Browsing: Today’s Post

Today’s Post

Financialization and the Volatility of Commodity Prices

Dec 20th, 2018 | Filed under: Newly Added, Commodities, The A.I. Industry, Industry Size & Managers, Investing in Commodities, oil, Commodities, Energy, Risk Management Strategies & Processes, Risk Management & Operations

A recent article in the Journal of Risk and Financial Management  takes a fresh look at a familiar issue:  whether the development of exchange-traded funds (ETFs) and related instruments tracking the commodities industry (or, in short, the financialization of commodities) has had an impact on the volatility of the pricesRead More


The Rise of the Net Short Debt Activist

Nov 23rd, 2018 | Filed under: Newly Added, The A.I. Industry, Hedge Funds, Event-Driven Hedge Funds

A memorandum prepared by law firm Wachtell Lipton looks at what it calls the “rise of the net short debt activist.” Wachtell Lipton earned its wings on Wall Street as a defender of established managements when those managements find themselves facing activism or takeover. Indeed, one of the founding partners,Read More


Eurekahedge: Hedge Funds Trailing Behind Last Year’s Performance

Aug 19th, 2018 | Filed under: Newly Added, Hedge Fund Industry Trends, Hedge Fund Strategies, CTA, The A.I. Industry, Industry Size & Managers, Equity Hedge Funds, Hedge Funds, Event-Driven Hedge Funds, Macro and Managed Futures Funds, Relative Value Hedge Funds

According to Eurekahedge, with the July numbers on hedge fund performance now available, 8.5% of hedge fund managers have posted double-digit gains in 2018 to date. Most of that gain is focused on those with a long/short equities mandate. That number is quite low. Eurekahedge contrasts it with the firstRead More


Central banks: Hedge fund friend or foe?

Aug 12th, 2018 | Filed under: Newly Added, The A.I. Industry, Equity Hedge Funds, Hedge Funds, Relative Value Hedge Funds

Are central bankers friends or foes of hedge funds and other seekers of alpha? In particular, what is the answer to this friend-or-foe question for the period since the global financial crisis a decade ago, where the central bankers with whom we are especially concerned are those at the USRead More


A Fresh Look at Bubbles: Revising Assumptions

Sep 16th, 2015 | Filed under: CAPM / Alpha Theory, Derivatives

If it is possible for bubbles to arise in frictionless circumstances, then it follows that any theory that treats bubbles as the consequence of friction is, at very best, incomplete. And that is important to know especially if policy makers are busy drawing their own conclusions from those incomplete-or-worse theories. Read More


SWFs under Pressure: No Panic Selling Yet

Sep 15th, 2015 | Filed under: Hedge Fund Strategies, Institutional Investing, Alpha Strategies

Sovereigns and their politicians are looking over the shoulders of the managers of their sovereign wealth funds. This is a pain in the neck for the latter, but it may mean opportunity for their counterparties. Read More


The Canary in the Coal Stocks and Fossil Fuel Divestment: the Portfolio You Save May Be Your Own

Sep 14th, 2015 | Filed under: Commodities, Energy, Climate change

A Wall Street analyst recommends bottom fishing in fossil fuel stocks and does an excellent job in analyzing all the market forces EXCEPT the primary one, rapidly increasing climate change. If he is typical of Wall Street expert analysis on fossil fuel stocks, be afraid. Be very afraid. Read More


A Curtain Opener for the Australia Forum

Sep 13th, 2015 | Filed under: Performance, Analytics & Metrics, Hedge Fund Regulation, Alternative Beta & Hedge Fund Replication

Paul Chadwick, chairman of AIMA Australia, says that the hedge fund industry in Australia is at an "inflection point." Faille reflects on that ubiquitous expression, and then turns to Australia's new Investment Manager Regime. Read More


Supreme Court Decisions: Post-Announcement Hours & Days

Sep 10th, 2015 | Filed under: CAPM / Alpha Theory, Hedge Fund Strategies, Alpha Hunters, Alpha Strategies, Legislation/Court rulings, Alpha Seekers

Presumably the U.S. Supreme Court's decision, in December 2008, that states can in fact make and enforce tougher labeling standards for cigarettes than does the federal government was a negative for tobacco stocks. But did that mean that stock prices had already anticipated the decision before it happened? or that they immediately adjusted downward on the morning the decision was announced? Or ... neither of those? Read More


Japan: Richardson makes a Tricky Case

Sep 9th, 2015 | Filed under: Currencies, Institutional Investing, Indexes, Forex

The Japanese economy deserves some credit for having pulled itself out of a recent recession, and it is "beginning to show signs of benefiting from a weaker yen" as a BlackRock strategist tells us. But (there is always a "but"). Read More


Javert Frustrated Again: This Time in the Second Circuit

Sep 8th, 2015 | Filed under: Insolvency, Emerging markets, Legislation/Court rulings

NML tried to get around the sovereign immunity of Argentina's Central Bank by arguing that it and the Republic were only one entity (the "alter ego" theory developed by the U.S. Supreme Court in an opinion concerning Cuba, in the 1980s), and that the one entity involved has waived its/their immunity. No dice. Read More


Billion Dollar Claim from Black Swan Fund: Not from Taleb

Sep 7th, 2015 | Filed under: CAPM / Alpha Theory, Performance, Analytics & Metrics

As regular readers of this blog may recall, I have found much to admire in the writings of Nassim Nicholas Taleb. So I am happy that he had decided to put some distance between himself and a recent claim that Universa made $1 billion when bad news from China shook the world's markets in late August. Read More


The Skorina Report: Fearless Forecast Says That Endowment Returns Will Disappoint in FY2015

Sep 3rd, 2015 | Filed under: Performance, Analytics & Metrics, Hedge Fund Strategies, Institutional Investing, Alpha Hunters, Alpha Strategies, Alpha Seekers, Endowments & Foundations

Guest columnist Charles Skorina looks at the potential for 2016 endowment returns and finds them to be somewhat lacking... Could alternatives ride to the rescue?Read More


Foundations: They’ve Taken a Blow from “Subdued” Markets

Sep 2nd, 2015 | Filed under: Hedge Fund Industry Trends, Performance, Analytics & Metrics, Hedge Fund Strategies, Institutional Investing, Indexes, Risk management, Liquid Alts

Both private and community foundations depend heavily on U.S. equities. Indeed, domestic equities remained the bright spot while other strategies underperformed in 2014. A new report from a collaboration of the Council on Foundations and Commonfund provides food for thought about the reversal in foundation returns in that year. TheRead More


The Enablers of the Fraudsters, Part I

Sep 1st, 2015 | Filed under: Regulatory, Insolvency

A new lawsuit against the corporate and individual enablers of a securities fraudster moves forward. The former are "alleged" enablers, but the latter is a convicted fraudster, already serving his time. Faille seeks to draw lessons. Part One of Two. Read More


Administration, via Verrelli, Rolls the Dice on Insider Trading Issue

Aug 31st, 2015 | Filed under: Hedge Fund Strategies, Alpha Hunters, Legislation/Court rulings

Not all benefits are as tangible as a suitcase of cash, and the question of law for the Second Circuit, for the Ninth, and now perhaps for SCOTUS is: is friendship enough? how about regard for one's brother? Read More


What Taper Tantrum?  And, Will Yellen Pull a Bernanke?

Aug 30th, 2015 | Filed under: Hedge Fund Industry Trends, Alpha Strategies, Indexes, Macroeconomics

The head of the New York Fed said on Wednesday, August 26th, that "the decision to begin the normalization process at the September FOMC meeting seems less compelling to me than it was a few weeks ago." We may be about to see another Fed retreat, analogous to that of a little more than two years ago. Read More


Cause and Effect: Or, Shooting the Messenger

Aug 27th, 2015 | Filed under: Media Coverage of Hedge Funds, Behavioral finance

Not even Schrodinger blamed the reporters for market irrationality. Saying out loud, "Hey, this cat is dead," doesn't kill the cat. Read More


An Overview of Real Asset Investing

Aug 26th, 2015 | Filed under: Real Estate, Private Equity, Infrastructure, Risk management, Intellectual Property

Guest columnist Andrew Smith, CAIA, provides an overview of real assets and their commensurate risks and rewards.Read More


CFTC Exempts ASX Clear from DCO Registration

Aug 25th, 2015 | Filed under: Hedge Fund Industry Trends, Commodities, Alpha Hunters, Alpha Seekers

The CFTC has issued its first exemption from the CDO registration mandate under 5b (h). The successful petition for that exemption, from ASX Clear, has the additional merit of having inspired an idiosyncratic seeming, but concise, comment letter, quoted in full here. Read More


When Underfunded Pension Funds Take Up Social Responsibility Investing

Aug 24th, 2015 | Filed under: Institutional Investing, Socially responsible investing, Legislation/Court rulings

In November 2014, Scott Stringer, New York City's Comptroller, launched a campaign he called the Boardroom Accountability Project. Bernard Sharfman makes a case that this BAP is a good example of much that is wrong with institutional/activist investing today. Read More


Study Says The Gold Bugs are Right

Aug 23rd, 2015 | Filed under: Currencies, Hard metals, Risk management, Forex, Gold

Gold seems, to a larger extent than silver, and even more so to an extent larger than is true for palladium or platinum, to work as a true financial asset: decoupled from price developments in the commodity markets. It succeeds as a hedge against currency and stock-market trouble.Read More


Weintraub of GFT: Basel III Coming Into Force by Increments

Aug 20th, 2015 | Filed under: Hedge Fund Industry Trends, Risk management, Regulatory, Asset allocation

Faille spoke recently to Herman Weintraub, executive director and head of alternative investment practices at GFT, about the impact of the Basel III rule changes upon the HF industry. Weintraub says, one ought to look not at the parts, but at the whole. Read More


Hedge Fund Assets to Increase a Quarter Trillion Dollars by Summer of 2016

Aug 19th, 2015 | Filed under: Hedge Fund Industry Trends, Media Coverage of Hedge Funds, Hedge Fund Strategies, Institutional Investing

Guest columnist Don Steinbrugge on why hedge fund AUM is set for an increase over the course of the next 12 months.Read More


Eurekahedge: The Markets are Reading the Headlines

Aug 18th, 2015 | Filed under: Commodities, Hedge Fund Strategies, Currencies, CTA, Alpha Strategies, Alpha Seekers

In the three month period that ends with July, Eurekahedge’s Greater China Index (which has 85 constituents) is down 9.39%. That has come about for precisely the reasons that a reader of the pertinent headlines would guess. Read More


Another Southeast Asia Currency Crisis

Aug 17th, 2015 | Filed under: Currencies, Forex, Emerging markets

China's moves in recent days seem likely to set off a new Southeast Asia currency crisis, which will look a lot like the old Southeast Asia currency crisis. This was clear even on August 11th, when traders in the rest of the world were apparently working on the premise that China's move that day was a one-off. Read More


The Skorina Report: Risky Business–Chief Investment Officers and Public Pension Plans

Aug 16th, 2015 | Filed under: Institutional Investing, Alpha Hunters, Alpha Strategies, Risk management, Alpha Seekers

Guest columnist Charles Skorina with a cautionary tale of greed and deceit and less-than-best practices at a large public pension plan.Read More


5 SNAFUs to Avoid With Investors

Aug 13th, 2015 | Filed under: High-net-worth investors, Family Offices

Guest columnist Diane Harrison discusses the art communicating with investors.Read More


Commodities & Currencies From May to August: How Much Has Changed

Aug 12th, 2015 | Filed under: Commodities, Currencies, Insolvency

What a difference a summer makes! In May of this year it was still taken for granted that the "normalization" of Federal Reserve policy and so of U.S. interest rates approached. Now, that cannot even remotely be taken for granted.Read More


Event-Driven Hedge Funds Rescued by Obamacare

Aug 11th, 2015 | Filed under: Hedge Fund Industry Trends, Hedge Fund Strategies, Institutional Investing, Alpha Hunters, Alpha Strategies, Alpha Seekers

Obamacare's impact on the investment world may have been mitigated until very recently by the protracted and complicated litigation that the law immediately generated starting with its enactment in 2010. But now.... Read More


SEC’s Daniel Gallagher: Friend of the Beleaguered CCO

Aug 10th, 2015 | Filed under: Hedge Fund Regulation, Risk management, Regulatory

Commissioner Gallagher contends that some recent enforcement actions "have unfairly contorted the rule to treat the compliance function as a new business line," thus giving compliance officers the unwelcome role of business heads. In this and other respects, Gallagher says the agency is setting up a perverse system of incentives for those who ought to be its allies, the CCOs of IAs. Read More


The LIBOR Fixing Scandal Gets a Conviction and a Book

Aug 9th, 2015 | Filed under: Currencies, Derivatives, Forex

When it all hit the fan, U.S. investigators in particular (the Brits somewhat less so) came to see Hayes as a mastermind behind its digestive generation. But Arvedlund seeks in her new book on the Libor Rigging scandal to place the role Hayes played in context. Read More


Fractal Ambiguity in the AIFMD Passport Status of the U.S.

Aug 6th, 2015 | Filed under: Regulatory

What does the road to passport status look like for the US, regarding Europe's AIFMD? It looks rocky, and ESMA seems disinclined to draw a legible map. Instead it offers ambiguity and links to further ambiguity in the footnotes of its report.Read More


MMIF Reporting: An Ongoing Challenge for Fund Administrators

Aug 5th, 2015 | Filed under: Hedge Fund Industry Trends, Hedge Fund Regulation, Due Diligence Process, UCITs

Guest columnist Shane Brett discusses a new RR Donnelley survey on the MMIF challenges facing fund administrators.Read More


The Varoufakis Tape: Part Two

Aug 4th, 2015 | Filed under: Currencies

Faille returns to the matter of a recorded conversation in which a former Greek finance minister talked about German ideas that ought to have the French government worried. Specifically, it is allegedly Werner Schäuble’s intention to scare the French into abandoning sovereignty. Greece is just a pawn. Read More


The Varoufakis Tape: Part One

Aug 3rd, 2015 | Filed under: Currencies

In a newly released recording (of a conversation apparently intended to remain secret somewhat longer), the former finance minister discussed the cloak-and-dagger task force that had drawn up plans for a Grexit. And, looking forward, he talked about German ideas that ought to have the French government worried.Read More


The Strength of Multi-Strat Is No Mystery

Aug 2nd, 2015 | Filed under: Hedge Fund Industry Trends, Hedge Fund Strategies, Institutional Investing, Alpha Hunters, Alpha Strategies, Fees

Credit Suisse Capital Services says that appetite has increased of late, among institutional investors, for multistrategy funds. Faille offers some thoughts as to why. Read More


Overtrading and the Danger of Pro Rata

Jul 30th, 2015 | Filed under: Commodities, Algorithmic and high-frequency trading, Currencies, Derivatives, Forex

Guest columnist Ginger Szala looks at pro rata and what happens if...Read More


Crisis? Tempted to Flee to Shelter of Big Funds? Bad Idea

Jul 29th, 2015 | Filed under: CAPM / Alpha Theory, Hedge Fund Industry Trends, Hedge Fund Strategies, Institutional Investing, Alpha Hunters, Alpha Strategies, Behavioral finance

The authors of a new study of the relationship between fund size and performance employ a database consisting of 7,261 funds and their performance over a twenty year period (1994 to 2014). Spoiler alert: size is bad. Especially in a crisis.Read More


PwC on Mergers and Acquisitions Activity

Jul 28th, 2015 | Filed under: Currencies, Agriculture, Alpha Strategies

"Not moving is more risky than moving," said one CEO asked about mergers and acquisitions. "We will make more acquisitions, but they’ll probably be larger in nature, more transformative. " Read More


A New Look at Last Year’s Conference Board White Paper on Governance

Jul 27th, 2015 | Filed under: CAPM / Alpha Theory

Last year the Conference Board asked itself several questions germane to corporate governance. They were good questions. The odd thing about the report was the way the greybeards involved simply threw up their hands rather than trying to answer any of them. Read More


7 Messages Family Offices Give Emerging Managers

Jul 26th, 2015 | Filed under: Institutional Investing, Alpha Strategies, Family Offices

Guest columnist Diane Harrison examines the relationship between family offices and emerging managers and why some managers get money and why others don't. Read More


Alternative Investments By the Numbers: Top 5 2015 YTD Takeaways

Jul 23rd, 2015 | Filed under: Hedge Fund Industry Trends, Performance, Analytics & Metrics, Private Equity, Hedge Fund Strategies, Alpha Strategies, Liquid Alts

Guest columnist Andre Boreas takes a look at the alternative investment universe year-to-date 2015 by the numbers.Read More


‘Women of the Street’—Not Just Another War Story

Jul 22nd, 2015 | Filed under: Retail Investing, Institutional Investing, Alpha Hunters, Alpha Strategies, Alpha Seekers

Meredith Jones' book on investing in women takes it to the Street and comes back with some solid conclusions.Read More


Enterprise Software Marketers Confirm: Seven is a Sacred Number

Jul 21st, 2015 | Filed under: Regulatory, Technology

God rested on the seventh day of the week of creation. Ever since, the number seven has stood for the completion of an epoch, or of a perfect set. Thus, a German enterprise concern has now listed the "seven pillars" for improved market surveillance through software.Read More


Delivering Alpha Highlights: Part Two

Jul 20th, 2015 | Filed under: Hedge Fund Strategies, Alpha Hunters, Alpha Strategies, Alpha Seekers

Low interest rates and record equity valuations together mean that companies can use either stock swaps or borrowed cash or a combination of the two, to buy one another. Further, corporate executives infer that they have to keep buying in order not to become a target themselves. Read More


Delivering Alpha Highlights: Part One

Jul 19th, 2015 | Filed under: Media Coverage of Hedge Funds, Currencies, Alpha Hunters, Alpha Strategies, Alpha Seekers, ETFs

Larry Fink is "deeply worried" that the combination of share repo with high-yield debt is "one of the reasons why we have a below trend-line economy. We're not investing in the future as much as we should." Carl Icahn, predictably, has a very different view of what ails us. Read More


SBA of Florida Looks into Truth & Consequences of Activist Investing

Jul 16th, 2015 | Filed under: Institutional Investing, Risk management

Florida's State Board of Administration deserves some credit for undertaking a recent corporate governance study. Even trying to look at the consequences of its proxy-contest votes over a period of up to five years after they are cast seems to have shattered a glass ceiling separating actual institutional behavior from common sense. Read More


Climate Finance: A Priority for the MDBs

Jul 15th, 2015 | Filed under: Social investing, Socially responsible investing, Technology, Climate change

A new report from the World Bank says that six multilateral development banks delivered more than $28 billion in financing in 2014 that "address climate change" in one of two ways, mitigation or adaptation. Read More


SEC: KKR Misallocated ‘Broken Deal’ Costs

Jul 14th, 2015 | Filed under: Private Equity, Risk management, Regulatory

A recent SEC finding at the expense of KKR illustrates the risk inherent in non-allocation, or careless allocation, of broken-deal expenses, and illustrates that lawyers don't necessarily use the word "deceit" to mean what one might think it means. Read More