Lone Pine Veteran Eisenstein Starts Hedge Fund With $350 Million (link)
Vetamer Capital Management, which launched in January, invests in public and private financial-technology companies, which include digital-commerce, insurance-technology and cryptocurrency-infrastructure firms.
A third of investments focus on growth-stage companies that Vetamer expects could pursue an IPO in about three or four years. Hedge funds are increasingly blending stock-picking with venture capital wagers amid high valuations and a hot market for IPOs.
Eisenstein spent 13 years at the firm, he focused on public and private investments in financial services companies. Vetamer started trading his own wealth in mid-2020 and opened up to outside cash this year.
Hedge Funds Capitulate on Dollar Short Bets as Losses Mount (link)
Hedge funds become net buyers of the world’s reserve currency after surging Treasury yields upended a favorite global macro strategy. They added bearish bets on the yen and euro, and switched from bullish positions on the New Zealand dollar.
“It is the bond market that has been driving the U.S. dollar in the past couple of months, and it appears to be intensifying,” said Alvin T. Tan, RBC Capital Markets. “I would expect further short-covering versus the U.S. dollar.”
Hedge funds’ long dollar positions climbed to 2,414 contracts, compared with shorts of 62,781 a week earlier, it is the first time they are bullish on the greenback since November.
“U.S. Treasury yields and virus dynamics will probably determine where the leverage community will land,” said Rodrigo Catril from National Australia Bank. While the pound and commodity-linked currencies have risen against the dollar this year, “any question marks on vaccine supplies or commodity weakness will likely see these pairs come under pressure.”
Global Hedge Fund Investors With $812 Billion Prefer Asia (link)
Hedge funds focused on Asia are predicting a surge of new money from North America and Europe as investors move away from overvalued U.S. assets to tap the early pandemic recovery in China and other parts of the region.
A Credit Suisse survey of more than 200 institutional investors with $812 billion in hedge fund assets showed Asia-Pacific was the most-sought after region with 55% net demand.
“The areas we are seeing most demand for are China equities, low-net hedge funds and private credit.” Investors around the world are trying to find ways of profiting from the region’s economic growth, and Asia hedge funds have outperformed global peers.
The surge in monetary and fiscal stimulus in North America and Europe may also push some investors to park more money in Asia, skirting the frothiness of U.S. markets.
APS Asset Management's CIO predicts some of the institutional investors who got burned backing hedge funds that shorted GME and AMC would redeem some money and redeploy a portion to Asia, due to lack of local alternative to WallStreetBets and Robinhood.
Still, Dymon’s Yong first line of protection is to run a multi-strategy fund with low correlation to equity indexes. A second strategy is to make 1,000 short bets and 1,000 long wagers to lower the potential impact of a single, major event.
The Bond Market’s Weird and Scary Breakdown Is Still a Riddle (link)
Last year March, the 10-year Treasury completed a bizarre rebound, from 0.31% to 1.27% within 10 days. For some reason there had been massive selling of Treasuries at a time of extreme high risk, which would normally be exactly when investors would be expected to buy.
CCMR released a new report, Nothing but the Facts: The U.S. Treasury Market During the COVID-19 Crisis. It comes to the disturbing conclusion that there isn’t enough information about this vital market for us to work out with any certainty who sold, or why.
The CCMR suggests that regulators stay their hands when it comes to making potential radical reforms until they have better information. But the CCMR makes clear that the greatest need is to fix the disclosure regime, which has plainly not kept up.
Ex-H2O and State Street execs unveil ESG-focused macro hedge fund LIOR Global (link)
LIOR Global Partners will use a top-down research process to identify a mix of directional, relative value and thematic investment opportunities, investing both long and short to generate absolute returns regardless of market environment.
The portfolio-building process brings together macroeconomic research, valuation metrics, technical indicators and quantitative tools, fusing quantitative models with human analysis.
“Covid created a bigger inflection point in a market and as we look forward global macro has a strong role in delivering positive returns with contained volatility. By incorporating ESG, we can reduce investment risk over time and hopefully lead the way in how global macro can evolve and contribute towards positive change over the coming years.”
The ESG approach uses Sustainalytics data, which assesses sovereigns and corporates and overlays these with further exclusions including coal, tobacco and controversial weapons, with the aim of outperforming the ESG score of the fund’s dynamic strategic asset allocation.