For Hedge Funds, Being Like Buffett Isn’t Easy

While Warren Buffett’s track record is appealing to large private equity firms, his buy-and-hold strategy (averaging 10-20 years rather than the hedge fund industry norm of 3-5 years) can be hard for many to adopt, according to a recent Bloomberg article. “To play,” the article says, “they would need to give themselves lots of time—decades, in fact—and as near-to-permanent capital as they could muster. Ambitious buyout firms bet that by raising long-duration funds, they would finally have the patient capital to do those eye-watering megadeals they’d been coveting.” Some of the biggest hedge fund firms (such as Carlyle Group, Blackstone Group, […]

Hedge Fund Manager Calls Have Less Pull

A recent Bloomberg article takes a look at the influence on share prices caused by the comments of hedge fund “stars” at the industry’s three biggest annual events: Robin Hood, the Sohn Investment Conference in New York and the SkyBridge Alternatives Conference (SALT). “While the managers’ pronouncements consistently moved shares of the companies they targeted,” the article says, “their influence has been on the decline.” It outlines findings as illustrated by movement of stock price (intraday shifts between high and low prices on the corresponding conference day) compared to that of the entire year. The analysis also measured which managers […]

A Trader Betting on Market Turmoil

While betting against market upset has been “one of the longest-running and most profitable trades in recent financial history,” hedge fund manager Christopher Cole is “arguing with the passionate intensity of a true believer that this market calm cannot last.” This according to a recent article in The New York Times. Cole, chief of Artemis Capital (which manages about $200 million) says, “Optically, volatility is still very low, but fear is increasing.” The article cites a parallel between Cole’s stance and the sentiment preceding the stock market crash of 1987, “when investors were similarly lulled into believing that volatility would […]

The Bridgewater Culture and “Principles” of Ray Dalio

Westport, Connecticut-based Bridgewater Associates, the largest hedge fund firm in the world, was one of the first to “embrace quantitative analysis,” according to a recent article in The New York Times that  delves into the idiosyncrasies of the Bridgewater culture—both positive and negative—on what it terms a “rigid and sometimes oppressive work environment.” The article describes the strict set of rules, or “Principles,” created by CEO Ray Dalio , which include “advising employees not to tolerate badness;” “to look for people who sparkle;” and to “be willing to ‘shoot the people you love.’ ” Employees (numbering 1,500) are quizzed and […]

Cohen’s Comeback Revisited

In a follow-up to an article it published a few days earlier, Bloomberg recently reported that hedge fund manager Steven Cohen “is preparing to raise as much as $10 billion from outside investors in 2018 for a new fund.” The move, the article says, would represent an “extraordinary turnaround” for Cohen, particularly given that his former firm, SAC, got bad press four years ago on its guilty plea to insider trading for which it paid a “record $1.8 billion penalty.” The article suggests that Cohen’s efforts could be an attempt to save face with investors, but argues that if he […]