How did Ackman get so Marrried to this Valeant Trade
RCM’s Attain Alternatives Blog
The answer lies in what type of investor he is. He picks the stocks he believes in. He’s a feelings investor. And when it doesn’t go his way – he goes ‘activist’ as they call it, pushing his way onto the board and pushing the company through the large ownership percentage to change this. He’s been nothing if not popular with this strategy – continuously in the news headlines. But this trade highlights the ENORMOUS differences between human based discretionary program such as Pershing Square and their systematic, computer based hedge fund brethren.
***DA: A spectacular showcase of what makes a trader. The only reason he is still solvent is because, due to prior wins, he is playing with house money. I knew guys like him on the trading floor, and I can say definitively that the clearing firm’s risk manager would have deactivated his keycard a long time ago.
Managed futures move to broader investments universe (video)
Dan Collins, Editor in Chief at Modern Trader magazine talks about how managed futures are an alternative investment strategy using futures that are increasing in popularity.
***DA: Not just a face for radio.
Legal threats Added To Jacob Wohl Strategy
Mark Melin, ValueWalk
Self-proclaimed hedge fund guru Jacob Wohl appears to be shifting to yet another strategy as he apparently issues legal threats to his one-time employee who spoke on the record in a previous ValueWalk article.
***DA: This story will not end well.
Multi-strategy and CTA funds continue to gain popularity and net inflows.
The interest in multi-strategy and CTA funds continues to grow in the hedge fund industry. While the hedge fund industry in total recorded near record outflows in Q1, multi-strategy funds and CTAs were the only strategies to document net inflows. A recent article by Preqin indicates that the hedge fund industry recorded net outflows of just over $14bn during the first quarter.
Hedge Funds Year-to-Date Returns in Positive Territory for First Time in 2016
The Preqin All-Strategies Hedge Fund benchmark recorded the second consecutive month of positive hedge fund performance in April to bring 2016 YTD figures into the black for the first time this year. Returns of 1.44% through the month follow gains of 2.40% in March to put performance for 2016 so far at 0.70%.
***DA: CTAs back in the black; now up 1.75 percent on the year.
Appetite for hedge funds rises as investors ramp up the risk
Hedge funds are well and truly back in vogue, according to a new report by global bank Citi, which has outlined some of the fastest growing investment products in the entire asset management industry.
A new survey from the bank published Thursday was conducted at a client event of institutional investors with the respondents representing $935 billion of assets under management. The survey said these investors were adding to their allocation of hedge funds and opting for “risk premia” and “smart beta” products.
**According to the survey, 81 percent of respondents are currently investing in, or looking to invest in, risk premia and smart beta solutions.
These hedge fund managers made $4.7 million per day last year
Wall Street’s elite club of hedge fund managers got a bit richer last year, according to an annual ranking published this week. The top two hedge fund managers made $1.7 billion each in 2015, and the top 25 averaged 10 percent more than the previous year.
eVestment: Hedge Funds Gain +1.10% in April, Turn Positive for 2016
Hedge funds continuing on a winning streak in April following the best aggregate performance in two years in March, according to eVestment’s latest Hedge Fund Performance Report. The company’s Hedge Fund Aggregate measure gained +1.10%, which brought year-to-date returns into the green at +0.83%.
***DA: From the report: Commodity hedge funds produced average aggregate returns of +4.10% in April, bringing YTD returns to +6.01%. Also, managed futures hedge funds have taken in more new money than any other hedge fund segment in 2016. Performance in April was slightly positive in aggregate, although larger funds, those which gained the most new money in 2015, were negative at -2.19%.
Bank of Singapore Sees Asia Rich Shift to Paying Fees for Advice
Bank of Singapore Ltd., which recently bought the wealth-management units of Barclays Plc in Asia, sees the region’s private-banking industry shifting towards a fee-based model at the expense of the traditional practice of charging rich clients commissions on their transactions.
“The whole industry is moving into advisory,” said Bank of Singapore Chief Executive Officer Bahren Shaari, speaking about private banking in Asia. At a time of volatility in global financial markets, rich clients are more cautious about trading and increasingly prefer the relative consistency of returns from fee-based managed portfolios, Shaari said in an interview Friday at the bank’s headquarters.
**JK: Not a managed futures story, but a bigger story about the rise in advisory services, which could be a managed futures story.
Reports saying hedge funds are dead could be a bit premature
Pensions & Investments
Hedge fund managers are taking it on the chin of late. Headlines describing an industry teetering on the brink and criticism about poor performance and high fees by the likes of investment legends Warren Buffett and John C. “Jack” Bogle are magnifying ill will against hedge funds from the public, politicians and labor leaders.
Managed Futures/Managed Funds
Pouring SALT on Hedge Funds’ Wounds in Vegas
Hedge Fund managers claim to love a good contrarian bet. And right now, the most contrarian bet of all might be on their own future.
**JK: A report from the SALT Conference.
What current trends tell us about the future of the hedge fund industry
Agecroft Partners’ Don Steinbrugge discussed a number of recent hedge fund industry media quotes and articles in a presentation delivered at the 69th CFA Institute Annual Conference held on 9 May, 2016 in Montreal.
In many cases there was over a 20 per cent differential in returns between the best and worst performers within a single strategy. When strategies underperform investors’ expectations and when dispersion of returns between managers increases significantly, it results in a significant increase in fund redemptions, especially for those managers that underperformed.
‘Justify your high pay,’ consultants tell asset managers
Senior investment consultant Jeremy Spira said: “Managers are able to pay their staff handsomely and still achieve high margins and this is, by definition, funded by their clients,”
“We would contend that if this state of affairs is to persist, managers need to be called to account to demonstrate the value they are adding for the fees they are extracting.”
Oppenheimer’s shuttered fund spotlights challenges for commodity strategies
The roller coaster ride continues for investors in commodity-focused funds, as witnessed Wednesday with the announced liquidation of the 19-year-old Oppenheimer Commodity Strategy Total Return Fund (QRAAX). Even though the category, as tracked by Morningstar, has been on the upswing since the start of the year, commodity investors and portfolio managers have been generally behind the curve for the past several years as commodities have experienced wild volatility.
Hedge Funds On Pace To Record Growth For Another Month
With a little over two weeks left in the month of May, hedge funds are on pace to show at least some growth for the second consecutive month. Industry wide, hedge funds so-far have outperformed underlying markets during the month, and were up 1.12% in April while underlying markets as represented by the MSCI World Index ended the month up 0.67%.
Top hedge-fund managers made $13 billion in 2015 even as Wall Street tanked; Hedge fund’s top 25 managers made 10% more in 2015 than the previous year, according to Alpha
By MARK DECAMBRE – MarketWatch
The rich continued to get richer in 2015 despite a tepid performance from U.S. stocks, according to a ranking of the top 25 highest-earning hedge-fund maestros compiled by Institutional Investor’s Alpha magazine
AllianceBernstein chief says active management ‘too big’; Bloated industry needs to restore investors’ faith, says Peter Kraus
by: Robin Wigglesworth, US Markets Editor
The asset management industry has grown too bloated to consistently produce market-beating returns and needs to be more disciplined on size to restore investor faith, according to the head of one of the biggest US investment houses.
The World’s Smartest Investors Have Failed
The Motley Fool
Investors started getting excited about hedge funds in the 1990s, when people like George Soros and Steve Cohen were earning returns of 30% or more, year after year, crushing the market. More funds opened, and their marketing pitch went something like this: We have the best investors in the world, and their returns are not correlated to the rest of the market. We will earn you so much money that we deserve the absurd fees we’re going to charge you for it.
This worked for some funds for some time, but it’s become plainly clear in recent years that the biggest bull market was in inflated promises. As a group, hedge funds — which now manage $2.5 trillion — have consistently underperformed a basic S&P 500 index fund over the last five years.
**JK: The case for passive investment.
Are Alternative Mutual Funds Eating From The CTA Pie?
Jeff malec, RCM’s Attain Alternatives Blog, via Seeking Alpha
It seems like everywhere you look, you see a chart showing the upward AUM growth of liquid mutual funds, as well as the number of new funds. These charts left us with one main lingering question that we think is on the mind of many in the Managed Futures space. How big is the Liquid Mutual fund compared to the rest of the industry? And is that growth in addition to, or at the expense of, the rest of the industry? We explored this question in the latest article featured in CTA Intelligence, seen below.
Pensions & Institutions
Public pensions stick with hedge funds despite frustrations
Data, however, suggest that U.S. public pensions are staying put. The number of public pensions that use hedge funds has steadily increased to 282 in 2016 from 234 in 2010, data from research firm Preqin show. The average percentage of pension portfolios in hedge funds has also rose to nearly 10 percent.
CalSTRS to hike percentage of assets managed internally
Pensions & Investments
CalSTRS will substantially increase the proportion of assets it manages internally to about 58% of total assets from 45% when it launches a $6 billion international equity fund benchmarked to the MSCI Europe, Australasia and Far East index on its internal trading platform in June, said Christopher J. Ailman, chief investment officer.
$6 billion short, no easy answers: Council quizzes pension chief
Philadelphia’s $5 billion pension fund is an asset some city officials would love to direct toward investing in the city’s rundown neighborhoods and prospective employers. Sadly, the city owes its pensioners a lot more than that — $11 billion — after years of underpayment and mixed investment yields. It’s going to be tough to make up the difference in the years ahead. Maybe extra tough if we give the fund new missions, like local economic development.
***DA: Hedge fund underperformance cited as one of the reasons for the shortfall.
Big Insurers Send a Wake-Up Call to Hedge Fund Investors
The New York Times
Like many sophisticated investors, the nation’s largest insurers drank the hedge fund Kool-Aid, pouring billions into the high-fee investment funds and helping drive hedge fund assets to over $3 trillion. Now comes the hangover. Steep losses in hedge fund investments during the last quarter damaged many insurance company earnings, reinforcing decisions to rethink the premises that led them to follow the Pied Pipers of finance in the first place.
***DA: A hangover? Who spiked the Kool-Aid?
Corporate pension funding falls on second-lowest discount rate since 2001 — 2 reports
Pensions & Investments
The aggregate funding ratio of corporate pension plans declined in April, primarily due to falling discount rates, said reports from Milliman and Aon Hewitt. The funded status of the 100 largest U.S. corporate defined benefit plans fell 1 percentage point to 77.1% at the end of April, said the Milliman 100 Pension Funding index on Monday.
Investor Brochure now available
National Futures Association
NFA’s new Investor Brochure provides the investing public with a list of NFA’s online resources.
Regulatory confusion creates physical commodity risks worldwide, Iosco says
Neil Roland, MLex (Subscription Required)
A patchwork of supervision over physical commodity warehouses poses the risk that authorities around the world won’t be able to detect potential problems or come to ready solutions, an International Organization of Securities Commissions report said. Conflicts of interest at warehouses, where an operator may work for the same company as a derivatives trader, “raise the potential for one trader to have an unfair advantage.”Iosco should develop guidance for the oversight of infrastructure such as grain silos and metals warehouses, the report said.
The Global Financial Industry is Over-Regulated
By SG Value Investor – ValueWalk
‘The Global Financial Industry is Over-Regulated
The recent crises have brought about a barrage of regulations on banks which have reduced their profitability so much so that a number of major banks have wind down their investment banking operations. Regulation of the financial industry has been a widely debated topic ever since the Global Financial Crisis in 2008. The increased regulations on banks, such as the imposition of the Basel III and the Volcker rule, has significantly curtailed profits of the investment banking industry.
State Comptroller Thomas DiNapoli looks to ease off hedge funds
Crain’s New York Business
The man holding the state pension fund’s purse strings said Wednesday the system is likely to pare back its hedge fund investments, especially if fees aren’t reduced. While state Comptroller Thomas DiNapoli said the $184.5 billion Common Retirement Fund would continue with so-called alternative investments, including in hedge funds, the combination of high fees and disappointing returns could lead the state to ease off.
It’s back to the drawing board for multiemployer pension reform
Pensions & Investments
The result of the first test of a new multiemployer pension reform law has left trustees of the Central States Teamsters pension fund reeling, other troubled multiemployer pension fund officials uncertain about their options and some politicians feeling the pressure to step in.