insidertrade

    Today's Post

    Thoughts about Latest Insider-Trading Scandal The story on the front page of The Wall Street Journal, about the Dendreon/Provenge investigations, focuses on trading in Dendreon stock over a three week period, beginning with the date of an e-mail sent out on June 7th, 2010.

    A front-page story in The Wall Street Journal for Wednesday, October 29 discussed possible insider trading in the stocks of Dendreon Corp., the Washington state based biotech firm that manufactures Provenge. Provenge doesn’t cure prostate cancer, but it does prolong the life of those treated. Specifically, patients who had received Dendreon in a critical clinical trial lived a median of 4.1 months longer than those who had received the trial’s placebo. In late April, 2010, the Food and Drug Administration approved its use. Weeks later, on June 7th, as Medicare officials engaged in discussions over whether they should set coverage limits on the use of Provenge, an official there [Dr. Louis Jacques] sent three colleagues an email telling reminding them that these in-house discussions were hush hush. Jacques was at this time the head of the Coverage and Analysis Group. Either Mr. Market figured out that something was up, or somebody told him. Dendreon’s stock price fell 10% later that day. Possibly the markets did figure it out without a leak, that after all ...

Featured Post


The Skorina Report: Another try at herding Gotham’s five-headed fund

Guest columnist Charles Skorina looks at the five-headed NYC pension system with its new leader, Scott Evans.

By Charles Skorina In July, Scott Evans reported for duty as Chief Investment Officer in New York City's Bureau of Asset Management, where he'll manage $160 billion in employee pension funds. Traditionally the city's CIO is replaced when the political wheel turns, which it did last fall. Retiring Mayor Michael Bloomberg was succeeded by William De Blasio; and Comptroller John Liu, the independently-elected custodian of the city's pension funds, was replaced by Scott Stringer. Mr. Stringer beat back a last-minute primary challenge from disgraced ...


One Ordinary Week in the Life of Climate Change


We thought it would be instructive to share with you links and the odd quote from recent press reports on the subject of climate change.  As a professional investor,  you no doubt want to be ahead of trends in the investment world.   Investment opportunities arise when there is a divergence of opinion, as is uniquely the case in the United States (unlike the other nations on Earth) on the subject of climate change.  The headlines of a few days tell ...

Guest Posts


The Skorina Report: Another try at herding Gotham’s five-headed fund
Guest columnist Charles Skorina looks at the five-headed NYC pension system with its new leader, Scott Evans.

By Charles Skorina In July, Scott Evans reported for duty as Chief Investment Officer in New York City's Bureau of Asset Management, where he'll manage $160 billion in employee pension funds. Traditionally the city's CIO is replaced when the political wheel turns, which it did last fall. Retiring Mayor Michael Bloomberg was succeeded by William De Blasio; and Comptroller John Liu, the independently-elected custodian of the city's pension funds, was replaced by Scott Stringer. Mr. Stringer beat back a last-minute primary challenge from disgraced ...


Risk management

Central Clearing and the Bank of England
A Bank of England paper discuses the "cover 2" standard for the adequacy of the default funds of central clearing houses, an issue of increasing importance as the push to centrally-clear everything picks up steam. One question it raises somewhat incidentally is the proper pronunciation of the acronym SLOIM, for "stressed losses over initial margins."

A new Financial Stability Paper from the Bank of England offers some re-assurance about the adequacy of the ‘cover 2’ standard for the default fund of central counterparties. It also suggests, though, that supervisors should monitor the distribution of tail risks to ensure that it remains adequate. The paper, by David Murphy and Paul Nahai-Williamson, begins with the definition of the cover 2 standard: systemically important clearing houses “must have sufficient financial resources to … be robust under the failure of … their two largest members in extreme but plausible circumstances.” ...

Socially responsible investing

Microfinance and Its Critics: An Update
The convergence of a central banker and micro financiers at a recent ceremony in Port Moresby, Papua New Guinea inspires a look at where the MFI industry stands, and where it is headed.

On August 15, 2014, an official of the Bank of Papua New Guinea spoke at the opening of the Women’s Micro Bank Limited. The address, by Ellison Pidik, whose title at the Bank of PNG is “Assistant Governor for Financial System Stability,” gives us a chance to check back in on the world of micro-finance. This is the widely lauded practice of lending to small-scale producers, “microenterprises.” Institutions engaged in such lending, MFIs, operate now in many emerging-market nations. Such lending’s benefits for a portfolio include capital preservation (the default rates are ...

Performance, Analytics & Metrics

Hedge Funds and Position Crowding
Move over! It's crowded in here. What happens when hedge funds crowd a trade? Guest columnist Andrew Beer looks at hedge fund performance and the crowded trade.

By Andrew Beer As of mid-month October, the S&P 500 was down over 5% and the MSCI World was down 6%. In this context, drawdowns among hedge funds have been unexpectedly large.  Before fees, the HFRX Global Investable index was down over 4%, while the Equity Long/Short and Event-Driven sectors were down 5% and over 7%, respectively (note that the reported losses are lessened by the reversal of accrued performance fees).  The average alternative multi-manager mutual fund (generally with 0.2 to 0.3 equity beta targets) was down 3% net of fees. What ...

Performance, Analytics & Metrics

Hedge Funds: Good Run for India, but Troubles in Brazil
India accounts for much of the positive showing of Asia ex-Japan in the hedge fund world YTD. That positive showing, in turn, may be attracting asset flow.

 The independent data provider Eurekahedge says in its most recent report that funds investing in India are still recording large gains. Specifically, such funds have enjoyed eight consecutive months of positive returns, and are now up 30.65% year to date. India’s equities have also had a very strong year 2014, up 25.79% through the first three quarters. To India’s east, stimulus measures by the People’s Republic have kept Chinese equities moving upward, but late in September Hong Kong experienced the start of mass demonstrations (which have continued) and as a consequence local ...

CAPM / Alpha Theory

Hedge vs. Mutual Funds and the ‘Timing of Information Acquisition’
A new paper by a scholar at the McCombs School of Business looks at what causes what on Wall Street, starting with how (if at all) analyst downgrades cause price declines.

A recent paper by Nathan Swen, of the McCombs School of Business, University of Texas, compares the “timing of information acquisition” by hedge funds and mutual funds, focusing especially on the release of broker-dealer analyst reports. I won’t follow Swen’s argument, which you can study for yourself here. I will instead just use his interest as a way of catalyzing my own thoughts on an underlying subject. Specifically: do broker/dealer analysts move markets and, if so, ...

Legislation/Court rulings

Two Types of Secrecy: Proprietary Trading Data and the Doomsday Book
Christopher Faille offers some personal thoughts about the Starr International/AIG litigation, and about the hush-hush Federal Reserve Doomsday Book. This leads to the deeper question of the openness of the U.S. as a society.

Unseal the Doomsday book! Yes, though, I know: governments never run out of excuses to keep secrets. Further, in some situations no need arises to split the hair between “government” and “the central bank.” The Federal Reserve loves secrecy as much as does the Treasury, especially when the two work hand in hand. That observation brings us to the AIG trial, properly known as Starr International v. the United States of America. A primer on the case For those ...

Hard metals

November Vote: Do the Swiss Believe in Gold?
The Swiss National Bank and the government oppose a pending referendum that would drastically change the country's policy on gold. But of course the anti-establishment nature of the petition is the whole point.

Early this month the price of gold dipped briefly below $1,200 an ounce. Since then it has risen, not all that dramatically but more-or-less steadily, and it is as I write above $1,240. The latest move may have a lot to do with the Swiss vote on gold scheduled for the end of November. Specifically, the people will vote on a question put forward by three members of parliament, and endorsed by the necessary 100,000 petitioners. A “yes” ...

Insolvency

Detroit Bankruptcy: Foes Become Allies
The legal environment in The United States remains averse to the sort of bold-faced repudiation of debt that Detroit attempted in the matter of its so-called Certificates of Participation (COP). Fortunately on several fronts, Detroit has decided to repudiate the repudiation.

Detroit filed for bankruptcy court protection in July 2013. In December, challenges to its eligibility for such protection failed. The case, since then, has moved along at a rapid pace, at least by the usually-glacial standards for large complicated re-organizations. It has attracted, meanwhile, a large body of commentary and punditry, some of which I have reviewed in my personal blog. With AAA’s indulgence I’ll link interested readers there. What piques my interest again just now is the ...