Hedge Fund Strategies

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.


GFIA: June is ‘Listless’ for Many Asia Managers

Aug 10th, 2014 | Filed under: Alpha Strategies, Hedge Fund Strategies, Indexes, Today's Post

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’s Earnings and Ackman’s Timing: Part II

Aug 5th, 2014 | Filed under: Hedge Fund Strategies, Legislation/Court rulings, Today's Post

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’s Earnings and Ackman’s Timing: Part I

Aug 4th, 2014 | Filed under: Hedge Fund Strategies, Legislation/Court rulings, Today's Post

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.


Tactical Alpha and Persistence in Hedge Fund Returns

Jul 7th, 2014 | Filed under: Alpha Hunters, Alpha Strategies, Hedge Fund Strategies, Performance, Analytics & Metrics, Today's Post

Guest columnist Andrew Beer looks at the consistency of hedge fund returns and finds them, well, lacking...


Industry Discovery: Maturity is a Pain

Jun 26th, 2014 | Filed under: Hedge Fund Industry Trends, Hedge Fund Strategies, Institutional Investing, Seeding/early-stage, Today's Post

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.


A Far-sighted View: Fund Alignment Rights Are Wave of the Future

Jun 12th, 2014 | Filed under: Hedge Fund Industry Trends, Hedge Fund Regulation, Hedge Fund Strategies, Investment Management Fees, Today's Post

Guest columnist Rick Ehrhart looks at hedge fund incentive compensation.


The Hedge Fund Fee Conundrum

Jun 1st, 2014 | Filed under: Hedge Fund Industry Trends, Hedge Fund Strategies, Investment Management Fees, Today's Post

Andrew Beer, guest columnist, takes another look at the never-ending debate about hedge fund fees. Do they or don't they justify themselves?


Why Do Investors Love Large Hedge Funds?

May 8th, 2014 | Filed under: Hedge Fund Industry Trends, Hedge Fund Strategies, Institutional Investing, Performance, Analytics & Metrics, Today's Post

Jeff Malec, CAIA, looks at why large hedge funds have all the fun and get all the money.


Performance Drag in Alternative Multi-manager Mutual Funds

May 5th, 2014 | Filed under: Alternative Mutual Funds, Hedge Fund Industry Trends, Hedge Fund Strategies, Institutional Investing, Performance, Analytics & Metrics, Retail Investing, Timely Research, Today's Post

Guest columnists Andrew Beer and Michael Weinberg look at the opportunities that lie in the largely untapped alternative mutual fund markets.


Keep Hope Alive: Look at Standard Deviations

Apr 28th, 2014 | Filed under: Hedge Fund Industry Trends, Hedge Fund Strategies, Performance, Analytics & Metrics, Today's Post

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 Letter: Sunshine and the New Tech Bubble

Apr 23rd, 2014 | Filed under: Alpha Strategies, Alternative energy, Hedge Fund Strategies, Technology, Today's Post

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.


Beware the Hedge Fund Indices of March, Caesar

Apr 14th, 2014 | Filed under: Hedge Fund Industry Trends, Hedge Fund Strategies, Performance, Analytics & Metrics, Today's Post

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.


What a Hedge Fund Failure Looks Like

Apr 13th, 2014 | Filed under: Alpha Strategies, Hedge Fund Industry Trends, Hedge Fund Strategies, Today's Post

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 […]


Two Unanswered Questions About Alternative Beta

Mar 25th, 2014 | Filed under: Alternative Beta & Hedge Fund Replication, Hedge Fund Strategies, Portable Alpha & Alpha/Beta Separation, Today's Post

Andrew Beer, Beachhead Capital, and AllAboutAlpha.com guest columnist, takes a different look at alternative beta.


Investment Views on Emerging Markets Exposure Brighten

Mar 24th, 2014 | Filed under: Emerging markets, Hedge Fund Industry Trends, Hedge Fund Strategies, Performance, Analytics & Metrics, Today's Post

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."


Is Global Macro en Vogue for 2014?

Feb 20th, 2014 | Filed under: Alpha Strategies, Hedge Fund Industry Trends, Hedge Fund Strategies, Today's Post

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 to Hedge Funds: Emulate the Agility of a Skier

Feb 10th, 2014 | Filed under: Alpha Strategies, Alternative Mutual Funds, Hedge Fund Industry Trends, Hedge Fund Strategies, Institutional Investing, Performance, Analytics & Metrics, Risk management, Today's Post

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."


Two Troubled Strategies by the Numbers

Feb 9th, 2014 | Filed under: Alpha Strategies, Commodities, CTA, Hedge Fund Industry Trends, Hedge Fund Strategies, Today's Post

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.]


North American Distressed Debt: Review and Prospect

Feb 5th, 2014 | Filed under: Alpha Strategies, Hedge Fund Industry Trends, Hedge Fund Strategies, Today's Post

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.


Hedge Fund Replication: A Practitioner’s Scorecard

Jan 30th, 2014 | Filed under: Academic Research, Alpha Hunters, Alpha Seekers, Alpha Strategies, Alternative Beta & Hedge Fund Replication, Hedge Fund Operations and Risk Management, Hedge Fund Strategies, Today's Post

Andrew Beer looks at hedge fund replication to see if it works.


10 Top Hedge Fund Industry Trends for 2014

Jan 6th, 2014 | Filed under: Alpha Seekers, Alpha Strategies, Hedge Fund Industry Trends, Hedge Fund Strategies, High-net-worth investors, Institutional Investing, Today's Post

Guest columnist Don Steinbrugge provides his thoughts on what the coming year will bring for hedge funds.


October Wasn’t Spooky for Hedge Fund Industry

Nov 24th, 2013 | Filed under: Hedge Fund Industry Trends, Hedge Fund Strategies, Today's Post

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.


Time to Put Away the Trashy Novel

Aug 25th, 2013 | Filed under: Alpha Seekers, CTA, Hedge Fund Industry Trends, Hedge Fund Strategies, Today's Post

Print 'em out and head to the beach for one last hurrah of summer!


Tolstoy, Happy Families and Asian Managerial Success

Jul 8th, 2013 | Filed under: Alpha Seekers, Alpha Strategies, Emerging markets, Hedge Fund Industry Trends, Hedge Fund Strategies, Today's Post

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.


Barclays: Growth Strategies as an Industry Matures

Jun 27th, 2013 | Filed under: Alpha Strategies, Hedge Fund Industry Trends, Hedge Fund Strategies, Today's Post

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.


A Year After the AOL Proxy Fight: The Simple Lesson

Jun 26th, 2013 | Filed under: Hedge Fund Industry Trends, Hedge Fund Strategies, Today's Post

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: No Wind in Sails of Long/Short Equity

Jun 9th, 2013 | Filed under: Alpha Strategies, Hedge Fund Industry Trends, Hedge Fund Strategies, Timely Research, Today's Post

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.


A Plea to the Retail Investors

Jun 2nd, 2013 | Filed under: Alpha Strategies, Book review, Commodities, CTA, Hedge Fund Strategies, Retail Investing, Today's Post

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."


Merger Arb: Dampers and Bright Spots

May 9th, 2013 | Filed under: Hedge Fund Industry Trends, Hedge Fund Strategies, Today's Post

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.


How Hedge Funds Need to Adapt Part II

Apr 21st, 2013 | Filed under: Hedge Fund Industry Trends, Hedge Fund Operations and Risk Management, Hedge Fund Strategies, Institutional Investing, Performance, Analytics & Metrics, Today's Post

Part II of a new SEI report on hedge funds and adapting to survival.


How Hedge Funds Need to Adapt: Part I

Apr 7th, 2013 | Filed under: Alpha Strategies, Hedge Fund Industry Trends, Hedge Fund Strategies, Performance, Analytics & Metrics, Today's Post

“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.


Smaller Hedge Fund Managers Outperform: A Study of Nearly 3,000 Equity Long/Short Hedge Funds

Feb 18th, 2013 | Filed under: Alpha Strategies, Hedge Fund Industry Trends, Hedge Fund Strategies, Performance, Analytics & Metrics, Today's Post

Beachhead Capital looks at performance in the long/short equity sector and finds that small funds outperform the large.


Merger Arb and Alpha Capture: By the Numbers

Dec 16th, 2012 | Filed under: Alpha Strategies, Hedge Fund Strategies, Today's Post

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.


Investing in, Not Gambling Within, the Casino

Nov 20th, 2012 | Filed under: Hedge Fund Industry Trends, Hedge Fund Strategies, Institutional Investing, Timely Research, Today's Post

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.


Casella on Future of Hedge Fund Industry, Part Two

Aug 2nd, 2012 | Filed under: Alpha Strategies, Hedge Fund Industry Trends, Hedge Fund Strategies, Institutional Investing, Today's Post

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 on the Future of Hedge Fund Industry: Part One

Jul 30th, 2012 | Filed under: Alpha Strategies, Hedge Fund Industry Trends, Hedge Fund Strategies, Today's Post

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.


More than $3 Trillion AUM for Top 100 Alternative Investment Managers

Jul 25th, 2012 | Filed under: Alpha Strategies, Hedge Fund Industry Trends, Hedge Fund Strategies, Infrastructure, Institutional Investing, Private Equity, Real Estate, Today's Post

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.


ACG: Intense Competition for Seed Money

Jul 12th, 2012 | Filed under: Hedge Fund Industry Trends, Hedge Fund Strategies, Seeding/early-stage, Today's Post

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.'


Citi Says: Second Big Wave of Allocations on the Way

Jul 10th, 2012 | Filed under: Hedge Fund Industry Trends, Hedge Fund Strategies, Institutional Investing, Timely Research, Today's Post

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.


Preqin to Hedge Funds: Wooing Institutions May Require Patience

Jun 27th, 2012 | Filed under: Alpha Strategies, Asset allocation, Hedge Fund Industry Trends, Hedge Fund Strategies, Institutional Investing, Today's Post

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?


Alpha Hunters: Looking at Alternative Investments From the Inside Out

Jun 7th, 2012 | Filed under: Alpha Hunters, Alpha Strategies, CTA, Derivatives, Forex, Hedge Fund Industry Trends, Hedge Fund Strategies, Institutional Investing, Private Equity, Real Estate, Today's Post, Venture capital

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.


Efficiency May Be Special Case of Adaptation

Apr 24th, 2012 | Filed under: Alpha Strategies, Behavioral finance, Hedge Fund Strategies, Today's Post

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."


Not Just Fire Sales: Contrarian Hedge Funds Find Alpha

Apr 16th, 2012 | Filed under: Alpha Hunters, Alpha Strategies, Hedge Fund Strategies, Today's Post

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.


Examiner Reports on an Ongoing Family Saga

Mar 19th, 2012 | Filed under: Alpha Strategies, Hedge Fund Strategies, Today's Post

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.


Catastrophism Versus Darwinism: Dodd-Frank as Climate Change

Mar 14th, 2012 | Filed under: Alpha Strategies, Commodities, CTA, Hedge Fund Industry Trends, Hedge Fund Regulation, Hedge Fund Strategies, Private Equity, Retail Investing, Today's Post

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.


What Do Day-One/Early-Stage Investors Want?

Mar 12th, 2012 | Filed under: Alpha Strategies, Hedge Fund Industry Trends, Hedge Fund Strategies, Institutional Investing, Seeding/early-stage, Today's Post

Funds of funds dominate the world of institutional investors in Day 1 or early stage (D1/ES) hedge funds, and they do so for a simple reason. That is their business model. They exist to invest in hedge funds, and their goal is to be fully invested at all times, not to have a lot of money sitting around as cash.


PwC on Public Pension Managers Who ‘Do’ Hedge Funds

Mar 5th, 2012 | Filed under: Alpha Strategies, Hedge Fund Industry Trends, Hedge Fund Strategies, Institutional Investing, Investment Management Fees, Today's Post

The question in 2012 is not whether hedge funds (and other alternative investment vehicles) can attract pension funds, but how they should go about it. Alternatives managers will benefit most from the heightened interest of pension funds if they address the continuing concerns of their pension fund colleagues. For example, pension fund managers are well aware that investment in exotic and illiquid products is something hedge funds do, and they know that these products can help make a quick exit impossible.


Aleynikov Released: Second Circuit Doesn’t Love a Wall

Feb 27th, 2012 | Filed under: Algorithmic and high-frequency trading, Alpha Strategies, Hedge Fund Strategies, Today's Post

Some managers of HFT or algorithmic funds must have felt some relief upon the arrest of Sergey Aleynikov in July 2009, his conviction in December 2010, or his imprisonment the following March. Programmers in the financial world were put on notice that criminal prosecution was among the possible consequences were they to treat their knowledge of their employer's edge as a marketable commodity. Thus, the news on Friday [February 17, 2012] that Aleynikov is now a free man came as something of a jolt.