No hedge fund strategy is fool-proof. The success of a particular approach often depends on market conditions and timing. If you want to be where the action is this year, find a firm that employs the old reliable: a long/short equity fund.
Three-fifths of investors polled by Credit Suisse say they plan to allocate funds to long/short equity strategies in the second half of 2013. They appear correct in their thinking. While bond funds have been getting slammed since the Fed put a timetable on tapering stimulus, once-idolized stock pickers are killing it again. Several big name money managers earned profits last month, despite a drop in the S&P. Equity funds willing to short stocks have been particularly successful.
The study marks a great turnaround for the long/short equity strategy, which was the 19th most popular approach just 18 months ago, according to Financial News. It now tops the list.
Event-driven hedge funds are also hot, seeing massive inflows in the first half of the year, and for good reason. With investors thirsty for change, activist funds have been booking double digit returns for well over a year.
The losing approaches are fairly obvious. Investors plan to pull from funds dealing in commodities and emerging markets credit. Steer clear of those funds is possible, although they’re probably not hiring anyway.
Answers to Difficult Interview Questions (eFinancialCareers)
The questions that truly challenge candidates are those that deal with their baggage: weaknesses, employment gaps and career failures. Here’s how to answer them.
Not Guilty Plea (WSJ)
SAC Capital is sticking to its guns. The hedge fund giant pleaded not guilty to insider trading a day after the Fed dropped an aggressive and eye-opening indictment on the firm. The firm told clients and employees that it will remain open during the legal proceedings. Meanwhile, a friend of Steven Cohen said the SAC founder has gained 15 pounds in a month and “looks terrible.”
Current SAC employees may find it difficult leaving the firm. “While believing that there are good-quality portfolio managers at SAC, [competitors] don’t want to recruit a potential ticking time bomb,” one recruiter said. Then there is the issue of deferred payments.
Brokerage Firms Bracing (Business Insider)
A major fallout from the SAC Capital indictment that isn’t getting much coverage: If SAC goes down, brokerage firms will take a big hit. In 2006, SAC’s trading reportedly accounted for a ridiculous 2% of all market activity.
The Good and The Bad (WSJ)
Net income at KKR fell significantly during the second quarter, from $146.3 million in 2012 to $15.1 million this year. However, the private equity firm’s cash profits spiked as proceeds from previous deals rolled in.
Moving On Up (FIN Alternatives)
Millennium Management is moving its headquarters from the financial district to midtown Manhattan. They now have 17,320 square feet of space. Plenty of room for growth at a firm that’s been adding talent.
No Jobs, Eh (Bloomberg)
A rash of layoffs may soon hit Toronto’s financial sector, particularly at small boutiques.
Analyst Meredith Whitney, known for her bold prognostications, believes “the biggest layoffs are ahead” on Wall Street. Profits are up, but returns on equity are just average, she said.
Buzz Around the Office
Making It Hail (The Hill)
There is much debate surrounding an initiative aimed at replacing the U.S. dollar bill with a $1 coin. Senator John McCain, who is backing the legislation, said the bill will do plenty of good, including encouraging patrons to give exotic dancers larger tips.
List of the Day: Tips for Twenty Somethings
If you just graduated from college, you’re likely ignorant of a few things. Here are three.
- Time is not a limitless commodity. Get going!
- You’re talented, but talent is overrated.
- Forget emails – pick up the phone.