CNBC: Hedge fund Derwent Capital Markets says it has delayed the launch of its closely-watched "Twitter" fund due partly to higher-than-anticipated interest from clients—largely the result of international media attention the small eight-person boutique investment firm has received in recent weeks.
David Tepper, founder of Appaloosa Management, and benefactor of Carnegie Mellon University's business school has made headlines once again with his generosity. Mr. Tepper has made major contributions to Food Banks in New Jersey and Pennsylvania.
From WSJ.com:"Appaloosa has been involved with the recapitalization of the country's banks. Well, is there a more important bank to be involved in than these food banks?" says Mr. Tepper, whose hedge fund made billions during the financial crisis by betting that big banks would rebound from their lows after government intervention.
What happens when everyone is working with the same toolbox and plans? Everyone builds the same thing. To stand out in this enviroment, you have to be better than everyone else at using the tools (Warren Buffett) or you have to make new, different tools (James Simons).
Let's use a NASCAR analogy. How do you consistently win NASCAR races, which have strict guidelines for the car? You either must have a better driver & crew, or bring in a Formula 1 car. In NASCAR, fielding a non-regulation car is cheating, fortunately the rules on using new technology for investing are not as restrictive.
In that regard, the article below examines the fact that there is less originality in hedge fund land than there has been previously.
Study: Hedge Funds Crowding Into Same Stocks
Thanks to Ben Garber at BenjaminJGarber.com for the post below. Chinese economic weakness is a theme I have been interested in lately. Apparently several prominent hedge fund managers are also bearish on China, including James Chanos and Hugh Henry. In the video, China discussion starts at the 4:30 mark. Below are also a few articles regarding China's situation, and those who are betting against it.
Full Disclosure: I own FXI puts and UHPSX as of January 17th 2011.
Never forget: "Markets can remain irrational a lot longer than you and I can remain solvent." - John Maynard Keynes
China Central Bank Raises Reserve-Requirement Ratio
China Raises Bank Reserve Ratio 50 Points,"
China Bears Gathering as Analysts Question Economy
RBS Issues Warning that China Credit is About to Burst
China's GDP is "man-made," unreliable: top leader
Meltzer is the author of the definitive history on the Federal Reserve. He is also The Allan H. Meltzer Professor of Political Economy at Carnegie Mellon University's Tepper School of Business. He and former Fed Chairman Paul Volcker sat down to discuss the second volume of Meltzer's books, A History of The Federal Reserve, in November 2010.
It is interesting to note that politically, Volcker is aligned with the Obama Administration, and Meltzer is an advisor to the G.O.P., specifically speaker of the house John Boehnor.
This video is longer than we typically post, but the conversation between these two great economists is priceless.
We're back! I hope everyone enjoyed their holidays. Now, back to work!
The investment community is buzzing with news on who did great in 2010, and who slipped. Below are links to articles along those lines.
Update 1-9-11:Hedge funds return 11.46% in 2010, investors add $86bn
Update 1-7-11:Hedge Funds Rebound 1.7% in December to Hit Two-Year Peak
Update 1-5-11:Hedge Fund Performance Numbers: Not That Good
We will be updating this post as the numbers come out, so check back soon.
DealBook: Looking to diversify, wealthy people and big institutions are flocking to hedge funds that buy so-called catastrophe bonds and other investments tied to the probability of natural disasters.
I recently read a great book that applied a Modern Value Investor framework to Super-Catastrophe valuation. In Applied Value Investing, Joseph Calandro Jr valued the "Play for a Billion" sweepstakes that Buffett insured via Berkshire Hathaway.
What did Buffett charge to insure a $1 billion sweepstakes? About $10 million. For details, check out the book below.