Wells Fargo’s Derrick Irwin says the indiscriminate selling of emerging market stocks has created opportunities to buy in regions like central Europe and sectors such as Chinese technology.
Archive for the ‘Video’ Category
Potential conflict in Syria and the scaling back of Fed stimulus point to a full-scale market “mess,” says investor Jim Rogers, with the countries running trade deficits likely to be hardest hit.
CLICK HERE to watch this Oscar-worthy movie, and please pass it around. Marvel at the clones clashing with the evil genius in the battle of beta versus alpha. Itâ€™s five minutes of futuristic merriment and enlightenment. Gene Roddenberry would be proud of this trek.
The timing of this movie is brilliant. We are on the brink of a perfect financial storm, which is why investors are seeking alternatives to conventional investing strategies built on stocks and bonds. U.S. equities have reached new highs, skyrocketing more than 100% since May, 2009 as bond yields remain near historic lows. Stir in the federal governmentâ€™s humongous budget deficit and the imminent tapering of the Federal Reserveâ€™s quantitative easing program and weâ€™re looking at one rocky future. No wonder that itâ€™s a bull market for investment alternatives, especially hedge funds. The demand for these products is sure to increase substantially in the years ahead as the crowd grapples with the harsh reality of the future. But all the usual caveats still apply, namely: separating the alpha wheat from betaâ€™s chaff is crucial in the business of intelligently selecting hedge funds.
In the future, we wonâ€™t pay much for exotic hedge fund betas (risk profiles), but the market will continue to put a premium on superior human intellect. Weâ€™ll know the difference because weâ€™ll abandon simple-minded performance benchmarks like peer groups and indexes, and replace them with smart science. Disruptive innovation will elevate our comprehension and contentment. Everybody will win, or at least everybody who recognizes that prudently choosing hedge funds demands a higher standard. The first step is recognizing that the old traditional methods are as out of place with hedge funds as Klingons are with Starfleet Command.
Hedge funds, after all, are unique. Products in the same strategy are usually galaxies apart when it comes to management details. Uniqueness is the main attraction of hedge funds, of course, and itâ€™s also the primary reason why a robust due diligence process in this corner is essential. The definition of unique is â€świthout peers,â€ť which means that a distinctive hedge fund canâ€™t be squeezed into an artificially defined group. â€śUniqueâ€ť and â€śpeerâ€ť simply do not play well together. Hedge fund managers win or lose against peer groups because they are different rather than because they are better or worse than quasi-comparable strategies.
Itâ€™s this uniqueness (heterogeneity) that will lead us in the future to the science of evaluating hedge funds. Our Oscar-worthy hedge fund movie predicts that hypothesis testing and cyberclones will revolutionize due diligence. No one wants or needs to pay for exotic betas that can be reverse-engineered (replicated). In sharp contrast, everyone is willing to pay for that critical factor that canâ€™t be synthesized: superior human intelligence and wisdom that engender profitable decisions by way of savvy investment choices.
Yes, we should be prepared to pay a fair price for brainwork, commensurate with the level of brainwork rather than the typical â€ś2 and 20â€ť fee. But first weâ€™ll need a robust model for deciding whoâ€™s truly delivering the equivalent of Oscar-winning performances in the hedge fund universe.
ABOUT THE PRODUCER
PPCA, Inc. (San Clemente CA) provides advanced analytical services to investors and their consultants in the areas of asset allocation, market research, performance evaluation, style analyses and target date funds. PPCA president Ron Surz is a pension consulting veteran. Further information is available at LinkedIn and www.PPCA-Inc.com and HedgePOD.
ABOUT THE CREATORS
Kathy Tarochione (Harrison, AR) is a digital artist providing life stories for individuals and their pets â€“ digital memories in pictures and art. She is also the Founder & Partner of Picture A Moment Pet Productions LLC with its divisions, The Canine Community Reporters News and WCCR.TV, designed to help animals in shelters. Kathy has mastered digital productions of all sorts. Further information is available on LinkedIn.
Jim Bumgardner (Harrison, AR) is a professional broadcaster, videographer, marketer, all-around nice guy, and partner of Kathy Tarochione (see links above). Being a true believer in the entrepreneurial spirit and always rooting for the underdog, Jim prides himself on his personal philosophy of “If you dream it, I can build it.” Further information is available on LinkedIn and www.jimstv.com
Ed Egilinsky, head of alternatives at Direxion, says that while the overall trend for commodities is negative, his fund is currently long three of the 12 commodities in which it invests.
Rob Cox and the Breakingviews editors discuss hedge fund manager Philip Falcone’s settlement with the Securities and Exchange Commission and the rare admission of wrongdoing. Falcone agreed to a five-year ban from the financial industry and will admit wrongdoing to settle charges by the SEC that he improperly used money from his hedge fund and unfairly favored some of his investors by letting some out of his fund while denying that opportunity to others.
Reuters’ Katya Wachtel talks with Reuters TV’s Lisa Bernhard about what can be gleaned about hedge fund managers’ market views and performance based on their quarterly holdings filings with the SEC. George Soros looks prescient with his decision to dump shares of U.S. Airways Group Inc. ahead of news that the Justice Department would sue to block a proposed merger between U.S. Airways and American Airlines. Soros also got into Sprintâ€”along with Eton Park, Farallon and Omega Advisorsâ€”ahead of news that SoftBank would buy the mobile provider. Meanwhile after losing hundreds of billions on gold, John Paulson halved his gold bet in the second quarter. Dan Loeb also cut his gold holdings.
Katya’s discussion runs from the opening to about the 3:55 mark.
Billionaire activist investor Carl Icahn has added Apple to the list of companies he hopes to turn into winners for his portfolio. That portfolio includes holdings in Dell, Nuance, Herbalife and Netflix, among others. On Tuesday [Aug. 13], Icahn tweeted, “Had a nice conversation with [Apple CEO] Tim Cook today. Discussed my opinion that a larger buyback should be done now. We plan to speak again shortly. We currently have a large position in Apple. We believe the company to be extremely undervalued.” Apple’s share price rose 5% following Icahn’s Twitter announcement.
Reuters’ Katya Wachtel talks about William Ackman’s misadventures in J.C. Penney and Herbalife this year, but points out that despite these bumps his hedge fund, Pershing Square Capital Management, is doing OK, thanks to good bets on Procter & Gamble, Howard Hughes and Canadian Pacific. The relevant portion starts at the 5:00 mark.
Has Sony CEO Kazuo Hirai done enough to resuscitate the company? Two big-budget film duds this summer are giving activist investor Daniel Loeeb’s push for a movie-unit spin off renewed momentum.
The federal indictment charging “substantial” insider trading at SAC Capital Advisors details how information allegedly leaked by a Dell insider found its way to SAC Capital’s portfolio managers.