Insomniac Hedge Fund Guy

RBC Accused By CFTC Of Largest Trading Scheme To Date

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Just earlier today, the Royal Bank of Canada (ticker RY) found out they have a serious situation on their hands involving some of their trading practices.  It appears the Commodity Futures Trading Commission (CFTC) is now claiming that RBC not only intentionally made a large number of fictitious trades to reap benefits from tax arbitrage, but they covered their tracks for the past five years.  According to the NYTimes: “In a civil lawsuit filed in federal court in Manhattan, the trading commission accused the bank of creating “fictitious trades” between various arms of the firm. The trades, involving hundreds of … Read more

Cash is trash market powers on

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Today on CNBC, Federal Reserve Member Fisher adds his two cents.   “A lot of investors, quote unquote, have counted on us to provide the tailwind, rather than do the hard work that one needs to do to just basically ascertain underlying valuation,” Fisher said. “I think the easy part for those that just rode on the jet stream of Federal Reserve accommodation is over now. Now they actually have to do the work, to do their analysis.”    

$8.5 Million To Settle Groupon Coupon Expiration Lawsuits

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Part of a settlement on the 17 different pending lawsuits on Groupon’s policies regarding the expiration date on their daily deals, the online coupon company is setting aside $8.5 million.  If you purchased a voucher before December 1 of last year and it expired, your refund will come from the money set aside. From Businessweek: The settlement pertains to 17 lawsuits against Groupon that were consolidated before U.S. District Judge Dana M. Sabraw in San Diego. The plaintiffs claimed Groupon and various retailers violate federal and state consumer protection laws with improper expiration dates and other provisions for the vouchers, … Read more

Time To Check Your Wallet: 1.5 Million Visa And Mastercard Numbers Stolen

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Global Payments, the US based third party payment processor, just confirmed that hackers managed to escape with up to 1.5 million of their customers credit card numbers.  This is positive news considering initial estimates were as high as 10 million, and the firm has already announced that they will be able to absorb any and all costs associated with the breach.  It is still possible however, that enough data was stolen to produce new, counterfeit cards but Global Payments is still investigating this possibility.  All customer data such as addresses, social security numbers, and names remain protected though.   Up … Read more

A Bill to Loosen Hedge Fund Marketing – NYTimes.com

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Is this the end of hedge funds as we know it or is the economy just desperate for advertising dollars. Maybe both but I think the latter. BY AZAM AHMED AND KEVIN ROOSE   Hedge Fund Managers Fare Well (March 29, 2012) Investors may soon get a keyhole view into the cloistered world of hedge funds and private equity firms, thanks to a little-known provision in a new bill that would relax rules on how investment firms can market themselves to the public. The bill, called the Jump-start Our Business Start-ups Act, or JOBS Act, would reverse parts of a … Read more

What to Look For in an Active Investment Manager – NYTimes.com

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One of the conclusions of this article is that emerging managers with hot track records fall victim to the law of  large numbers.  They fail to explain how Peter Lynch of Magellan Fund fame managed to stomp the market for so many years managing billions.   Want an Active Investment Manager? Here’s What to Look For By PAUL SULLIVAN Paul Sullivan writes about strategies that the wealthy use to manage their money and their overall well-being.Paul Sullivan’s Columns »Yet investors regularly ask for a mutual fund’s track record over one, three, five years or more before putting their money in. … Read more

New Goldman Fund Long Real Estate. So Does That Mean Run?

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Goldman Sachs Group is rolling out a new fund at the beginning of the month.. and they’re betting on a housing recovery.  According to Bloomberg, Goldman is joining the hedge fund ranks of Hayman Capital, Cerberus Capital, and Canyon Partners in raising money for a mortgage backed product.  The goal of these new funds is to take advantage of the recent appreciation in the $1.1 trillion dollar market in non-government backed mortgage securities.   The market consists of the remnants from the causation of the 2008 crisis, primarily ARMs (adjustable rate mortgages) and Alt-A ARMs.  Since last November, the senior … Read more

‘s Peak? Zynga Can..

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Having just paid a pretty premium for app designer OMGPOP and their wildly successful game Draw Something, Zynga was hoping they just scratched the surface on the pictionary-like game’s profits.  It seems they might have jumped on the bandwagon just a little too late however, according to AppData’s most recent metrics on game use.  Take a look, courtesy of Business Insider: Not the kind of flatline on a chart that anyone wants to see out of a recent acquisition.  Lets hope for Zynga’s sake that OMGPOP has some more success in that pipeline..       The Hottest App On … Read more

Facebook Action Done In Secondary Markets

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Looks like May will bring Facebook shares out of the shadows of the secondary markets and into the spotlight. The month before may will be a quiet one though, as the social media company halted all trading of its shares this week.   According to SharePost, Facebook is looking “to help ensure its orderly transaction into the public markets”.  While it’s common to see a halt before the IPO, this is the first time trading has been halted for as long as a month.  Although the $100 billion valuation on the company should merit some special consideration.     Facebook sets … Read more

Can You Beat The Market Following Insider Buying?

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Note: The difference between the average of all insider buys vs. the median return.  This suggests that well over half of the insiders performed better than the median of 14.95%.  Our research shows unequivocally you can.  Over the last 12 months we tracked 421 insiders that bought $100,000 or more of their company’s stock.  We omitted from this 10% owners as we view them more like hedge funds than true insiders.  We dont’ look at numbers less than $100,000 because that can be window dressing, simply execs trying to pump up investor confidence. The average return on these insider buys … Read more

Draw Something Changes the Game Quickly for Omgpop – NYTimes.com

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A Game Explodes and Changes Life Overnight at a Struggling Start-Up Jennifer S. Altman for The New York Times Dan Porter, chief of Omgpop, which makes Draw Something. By BRIAN X. CHEN and JENNA WORTHAM Published: March 25, 2012   At a cocktail party on the second floor of the expensive Bowery Hotel in Manhattan on Thursday night, as trays of stuffed mushrooms and thinly sliced filet mignon circulated, Charles Forman was marveling at how quickly things can change. via Draw Something Changes the Game Quickly for Omgpop – NYTimes.com.

Home Prices Hurt For Fifth Month In A Row

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While winter is usually the off-season for home sales, this is the fifth month in a row where prices slid.  With values at levels not seen since 2003, the strength of the housing market recovery isn’t looking as hot as it did before winter.  Of the 20 cities used in determining home prices, 17 lost value while Miami, Phoenix, and Washington were the only locations to see an appreciation in value.  Historically, the early spring weather should help fuel an early buying season but the housing slump seems immune to any medicine, including repressed interest rates.     Case-Shiller Shows … Read more

Feb 2012 Hedge Fund Results

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The Dow Jones Credit Suisse Hedge Fund Indexes Performance data for Feb 2012 has been updated. Please visit our site at http://www.hedgeindex.com for further details.    Dow Jones Credit Suisse Core Index Performance Index / Sub Strategies Value** Feb 12 YTD 1 Year Annl* Std Dev* Sharpe* Dow Jones Credit Suisse Core Hedge Fund Index 95.93 1.31% 3.60% -5.25% 6.65% 6.70% 0.73     Convertible Arbitrage 97.78 2.34% 5.89% -4.48% 3.92% 11.38% 0.19     Emerging Markets 101.17 1.83% 3.66% 1.61% 9.75% 10.63% 0.75     Event Driven 91.33 1.47% 4.41% -10.48% 5.02% 8.24% 0.39     Fixed Income Arbitrage 100.09 0.43% 1.36% 0.26% 7.36% 8.57% … Read more

‘s Really Broken..

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Last week saw the disaster of epic proportion that was BATS debut into the market with their IPO (seen here).  As a result, BATS retracted their offering with the intentions of regrouping.  However, this incident left a whole host of skeptics who would never trust an exchange operator that couldn’t handle their own IPO.  No doubt, BATS’ valuation will be adjusted when they are ready to bring the IPO back to the table..  But will this be a discount opportunity on essentially the same stock?  According to founder Dave Cummings (who no longer works for BATS but is still and investor) … Read more

‘m working on

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One area, probably the area that has the most insider buying by sheer numbers of companies and officers is the mortgage REIT sector.  Names that I’m watching there are Annaly NLY, Chimera CIM, PennyMac Mortgage Investment Trust PMT, and a few others.  These are all REITS paying outsized distributions with yields of 12-15%.  The conventional wisdom of course is that anything with this high of yield is risky and probably will end up cutting their distribution.  It’s just a matter of when not if. But what if that’s already in the stock?  That’s hard to know.  That’s like predicting stock price direction or for that matter … Read more

‘t Break The Market The First Day On The Job

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Imagine this: you’re driving to the office the very first day on the job.  As you casually hang a right into the parking lot, you begin thinking of how you are going to leave a stellar first impression on your co-workers and management, since you know that first impressions mean everything.  Pulling into the first spot you see right in front of the entrance, you jump the curb and slam into the front of the building as your car bursts into flames while your hood flattens the reception desk against the back of the wall. Now imagine this is how … Read more

| ETF Trends

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This is a good article explaining why these products don’t work.  I’ve been railing against synthetic ETFS for some time.  What I mean by synthetic is an instrument that tries to mimic an index or futures contract and is NOT actually the index or future itself.  They just don’t work.  In fact they fail miserably for the most part.  It’s small wonder why many money managers fail because they opt out for lazy man macro decisions composing their client’s portfolios entirely from ETFs.   What Really Happened with TVIX March 23rd at 9:33am by John Spence TVIX Falls More After … Read more

Afghan Shooter Was A Broker? Joined Army To Escape Paying A $1.5 Million Judgement

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With the recent sad news of the terrible incident in Afghanistan where a solider is suspected of shooting 16 civilians, information has been slow to be released on the situation.  Reuters released an article this morning, revealing that the suspected shooter’s background before the military was in finance.  Apparently the shooter, Robert Bales, worked for a number of shady, interconnected brokerage houses for a number of years before leaving the industry to avoid paying a million and a half judgement against himself for defrauding an elderly client. From Reuters: “Bales joined the Army 18 months after an Ohio investor filed … Read more

What Would You Give Up For The Internet?

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The global management consulting firm Boston Consulting Group just came out with some interesting statistics on just how important the internet is to day-to-day life.  Just how important is having a connection to you?  The full report can be found here: bcg.perspectives – The Internet Economy in the G-20.  

Life Lessons From A Professional Trader: The Hardest Lesson Of All? Do Nothing..

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One of the hardest lessons a trader learns is to do nothing at all.  Being able to sit still, watch the screen and resist the temptation of firing off a trade is too much for some people.  The Internet, the amazing drop in commissions, and the pulsating and riveting graphics of online trading programs have made it almost impossible to resist trading on impulse or inspiration.  Is it really that unlike the casino  with computer monitors replacing slot machines?   Many people learn this lesson the hard way.  It’s only when their account values drops to levels that are painfully … Read more

Goldman Upgrades, LinkedIn Jumps

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LinkedIn shares shot up almost 8% today on good news from the Goldman camp.  Analysts decided to raise the price target $55 to $135 and up the rating from Hold to Buy.  While shares of LNKD broke the $100 dollar mark for the first time since the IPO on this news, many consider the price target to be rather excessive, despite the fact that nobody should listen to price targets anyway.  According to Goldman, there is a “high perceived value” of LinkedIn services among recruiters and is poised to benefit from the increase in mobile usage and advertising.  It’s hard … Read more

‘s Effect On Home Prices?

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Home sale numbers are still weak, but there is a silver lining to this cloud.  Shadow inventory (the number of foreclosed, bank owned homes not on the market) is finally showing some signs of stabilizing.  According to the most recent report from CoreLogic, shadow inventory in January is about the same (1.6 million homes) as it was in October of 2011.  This is a 200,000 unit decrease from a year ago. “Almost half of the shadow inventory is not yet in the foreclosure process,” said Mark Fleming, chief economist for CoreLogic. “Shadow inventory also remains concentrated in states impacted by sharp … Read more

Google Probed By Regulators Due To Privacy Issues

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Google just can’t seem to stay out of the spotlight in the arena of online privacy.  Ever since they decided to “simplify” their online agreement, (see here, and here, and here) they have been scrutinized from every angle possible.  Sure, the policies they had in place were convoluted and ineffective.  Sure, they needed to play catch up on the data mining front to compete with the likes of Facebook.  However, they managed to do so with the grace and precision of a hand grenade.  This time around, the FTC is investigating to determine if Google intentionally tried to set a … Read more

An ETF To Capitalize on Growth in Regional Banks

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Guest Post By: Benjamin Shepherd Thus far, 2012 has been a great year for the money center banks; shares of Goldman Sachs (NYSE: GS) and JPMorgan Chase (NYSE: JPM) have all gained more than 30 percent year to date. Solid balance sheets, growing profits and a strengthening domestic economy have underscored the fact that, thanks to aggressive intervention by government and banking authorities at the peak of the financial crisis, American banks are now the strongest in the world. According to the Federal Deposit Insurance Corporation’s (FDIC) most recent quarterly assessment of the banking industry, the sector posted its tenth … Read more

Buybacks And A Dividend The Answer For Apple

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Looks like Apple finally has a solution for the pile of cash they have amassed.  According to SFGate, shareholders should expect a dividend of $2.65 and a significant buyback of stock that would return another 10 billion or so on a quarterly basis.  Apple’s decision will be completed over the next three years.  In the wake of the new iPad 3 selling out almost immediately, the tech giant knows that they need to start moving all this cash off their balance sheets.  Especially considering how it seems the massive company has been sucking some of the life out of the … Read more

Obama’s evolution: Behind the failed ‘grand bargain’ on the debt – The Washington Post

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Obama’s evolution: Behind the failed ‘grand bargain’ on the debt View Photo Gallery —  In the summer of 2011, the White House was embroiled in a battle with Republican leaders over legislation to increase the debt ceiling and avert the country from defaulting. By Peter Wallsten, Lori Montgomery and Scott Wilson, Published: March 17 President Obama had just arrived home, walking across Lafayette Square after attending Sunday services with his family at St. John’s Church. In the West Wing, Obama ducked into the spacious office of his chief of staff, where he found his negotiating team huddled with two leading Republicans … Read more