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    GOOG to Test Buy-on-Antitrust-Charge Theory Look for the EC sometime in the near future to bring a complaint about the contracts into which Google has entered with manufacturers that require them to construct the handsets in a way that favors Google’s famous search engine [over, for example, Microsoft’s Bing.] But consider that even this preliminary skirmish over comparison shopping might be a bullish sign for GOOG.

    Before there were “computers” in the modern sense, years before Alan Turing built a machine to decode Enigma, there were “tabulating machines,” some manufactured by IBM, such as the one pictured here. These machines became the subjects of an antitrust lawsuit, because the company tied its leases of the machine to the purchase of the punch-cards that were to be employed in its use. According to the government this tie was an effort to use IBM’s dominance in the manufacture of the machine to develop dominance in the otherwise pristine market of the manufacture of punch cards. In a decision in 1936, the U.S. Supreme Court ruled against IBM, ordering the defendant to let its lessees use competitor’s cards. According to the Oxford Encyclopedia of Economic History, IBM complied with this order but the compliance did it no harm. It continued to hold 90% of the market for the cards. Antitrust theories that involve tying violations continue to play out in the world of computers. On April 5th I posted here some reflections ...

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


(March 24 update) We present here recent anecdotals on the subject of climate change.  It's a topic that affects many industries: insurance, real estate, energy (renewable and non-), food, water, national defense, to name a few.   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.  There's an argument to be made that investors who accept the settled science ...

Guest Posts


The Skorina Report: Divestment vs. Fiduciary Duty Whose Money is it?
Guest columnist Charles Skorina takes a look at investment divestment..

What the divestment debate comes down to is how boards define their fiduciary duty. [Spoiler: We don't think divestment is a good idea] We're recruiters in the business of finding chief investment officers and senior asset managers, and our readers worry more about investing than divesting.  So you may be forgiven if you overlooked Global Divestment Day on Friday, February 13. It was spearheaded by Bill McKibben's 350.org/Fossil Free group with support from many other Green enthusiasts.  Mr. McKibben is the Pied Piper ...


Infrastructure

Some Assets are Hard to Ignore
Guest columnist Diane Harrison looks at the world of alternatives to alternatives, including stamps, cars, farmland and more...

Investors are always in search of that ‘fail-safe’ investment option, the one that offers the perfect hedge against whatever risk du jour poses a threat. Even though conventional wisdom suggests there is no such animal, the quest continues, and periodically one category or another finds itself leading the charge in general interest. Currently at bat in this popularity contest is the category of hard assets, a broad swath of investment options that appear to offer some protection against the general inflationary and economic fragility fears at work in the markets ...

Legislation/Court rulings

Aleynikov’s Trial and My Cousin Vinnie
A party seeking to employ an expert witness is supposed to let the other side know who the expert is in advance of trial. Fans of a classic Joe Pesci movie will remember that it isn't necessary to join the prosecutor in a hunting lodge.

Prosecutors keep trying to ensure that Sergey Aleynikov is treated as a criminal for allegedly attempting to convey to his new employers some computer code on which he had worked for his prior employers. The whole thing gives off a bad odor, as prosecutors seem to be fetching water for Goldman Sachs. Still, it has its amusing moments, and some of the recent amusement recalls a 1992 movie starring Joe Pesci. Most readers of AllAboutAlpha will remember that in 2009 Aleynikov tried to leave Goldman and go to work at Teza ...

Currencies

Larry Fink Thinks ‘The Market Is Wrong’ on Greece
It is always dangerous to say (of any deep and liquid market) that the market is simply wrong in its valuations. Likewise, if you're sitting at a poker table and you don't know who the sucker is ....

By the time the talk between Maria Bartiromo and Larry Fink got underway, nearly half an hour before the opening bell April 17th in New York, the financial news was dominated (not for the first time in recent months or years) by concerns about Greece, and specifically by worries about whether Greece was near default and/or Grexit. There was a sense by Friday morning that the coming weekend would prove decisive in a crisis that has been in the making so long one forgets when it wasn’t. Greece was obliged to ...

Risk management

The Latest News from Italian Banking and the Dane-geld
Banca Monte dei Paschi di Siena, BMPS, the oldest bank in the world, has now admitted that its exposure to Nomura Holdings has exceeded the 25% cap set by Italy’s regulators. Faille can't think of a good alpha-winning play on this fact, but it does inspire him to re-work a Kipling poem.

Rudyard Kipling famously warned that once a nation starts “paying the Dane-geld” it will never get rid of the Dane. Those who have succeeded in an extortion racket will continue with it. This is usually taken (and was surely intended) as a caution against appeasement: the Anglo-Saxon King Aethelred bought off the Vikings with silver because he was not prepared to fight them. Even after the Danes killed the Archbishop of Canterbury in 1012 the response of the Anglo-Saxon monarchy was … to send the Danes more silver. But the idea of ...

Indexes

Authorities Offer Revisionism About Flash Crash
Authorities now claim that the shenanigans that set off the flash crash of May 2010 were the work of Navinder Singh Sarao. Does this mean Waddell & Reed were unjustly maligned? Almost certainly.

So now there’s a new theory about the “flash crash” on 2010. I thought we had this one straightened out. It has passed out of the realm of journalists, into that of historians. It was Waddell & Reed. Right? What puts it very much into the former realm, though, is the arrest of Navinder Singh Sarao in London, and charges by the Commodity Futures Trading Commission against both Sarao individually and his firm, Nav Sarao Futures ...

Venture capital

Tax & Election Seasons Create Alternative Altercations in the US
As a general rule, politicians [mostly] on the Democratic side benefit by raising the issue of the taxation of carried interest during campaigns and then quietly letting it die, as their donors expect, when the legislature is actually working on tax bills. It's a way of signaling who is a "populist" and who isn't.

The end of tax season and the start of Hillary Clinton’s campaign for President nearly coincided this year, and that gives rise to some thoughts of concern to alpha hunters. At one of the earliest events of her now-official campaign, the former Secretary of State denounced the use of capital gains tax rates by hedge fund managers. Specifically, at a roundtable in Monticello, Iowa on Tuesday, April 14th, she said, “And there’s something wrong when hedge ...

Risk management

Eurelectric Speaks Up For Grushenka
Is it possible or desirable to separate "speculation" from operational hedging, so as to clear the way for industries to do the latter without the regulatory burdens that planners want to impose upon the former? Once Europe has decided that speculation is a bad thing, won't it end up pursuing the demon ways that will collapse the proposed distinction?

Sometimes I can’t help but think of a passage from The Brothers Karamazov: “It was known too that the young person had, especially of late, been given to what is called ‘speculation,’ and that she had shown marked abilities in that direction…. [S]he had for some time past, in partnership with old Karamazov, actually invested in the purchase of bad debts for a trifle, a tenth of their nominal value, and afterwards had made out of ...

Institutional Investing

They Do It Right Down Under: Australian Institutional Funds
The hapless U.S. mutual funds Chen and Gallagher sample have a nominally positive pre fee alpha only when measured against CAPM. That disappears into the negatives when the baseline used is the Fama-French model, and deeper into the negatives when the momentum factor is added.

A new paper by two scholars affiliated with the University of New South Wales compares Australian institutional funds to U.S. mutual funds. Along the way, these two scholars illuminate the distinction between true alpha on the one hand and beta-posing-as-alpha on the other. Their bottom line: Australian institutional funds generate positive alpha, even when alpha is defined in narrow and challenging ways. U.S. mutual funds don’t. U.S. mutual funds can barely generate positive alpha when it ...