Today’s Post

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.


Not Your Grandfather’s Market: The Evolution of Liquid Alternatives

Oct 5th, 2014 | Filed under: Alpha Hunters, Alternative Mutual Funds, Liquid Alts, Retail Investing, Today's Post

Guest columnist Andrew Smith, CAIA, traces the rise and growth of liquid alternatives.


Signs of a Renaissance in Emerging Manager ‘Alpha’

Oct 2nd, 2014 | Filed under: Alpha Seekers, Alpha Strategies, Hedge Fund Strategies, Institutional Investing, Performance, Analytics & Metrics, Today's Post

Guest columnist Peter Urbani looks at emerging managers and why they may be re-emerging and bringing alpha with them.


Old-Line Oil and Coal are Techno and Exciting These Days

Oct 1st, 2014 | Filed under: Alternative energy, Alternative energy investing, Energy, Today's Post, Venture capital

Revolution is underway in the energy world. For investors, one of the most unexpected facts about this revolution is that it permeates precisely those portions of the energy sector long thought sleepy and conventional: the fossil fuels.


What hath CalPERS Wrought? And Why?

Sep 30th, 2014 | Filed under: Institutional Investing, Investment Management Fees, Today's Post

Should investors, especially institutional investors, push back (or push back harder than they have so far) against the fee structure preferred by those whom they pay to manage their money? And is the recent announcement from CalPERS such a push?


Key Alpha-Oriented Law Firms Merging

Sep 29th, 2014 | Filed under: Alpha Hunters, Private Equity, Today's Post

Yes, law firms that serve alpha hunters are consolidating. But don't take it personally, HF or PE managers. This isn't about you. It's about them. And it isn't necessarily a bad thing.


Self-Employment Tax – Limited Partners Beware!

Sep 28th, 2014 | Filed under: Partner accounting, Today's Post

Guest columnist Maury Cartine looks at a new IRS memorandum on self-employment tax and how it applies to limited partners.


Looking at the Next Generation of Institutional Investing

Sep 25th, 2014 | Filed under: Asset allocation, Hedge Fund Industry Trends, Institutional Investing, Today's Post

Guest columnist Andrew Beer looks at the changes in institutional investing.


Top 5 Ramifications of CalPERS’ Hedge Fund Exodus

Sep 24th, 2014 | Filed under: Alpha Hunters, Hedge Fund Industry Trends, Institutional Investing, Today's Post

Guest columnist Don Steinbrugge, CFA, looks at some of the potential reactions to CalPERS' leaving hedge funds.


Celent Reports on Equity Crowdfunding

Sep 23rd, 2014 | Filed under: Crowdfunding, Retail Investing, Today's Post, Venture capital

A new report from Celent discusses the as-yet unimplemented Title III of the JOBS Act. Celent's Isabella Fonseca offers suggestions for how both wealth managers and tech providers might benefit.


Hong Kong Shariah-Compliant Launch Sells

Sep 22nd, 2014 | Filed under: Behavioral finance, Best Practices, Emerging markets, Today's Post

If I should declare that I will never eat duck, and then I simply re-name certain ducks “chickens” and eat them, then people who genuinely as a matter of principle refuse to eat duck may consider me a false friend. And those who have no objection to the eating of duck may think me a silly goose.


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

Sep 21st, 2014 | Filed under: Featured Post, Guest Posts, Institutional Investing, The Skorina Report, Today's Post

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


Metamorphosis in HFT: Update with Brad Katsuyama of IEX, Central Figure in ‘Flash Boys’

Sep 18th, 2014 | Filed under: Algorithmic and high-frequency trading, Alpha Hunters, Hedge Fund Strategies, Today's Post

Guest columnist and intrepid reporter Doug Friedenberg talks to Brad Katsuyama about HFT, Michael Lewis and more.


Exemptions and Pools: CFTC Harmonizes with the JOBS Act

Sep 17th, 2014 | Filed under: Commodities, Hedge Fund Regulation, Today's Post

Two rules within the CFTC rulebook that offer exemptions for certain CPOs from certain regulatory requirements mirrored the original pre-JOBS Act Reg D on the SEC side. But of course we are now in a post-JOBS Act world, and the CFTC staff has now acted, not through a rule change but by staff letter, to harmonize with its sister agency and with the JOBS Act mandate.


Is Liability Insurance an Estate Asset in Bankruptcy?

Sep 16th, 2014 | Filed under: Derivatives, Insolvency, Legislation/Court rulings, Today's Post

The Manhattan bankruptcy court has now granted individual defendants in the MF Global matter, including Jon Corzine, access to funds from their D&O insurance. But it wasn't easy for them to get here, and therein lies our moral.


Burr XII, Extreme Value, and a Fantasy

Sep 15th, 2014 | Filed under: Academic Research, Asset allocation, Risk management, Today's Post

The eight authors of a new study seek to add to “the existing literature of Bayesian VaR methods by … considering the … general class of Burr XII extreme value distributions “ and by estimating error bounds. After having a little fun we try to puzzle out what that means.


Asset Allocation & the Practical Application of Time-Window Analysis

Sep 14th, 2014 | Filed under: Asset allocation, Performance, Analytics & Metrics, Today's Post

Guest columnist Andrew Smith, CAIA, on performance analysis and its effect on asset allocation.


Custodians Helping Customers with Securities as Collateral

Sep 11th, 2014 | Filed under: Infrastructure, Insolvency, Risk management, Today's Post

How address issues of supply/demand imbalance in the world of collateral requirements? Custodians can do a good deal on behalf of their customers here, and are exploring just how much.


Vindicating Austrians: The New ESMA Warning on Risks

Sep 10th, 2014 | Filed under: Asset pricing, Risk management, Technology, Today's Post

In a new report, ESMA discovers that some investors may be guilty of "over-reliance on continued policy support." I gather that means that investors believe that central bankers and governments will play the role of Santa Claus indefinitely.