INVESTMENTS

HEDGE FUNDS RISE IN SEPTEMBER, OUTPERFORM EQUITY AND BONDS

Hedge funds were up 1.7% in September, outperforming both equity and bond markets, hedge-fund adviser Hennessee Group said yesterday.

Over the same period the S &P 500 increased 0.69%, the Dow Jones Industrial Average rose 0.83% and the Nasdaq Composite was down 0.02%. Bond markets declined 0.85%, according to the Lehman Brothers Intermediate Government Corporate Bond Index. Twenty-one of the 23 hedge fund strategies covered by the Hennessee Hedge Fund Index, which bases its findings on an analysis of 900 funds, produced positive returns. The telecom and media index and the merger arbitrage index were down only slightly, by 0.08% and 0.06% respectively.

“Hedge funds continue to perform above market averages on both the long and short side of the portfolio,” E. Lee Hennessee, managing principal of the Hennessee Group said. – Dow Jones Newswires

UBS, MERRILL GET HIGHEST PRICES FOR SHAREHOLDERS

If you thought Goldman Sachs Group and Morgan Stanley, Wall Street’s top firms for arranging acquisitions, get the best deals for shareholders, think again.

UBS AG, Europe’s largest bank, and Merrill Lynch & Company, which has never come closer than no. 3 in the merger rankings the past five years, negotiate the highest prices on average for shareholders of acquired companies with a value of more than $5 billion, data compiled by Bloomberg show.

“The surprise is that the best banks for getting large premiums on the marquee deals aren’t the so-called white-shoe elite of Wall Street,” a finance professor at Rensselaer Polytechnic Institute, Phillip Phan, said.

The average premium for takeovers, the difference between the offer price and the stock’s 20-day trading average before a merger is announced, is 21% when UBS advised the acquired company during the past two years. For Merrill, it’s 20%,well above the 18% shareholders got from Goldman, the world’s no. 1 merger adviser since 2001, and the 16% from Morgan Stanley, the perennial no. 2.

For shareholders, a few percentage points can mean billions of dollars, which is why institutional investors such as Boston-based Putnam Investments increasingly raise an alarm when an offer is considered inadequate. – Bloomberg News

TRADE

AMERICA MAKES PLEDGE TO SCALE BACK AGRICULTURE AID

U.S. Trade Representative Rob Portman pledged to scale back agriculture aid in a bid to unblock talks aiming at a global trade agreement and said the European Union and Japan must slash farm spending by 83%.

America and other wealthy World Trade Organization members should trim farm aid by 60%, Mr. Portman said yesterday. The European Union and Japan need to go beyond that because they spend far more on their farmers than America, he said, adding that even with 80% cuts, their payouts would be double those of America.

“The U.S. is willing to take some pain” to revive trade talks that began under World Trade Organization auspices in December 2001, Mr. Portman told journalists in Zurich. The E.U. is too, Trade Commissioner Peter Mandelson said, adding that the bloc is willing to cut its most trade-distorting subsidies by 70% and would make other offers that go beyond what Mr. Portman put forth.

– Bloomberg News

IN BRIEF

Life insurer Lincoln National agreed to buy Jefferson-Pilot for about $7.5 billion to add premiums after the company’s stock trailed competitors for the past five years … Phillip Bennett, the chief executive and chairman of Refco, who took the futures broker public two months ago, was placed on a leave of absence after an internal review found he owed the company $430 million … Ford’s product development chief, Phil Martens, is leaving the automaker as Chief Executive William Clay Ford Jr. moves to revamp his company’s money-losing North American operations.

– Bloomberg News