Posts filed under “Hedge Funds”
click for larger graphic
Hat tip Bianco Research
The chart above raises a very interesting question: Why are hedge funds underperforming this year? In general, the answer would involve costly fees, and no Alpha creation — but what is it about this year that is so problematic?
A few theories have been trotted out:
• Excess Correlation
• Lack of clear trend
• Federal Reserve Intervention
I doubt any of these are the answer — I think there are two primary possibilities:
1) Managers have been excessively timid this year. (I am not sure why given Fed guarantees of ongoing liquidity).
2) Nassim Taleb’s suggestion that the Alpha that most managers create is the result of dumb luck, and not skill.
Between those two possibilities, I am leaning towards Taleb’s explanation . . .
Friends and colleagues who run hedge funds all understand I am not referring to them.
click for updated futures Sometimes in a close football game, when the team with the ball has a small lead, and with only a few minutes left, they will run out the clock. They can use the maximum amount of time before, during and after each play, to burn off as many minutes and…Read More
“I simply love the mortgage market. It’s the best place to be right now.” -Steve Kuhn, Pine River’s mortgage chief, at the 2012 SALT Conference Absolute Return and Alpha: Hedge Fund Firms are piling into the MBS market and putting up lofty returns, but high risks remain: “Cerberus Capital Management, Pine River Capital Management…Read More
Click to enlarge: Source: Bianco research Various hedge funds that had extensive commodity exposure have been throttling back, according to a recent Bloomberg report: “Hedge funds trimmed bets on a commodity rally for the first time in nine weeks as signs of U.S. growth and speculation that central banks will do more to…Read More
Simon Lack, author of “The Hedge Fund Mirage: The Illusion of Big Money and Why It’s Too Good to Be True,” talks about his book and the reasons investors should avoid hedge funds. He speaks with Deirdre Bolton on Bloomberg Television’s “Money Moves.”
Every now and again, an article or piece of research crosses my desk that is so wrong-headed, it demands a riposte. Today’s deserving article is in the WSJ based on a survey from Citi: Hedges’ Assets: $5 Trillion; with the sub hed Funds May Triple Over Five Years, Survey Says; New Offerings to Stoke Growth:…Read More
I found this quote in the BusinessWeek cover story on Paulson & Co to be rather telling. The author quoted an (unnamed) institutional investor who participates in hedge funds. He notes that “most hedge funds follow a familiar developmental pattern.” Stage 1: Funds often improve quickly, but they’re also small and therefore difficult for large…Read More
click for larger version Source: Dalio’s World SANDRA WARD Barron’s, May 19, 2012 http://online.barrons.com/article/SB50001424053111904370004577390023566415282.html
Category: Hedge Funds