Frost forms on 130/30 growth

April 28, 2006

From Pensions & Investments:
Demand for 130/30 equity strategies — one of the hottest institutional products in history — declined sharply in the six-month period ended March 31, with most of asset gains picked up by fundamental managers.

JPMorgan Asset Management, New York, the largest fundamental 130/30 manager, and the third largest manager of so-called active extension strategies overall, accounted for 45% of the $12 billion in growth during that time period. The firm's active extension assets grew 161% to $8.6 billion, up from $3.3 billion six months earlier.

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China Long/Shorts Still Learning to Short

April 26, 2006

From Black Enterprise:
Emerging markets investors are a demanding set, even if their hedge fund manager is doing what he or she is paid to do. If the index is up 50% and the manager achieved 30%, they grumble that their fund has underperformed the index, and begin to fantasize about what they might have achieved with a leveraged manager. When the index then tanks 30% and their manager is down 10%, they will wonder out loud what happened to the absolute returns they were supposed to be getting.

Clearly, leveraged managers can give investors enhanced upside; but they can tank spectacularly on the downside if there is a sharp correction, especially if the market suddenly turns illiquid and spreads widen unexpectedly, making an exit complex. This is common during corrections in emerging markets, which thus tend to see sharper drawdowns than more developed markets. This is true even for markets as large and apparently liquid as China, whose strong run- up from 2006 until October 2007 had attracted large inflows of both domestic and foreign investment.

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Energy Hedge Fund Goes Long (And Short)

April 22, 2006

From FINalternatives:
Electranet Capital, a San Francisco commodity shop, has launched its maiden hedge fund, a long/short public equity portfolio.

Electranet Fund I will seek opportunities arising from developments in energy efficiency, storage and management, as well as electric infrastructure, according to John Morris, chief investment officer.

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Long on shortcomings

April 20, 2006

From MarketWatch:
Mutual fund companies come up with "new ideas" all the time, but most don't gain any traction.

So when Fidelity Investments joined the latest trend earlier this month and opened a "130/30" fund, it signaled that the newest fad in funds had gone big time.

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New Index Takes Different Spin On 130/30 Portfolios

March 31, 2006

From IndexUniverse.com:
Dow Jones has come out with a new index that puts its own twist on the popular 130/30 investing strategy used by hedge funds.

The Dow Jones U.S. RBP Indexes bases its strategy for picking the stocks it should short and take long positions on based on a two-part methodology developed by Transparent Value.

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Texada Pushes Long/Short Equity Fund

March 26, 2006

From FINalternatives:
Jackson, Wyo.-based Texada Capital is ramping up marketing for its 10-month old global equity long/short hedge fund.

The $11 million Nashuk Partners fund launched last June and is down 1.2% year-to-date, according to Christopher Dean, member.

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Maybe a Long/Short Approach Is the Answer...

March 17, 2006

From Seeking Alpha:
A day does not go by that I get one of two questions over email regarding the paper I published:

1. Have you considered going all-in to the positions on a buy signal?
2. Have you considered a long-short version of the model?

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Threadneedle launches Asian Crescendo hedge fund

March 17, 2006

From Citywire:
Threadneedle Investments has added an Asian hedge fund to is nine-strong Crescendo range.

The Threadneedle Asia Crescendo fund will utilise the group’s power in Asian equities with its knowledge of running equity long-short portfolios.

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Long and short gold equity ideas

March 10, 2006

From Financial Times:
With gold prices still well within reach of the quadruple-digit mark at around US$960 per ounce, and both small and large cap gold stocks doing well in recent months, investors are still searching for the best way to play bullion.

Wellington West has run a quantitative analysis screen to identify the best and worst-performing gold stocks, and has produced a long/short portfolio of potential candidates. The firm’s model has six categories: valuation, profitability/balance sheet, growth, momentum, beta and analyst revisions.

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Scipion Preps Pan Africa Long/Short Fund

March 7, 2006

From FINalternatives:
London- and Geneva-based Scipion Capital next month will launch the Scipion Alpha Seeker Fund, a pan-Africa long/short equity offering.

The fund, which will exclude South Africa and Egypt, will employ a top-down approach to find companies in the mobile telecommunications, brewing and cement sectors, as well as, indirectly, banks benefiting from the increased cash flow of the first three sectors mentioned, according to fund documents. Within the above-mentioned sectors, the fund favors large-cap companies offering daily liquidity.

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Fidelity introduces FAST range to UK market

March 3, 2006

From Investment Week:
Fidelity introduces FAST range to UK marketFidelity International has unveiled a pair of sophisticated long/short funds that aim to provide additional alpha for investors.

FAST Europe and FAST Japan add synthetic shorts, pair trades and covered call options to a long-only portfolio.

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130/30 is popular new option

March 1, 2006

From Financial Post:
Mention a 130/30 fund -- as we did this week with the news JP Morgan had signed up its first pension fund, which agreed to ante up US$100-million -- and what follows is the news that at least five other providers are also offering the same product. The 130/30 strategies -- in effect where the manager is 130% long a basket of stocks and 30% short a different basket -- "is where the alternative manager can pitch the core [mandate] into the core because it uses the benchmark and it's where managers bring all their portfolio construction skills," said Chris Guthrie, co-founder of Hillsdale Investment Management, which has had a Canadian 130/30 fund for about five years.

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Torrey Pines Launches Asia Long/Short Equity Fund

February 14, 2006

From FINalternatives:
San Diego-based Torrey Pines Capital Management, the $510 million global long/short equity manager, last month opened up its new Torrey Pines Asia Fund to investors after three months of trading with internal capital.

The $10 million Asia-only long/short fund returned 4.71% net for the fourth quarter and was up an estimated 1.3% net last month.

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Hulse fund comes up short

February 12, 2006

From Citywire:
James Hulse believes his new climate change fund’s long-short investment strategy will give it the edge in the sector.

PCE Investors has launched the Cumulus Climate Fund with Hulse at its helm in a bid to profit from the financial impact of climate change.

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Separate the Wheat from the Chaff in Long-Short Land

January 24, 2006

From Yahoo! Finance:
The past year was nothing if not volatile. The S&P 500 Index gained 5.5% last year, but thanks to the subprime mortgage debacle and the crippling credit crisis, its annual standard deviation of returns was near 10%, making 2007 bumpier than any of the calendar years since 2003. Given the ups and downs, it's not too surprising that funds offering protection from the fits and starts have attracted more attention. In particular, long-short funds, or funds that can buy stocks or bet against them by selling them short, have intrigued investors. Many of them employ strategies formerly used only by hedge funds and aim to provide a smoother ride than the broad market.

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State Street Global Advisors Launches 130/30 Mutual Fund

January 24, 2006

From Yahoo! Finance:
State Street Global Advisors (SSgAa), the investment management arm of State Street Corporation (NYSE: STT - News) and the largest institutional fund manager in the world¹, today announced the launch of the SSgA Core Edge Equity Fund, a long-short (130/30) mutual fund that seeks to achieve long-term capital appreciation over the course of an economic cycle.

The SSgA Core Edge Equity Fund will invest its assets, including proceeds received from short sales of securities, primarily in large and medium-capitalization securities; the underlying valuation or business fundamentals of which indicates prospects for growth. The equities that the fund owns should equal as much as 130 percent of the fund’s net asset value at any given time. The fund plans to short sell the securities of companies with apparent deteriorating business fundamentals and/or valuations. The replacement cost of all securities sold short should equal approximately 30 percent of the fund’s net asset value at any time.

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Long/Short Has Best Year In Four, Hennessee Says

January 10, 2006

From FINalternatives:
Hedge funds broadly outperformed the broader markets in 2007, according to year-end figures from the Hennessee Group.

Overall, the average hedge fund added 11.64% last year, with the Standard & Poor’s 500 rising 4.9%. The Hennessee Index outpaced the S&P500 by the widest margin in five years.

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New index to measure long, short positions in US equities markets launched - S&P

January 9, 2006

From Forbes:
Standard & Poor's said it has launched a new index, S&P 500 Inverse Index, to measure the performance of long and short positions in the US equities market.

The ratings agency said the index will give investors the inverse performance of the S&P 500, representing a short position in the stock market barometer.

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Long-short funds

December 27, 2006

From FinancialNews-US.com:
A handful of “long-short” funds, designed to hold up well in a down market, are in the red this year, even as the Dow Jones Industrial Average is up 8.7% and Standard & Poor's 500 stock index is up 5.6%.

The worst performer, Forward Long/Short Credit Analysis fund - which invests in primarily low-quality municipal and corporate bonds - is down 17% year-to-date, research firm Morningstar said.

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Last Atlantis Launches 130/30 Strategy

December 24, 2006

From FINalternatives:
Alternative investment firm Last Atlantis Capital Management has launched a 130/30 strategy that aims to yield consistent, low volatility returns over various market conditions.

Assets allocated to long positions within the new vehicle, LACM Long/Short Equity, are equally distributed among the baskets and stocks in each basket. Short positions represent 30% of the portfolio’s overall value with funds from the short sales equally allocated to long positions to maintain diversification.

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Volatile markets give quants a rough ride

December 17, 2006

From FinancialNews-US.com:
Long-only quantitative funds, which use computer models to make investment decisions rather than relying on human judgment, seem to have recovered from the setbacks encountered in August. However, consultants and fund managers warn of a rougher ride ahead in markets that are more volatile and less rational.

One equity fund manager who employs a fundamental process, but with a quant screen, said: “Quantitative processes are okay in markets that steadily rise or steadily fall, but choppy conditions make it tough.”

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Poll finds pension funds sceptical towards 130/30 strategies

December 17, 2006

From AsianInvestor.net:
A recent polling of Hong Kong-based institutional investors by Watson Wyatt revealed interest in non-traditional equity strategies, but a rejection of 130/30 and other so-called active extension strategies.

Watson Wyatt’s consultants each selected an equity strategy to ‘pitch’ clients, who then voted their preferences. Long/short (18% of respondents) and long-term long-only (also 18%) strategies proved popular for alternatives, although traditional passive (23%) and traditional active (23%) maintained their popularity. Support for beta prime strategies (ie using fundamental or wealth-weighted indices) was lukewarm, selected by 13% of respondents.

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Race to support 130/30 funds begins

December 11, 2006

From FinancialNews-US.com:
The arrival of 130/30 funds has caused a rush of activity among custodians, investment banks and fund administrators looking to provide back office and administration support for these new investment strategies.

Fund managers in Europe and the US have started to embrace 130/30 funds, which allow them to short-sell up to 30% of their portfolios, and use the proceeds to buy an extra 30% long, while maintaining a full market exposure. However, for many long-only fund managers, the ability to go short to help generate better returns is raising questions over their front and back office capabilities, and piling the pressure on custodians and administrators to respond.

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Equity managers report biggest losses in five years

December 10, 2006

From MarketWatch:
Equity hedge fund managers reported their biggest losses in almost five years last month as stock markets swooned, industry tracker Hennessee Group LLC said on Monday.

The Hennessee Hedge Fund Index fell 1.58% in November, leaving it up 11.94% so far this year. Long/short equity managers tracked by the firm lost 1.56% on average. The Standard & Poor's 500 index dropped more than 4% last month, leaving it up 4.45% in 2007.

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