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.
Hedge Fund Strategies
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.
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.
Guest columnist Peter Urbani looks at emerging managers and why they may be re-emerging and bringing alpha with them.
Guest columnist and intrepid reporter Doug Friedenberg talks to Brad Katsuyama about HFT, Michael Lewis and more.
For many fund managers working in Southeast Asia, and/or China, June 2014 was “listless,” with numbers that suggest a flat tire. The booms on the ASEAN bourses are concentrated where the fund managers aren’t, in “high beta cyclical sectors.”
Herbalife (NYSE: HLF) may survive the tricky game it is playing. One critical point: even on the worst plausible reading of its behavior, Herbalife as a corporation or a stock isn't a chain letter. The products it offers its distributors and the public -- they are the chain letters. That's an important practical (though not a legal) distinction.
Herbalife (NYSE: HLF) is playing a tricky sort of game right now: outlast the high-profile short. If its underlying business model is sustainable it can win that game. It may also be able to win, or Ackman may lose, even if the model isn't sustainable, although in that case Ackman's odds are obviously better.
Guest columnist Andrew Beer looks at the consistency of hedge fund returns and finds them, well, lacking...
One takeaway, from the point of view of the managers, is that a close engagement with institutional investors requires a lot of time and effort, and those commodities have to be budgeted. How to handle the circumstances of industry maturity is an individualized call.
Guest columnist Rick Ehrhart looks at hedge fund incentive compensation.
Andrew Beer, guest columnist, takes another look at the never-ending debate about hedge fund fees. Do they or don't they justify themselves?
Jeff Malec, CAIA, looks at why large hedge funds have all the fun and get all the money.
Guest columnists Andrew Beer and Michael Weinberg look at the opportunities that lie in the largely untapped alternative mutual fund markets.
We'll suppose you're an investor with a dream. You want to get in on the ground floor of something that will be really big. You can't be risk averse then, can you?
Einhorn explained to his investors his view that the markets are engaged in a new tech bubble, an echo of the infamous dotcom bubble of the 1990s. Accordingly, he says, Greenlight has created a basket of bubble stocks worth shorting.
Japan-focused funds had three consecutive months of negative returns this quarter. These numbers look particularly jarring in contrast to the 2013 returns, from back in the days when Abenomics was being hailed as a success.
By Jeff Malec, CAIA CEO, Founding Partner Attain Capital Management, LLC The Twittersphere couldn’t get enough of the news last week that hedge fund legend Paul Tudor Jones was shutting down one of his eponymous funds, the Tudor Tensor Fund (try saying Tudor Tensor 10 times fast). And critics of hedge funds will jump to the […]
Andrew Beer, Beachhead Capital, and AllAboutAlpha.com guest columnist, takes a different look at alternative beta.
Have the emerging market assets and the funds focused thereon warranted this return of confidence by their recent returns? The answer to this question can't be any more emphatic than, "yes, somewhat."
Global macro was the strategy of choice for many of the big managers early in their careers. Big-name brands including Soros, Tudor and Moore saw the value of the strategy in the 1990s. This oft-misunderstood strategy is returning to the forefront. Diane Harrison looks at why.
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.
Andrew Beer looks at hedge fund replication to see if it works.
Guest columnist Don Steinbrugge provides his thoughts on what the coming year will bring for hedge funds.
October saw some outflow of money from hedge funds in North (and Latin) America, though there were net inflows in the other regions. Eurekahedge attributes the North American outflow to profit taking and portfolio shuffling, and expects that money will be back.
Print 'em out and head to the beach for one last hurrah of summer!
Asset managers within the Asian boutique universe keep telling GFIA that "asset raising is hard" in the present climate. It isn't going to become easy any time soon, but there is a new level of stability.
On of the key points of the new report from Barclays, Making It Big, is that there are four broad business strategies that define hedge fund managers: product specialists (PS); asset class specialists (ACS); multi-strategy managers (MSM); and diversified alternative asset managers (DAAM). This classification has implications for growth.
It was surely not irrational for Starboard Value, a year ago, to ask its fellow AOL shareholders to withhold or withdraw the sort of 'trust' that Armstrong has requested of them on the subject of the hyper-local news experiment Patch.
PrevInvest begins a new report by documenting the doldrums in which long/short equity is stuck. As a first approximation because in the post-crisis world, certain traditional forms of stock-picker virtue have gone unrewarded.
This book, The Alternative Answer: The Nontraditional Investments that Drive the World's Best-Performing Portfolios is an appeal to the retail investor, to those author Bob Rice calls "typical investors," passing along the good news that they are no longer "stuck with the children's menu of investment options."
Twelve ministries in the People's Republic of China, including the Ministry of Industry and Information Technology, have together released guidelines for accelerating M&A activity in key industries. this is one of the "bright spots" that may lighten up the future for the M&A world, though macro-economic realities in the U.S. and Europe are holding it back.
Part II of a new SEI report on hedge funds and adapting to survival.
“Few managers would be surprised,” SEI says, “that nearly one-third of the institutions queried in SEI’s 2012 survey reported making their due diligence processes more robust over the last two years.” The new robustness in the search for the nature and sustainability of the funds’ edge involves a new granularity, the questioning of specific investment decisions in the context of portfolio construction models.
Beachhead Capital looks at performance in the long/short equity sector and finds that small funds outperform the large.
A recent investigation into merger arbitrage by Matthias Buehlmaier and Josef Zechner reduces what might seem qualitative considerations into a quantity. They use the wording of newspaper reports as a guide to the probability that an announced merger or acquisition will actually close.
Ineichen, the author of AIMA's updated roadmap to hedge funds, addresses some of the hot-button issues of investor/management interaction, including fees, leverage, and style drift. Although investors are naturally inclined to see style drift as a bad thing, they should be cautious about demanding that managers stay within a tightly-defined core area of expertise.
Mark Casella, leader of the U.S. alternatives group at PwC, explains that no manager "ever wants to put gates up or to announce a suspension," and talks about how the contract provisions that provide for such powers have been modified of late. This is part of the broader issue of the alignment of interests.
Mark Casella, leader of the U.S. alternatives group at PwC, tells us why he thinks funds of funds still have a role to play in the future of the hedge fund industry, although "we have seen more and more institutions invest directly in hedge funds rather than through funds of funds." This is the first part of a two-part transcript of a broader discussion.
The survey also asked that the asset managers state where their total assets are invested, using four geographical categories: Europe; Central/North America; Asia Pacific; Other. Commodity funds were easily the most heavily invested in C/NA, to the extent of 94 percent of their portfolios. Private equity funds are 61 percent invested in C/NA, and PE FoFs also have the majority of their portfolios there, at 54 percent.
Acceleration Capital Group says that there were 1,113 new hedge funds in 2011 (and 775 funds liquidated). The increase in the number of supplicants has coincided with a 'decline in [the] traditional seed capital currently deployed by fewer dedicated seeders.'
In the introduction to their report, the authors quote one of their interviewees, a leader at a European pension fund, who said: “To me, investing is about going back to the basics. Why do I want to be in this asset class? Why do I want this product? Where does it fit in my portfolio?” Much of the report is structured as a discussion of two distinct shifts in the answers that have been given and are being given to those old queries.
Institutions aren’t to be rushed into committing to a hedge fund. The process can take more than a year. Preqin asked institutions: once a fund has caught their attention, specifically once they have first seen a fund proposal, how much time typically passes before they actually make an investment, if they do?
A deeper look at alternatives with Dr. Bob Swarup, a world-renowned expert and commentator on alternatives and financial markets as well as being a visiting fellow at London School of Economics.
In a new paper, Andrew Lo has educed from his Adaptive Markets Hypothesis five practical conclusions, among them that during times of crisis, the usual positive relationship between risk and return may not hold. There is in general a "time-varying and often negative relationship between the two."
Although distressed“fire sales” are fewer in some periods than in others, it is true all around the business cycle that mutual fund managers face constraints related to the need “to cater to investors by investing in the hot stocks and by having a strong positive correlation between their flow and the value of the assets in which they invest,” as a new academic paper explains. Hedge funds, with their more professional investors, their deliberate opacity, and their constraints upon withdrawal, aren’t subject to those constraints. Thus, when mutual funds are constrained to follow a trend, hedge funds are in a position to be contrarians.
The parent corporation, Dynegy Inc. (NYSE: DYN) did not file for bankruptcy. As of August 31 of last year, Dynegy's only asset was the equity in Dynegy Holdings, which in turn owned various operating subsidiaries. But on September 1, Dynegy Holdings transferred its coal power facilities to Dynegy. Two months later Dynegy Holdings and related entities filed.
The Grant Thornton paper maintains that the asset management industry achieved "performance and operational efficiencies" during 2011, and this sounds like the sort of marginal adaptation that play a large part in Charles Darwins' writings, to which GT's Winstoin Wilson alluded. But ... the report also treats the regulatory environment as a meteor, capable of wiping out even the best-adapted of pre-collision dinosaurs. So "the Darwinian process" is an odd label for what it describes.