Carry Trade and Tech: Barclays, BofA

Chidem Kurdas

Analysts parsing market prospects have come up with different investment ideas. You see this among both banks and hedge funds. Barclays Capital’s outlook for the third quarter highlights divergences between countries.

Barclays head of research Larry Kantor notes that there may be more of a carry trade in the next few months. He says markets will bounce back near term but the easy money has been made in the first year of economic recovery and now it’s more difficult.

The people at Bank of America Merrill Lynch Global Research are more optimistic about US stocks. David Bianco, head of US equity strategy, says technology stocks offer low-hanging fruit with little risk, while financial shares promise strong returns. He sees foreign markets as the growth engine, with export-oriented companies doing well.

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Paulson Gold Bet DIY?

Chidem Kurdas

One could fairly easily build a Do-It-Yourself version of Paulson & Co.’s portfolio of gold and gold-related businesses. Its largest component  is an exchange-traded fund, the SPDR Gold Trust—nothing could be simpler. You could ask why  people pay hefty fees to Paulson & Co. to buy an ETF.

Others are busy trying to replicate the Paulson gold fund, launched at the beginning of this year.

Renaissance, Viking Like Pfizer, Biopharma

Chidem Kurdas

Despite uncertainty about new medications, bio-pharmaceutical companies have attracted significant investments from large hedge funds such as Omega Advisors, Renaissance Technologies and JP Morgan’s Highbridge.

Pfizer Inc. was a magnet for both the fundamentals-based stock pickers at Viking Global Investors and the quantitative traders at Renaissance—two very different equity strategies, apparently converging on the same pharmaceutical company.  Renaissance’s holding in Pfizer was worth more than half a billion dollars as of April.

Bio-pharmaceutical businesses thrive on innovation—-the problem is,  the number of new medications slumped since the 1990s. But  Pfizer’s research and development head Rod MacKenzie says he’s optimistic. “We’re at a very interesting place in the R&D cycle,” he said, during a presentation at the Argyle Executive Forum yesterday.

Bridgewater Benefits from Investor Caution

Chidem Kurdas

Wary investors may be pulling money out of the industry but favor certain big firms, among them institutional money manager Bridgewater Associates, which is one of the largest hedge fund shops.

Former AIG Team IPO; Thomas Lee

Chidem Kurdas

A credit investment group with backing from private equity firm Thomas H Lee Partners plans to go public as a business development company. The top managers of the credit operation once worked at AIG, the insurance giant now largely owned by the US government.

Andrew Lo Counts Uncertainties

Chidem Kurdas

If risk measures misled investors about mortgage-linked securities, what is wrong with the measures? Professor Andrew Lo of MIT offered a list of what’s missing from quantitative risk models. The root cause of the trouble, he suggests, is physics envy!

Former Citadel Traders May Cash Out

Chidem Kurdas

Solar Capital’s backers – well-known names in the hedge fund industry – have waited for years.  Will they exit in the coming months or stay in a holding pattern?

Legg Mason Preps Energy IPO

Chidem Kurdas

Master limited partnerships in energy are attracting managers, among them Legg Mason, which expects to launch a specialized energy fund this month. The vehicle is to trade on NYSE and invest most of its assets in energy sector limited partnerships.