the removal of cross-border
barriers to fund marketing. It said that
these barriers have hurt the European
economy as well as savers and investors,
citing registration and notification fees on
funds as a "major obstacle."
“We welcome the European
Commission’s scrutiny of barriers to the
use of the pan-European marketing
'passport', which have held back growth
in the European economy," Jack Inglis,
CEO of AIMA, said in the statement.
"The imposition of registration and/or
notification fees on funds or even sub-
funds in a great number of EU
jurisdictions can cost individual firms
hundreds of thousands of euros annually.
As well as reducing or removing the layer
of fees, we also would ask the
minimizing other administrative and
regulatory restrictions on marketing,
especially in the case of funds that are
marketed solely to professional
investors."
  — With assistance from Melissa Karsh
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June 3, 2016 Bloomberg Brief Hedge Funds Europe 5

BREXIT
Capstone’s Britton Says Market Still Not Pricing In Brexit Odds    
BY KATIA PORZECANSKI, BLOOMBERG
Implied Volatility on the Pound Is Higher — But High
NEWS
Paul Britton, founder of the $3 billion
Enough?
Capstone Investment Advisors, said
markets in the U.K. are failing to keep up
with polling data signaling growing
support for the nation to exit the
European Union.
While the “Remain” camp held the lead
for much of May, recent surveys show
the race may be narrowing as the June
23 vote approaches. The pound and
benchmark stock index dropped this
week after ICM polls released by the
Guardian showed “Leave” taking a lead.
Despite the selloff, derivatives used to
bet on the volatility of those markets are
still cheap relative to the probability of a
so-called Brexit, Britton said in a
telephone interview. His New York-based
hedge fund firm, which uses volatility-
based strategies to trade securities,
bought put options on the pound and
He said he hasn’t donated to either of Capstone was founded in 2004 and
FTSE 100 Index with the expectation that
the referendum campaigns and declined initially managed internal capital and
market fluctuations will increase over the
to comment on which way he’ll vote. separate accounts. Britton’s flagship
next month, he said.
A Bank of America Corp. survey Capstone Vol fund, started it 2007, uses
“It’s a fantastic risk-reward trade,” said
published last month showed that fund options to bet on fluctuations in prices
Britton, 42, who grew up in the London
managers consider the issue the biggest across equity, bond, currency and
suburbs. “If for whatever reason there is
tail risk in the world. German Chancellor commodity markets.
an exit then the market is going to be
Angela Merkel warned Thursday that the The fund, one of the largest of its kind,
caught so badly offside. It’s just not
U.K. would be isolated and lose influence returned 2.5 percent this year through
pricing in that probability at all right now.”
if it leaves the 28-nation bloc. May 27, according to a person with
Implied one-month volatility closed at
Campaigners for leaving argue that the U. knowledge of the matter. The SG
20.5 percent Thursday after spiking in
K. can continue doing business freely Volatility Trading Index, which tracks the
the past week. At a bid of 19.5, the
with the EU and reach favorable free- performance of volatility-trading hedge
payout for the options if the pound falls to
trade deals with the rest of the world funds, rose 3.5 percent through April, the
$1.35 is about 5 to 1, according to
once out of the bloc. most recent data available.
Britton. Options are derivatives that give
Since the date of the vote was set on Michael Bloomberg, founder and
the right but not the obligation to buy or
Feb. 20, at least 17.6 billion pounds majority owner of Bloomberg LP, the
sell an underlying security at a set price
($25.4 billion) have been wagered on parent company of Bloomberg News, has
and date.
options that would profit if sterling fell to publicly supported the campaign to keep
The pound — which traded at $1.44 as
or below $1.35 after the referendum. Still, the U.K. in the union.
of 5 p.m. Thursday in New York — may
as of late Thursday traders assigned only — With assistance from Vassilis Karamanis,
fall to as low as $1.25 if the U.K. opts to
about a 13 percent chance of the pound Anooja Debnath and Saijel Kishan
leave, or rally to $1.50 if the nation
reaching that level once the referendum
remains, Capstone estimates. The
results are known, according to
company began wagering on price
Bloomberg’s options calculator.
swings around the referendum two to
three months ago, said Britton.
 
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June 3, 2016 Bloomberg Brief Hedge Funds Europe 6

CALENDAR TO SUBMIT AN EVENT E-MAIL MKARSH@BLOOMBERG.NET

The "organizer" and "event" columns link to websites, where available. "Attendees of note" links to the individual's BIO page, where
available, on the Bloomberg terminal.  
DATE ORGANIZER EVENT SPEAKERS/ATTENDEES OF NOTE LOCATION
Christian Hammes, ETA Family Office; Michael O'Sullivan, Credit Suisse; InterContinental,
June 6-8 ICBI FundForum International 2016
Oliver Bilal, UBS Asset Management. Berlin
Mitsu Adachi, Basel Committee; Gerald Sampson, U.K. Financial Conduct London Victoria
June 13-16 Operational Risk OpRisk Europe 2016
Authority. Park Plaza
Michael Micko, Napier Park Global Capital; Jenna Collins, BlueCrest
June 14-16 Afme/IMN 20th Annual Global ABS Barcelona, Spain
Capital Management; Craig Scordellis, CQS.
Storm-7 Hedge Funds: Regulatory, Risk and Sessions include an overview of key regulatory frameworks in the U.S. and
June 16-17 London
Consulting Compliance EU, business continuity and disaster recovery and third-party administration.
Luke Ellis, Man Group; Peter Coates, Omni Partners; Michael Hart,
Hotel Okura,
June 20-22  ICBI   GAIM 2016 Amundi; Max Rijkenberg, Paamco; Lawrence Berner, Morgan Stanley
Amsterdam  
Alternative Investment Partners.  
Sept. 13 Risk.net Risk Hedge Europe 2016 To be released. London
Corporate Governance & Activist Gordon Singer, Elliott Advisors; Lauren Taylor Wolfe, Blue Harbour Group; Waldorf Hilton,
Sept. 19 The Deal
Investing in Europe 2016 Anne-Sophie d'Andlau, CIAM.   London
Family Office 10th Annual Family Office Leadership Heather Maizels, Victoria Private Investment Office; Alexandra Altinger, Marriott Grosvenor
Sept. 20
Intelligence Summit Sandaire Investment Office. Square, London
Pensions and
Lifetime Jane Ambachtsheer, Mercer; Christophe Frerebeau, eVestment; Sorca
Oct. 19-21 Annual Conference & Exhibition 2016 Liverpool
Savings Kelly-Scholte, JPMorgan Asset Management.
Association
Managed Funds
Nov. 2 Global Summit 2016 To be released. London
Association
European
European Alternative Investment
Nov. 22-23 ALFI To be released. Convention Center,
Funds Conference
Luxembourg
DISCLAIMER: The information on this page was compiled by Bloomberg from multiple sources, public and private, and is deemed to be accurate, but not definitive or exhaustive.
Questions about events should be addressed to the event organizer.
 

Bloomberg Brief: Hedge Funds Europe

Bloomberg Brief Managing Editor Reporter Marketing & Partnership Director
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