The idea behind today’s post as I had certain questions yesterday with my peers wanted to know more about Hedge funds so trying to put in simple way 🙂
What is a “hedge fund”? It’s a legal category, like “mutual fund”. The “hedge fund” category is basically a “none of the above” legal category, meaning that hedge funds, alone among money management companies, have essentially no restrictions on the kinds of assets they are allowed to trade. To start a hedge fund, all you have to do is be a “qualified investor” with $5 million in capital, or be a “sophisticated investor”. Continue reading “The Hedge Fund Series”
My question is about arbitrage (tenders and merger arb). I’ve been reading through Buffett’s old letters and in the late 1980’s he had quite an impressive run with his arbitrage investments (I think in 1987 he made around 80% on his arb investments).
Both he and Graham seem to have had long time success for decades using merger arb and other arbitrage techniques. I’m wondering if you ever employ any of these strategies in your portfolio? It seems like a specialized area, but also seems like an area that would add uncorrelated returns to the portfolio, and serve as a great substitute for cash when markets begin to become overvalued. Continue reading “Merger Arbitrage”
Oscar Wilde once said that ‚if one cannot enjoy reading a book over and over again, there is no use in reading it at all.
‛Most of the books of the subprime era were dedicated on the contagion, failures and humongous losses, for Investment banks, Financial institutions and Government agencies.
The Greatest trade ever – by Gregory Zuckerman is a long conversation and co-operation of the person John Paulson, ( whose Hedge fund was in lime light the famous Abacus deal were Goldman Sachs was in trouble). Continue reading “Book review : The Greatest Trade Ever : by Gregory Zuckerman”
Well it seems like actual credit investing failed so insurance policies were invented to get rid of actual cash flow and collateral analysis.
There was no need to do any research. Just buy a default insurance policy.
The funny part is the banks created and sold default insurance policies to hedge funds and they couldn’t manage their own books. makes sense
That’s why the government needs to shut down the hedge fund Continue reading “How did the credit market turn into an insurance market?”
Hedge fund is a type of private and unregistered investmentpool that employs sophisticated hedging and arbitrage techniques in both domestic and international markets to generate high returns. Traditionally Hedge funds have been limited to sophisticated, wealthy investors because they required a large initial investment.
Earlier most of the hedge funds strategies such as leverage, long, short and derivative positions were focused on corporate equity markets. But now hedge funds new focus areas are commodities and money markets. Because hedge funds are unregistered, they can use securities and strategies that are either prohibited or restricted in registered funds. That is why –hedge funds are also referred Continue reading “What are Hedge Funds –”