The Savvy Research team has curated this list of the most popular hedge fund white papers from 2016. Topics covered include investor surveys, short selling, systematic investing, alternative beta, and more.
2016 Global Hedge Fund and Investor Survey (EY)
This 52-page paper by EY provides detailed insights into the state and outlook of the global hedge fund industry.
The Long and the Short of It: The Quant Shorting Advantage (QMA, 2016)
This paper describes how short selling can allow investors to find alpha in often overlooked places. It explains the three main categories of shorting-enabled equity products, and explains the benefits of a systematic quantitative process.
Factor Investing and Risk Allocation: From Traditional to Alternative Risk Premia Harvesting (EDHEC, 2016)
This detailed paper by EDHEC-Risk Institute examines factor investing beyond traditional factors. It seeks to analyse what the best possible approach is for harvesting alternative long/short risk premia.
Institutional Investors in Hedge Funds Survey 2016 (JP Morgan)
This 76-page paper provides insights into the findings of JP Morgan’s 13th annual survey of institutional investors in hedge funds. It helps investors gauge the state of the hedge fund industry – trends and investment behaviour.
Hedge Fund-ing the Pension Deficit (Cambridge Associates, 2015)
This research note by Cambridge Associates examines the role hedge funds can play in pension investment portfolios and why in the current environment particularly, they may be additive to a pension risk management strategy.
Global Alternatives Survey 2016 (Willis Towers Watson)
This detailed 99-page paper examines current trends in ten different alternative asset classes. The survey reveals how the preferences for alternative assets vary between different types of asset owner.
The alignment of interests between hedge fund managers and investors (AIMA, 2016)
This paper has been authored by the Alternative Investment Management Association (AIMA). It investigates the methods used to bring together the interests of hedge fund managers and hedge fund investors.
Systematic Investing – made simple guide (PLSA, 2016)
This guide has been authored by the PLSA. It examines the systematic macro style of hedge funds. The guide explains the concept, what it is and how it works.
The Changing World of Alternative Beta (bfinance, 2016)
When it comes to defining and implementing an alternative beta allocation, a great deal can fall through the cracks between theory and practice. This paper provides key insights on important practical issues.
Hedge fund financing challenges under Basel III and beyond (AIMA/S3 Partners)
This report seeks to “cut through some of the noise” and provide a clear overview of how Basel III and its associates rules have affected hedge fund managers so far. The report also explores ways in which the relationship between hedge fund managers and prime brokers and other financing counterparties might change over the coming years.
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Mr. Robbins started his presentation with a slide entitled “Honey, I LBO’d the kids,” and went on to joke that if a rumor were started that Blackstone was going to buy out Kohlberg Kravis Roberts, it would probably happen in a month.
Bill Miller, the money manager who beat the Standard & Poor’s 500-stock index for 15 years running until last year, noted that the market was indeed puzzling: How is it that both he and James Chanos, the short seller who catapulted to fame by questioning Enron, have successful businesses even though they are always on opposite sides of the same stocks?
Mr. Mandel from Lone Pine, a widely admired yet extremely private manager, made a strong case for Google, suggesting that paid search is still in “its early innings.”
William Ackman of Pershing Square Capital Management, a passionate activist who has made successful and well-publicized investments in Sears, Wendy’s and McDonald’s, condensed an hourlong presentation on the architecture of the meltdown in the subprime mortgage market into 20 minutes.
He explained how Wall Street created collateralized debt obligations to buy up risky paper, pool it and make it less risky, in turn enabling more reckless lending. He highlighted the conflicted role of the rating agencies (they are paid to rate things, not to be right) and deconstructed the high levels of leverage and low capital bases underlying the bond insurers, namely MBIA and Ambac. He is short the stock of both.
Mr. Chanos was unequivocal in his prediction that the current LBO boom would end in tears. He voiced concern about the number of large institutions, like endowments and pension funds that are reducing their exposure to stocks but increasing their allocation to private equity — high-fee pools of capital that are buying up large-cap stocks at large premiums. The institutions, he said, mistakenly think that they are lowering their correlations to the market.
Mr. Chanos’s short idea was Macquarie Bank, an Australian bank that has made a lot of money by raising big investment funds, using the money to buy expensive assets at soaring premiums and selling to separate Macquarie entities and capturing a lot of fees along the way. He drew some comparisons between Enron and Macquarie — whose business model Wall Street is desperately trying to replicate. A spokesman for the bank rejected Mr. Chanos’s observations.
Wilbur Ross, who has made a fortune on contrarian bets in out-of-favor industries, made the case for coal, a very out-of-favor industry. (He said that his wife had accused him of trying to reinvent the 19th century.)
Mr. Ross predicted that the current inventory glut would be corrected by the fourth quarter of 2007 and suggested that coal would gain a larger share of electricity generation. Mr. Ross acknowledged the environmental issues, but argued that coal could be made clean. He also predicted that Congress would not do anything punitive. “If they do, the public will have to choose between green and lights out,” he said.
Mr. Singh, who once ran Goldman Sachs’s principal strategies trading, predicted that the shift away from an “exaggerated U.S. focus” would continue and identified value in Europe through restructuring plays, notably in chemicals. In the United States, he likes noncredit-sensitive financial stocks, recommending the American International Group.
The event was not all about investing ideas. Joel Greenblatt and his business partner, Robert Goldstein, announced the Gotham Prize for Cancer Research, a $1 million annual award to be given to innovative approaches to cancer research by a panel of scientists.
While there were all sorts of reverential notes made to the money managers, the only standing ovation of the day went to Mark Messier, the hockey star, who works closely with the Tomorrow’s Children fund. Mr. Messier, visibly moved, talked about what it was like to spend time with young cancer victims and their families. It takes all types to finance a cause.Continue reading the main story