Commodity Complex to Gain from Quantitative Easing

According to Judah Kraushaar, managing partner of the hedge fund Roaring Brook Capital, the commodity complex is going to gain much from quantitative easing.

“We’re in a world of quantitative easing where money is being thrown at the market left and right. You want to focus on companies that can get the benefit of that,” he said. “There’s selective inflation out there, it potentially can broaden out, but right now most of the commodity complex is going to be the big beneficiary of that.”

He continued, saying “Some of the companies that we’re invested in have natural gas and oil, but I’m much more interested in the oil side, still. The oil side of these companies is going to get the best leverage.”

“We’re going to be seeing a lot of changes in terms of what types of companies have pricing power, and which companies are going to be on the losing end of that bargain- where the input costs are going to be rising and they’re going to face margin pressure,” he finished.

Renaissance Tech Boosts liquidity in Brazil

One of Jim Simons’ hedge funds, Renaissance Tech, recently set camp in Brazil. The move resulted in an immediate boost of the Brazilian market liquidity.

Business Insider said: “It seems like hedge fund satellite offices are popping up down there for a few reason. One is that Brazil is one of the BRIC emerging economies that are surging right now, so, obviously, hedge funds would be interesting in finding investments in the country.”

Whether it is due to the influence of Renaissance Tech’s  trading or the fact that everyone wants a share of Brazil’s climbing economy, the Brazilian market is certainly on the rise.

SOHU.com Inc. Sells Five Thousand Shares

Carol Yu, CFO of Sohu.com Inc. sold five thousand SOHU shares on February 4th.The shares were sold at an average price of eighty-five dollars per share. Over the past five years, SOHU.com Inc. has had a yearly average income growth of 49.2 percent.

The company has a market cap of $2.8 billion. The shares are traded at approximately $85.76, with a P/S ratio of 5.44 and a P/E ratio of 21.86.

Hedge fund gurus who own SOHU include Bruce Kovner, Jim Simons and Eric Mindich, and other gurus and mutual funds who own shares include Chuck Royce and Sarah Ketterer.  

 

News from SocialGO and Veddis Ventures

 

Bright Things PLC’s flagship venture SocialGO (a company providing an end-to-end social networking platform) just received an $800,000 investment from Veddis Ventures.    SocialGO has been developing fast and this trend is set to continue.   CEO of Bright Things, Dominic Wheatley said, "SocialGO is experiencing good growth as businesses, non-profits, educational establishments, entrepreneurs and other organizations increasingly recognize the value of its offering of full ownership and control over membership and content.”

Veddis Ventures gives social media-based and entertainment businesses in Europe and India run by bright entrepreneurs the capital needed to run their companies businesses with significant growth potential.  SocialGO enables organizations to “network around shared interests, sell products and services, fundraise and build their brands online.”  This network can be integrated into any website or “used to establish an online presence” which leads to “a loyal, expansive customer base by establishing a web-based hub for all things related to the business, organization, community or brand.”  The company also offers a Concierge service which can create “a fully customized, white-labeled social network and provide premium support.”

Vikrant Bhargava from Veddis Ventures is now on SocialGO’s Board of Directors of SocialGO.  He has a strong background in internet-related industries to SocialGO and it is hoped he will help the company develop even further.  

 

Hedge Funds Report Inflow of $6.6 Billion

BarclayHedge and TrimTabs Investment Research have reported that the hedge fund industry’s revenue reached $6.6 billion in December of last year. Industry resources are at the highest they’ve been since 2008- $1.7 trillion.

Sol Waksman of BarclayHedge said “the December inflow is very bullish for the industry because year-end redemptions typically produce an outflow in December. Additionally, about 50% of hedge fund managers will collect fees for their performance last year, a much larger share than 32% in 2009, and we estimate that industry revenue in 2010 clocked in at a hefty $53 billion.”

Vincent Deluard of TrimTabs explained that “macro funds hauled in $13.9 billion last year, which made them the most popular hedge fund strategy of 2010, even though they underperformed the S&P 500 by about 650 basis points. But macro themes have dominated markets, and hedge fund investors count on macro managers to navigate extremely volatile currency markets. The bulk of last year’s macro inflow hit after the first leg of European debt crisis erupted in May.”

 

IT Professionals Drift Towards Hedge Fund Start-Ups and Better Pay

ReThink Recruitment recently publicized that IT developers have been leaving investment banks and drifting towards a new surge of hedge-fund start-ups.

The hedge funds have been able to recruit the professionals with the promise of 80,000-100,000 euro salaries, with an additional 100% guaranteed bonus. Banks, on the other hand, have been forced to limit and even defer bonuses a well as pay only a small percentage in cash, making the hedge fund offer even more appealing.

Head of Financial Services at ReThink Recruitment Fhamid Malik sais “IT is critical to competitive advantage in the financial services industry, so banks will need to find innovative ways to retain staff if they are to compete in this escalating arms race… The trading process of many of these funds is now so IT-dependent that they are increasingly taking the lead role,” he added.

China’s Economy Forces Hedge Funds to Lower Copper Bets

Worried that China might further restrain its economy, Hedge Funds have lowered their bets on copper stocks by the most in five months. Wagers and net-long positions have been dropped by 22%, which, according to the U.S. Commodity Futures Trading Commission data, is the biggest cut since August.

China’s economy increased by 9.8% in the fourth quarter, following a growth of 9.6% in the quarter before. The development forced experts to acknowledge that financial constriction is imminent. On January 3rd copper reached $4.498 per pound, and has since dropped 2.8%.

A portfolio manager at U.S. Global Investors Inc., Brian Hicks, explained that “copper got a little bit ahead of itself. China is the main driver for the market. Concerns about China tightening prompted some profit-taking.”

Busting the Myth of Hedge Fund Anarchy

There is a myth that hedge funds remain beyond the pale of active regulation.  Let me bust that myth with a few facts. First, the Alternative Investment Management Association (AIMA) who has spared no moment in getting regulations placed on hedge funds has come out to bat on behalf of the Hedge Fund industry.

Andrew Baker, CEO, AIMA recently said the following: “All the major jurisdictions where hedge fund managers operate – whether in North America, Europe or Asia-Pacific – have rigorous regulation of the industry. And this already rigorous regulation is being increased by new legislation introduced since the crisis – for example the Dodd-Frank Act in the United States, and the Alternative Investment Fund Managers Directive in the European Union.”

He continues: “Some recent references to the ‘un-regulated’ financial sector internationally have been interpreted as referring to hedge funds. Given that it would be completely mistaken to call the global hedge fund industry ‘un-regulated’, this interpretation is presumably inaccurate.”

“It’s also worth noting that because the G20 has declared that no financial market, participant or instrument should go un-regulated and is delivering on this promise, no major financial services sector globally can remain ‘un-regulated’”.

A second fact is that G20 leaders came to an agreement in 2009 that requires the registration of all hedge fund managers by their respective national regulators, and that managers should report systemically important data of relevance to their national regulators to ensure financial stability.

In conclusion, one cannot help but to dismiss any further regulation of the Hedge Fund industry as political banditry at the expense of profitable and important investing.

Banks Easing Credit Terms for Hedge Funds

According to the Federal Reserve’s end-of-the-year financing survey, Wall Street’s largest banks have alleviated credit terms for hedge funds and private equity firms in 2010’s fourth quarter. Many banks believe that credit terms have “eased somewhat,” and fifty five percent of dealers claimed that client requests for concessions have “increased somewhat” or “increased considerably” in efforts to negotiate better terms for transactions.

The theory is that the terms are easing as a result of increased competition and general improvement of the market. Indeed, ninety percent of the survey-takers said that each factor was either “very important” or “somewhat important” in the decision to ease the terms. The Fed concluded that the results “highlighted that a significant volume of credit intermediation has moved outside of the traditional banking sector.” It added that “More aggressive competition from other  institutions and an improvement in the current or expected financial strength of counterparties were frequently cited reasons for the easing of terms. Dealers also noted that demand for funding of all categories of securities covered in the survey had increased over the past three months, including the demand for funding equities.”

Venus Beats Out Mars in Investment Success, Big and Small

Muhammad-YanusFemale hedge fund managers saw nearly double the returns of their male counterparts over the past decade, Hedge Fund Research said. Similarly, the national Association of Investors Corp. reported that investment clubs comprised solely of women enjoyed an annual return of 32.12% compared to a 23.12% average return for men-only clubs and 27.4% for those of mixed gender.

On the other end of the financial spectrum, Muhammad Yanus, who won the Nobel Peace Prize for his success in providing micro-loans to impoverished citizens of Bangladesh, has 4 million borrowers, of whom 96% are women. His view: “When a destitute mother starts earning an income, her dreams of success invariably center around her children. A woman’s second priority is the household. She wants to buy utensils, build a stronger roof, or find a bed for herself and her family…”