Today’s Post

Case study: Straits gives managed futures a facelift

Dec 18th, 2014 | Filed under: Commodities, Retail Investing, Today's Post

As alternative investments become more mainstream, managers who traditionally have operated in the alternatives arena face a number of questions, including what is the right offering, the proper structure and how do we market the new vehicle. Guest columnist Ginger Szala examines the thought processes of one group as they made the leap to retailization.


Missing the Market: An American Visits Nigeria

Dec 17th, 2014 | Filed under: Alpha Hunters, Frontier markets, Today's Post

Guest columnist Doug Friedenberg explores Nigeria as a frontier market.


The Magnetism of Insider Trading: Part One

Dec 16th, 2014 | Filed under: Alpha Hunters, Hedge Fund Strategies, Legislation/Court rulings, Today's Post

A three-judge panel of the appeals court instructed the district court to "dismiss the indictment with prejudice as it pertains to Newman and Chiasson." Here we discuss why. in the second part, we'll discuss the likely consequences.


Plans for a Nickel-Tick Pilot: Trouble in the Details

Dec 15th, 2014 | Filed under: Algorithmic and high-frequency trading, Regulatory, Technology, Today's Post

Observers of the slow slog toward an empirical test of larger tick sizes have raised concerns about the details of the three-track plan under consideration. In particular, there's an order-protection feature for one of the three "tracks" that has raised the hackles of Larry Tabb and the STA


Does Leverage Have a Positive or Negative Effect on Private Equity Real Estate Investments?

Dec 14th, 2014 | Filed under: Private Equity, Real Estate, Today's Post

Guest columnist Brad Case, Ph.D., CFA, CAIA, explores the effects of leverage on private equity real estate investments.


Election direction, market correction, asset selection…it’s all an investment question

Dec 11th, 2014 | Filed under: Asset allocation, Today's Post

In the U.S., the midterm elections will largely dictate the course of the remaining years of the current presidential term. This course also plays a major role in the future direction and relative strength of the US markets, which subsequently impact advisors’ decision-making for client portfolios. The interplay between these three areas justifies a closer look at how their relationship correlates to the process of investment management.


Qatar and the QIA: When the SWF Is Also a Family Office

Dec 10th, 2014 | Filed under: Commodities, Institutional Investing, Technology, Today's Post

The royal family in Qatar, the House of Thani, just took direct control of the emirate's sovereign wealth fund. Also, that fund just invested big in Uber, confirming its reputation as perhaps the worlds most aggressive deal-hunting institution.


Aligning Interests: Side Pockets, Side Letters, and Central Issues

Dec 9th, 2014 | Filed under: Asset pricing, Best Practices, Hedge Fund Industry Trends, Investment Management Fees, Today's Post

A proposed new set of principles, designed to encourage investors in the alt-investment industry in their discussions with their managements, encourages skepticism both about side-pocketed assets and about other investors' sweetheart deals (i.e. "side letters.")


Don’t Blame the Swiss: Results Discounted Days Before Vote

Dec 8th, 2014 | Filed under: Commodities, Currencies, Forex, Gold, Hard metals, Today's Post

The price of gold took a swan dive as November ended, just as Swiss voters formally nixed an initiative that would have required the central bank to buy a lot of the stuff. Faille argues that this is not a matter of cause and effect. It is, on the other hand, a fascinating case study in the discounting machinery that is a market.


The need-to-knows of Master Limited Partnerships (MLPs)

Dec 7th, 2014 | Filed under: Alpha Strategies, Energy, Today's Post

Guest columnist Andrew Smith, CAIA, deep dives the Master Limited Partnership (MLP) structure.


What Happens to Hedge Funds if 2008 Market Conditions Repeat?

Dec 4th, 2014 | Filed under: Hedge Fund Industry Trends, Hedge Fund Strategies, Performance, Analytics & Metrics, Today's Post

Guest columnist Don Steinbrugge examines what might happen to hedge funds if there's a 2008 "Groundhog Day" in the markets.


The Best Offense is a Good Defense: Profiting from Hedging

Dec 3rd, 2014 | Filed under: Asset allocation, CAPM / Alpha Theory, Performance, Analytics & Metrics, Risk management, Today's Post

A regime switching model may treat a high-volatility environment as one “regime,” and a low-vol environment as its successor regime. The idea, as it applies to risk management, then, is simply to be ready in either setting for the switch to the other. This is both playing defense and playing offense. It is both managing risk and pursuing alpha.


The Growing Problem of Calculating Performance Fees

Dec 2nd, 2014 | Filed under: Alpha Strategies, Best Practices, Performance, Analytics & Metrics, Today's Post

A new white paper produced jointly by FundCalcs and Global Perspectives looks at the growing complexity of calculating performance fees.


Wars and Failed Mergers Make for a Tricky October

Dec 1st, 2014 | Filed under: Emerging markets, Performance, Analytics & Metrics, Risk management, Today's Post

Only two hedge fund strategies performed in the positive numbers in October, the rest were all in the red. Managed futures did best, according to the Eurekahedge numbers, benefitting from their short positions on oil prices.


Focus on U.S. Real Estate Benchmarks: Moody’s/RCA CPPI and CoStar CCRSI

Nov 30th, 2014 | Filed under: Alpha Strategies, Real Estate, Today's Post

Brad Case, Ph.D., CFA, CAIA, guest columnist, examines the value of U.S. real estate benchmarks.


The Economics of Happiness

Nov 25th, 2014 | Filed under: Alpha Strategies, Timely Research, Today's Post

The vast economic growth in the rich nations since the Second World War has failed to make people any happier. Is it time to rethink how we measure economies? A conversation with Prof. Richard Easterlin, a leading scholar in happiness economics.


The Top 0.004%: The Wealth-X Report

Nov 24th, 2014 | Filed under: High-net-worth investors, Indexes, Timely Research, Today's Post

A report focuses on the life and spending habits of the 211,275 wealthiest individuals on the planet, and their network of family and friends.


Capital Markets, Derivatives and the Law

Nov 23rd, 2014 | Filed under: Book review, Derivatives, Legislation/Court rulings, Today's Post

Alan Rechtschaffen quotes two definitions of "moral hazard" in this book. The first, from Ben Bernanke, seems to get the book off to a rather awkward start. The second, from Zachary Gubler much later on, represents something of a recovery.


Business Development Companies: The Basics

Nov 20th, 2014 | Filed under: Liquid Alts, Private Equity, Today's Post

Guest columnist Andrew Smith, CAIA, traces the history of Business Development Companies.


Mergers in Theory and Practice: Synchronicity and Synergy

Nov 19th, 2014 | Filed under: Alpha Hunters, Alpha Strategies, Today's Post

According to a new report from Intralinks and Cass Business School, M&A activity is a critical component in how successful companies innovate and enhance shareholder value. Actavis' latest coup, rescuing Allergan from the clutches of Valeant and Pershing Square, may make the report's authors' point more vividly than their dry numbers can.


Is Private Real Estate Actually Less Volatile than Public Real Estate?

Nov 18th, 2014 | Filed under: Alpha Hunters, Real Estate, Today's Post

Guest columnist Brad Case, Ph.D., CFA, CAIA, examines the differences between private and public real estate investments.


Big Data and Other Trends to Influence Hedge Funds in 2015

Nov 17th, 2014 | Filed under: Conference report, Hedge Fund Industry Trends, Technology, Today's Post

Big Data makes possible new ranges of inferences, and gives value to new skill sets. There will continue to be plenty of roles for human beings in recognizing the shadows cast by the intense light emitted by new technologies.


Extra! Extra! Central Banking the Disease It Affects to Cure

Nov 16th, 2014 | Filed under: Currencies, Forex, Today's Post

The release of Lord Grabiner's report provides evidence going well beyond the conclusions that Grabiner himself is willing to draw, and shows a central bank acting as a wink-and-nod clearing house.


Bitcoin: Three Bits of News on a Microcosm

Nov 13th, 2014 | Filed under: AAA Newsreels, Currencies, Technology, Today's Post, Virtual currencies

A bitcoin-mining fire, a survey of small and medium businesses and their levels of preparedness for bitcoin customers, and a new criminal accusation against an alleged ponzi scheme: all conribute to the sense that bitcoin is a microcosm of the whole financial world, good and bad.


Will HFTs force a market redesign?

Nov 12th, 2014 | Filed under: Algorithmic and high-frequency trading, Technology, Timely Research, Today's Post

One of the unintended consequences of high-frequency trading may be that it forces a market re-design. Guest columnist Ginger Szala looks at the issues.


Judge David Carter’s Valeant Decision: A Close Reading

Nov 11th, 2014 | Filed under: Alpha Strategies, Hedge Fund Strategies, Legislation/Court rulings, Today's Post

Carter's decision allows Pershing Square to vote its equity in Allergan in ways favorable to Valeant's planned purchase thereof. More is going on here than just another incident in the consolidation of the biopharm world.


Stop Draghi[ng] My Heart Around

Nov 9th, 2014 | Filed under: Behavioral finance, Currencies, Today's Post

Draghi and Yellen seem to be headed in opposite directions. One is revving up the money-creation engine, the other is 'tapering.' So why is Yellen so publicly supportive of Draghi? And what happened to the rebellion within the ECB?


The Building of an Infrastructure for Renewables: A Report

Nov 5th, 2014 | Filed under: Alternative energy, Alternative energy investing, Commodities, Infrastructure, Private Equity, Socially responsible investing, Today's Post

In 2012, [as the crude oil price was settling in to $110 and low vol,] the renewables’ infrastructure space for private funds reached an aggregate estimated deal value of $132 billion. In 2013, that fell to $95 billion. It now seems unlikely that 2014 will match last year.


Is it Time to Re-Design our Markets?

Nov 4th, 2014 | Filed under: Alpha Hunters, Today's Post

Guest columnist Vikas Shah speaks to Nobel Prize winning economist, Professor Alvin E. Roth about market re-design.


GFIA Hedge Fund Manager Review: The End of an Era

Nov 3rd, 2014 | Filed under: Alpha Strategies, Emerging markets, Performance, Analytics & Metrics, Timely Research, Today's Post

In what will be its last regular monthly report on such matters, GFIA tells us that a sharp correction hit markets in Asia ex Japan in September, and tells us of some of the funds that defied the outgoing tide.


The Undead Enron Model Returns to the World above Ground

Nov 2nd, 2014 | Filed under: Commodities, Energy, Legislation/Court rulings, Regulatory, Today's Post

Enron was once the leader in a category of merchant traders that mediated in the world of energy commodities. Enron died, and banks largely took it over. Yet in spirit, at least, Enron is back.


Thoughts about Latest Insider-Trading Scandal

Oct 30th, 2014 | Filed under: Media Coverage of Hedge Funds, Today's Post

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.


Central Clearing and the Bank of England

Oct 29th, 2014 | Filed under: Commodities, Risk management, Today's Post

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."


Hedge vs. Mutual Funds and the ‘Timing of Information Acquisition’

Oct 28th, 2014 | Filed under: Academic Research, Behavioral finance, CAPM / Alpha Theory, Today's Post

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.


Microfinance and Its Critics: An Update

Oct 27th, 2014 | Filed under: Alpha Hunters, Microfinance, Socially responsible investing, Today's Post

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.


Two Types of Secrecy: Proprietary Trading Data and the Doomsday Book

Oct 26th, 2014 | Filed under: Legislation/Court rulings, Today's Post

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.


Hedge Funds and Position Crowding

Oct 23rd, 2014 | Filed under: Hedge Fund Strategies, Performance, Analytics & Metrics, Today's Post

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.


November Vote: Do the Swiss Believe in Gold?

Oct 22nd, 2014 | Filed under: Currencies, Gold, Hard metals, Today's Post

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.


Hedge Funds: Good Run for India, but Troubles in Brazil

Oct 21st, 2014 | Filed under: Emerging markets, Indexes, Performance, Analytics & Metrics, Today's Post

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.


Detroit Bankruptcy: Foes Become Allies

Oct 20th, 2014 | Filed under: Insolvency, Today's Post

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.


Liquidity Makers and Takers: A Nobel Prize

Oct 19th, 2014 | Filed under: Academic Research, Retail Investing, Today's Post

The latest Economics Award has drawn the attention of the world briefly to a body of work that has a number of points of interest for the alt-investment community.


Asset Managers Need to Ride the Tides

Oct 16th, 2014 | Filed under: Best Practices, Today's Post

Guest columnist Diane Harrison looks at the ebb and flow of money and what it means to portfolio construction.


The Bubble This Time: Oil & Gas Energy Stocks?

Oct 15th, 2014 | Filed under: Commodities, Energy, Indexes, Today's Post

If we look for the recent peak in Dow Jones U.S. oil & gas stocks we’ll look to the start of the summer. In June of this year the energy sector got above $850. The fall from that height puts the size of our correction in the neighborhood of 16%. It is possible these stocks are leading the rest of the market down.


A Merchant/Academic’s Thoughts about Customizing Risk Models

Oct 14th, 2014 | Filed under: Risk management, Timely Research, Today's Post

When should customized risk models win out over the standard sort? According to two authors of a new report, there are seven factors, starting with the time horizon.


Untangling the web of HFT

Oct 13th, 2014 | Filed under: Algorithmic and high-frequency trading, Regulatory, Technology, Today's Post

What is the real issue behind intermarket sweep orders, and the recent dust-up over an NYSE rules change? Faille answers: Privilege.


GFIA Ruminates on Academia and Practice

Oct 9th, 2014 | Filed under: Alpha Strategies, Emerging markets, Hedge Fund Strategies, Today's Post

GFIA shares some ruminations about the relationship between the abundant academic work on alternative investment and the insights of practitioners. Meanwhile, the Bank of Japan seems to be engaged in some ruminations of its own, and practitioners have to await the results.


Late September Bombshell from Judge Lamberth

Oct 8th, 2014 | Filed under: Alpha Hunters, Insolvency, Legislation/Court rulings, Today's Post

As the editorial page of the Wall Street Journal reminded us recently, investors sometimes gamble on politics. That is their right, but good capitalist hygiene is served when, once in a while, such a bet goes badly wrong.


Footnote 13: Barclays Did ‘Change the Number’

Oct 7th, 2014 | Filed under: Algorithmic and high-frequency trading, Institutional Investing, Regulatory, Today's Post

The most intriguing revelation in the exchange of briefs between the State of New York and Barclays appears in a humble footnote, where Barclays seems to concede that an employee was pressured to change an internalization number. But it was just the once....


Bitcoin Miners: The Hammer and the Butterfly

Oct 6th, 2014 | Filed under: Currencies, Digital currencies, Editor's Pick, Forex, Today's Post

In the matter of a merchant selling computers that are supposed to mine bitcoin, the FTC alleges that the merchant is a sham, simply using the language of the bitcoin world to find suckers. But the agency might have gotten a bit ahead of itself here.