Archives of “hedge fund manager” tag

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Arbitrage Movie Trailer: Film About Hedge Fund Manager Played By Richard Gere

  
Education, Video
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Directed by Nicholas Jarecki, it stars Richard Gere, Susan Sarandon, Brit Marling, Tim Roth, and Nate Parker.  The trailer looks like it also features a cameo by CNBC’s Maria Bartiromo.  The movie will be released on September 14th, 2012.

Gere plays a hedge fund manager who is desperate to sell his trading empire before the depth of his fraud is exposed, but he makes an error that forces him to turn to an unlikely person for help.
The trailer makes it look like the film is less about finance and more about a drama and homicide case.  The film’s tagline is Arbitrage: Power is the Best Alibi.
Embedded below is the movie trailer for Arbitrage:

 

Jim Chanos On Short Selling: The Power of Negative Thinking

  
Analysis, Education
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Short selling and Jim Chanos go hand in hand. Whenever you see his name, you instantly think of Enron and how he unveiled the fraud there. The Kynikos Associates hedge fund manager is worth following due to his success but maybe more-so for the fact that he makes so many public appearances. If hedge funds operate behind a shroud of secrecy, then short sellers typically operate behind a shroud ten times as secret. Yet Chanos deviates from the norm and can often be found on television, doing interviews, and sharing his ideas. While talking his book might help some of his positions, it also means he’s more often than not cast as a villain. Chanos argues that good short sellers are born, not trained. Many would take issue with that statement as numerous hedge funds recommend their analysts read Kathryn Staley’s book, The Art of Short Selling

to really gain an edge.

In late May, Chanos delivered a presentation at the CFA Institute’s annual conference. You’ll remember that Baupost Group’s Seth Klarman also spoke at this event and we previously covered his thoughts on the markets

as well. This time around we present you Chanos’ speech entitled, “The Power of Negative Thinking” which focused on his bread and butter: short selling. (more…)

A story of how honesty cost one trader his job.

  
  Education
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With the current climate surrounding the investment banking culture in the wake of the Barclay’s Libor scandal, it is interesting to read about the story of Steve Clark taken from his interview with Jack Schwager in the Hedge Fund Market wizards. 
 
Clark is a highly successful hedge fund manager, running the Omni Global fund which during the period since inception in 2001 has returned almost 20% per annum, with a maximum peak to trough drawdown of just 7% and not a single losing year. However during the 90s he tells a story of how he was forced out of a major investment bank purely for being honest. 
 
The excerpt from the interview goes as follows:
 
‘Nomura ended badly for me because there was a change in management. The new guy in charge wasn’t straight. He had a convertible book, and all he was doing was buying illiquid convertible bonds and every month pushing the price up. He was the market because he owned most of these issues. So all he had to do was buy a few hundred bonds every month to push the price up. (more…)

Position Size Can Be More Important Than the Entry Price

  
  Education
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Too many traders focus only on the entry price and pay insufficient attention to the size of the position. Trading too large can result in good trades being liquidated at a loss because of fear.

On the other hand, trading larger than normal when the profit potential appears to be much greater than the risk is one of the key ways in which many of the Market Wizards achieve superior returns. Trading smaller, or not at all, for lower probability trades and larger for higher probability trades can even transform a losing strategy into a winning one.

For example, Edward Thorp, who started out devising strategies to win at casino games before achieving an extraordinary return/risk record as a hedge fund manager, discovered that by varying the bet size based on perceived probabilities, he could transform the negative edge in Blackjack into a positive edge. An analogous principal would apply to a trading strategy in which it was possible to identify higher and lower probability trades.

Paul Tudor Jones – 60 Minutes Interview

  
Education, Video
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Jones is considered one of the best traders in the business for one main reason: CONSISTENCY! He has produced positive returns for 25 straight years! I don’t know the exact number of years, but you get my point. The fuel behind his consistency is his discipline, specifically his ability to manage risk and cut losses.
Besides his tremendous success as a trader and a hedge fund manager, what makes Jones an even bigger hero in my view is his philanthropy. I love the phrase “The secret to living is giving” and Jones truly exemplifies this quote. In other words, what’s the point of being successful if you never give back to others? As Jones says in this 60 Minutes interview: “You find your joy in life through service and sacrifice.” Enjoy the video!
 

Must Watch !

The strategy of one of the best-performing hedge fund

  
Analysis, Education
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Norway is not what you would call a hotbed for hedge funds. Due to restrictive regulatory requirements and an almost uniformly long-only focused investor-community, there are only a handful of hedge funds managed out of Norway.

Despite this, Norwegian Warren Short Term Trading (WST) is one of the best performing hedge funds in the world. Since the fund’s inception in November 2011, its return has been 46.7% with a net 2012-return of 29.1% after fees (pdf).

WST hedge fund manager Peter Chester Warren explains how this works:

Our hypothesis is that most of what happens in the markets during a single day is noise created by orders, rumors and other temporary influences and that there is no informational value in this. Unlike our other funds, we do not try to separate the signal from the noise in WST but accept it for being just noise. … Time is instead spent on creating mathematical and statistical models meant to uncover short-term human behavior.

This is a significantly different strategy than that of most other hedge funds, which typically own assets over a period of time. WST rarely owns assets longer than a few minutes or sometimes even a few seconds.

And every day when the asset manager goes to sleep, he holds zero assets. Then, when he gets back in to the office the next day, he starts from scratch again, looking for tiny opportunities in the markets using a combination of correlations, math and experience. (more…)

Have superstar traders lost their magic?

  
  Education
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The Wizard of Oz, Greg Coffey, has clicked his heels together and said there’s no place like home. He is bowing out of the London hedge fund world, retiring to his native Australia at the ripe old age of 41.

One of the city’s best-known traders, the slick-haired investor who famously left his employer, GLG Partners, in 2008 after turning down a £156m “golden handcuffs” offer to stay, is the latest superstar hedge fund manager to leave the industry this year.

Rumours have circulated that he has fallen out with the founder of his current employer, Louis Bacon of Moore Capital, but the true explanation may be that after riding high during the boom years, like some of his fellow superstar traders, he’s decided to bow out at the top. A £430m fortune probably helped his decision, but it has also been a tough few years for the married father-of-three, who was once named the second sexiest hedge fund manager in the world.

He has gone from generating around £200m of GLG’s performance fees in 2007, capping an impressive annual return of 22% since 2004 (and ultimately leading to the massive golden handshake offer) to underperforming at Moore Capital, with two smaller emerging-market funds losing 16% and 2.3% respectively.

So could Coffey’s departure mark the end of the big-name trader? Jacob Schmidt, head of analysts Schmidt Research Partners, thinks so. “I think we have reached the end of the trend of the last 10 to 12 years of relatively easy money. Up to 2008, we had a fantastic run in the hedge fund business, but since then it has become much more difficult. The guys like Coffey who have had an easy run are thinking: ‘Why do I need this?’ That’s why they are leaving.”

Mark Dampier, head of research at Hargreaves Lansdown, agrees. He says: “Investment is like fashion. One moment it’s all flashy, the next it’s not. They are all fallible and when they start to think they can walk on water, that’s usually when it all goes wrong.”

The best “hedgies” achieved exceptional returns in the build-up to the financial crash in 2008. They weren’t alone in that: it was easy to make money in the boom years. However, what set the superstar traders apart was their ability to create the myth that they were infallible, tempting investors to put them in charge of billions of dollars. (more…)

Hendry takes a big bet on China crash

  
Analysis, Economy, Education
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Hugh Hendry, the voluble hedge fund manager well known for his bearish but highly successful calls on the global economy over the past two years, has taken a big position that is designed to profit from a crash in China.

Mr Hendry’s London-based Eclectica Asset Management has constructed a “short credit” portfolio that stands to make gains of 250 per cent for his flagship fund in the event of a slump in China’s growth.

Eclectica is also poised to launch a standalone fund to benefit from the strategy next month, the Financial Times has learned.

The new fund will stand to deliver even larger gains than those for the main fund if successful.

“The investment team and I have carefully constructed a short credit portfolio made up of over 20 single-name industrial, cyclical businesses that have the dubious distinction of suffering from gigantic financial leverage and Asian/commodity overdependence,” Mr Hendry wrote to investors in his monthly letter this week. (more…)

Julian Robertson: Obama Is Doing A Terrible Job

  
Analysis, Economy, Education
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Former star hedge fund manager and billionaire Julian Robertson thinks that President Obama is doing a terrible job. Robertson said:

“I’ve made a pretty good living over the years by never hiring anyone that wasn’t a lot smarter than I am. So when I go in a room, I know I’m not the smartest person in the room, not even approaching it. Now Obama, from all I read, thinks that on every occasion that he is the smartest person in the room. And I think he often probably is, but you can’t run the biggest business in the world having never run even a country store. And he’s running into that and he’s just doing an awful job and people see it. He’s enough of a politician to see it – although he’s so cocky maybe he doesn’t see it”

Trading Quotes that Will Change Your Trading

  
  Education
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“If you lack a solid trading plan and are stressed out when you trade, you’ll naturally tend to cut your profits short and hold on to losers.” – Van K Tharp
“Without a proper mental approach to trading, someone trading a “Holy Grail” system could produce mediocre results or even large losses.” – Van K Tharp
“A peak performance trader is totally committed to being the best and doing whatever it takes to be the best. He feels totally responsible for whatever happens and thus can learn from mistakes. These people typically have a working business plan for trading because they treat trading as a business” – Van K Tharp
“Trade with an edge, manage risk, be consistent, and keep it simple. The basis of all successful trading can be summed up in these four core principles.” – Curtis Faith
“When you really believe that trading is simply a probability game, concepts like ‘right’ and ‘wrong’ or ‘win’ and ‘lose’ no longer have the same significance. As a result, your expectations will be in harmony with the possibilities.” – Mark Douglas, trader & author
“Wharton taught you that 40 percent of a stock’s price movement was due to the market, 30 percent to the sector, and only 30 percent to the stock itself, which is something that I believe is true. I don’t know if the percentages are exactly correct, but conceptually the idea makes sense.” – Steve Cohen, hedge fund manager

 

“Traders fail for the same reason that most baby turtles fail to reach maturity: Many are called and few are chosen. Society works by the attraction of the many. As they are culled out, the good ones are left, and the others are released to go try something else until they find their calling. The same is true for other fields of pursuit.” – Ed Seykota

 

“Charting is a little like surfing. You don’t have to know a lot about the physics of the tides, resonance, and fluid dynamics in order to catch a good wave. You just have to be able to sense when it’s happening and then have the drive to act at the right time.” – Ed Seykota

 

“Win or lose, everybody gets what they want out of the market. Some people seem to like to lose, so they win by losing money.” – Ed Seykota, trader

 

“The markets are the same now as they were five or ten years ago because they keep changing-just like they did then.” – Ed Seykota (more…)

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