Hedge funds turn to “long-only” investing in bid to grow (Reuters)
Half of hedge funds now sell products traditionally the preserve of mainstream asset managers such as “long-only” strategies, a study shows, reflecting how conservative investors have come to dominate the industry’s client base. Hedge funds have made their name wagering on asset prices both rising and falling, and often increase the risk of their bets with borrowed cash. By contrast, traditional long-only managers can only bet the price of a stock or bond will go up.
‘Quant‘ Hedge Funds: Computer Says No (BusinessInsider)
Hedge funds looking to spot and ride market trends are hoping for a fresh start IF SOMETHING has not worked for five years, most people would conclude that it was broken. Tell that to the geeks managing “quant” hedge funds, who craft elaborate algorithms to profit from market movements. Once money-spinners, their prized formulae have misfired since 2009, losing money in four of the past five years. Unless their results improve markedly, the giant funds will finish this year as the worst-performing of the most common hedge-fund strategies. “Trend-following” involves programming computers to analyse market movements and try to infer where they might go next.
Insider trading trial spotlights trades by SAC’s Cohen (HedgeWorld)
Portfolio manager Michael Steinberg sought to warn SAC Capital Advisors founder Steven A. Cohen that he was trading in the opposite direction to bets that were based on inside information, a former analyst at the hedge fund testified Monday [Dec. 2]. Jon Horvath, a former analyst at SAC who is cooperating in the government’s insider trading case against Steinberg, said that three days before Dell Inc. (NASDAQ:DELL) announced its earnings in August 2008, Cohen was betting the company’s stock would go up. Horvath said that, at Steinberg’s direction, he emailed another analyst, whose advice Cohen was following, about a second-hand read from someone at the company that the results would disappoint Wall Street.
2 Carl Icahn representatives join Talisman board (CBC)
Two representatives of Carl Icahn will join the board of Talisman Energy Inc. (USA) (NYSE:TLM), increasing the activist investor’s involvement in the oil and gas company’s key decisions. One of Icahn’s representatives will sit on the board committee searching for a successor to Hal Kvisle, who plans to step down as Talisman’s president and chief executive next year. Kvisle took the reins of the company last year and has since set out a new strategy that has honed its focus on the Americas and Southeast Asia. Talisman announced last month it would sell 75 per cent of its assets in northeastern B.C.’s Montney formation to Progress Energy Canada Ltd (TSE:PRQ), a subsidiary of Malaysia’s Petronas, for $1.5 billion.
Gen Re’s Gilbert Says Fed Sets Up Stocks for a Decline (Bloomberg)
General Re-New England Asset Management, a unit of Warren Buffett’s Berkshire Hathaway Inc. (NYSE:BRK.A), said Federal Reserve policies that lifted stocks have also introduced systemic risks that could cause shares to tumble. Twitter Inc (NYSE:TWTR), which surged more than 70 percent in its first day of trading as a public company last month, is an example of investor euphoria, GR-NEAM Chief Investment Officer John Gilbert wrote in his December commentary posted on the asset manager’s website. The microblogging service is valued at more than $20 billion without having reported a profit.
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