The story told here of Bruce Kovner and a botched soybeans trade conveys a lesson about the value of persistence, and a lesson about risk management.
All entries by this author
My own quite speculative view is that Europe as a project is coming apart, and that some of the constituent nations may split into underlying parts in the process, but that this is happening slowly and messily so the world is as yet far from seeing any new equilibrium.
Lawson, the whistle blowing employee of an investment advisor, is protected by SOX. Six Justices agreed on that, although they disagreed on exactly why, or on how far the implications might take future courts.
Hoarding bad news bears this meaning: at some point a lot of bad news is going to break through the informational dam all at once, producing a flood, that is, a firm-specific crash.
The SEC says that it does not believe that “merely” providing analysis or information to the active members of a policy-making committee within a fund management firm is the same thing as making policy for the firm. That seems likely to provoke some wonderful hair-splitting disputes going forward.
Why convert a hedge fund to a mutual fund instead of establishing a stand-alone vehicle available to retail investors that could invest alongside the existing hedge fund?
Financial firms still have people manually implementing Excel spreadsheets in connection with various mandated stress tests, a fact that suggests to a Celent research director that Fred Flintstone runs the back office.
Cutting latency in any one layer is a task distinct from that of cutting it in any of the others. For the physical or interface layer (the ground floor of our ziggurat), optimization involves fiber optics and efficient queue management.
In June 2010, pursuant to an order of that BVI court, the court-appointed liquidators of a Madoff feeder fund in liquidation in BVI petitioned the bankruptcy court in the Southern District of New York to recognize those proceedings as the foreign main proceeding under Chapter 15.
Four researchers have developed an "event-based" understanding of Liquidity, measuring it as a characterization (from 0 to 1) of the predictability of asset price trajectories. Illiquidity is surprise.
Unless Reuters has been utterly misled, a recent report there suggests that Europe's greybeards are considering an astonishingly bad approach to the insolvency of their banking system: soak the pensioners.
That gadfly of financial modelers and quants is back. This time, Taleb writes in such a way as to establish that he isn't a mere popularize/diluter of familiar academic arguments -- which is how the critics of many of his earlier books have painted him. And them.
The separation of alpha and beta is becoming a matter of routine, and the result will (PwC suggests) eliminate the division between "alternatives" investing on the one hand and "traditional" investing on the other.
The multi-state, multi-national law firm Pillsbury Winthrop Shaw Pittman has offered its clients, especially the banking entities among them, a guide to the principal elements of the newly finalized Volcker Rule, and it touches upon several significant concerns that industry participants have expressed.
Deloitte's pie graphs emphasize the degree to which both hedge funds and PE vehicles have become dependent upon institutions in general, and detached from the retail market. But Deloitte says that 2014 "will likely see additional efforts by alternative fund managers to engage the retail investor base by taking their alternative investment strategies mainstream."
Managed futures are performing quite poorly. They also have a higher standard deviation than the HF industry aggregate, so it seems that if you're invested there your losses are at least buying you greater risk. [Wait. That can't be right.]
A new white paper from Debtwire and Bingham McCutchen finds some reason to be bullish about the distressed debt market in 2014. The long-awaited tapering of the Federal Reserve's easy-money policy may set off a wave of defaults, creating opportunities for the wary.
Corporations have cash in the till; and it is sitting up, begging to be put to work. Thus, M&A deals are on the way.
Pimco is expanding its active ETF offerings significantly. By serendipity, The Cerulli Edge contains some fascinating data on the growth of the ETF industry. both active and passive.
A new report from GFIA highlights some asset manager successes: in the Japanese markets riding the wave of Abenomics; in India benefitting from the weakness of the rupee; and in the Arab world thriving against the backdrop of political turmoil.
Higher-education endowments are sticking with the “endowment model,” that is, their asset allocations remain stable. For example, in 2012, the surveyed institutions had 15% of their total AUM in domestic equities, 16% in international equities. In 2013, those figures were only slightly higher, 16% and 18% respectively.
The need for risk management in general and, more specifically, the inability of HNW Chinese otherwise to hedge against RMB exchange risk, is driving them to invest overseas.
A forthcoming paper by Goldstein et al opens a window onto the convergence of two market-structure issues that, until quite recently, had not even been thought very similar.
The latest in a series of annual reports from Rothstein Kass on women in the alternatives world adopts a somewhat less cheery tone than did that of last year. No longer is the dominant metaphor a "tipping point." Now it's a marathon.
The Supreme Court has received several amici briefs in the Halliburton case. They generally take the side of the defendant/petitioner, the corporation accused of securities fraud, in its opposition to the use of a 1980s vintage fraud-on-the-market theory to certify a class.
The crucial generalization to be drawn from the last three decades of alternatives investing by institutions is that generalization is tricky. Even within one type of structure, such as VCs, broad statements have to take account of the wide dispersion in returns, "making manager access and selection key determinants of success."
Burton Lifland's death leaves us recalling the late summer of 2007, when a decision of his re-shaped the dispute over two Bear Stearns affiliated hedge funds, while the liquidators over-relied upon the funds' mail drop in the Caymans.
The U.S. Supreme Court has agreed to hear an appeal from a 2d Circuit decision in the long-running litigation between hedge fund NML Capital and the Republic of Argentina. Specifically, it is set to address whether a judgment against Argentina opens the door to discovery of Argentina's assets around the world, commercial and non-commercial alike.
Despite the uncertainties generated by contemporary politics, Cerulli is convinced that "investing in alternatives such as property and infrastructure funds should remain a major theme in the Thai mutual fund space in 2014."
Delaware's governor has nominated Leo Strine for the state supreme court. With that in mind, we review some of the highlights of Strine's career at the Court of Chancery especially as they concern clashes between corporate managers one the one hand and activist investors on the other.
In January 2013 the Council of the European Union agreed to allow 11 member states to institute a sweeping financial transaction tax as a matter of "enhanced cooperation." Now, a year later, the EU's tax commissioner, a one-time enthusiast of the idea, is signaling compromise.
Two academics had the nerve to question a thesis dear to the heart of David Kocieniewski of The New York Times. So he struck back.
Oilprice.com columnist Claude Salhani looks at the implications of Saudi Arabia opening a new pipeline.
A recent paper on "Option Implied Volatility, Skewness, and Kurtosis and the Cross-Section of Expected Stock Returns" finds a positive relationship between each of the three listed characteristics of a distribution on the one hand and ex ante expected returns on the other. In the case of skewness in particular, this finding struck me as a bit odd.
A contractual provision for the mandatory repurchase of loans affected by a misrepresentation was supposed to be the alternative remedy, keeping disputes between the parties out of the courts. In the matter of ACE Securities, that didn't work.
In the interests of full disclosure I acknowledge here that I recently entered the realm of bitcoin owners myself. That said, bitcoin is a fascinating story, one of our top five of the past year.
The IMF has been embarrassed by recent events and hopes to prove that its approach to debt restructurings is not all about the 'occupation' of debtor nations. So it seems determined to make life more difficult for the bondholders of insolvent sovereigns.
The numbers of undead mutual funds in China has created a sharp disparity between the fund count and the AUM count. Since no one ever drops out, the fund count only goes up.
Judge Rakoff has hit a nerve with his contention that criminal cases in connection with the late mortgage derivatives bubble aren't being brought in large part due to "the government's own involvement in the underlying circumstances that led to the financial crisis."
The IOSCO has recommendations for market authorities as to trade execution services. These recommendations are driven by a general sense that technology has brought about increased fragmentation and that this, unless carefully monitored, is a dangerous thing.
There is something inherently perilous in choosing the recipient of any important post by reliance upon the most impressive resume: by that method you can get an endless supply of insiders, confirming that the inside is always the right side.
Ogier Partner Peter Cockhill recently examined the direction in which the Cayman Islands regulator CIMA is headed on fund governance. He thinks the costs of the new framework, though real, will prove reasonable given the benefits.
The U.S. Supreme Court has now agreed to hear arguments about Alice, litigation that squarely raises a question with which lower courts have struggled ever since the Bilski decision in 2010 failed to offer them any guidance: is all software 'abstract' in the legal sense, and thus as such unpatentable? If not, then what is the legal sense of "abstract"?
A new report, which concerns specifically the post-trade operations of equities and fixed income instruments, says that since the crisis of 2008 the management of costs has become "an utmost priority." Cost management, though, isn't the same as downsizing.
It is certainly true that a lot of foreign-denominated debt would worsen prospects for South Africa. But even in the absence of such a trap: can a nation boast of anti-fragility (or even, more aptly, of robustness) simply because it has the option of devaluation?
Even after the worst of the U.S. debt ceiling crisis passed, concerns about the Yen and unsatisfactory second-quarter performance numbers weighed the Nikkei down.
For pension managers these days, decision making is about managing a glide path that doesn't become a fiery crash. In appealing to such clients, consultants shouldn't think of themselves as sales people selling particular products in separate boxes.
A recent decision from the Second Circuit constitutes the latest fall-out from the criminal behavior of Edward Strafaci, who as portfolio manager for the Lipper funds overstated the value of the assets they held between 1998 and 2002.
The share of equity trading volume accounted for by dark pools has risen steadily in the U.S. in recent years. What have been the preconditions of this? what are its benefits and what are its costs?