Quants Scrape Reddit to Help Hedge Funds Dodge More Retail Pain (Link)
Wolfe Research’s team of quants is telling institutional clients to avoid fighting this band of newbie day traders altogether. The retail army really is emerging as a disruptive show of force that makes both betting on and against stocks a dangerous game for Wall Street players.
Wolfe's team of quants built a portfolio of retail favorites that has returned 84% over roughly the past year, beating an equally-weighted version of the Russell 3000 at 54%.
Day traders appear to love companies with low profitability in high-profile industries such as communication services and consumer discretionary. Robinhood traders prefer to bet against hedge-fund favorites and to trade on momentum, while Reddit portfolio has been increasingly driven by bets on specific stocks and sectors.
“Hedge funds are back”: Veteran investor Dixon Boardman sees “compelling opportunities” across three key strategy areas (Link)
Boardman, who has more than 30 years’ experience in hedge fund investing, highlights three key areas of opportunities for 2021: Asia, especially China and India; healthcare; and concentrated ‘best ideas’ stock-picking by top long/short equity managers.
"Optima is taking the long view. Our strong conviction is that we are entering the ‘Age of Asia’. In particular, China and India" says Boardman. Key segments of the economies of these countries – especially tech and retail – are undergoing rapid transformation.
We believe that this is an ideal way to participate, a long/short approach to equities has the potential to add value and take advantage of short-term volatility.”
Healthcare sector is being driven by new drug discoveries and treatments, not only for Covid-19 but in other areas such as gene therapy, immuno-oncology, and orphan drugs. Optima is relying on a seasoned long/short equity manager in the healthcare space.
The firm’s approach includes a mix of investment styles, including growth, value, opportunistic, and event driven.
Glenview, Other Stock Funds Jump in January: Hedge Fund Update (Link)
Glenview among stock funds posting January gains
Multi-strats mostly sidestep market’s chaos
Einhorn’s Greenlight fell 11.1% last month
Fiszel’s Honeycomb dropped 4% in January
Renaissance’s RIEF fund slumped 9.5% last month
Hedge fund commitments from US public pensions total $12.5bn during 2020 with net $1.7bn of flows (Link)
Around 40% of US institutions are planning new allocations to hedge funds in H1, especially for credit hedge funds.
For LACERA's hedge fund portfolio with $900m, two managers have been scheduled for early 2021. CalSTRS and Oregon state pension hired Albourne Partners, LACERA's hedge fund consultant to build their respective diversifying hedge fund portfolios in the coming months.
Aside from US pension funds, interest among the wider institutional investor community suggests greater inflows are forthcoming. HFM survey found that US institutions are more likely to increase their allocation to hedge funds and private credit than any other asset class in Q1.
Greylock Files for Bankruptcy After Losses Spur Withdrawals (Link)
AUM of Emerging Markets hedge fund will drop to $100 million by the end of March in the absence of new investments, from $450 million (end of 2020).
Greylock is known for making bets on distressed debt and troubled sovereign bonds. The fund struggled last year as emerging market bond prices cratered at the start of the pandemic.
The firm was digging itself out of 3% losses in 2019 from private credit trades gone awry and tighter oil sanctions that pummeled Venezuelan debt when the Covid-19 pandemic hit. The fund booked a 14% loss in 2020.
Investors pulled their money following three years of losses, most recently stemming from the pandemic.
Asia Pacific PE/VC dry powder sets new record at $476bn (Link)
USD476 billion of dry powder represents 25% of the global total, above Europe (19%). Institutional investors will continue to increase allocations toward Asia PE/VC, according to KPMG analysis.
The industry proved its resilience through the increased number of deal volume and average deal sizes despite the pandemic.
In Asia, General Partners (GPs) remain overwhelmingly bullish on the outlook for 2021, as demonstrated by the large amount of capital that continues to be raised and that is to be deployed in the Asia Pacific region. - says Andrew Weir, Global Chair of KPMG China.