Tuesday, 11 December 2012

Hedge Fund Insight Stories Of the Last Month

Most Frequently Shorted UK Shares
By Simon Kerr
The FSA has been gathering information on the short positions held by investors for some time - it has been part of the Hedge Fund Survey for several years.  During the Credit Crunch a disclosure regime for significant net short positions in the stocks of UK financial sector companies was introduced, and then a disclosure regime was introduced for UK stocks undertaking rights issues. Disclosures to the FSA have been required of net short positions of 0.25% of the issued equity or above for stocks of companies in these categories.[read more HERE]

What does it take to be a successful investor?
Whitebox Advisors' Andrew Redleaf on what it takes to be a successful investor: "It requires a certain kind of personality, a certain kind of confidence to be able to act in the face of imperfect knowledge and uncertainty. Also, it requires humility to understand the imperfections in one's knowledge and the inherent uncertainty in the world."

Good Writing Can Help Win Back Investors’ Trust
By Nick Padmorea writer at The Writer the world’s largest language consultancy

Nearly half of all complaints in the investment slice of the financial services industry are about bad customer service or general admin[1].
Back in 2007 Andrew Ross Sorkin at the New York Times wrote this article, claiming that hedge fund managers used a ‘secret language’ made up of ‘technical-sounding explanations for losing billions of dollars of other people’s money’.
And Freakonomics author Stephen Dubner calls the language of economists ‘deeply obtuse’.
If they’re right, it could be that customer service numbers are through the floor partly because people can’t stand the way financial people talk to them. [read more HERE]

Strategic Rethinking Required by European Asset Managers

By Fitch Ratings Paris/London (Aymeric Poizot, Roger Schneider, Richard Woodrow)

In a new report, Fitch Ratings says that European asset managers need to strategically review their product offerings and re-shape their activities by strengthening their key areas of expertise, scaling down or outsourcing others areas, and expanding in neighbouring activities while investing in new areas.

There has been no growth in European assets under management (both funds and mandates) in the past five years, with assets unchanged at USD18trn. In the past three years, only 40% of managers experienced fund inflows and 75 to 80% of inflows concentrated with only the top ten houses across asset classes. [read more HERE]

Increased powers over approved persons for the UK's new regulators

By S.J. Berwin's Financial Markets Group
The UK Government has embarked on a major reform of the UK financial services regulatory structure. Under the proposed changes the FSA will cease to exist in its current form, and three new bodies will be established:  (a) the Financial Policy Committee, (b) the Prudential Regulation Authority (PRA), and (c) the Financial Conduct Authority (FCA). The Bill to implement these changes is currently working its way through the UK parliamentary process and the new structure is expected to be in place by the spring of 2013.
[read more HERE]

An Example Of A News-Based Trading Strategy

There are only a very limited number of funds employing an investment strategy which relies on automated  news gathering. It is still early days in the exploitation of this rich data source, and the spoils of the early adopter are available yet.  So the managers are reluctant to publicly disclose what they are doing and how they are doing it. Plus such media exploitation is typically going on as a feed to a broader strategy or as a sub-fund within a larger multi-strategy investment firm. Unless the approach is the main event at a fund it is unlikely to be discussed in any detail with investors.[read more HERE]

Inside OMAM Quants v2

The first Hedge Fund Insight Podcast is an exploration with Dr. Ian Heslop of how his team operates and it explores some of the structural decisions they have made to manage capital quantitatively at Old Mutual Asset Managers (OMAM).  Ian Heslop is Head of Quantitative Strategies, running a team of five, and he is co-Fund Manager of, amongst other funds, the Old Mutual Global Equity Absolute Return Fund. [read more HERE].