revolvingdoor

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    Study: Corporate/Government Cronyism Does Create Alpha A new report finds that firms where current public officials are destined to become employees outperform other private firms by 7.43% per year during the three years before the officials/employees pass from one post to the other. The outperformance is highest in the year immediately before the switch, Justas a cynic looking for corrupt quid pro quos would suspect.

    Three scholars, two affiliated with Oxford University, the other with the University of Connecticut, have brought statistical rigor to prove what seems intuitively plausible: firms on the private side of the public/private revolving door benefit from that situation. Their coziness with officialdom produces significant alpha for their investors. A simple example of the sort of public/private interaction that these three scholars have in mind arose out of the career of Darleen Druyun. Druyun, who at the turn of the millennium was the principal deputy undersecretary of the U.S. Air Force for acquisition, was involved in a decision to lease refueling craft, KC-767 tankers, from Boeing. The leasing meant that the U.S. spent more money per plane than it would have if it had purchased the planes outright. The decision created a public furor in 2003, when Druyun left the Air Force and took a job with … Boeing. Investigation showed she had actually been negotiating the terms of her contract with Boeing while she was dealing with the issue of the ...

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: The Best, The Rest & Our Pick for Public Endowment CIO of Decade
Charles Skorina looks at the top public endowments and discusses performance with Erik Lundberg.

This month we are pleased to bring you our annual survey of endowment performance at the Public Ivys, including many of America’s biggest, most prestigious, and best-endowed public universities. We think the performance of these endowments ought to be of interest not only to the endowment and foundation community, but to the investment world at large.  They include some extremely talented people getting results which rival investment organizations anywhere. And, they are important clients for many for-profit money managers all over the ...


Institutional Investing

The Skorina Report: The Best, The Rest & Our Pick for Public Endowment CIO of Decade
Charles Skorina looks at the top public endowments and discusses performance with Erik Lundberg.

This month we are pleased to bring you our annual survey of endowment performance at the Public Ivys, including many of America’s biggest, most prestigious, and best-endowed public universities. We think the performance of these endowments ought to be of interest not only to the endowment and foundation community, but to the investment world at large.  They include some extremely talented people getting results which rival investment organizations anywhere. And, they are important clients for many for-profit money managers all over the world.  Since most of them are located far from Wall ...

Performance, Analytics & Metrics

Eurekahedge on Asia in March, and on Asia Over the Years
According to Eurekahedge the hedge fund industry globally returned $54.1 billion in performance gains in the first quarter 2015. This is the greatest first-quarter gain since before the global financial crisis.

A new Eurekahedge report shows that Asia ex-Japan mandate funds delivered the best returns globally during March 2015. Asia ex-Japan as a whole was up 2.08%: Greater China focused funds were up 4.85%, leading the region. The region’s funds held $148.6 billion in AUM as March began. They made a little more than $1 billion through performance, and received net inflows of $0.3 billion. Europe and Latin America mandated funds, on the other hand, both had net outflows during the month. Japan mandated funds were flat as to net flow, and nearly ...

Technology

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 ...

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 Ltd. The CFTC complaint, filed with the U.S. District Court for the Northern District of Illinois ...

Risk management

Tavakoli on Death, an Industry’s Culture, and Decisions
Bill Broeksmit, with whom Tavakoli worked closely at the interest-rate swaps desk at Merrill Lynch in the late 1980s, killed himself in January 2014. The manner of this death, and the circumstances surrounding it, give this book even more gravitas than would a global financial crisis or two.

Janet Tavakoli, the president of Tavakoli Structured Finance and an authority on credit derivatives, has written a reflective memoir about life in the world of finance, and specifically about the ringside seat she occupied in the years leading up to the gravest financial crisis in history. Early on in Tavakoli’s work on Merrill Lynch’s interest-rates swap desk, in the late 1980s, she understood that whenever that desk had a problem, “it had nothing to do with ...

Macroeconomics

Griffin, Bernanke, and the Saud family
Why has Ken Griffin, the founder of Citadel, hired former Fed Chair Ben Bernanke as a Senior Advisor? This decision represents a surprise given Griffin's views on "quantitative easing," views he forcefully expressed a couple of years ago.

Tyler Durden has accurately observed of late that there is some contrariness (one might even say in a loose sense “irony”) in the latest twist in the career of former Federal Reserve Chairman Ben Bernanke. Bernanke is getting into the alpha-hunting business, taking a position at Citadel. His new boss there, Ken Griffin, has said the usual nice things one says at such a moment. Bernanke “has extraordinary knowledge of the global economy and his insights ...

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 ...

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 ...