Archive for September, 2011

Who Will Pay for Bad Mortgages?

September 28, 2011

Chidem Kurdas

The good news is that the US economy continues to grow despite panic rounds caused by the European debt crisis. The not so good news: housing losses continue to drag the economy while regulators, banks, investors and homeowners battle over who will bear the brunt of the real estate bust.

The problem is how to allocate the losses, said Joseph Tracy, executive vice president at the Federal Reserve Bank of New York, (more…)

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Shipping Races Against Time

September 26, 2011

Global slowdown is another blow to  shipping, still suffering from the downturn caused by the Great Recession. On the other hand, investors are attracted by low prices and see opportunities in the industry’s expected consolidation. Some hedge funds look to get into deals while others seek distressed assets.

Analysts discussed the prospects at a Capital Link Forum (more…)

My Kingdom for a Hedge!

September 22, 2011

Chidem Kurdas

Today people sold stocks and piled into US Treasuries, driving 10-year yields to another low. Everybody is trying to protect themselves.  Funds are hedging their portfolios but to put up defense against a crash is very costly now. There is no good-value, low-risk place to hide. Risky assets, on the other hand, are cheap.

Buying Treasuries looks like the one thing not to do. (more…)

Ex-SEC Counsel $140,000 Madoff Benefit

September 20, 2011

Chidem Kurdas

It would make great satire. David Becker shaped regulatory policy for years as the Securities and Exchange Commission’s general counsel. His “wisdom and careful judgment” was celebrated by SEC Chair Mary Schapiro. Now his conflict of interest as an investor with Bernard Madoff is to be reviewed by Congress and the Justice Department.  (more…)

Absolute Return Bond MF Beats HFs

September 15, 2011

Chidem Kurdas

This July American Beacon launched its Flexible Bond Fund, joining the small but growing group of absolute return-targeting mutual funds. An investor could consider this vehicle as an alternative to fixed income hedge funds. It goes long/short and uses derivatives. The managers are Brandywine Global Investment Management, GAM International and PIMCO. (more…)

Old Guard Exits Changing Industry

September 14, 2011

Chidem Kurdas

Caxton Associates’ founders Bruce Kovner and Peter D’Angel issued the latest in a series of retirement letters by well-known hedge fund managers. Exiting managers give different reasons for their decision, but in the main they’re tired of dealing with at least one of three temperamental forces—- (more…)

Margin Focus in OTC Default Risk

September 13, 2011

Chidem Kurdas

When Lehman Brothers collapsed in 2008, LCH.Clearnet took over huge derivatives  positions from the bankrupt bank. The clearing house successfully managed this and four other defaults, says Isabella Kurek-Smith, director and head of energy and freight markets at LCH.Clearnet. The experience demonstrated how important it is to require adequate initial margin—though some derivatives traders complain (more…)

Energy Derivatives Trends Point Upward

September 9, 2011

Chidem Kurdas

Market changes suggest increasing demand for energy derivatives. This is implied by four developments, discussed at a Capital Link Forum by Nicholas Dazzo of Koch Supply and Trading, a trading house that is part of privately-held giant Koch Industries Inc. (more…)

Paulson Loss From Macro Perspective

September 8, 2011

Paulson & Co.’s widely reported heavy loss in event arbitrage raises a question. Other funds with the similar strategy (more…)

Long Twilight of Bear Fund

September 7, 2011

Chidem Kurdas

Credit fund failures in 2007 were the first public sign of disaster at Bear Stearns, some nine months before its bailout by the Feds and sale to JP Morgan. (more…)