Joe Nicholas's Big Payday?

by: Greg Newton

UK-based HFMWeek reported Wednesday that Japanese gorilla Nomura Asset Management is negotiating to acquire the managed account platform developed by Chicago-based Hedge Fund Research to support its HFRX investable hedge fund index business. The proposed acquisition would reportedly allow Nomura to avoid Basel II implementation-related risk and transparency issues forcing many Japanese banks to review—read, dump—their hedge fund, and fund of hedge fund, investments.

HFR was founded by Joe Nicholas in the mid-1990s; its non-investable hedge fund indexes are among the sector’s most closely followed benchmarks. Its investable series was launched in 2003 and sold well, at least until investors found that investable hedge fund indexes tended to seriously underperform their non-investable equivalents (an issue, it must be said, not confined to the HFRX family). HFRX products did most of its business, in a variety of structured note and exchange-listed products, in Europe, and virtually all of it outside the U.S.

An email to HFR seeking comment on the report, and to establish the current level of assets tied to the HFRX products, was not returned by pixel time.

NakedShorts would like it noted that this article contains no allusions, references or inferences to the once reliable correlation between Japanese capital commitments and the sudden and unfortunate withdrawal of punch, if not the shattering of the actual bowl.

Nomura to buy HFR Asset Management (Free registration required)
by Kapila Gohel
HFMWeek Jul. 18 2007

Disclosure: NakedShorts, under an assumed name, is an occasional contributor to HFMWeek.