Hedge Fund Strategies

When I Learned Truth About RadioShack

Apr 13th, 2015 | Filed under: Hedge Fund Strategies, Insolvency, Technology, Today's Post

IT guys have been denigrating RadioShack, from their own perch of superiority, for a long time. The trouble is, while those IT guys were the future, RadioShack's customer base was fading into the past.


Liquidity, Leverage and Those Nimble Hedge Funds

Apr 9th, 2015 | Filed under: Derivatives, Hedge Fund Strategies, Regulatory, Risk management, Today's Post

Basel III has given us three different statistics with a common goal, to keep banks to a stable funding profile, neither too illiquid nor too highly leveraged. As these requirements come on-line, what will be the consequences for the relationship between prime brokers and hedge fund managers?


Does the hedge fund industry benefit society?

Mar 30th, 2015 | Filed under: Alpha Hunters, Alpha Strategies, Hedge Fund Industry Trends, Hedge Fund Strategies, Media Coverage of Hedge Funds, Today's Post

Guest columnist Donald Steinbrugge, CFA, looks at the bad rap hedge funds have gotten and talks about why it's not deserved.


Hedge Fund Investors and Managers: Concord and Discord

Mar 29th, 2015 | Filed under: Alpha Hunters, Alpha Strategies, Hedge Fund Strategies, Institutional Investing, Today's Post

Investors in hedge funds want more transparency than they think they're getting, a fact that might not be clear to their managers.


A Taylor-Swift Lawsuit: ‘I’ve Got a Blank Space Baby.’

Mar 26th, 2015 | Filed under: Algorithmic and high-frequency trading, Derivatives, Hedge Fund Strategies, Technology, Today's Post

This is the story of one high-frequency trading firm suing one or more others and giving detailed credence to everything that has been said over the last year or so by those who bemoan the rise of HFT firms.


KPMG, MFA & AIMA: Institutional Investors & Customization

Mar 19th, 2015 | Filed under: Alternative Mutual Funds, Asset allocation, Hedge Fund Industry Trends, Hedge Fund Strategies, Institutional Investing, Investment Management Fees, Liability Driven Investing, Regulatory, Today's Post

Surveys suggest that certain conspicuous ongoing trends will continue. For example, the classic 20 + 2 fee structure will continue to crumble, replaced by "customized" structures. A full 91% of the small hedge fund managers who filled out a survey agreed with this. A mere 76% of large hedge fund managers did likewise.


A Defeat, but Not a Rout, for Appraisal Arb

Mar 17th, 2015 | Filed under: Alpha Strategies, Asset pricing, Hedge Fund Strategies, Legislation/Court rulings, Today's Post

The Delaware Chancery Court would apparently have preferred to stay out of the issue of valuation as it played itself out in the 2012 acquisition of Ancestry.com by Permira. But it couldn't: the statute encouraging appraisal fights was too clearly worded for that.


5 Insights on a Hedge Fund Outlook

Mar 12th, 2015 | Filed under: Hedge Fund Industry Trends, Hedge Fund Strategies, Institutional Investing, Today's Post

Guest columnist Diane Harrison finds five trends in hedge funds that are worth watching.


Why Constraints on Hedge Funds Matter

Mar 8th, 2015 | Filed under: Alpha Strategies, Alternative Mutual Funds, Hedge Fund Industry Trends, Hedge Fund Strategies, Indexes, Performance, Analytics & Metrics, Today's Post

Andrew Beer looks at what happens when talented hedge fund managers try and perform within the constraints of the mutual fund structure.


AIMA Reports: Activist Hedge Funds are the Good Guys

Mar 3rd, 2015 | Filed under: Best Practices, Hedge Fund Strategies, Private Equity, Regulatory, Today's Post

Activist investors usually aren't trying to take control of a company. And when they are, managers have strong existing tools to foil them. What activist investors can do is increase share value, over sustained periods.


Do you like or dislike equity?

Mar 1st, 2015 | Filed under: Hedge Fund Strategies, Liquid Alts, Today's Post

John Shearman, CAIA, guest columnist explores the basics of liquid alts.


A Metaphorical Map that Proposes an Unbound Barbell

Feb 12th, 2015 | Filed under: Alpha Hunters, Alpha Strategies, Alternative Beta & Hedge Fund Replication, Alternative Mutual Funds, Asset allocation, Hedge Fund Strategies, Liquid Alts, Risk management, Today's Post

The hedge fund universe has become a much more complicated place since 2008. The old-school hedge funds offering only quarterly redemptions with at least one month notice are no longer the only option for those seeking alternatives plays. And those who are seeking such plays may be somewhat confused by the proliferation of possibilities.


Arbitrage 101: When Voting Has Negative Value

Feb 11th, 2015 | Filed under: Asset pricing, Hedge Fund Strategies, Performance, Analytics & Metrics, Today's Post

Reuters is now reporting that major investors seek the opportunity to convert their voting shares of Twenty-First Century Fox into non-voting shares, because the voting shares are trading at a discount. Faille takes Reuters' anonymous sources at their words for the purposes of discussion. He doesn't think these investors will get their convertibility.


Recent Russian Investment History: Misty Water-Colored Memories

Feb 8th, 2015 | Filed under: Book review, Emerging markets, Frontier markets, Hedge Fund Strategies

William Browder's new book, Red Notice, is a fascinating window into the recent history of Russia, both when Yeltsin (and at first Putin) welcomed foreign investment and then when things turned very ugly for those investors.


Should Governments Slow Trading Down by Taxing It?

Feb 5th, 2015 | Filed under: Algorithmic and high-frequency trading, Hedge Fund Strategies, Regulatory, Technology, Today's Post

A physicist recently suggested that exchanges might do well to change the nature of the trading they host, holding batch auctions every one-hundredth of a second to better serve their real economic functions. Then a commenter proposed that taxation could achieve the same effect. Our physicist went back to the drawing board to consider this.


Stifling Debate on Classified Boards: Je Suis Charlie!

Feb 2nd, 2015 | Filed under: Best Practices, Hedge Fund Strategies, Regulatory, Today's Post

Unfortunately, Gallagher and Grundfest aren't simply contributing to the on-going debate over shareholder activism, classified boards, etc. They're trying to stifle it by suggesting a litigation campaign against the side they oppose. Shame on them.


Low Energy Prices: Crude and Refined Consequences

Jan 21st, 2015 | Filed under: Currencies, Hedge Fund Industry Trends, Hedge Fund Strategies, Indexes, Today's Post

Eurekahedge tells us that hedge funds were in the black 4.57% in 2014. That's hardly cause for celebration, since the MSCI World Index returned 6.79% over the same year. But all eyes now turn to the still-sliding price of oil.


The Quant Conundrum: Perfectly Repeatable or Repeatedly Imperfect?

Jan 15th, 2015 | Filed under: Algorithmic and high-frequency trading, Alpha Seekers, Hedge Fund Strategies, Risk management, Today's Post

Guest columnist Diane Harrison looks at both sides of the quantitative investment debate.


Top 10 Hedge Fund Trends for 2015

Jan 8th, 2015 | Filed under: Alpha Hunters, Hedge Fund Industry Trends, Hedge Fund Strategies, Institutional Investing, Today's Post

Guest columnist Don Steinbrugge, CFA, surveys institutional investors and hedge funds to find out what the top trends may be for 2015.


Thoughts on Futurology and its Perils

Jan 6th, 2015 | Filed under: Algorithmic and high-frequency trading, Hedge Fund Strategies, Technology, Today's Post

The Permal Group takes a refreshingly modest view of the eventual impact of Big Data on the business model of hedge fund managers. The better the data about a corporation, the more accurate the stress testing. Yes, that seems reasonable.


The Magnetism of Insider Trading: Part Two

Dec 28th, 2014 | Filed under: Alpha Hunters, Hedge Fund Strategies, Legislation/Court rulings, Today's Post

In Part One Faille discussed the Newman/Chiasson decision of a three-judge panel of the appeals court. In this follow-up, he discussed consequences, starting (but not ending) with the good news this offers Michael Steinberg.


Yes, Speech is Free for Short Sellers, Too

Dec 23rd, 2014 | Filed under: Hedge Fund Strategies, Legislation/Court rulings, Media Coverage of Hedge Funds, Today's Post

The success of Wynn's lawsuit would have chilled free speech by short sellers. So let us take a moment to celebrate its quick demise at the hands of Judge Orrick. As a general rule, though, when a plaintiff quotes an expression from a transcript that, in fact, is immediately preceded by the word "not," and the plaintiff leaves the "not" out of the quote ... things are knotty.


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.


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.


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.


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.


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.


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.


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.