” Investors don’t seem at all daunted that Bank of America plans to do away with overdraft fees on debit card purchases. That’s probably because this has been the direction things have been going for a long time. The Journal reports that last year, Bank of America said it would abandon a plan to raise overdraft fees and offered other concessions, like lower daily limits on fees and assistance for unemployed customers, costing the bank an estimated $200 million per quarter.”
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“Hedge funds that trade currencies are taking hits from politicians casting them as speculators out to sink the euro and push Greece into insolvency. They are also losing money.”
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Yield spreads on agency mortgage-backed securities (MBS) narrowed to historic tights in recent months as prepay speeds increase at Fannie Mae and Freddie Mac.

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“. Although the 2010 peak in the Alt-A / Option-ARM reset schedule doesn’t occur until July, with a much larger peak in mid-2011, a small initial round of resets is already in progress, having started about November of last year. I would expect that if we are indeed at risk of a second wave of mortgage defaults and credit strains, it will show up first as a surprising jump in 30-day mortgage delinquencies in the data we see over the next 2-4 months. I do not expect quarters upon quarters of uncertainty. It may take longer to observe the full effect of continued mortgage delinquencies and foreclosures, but we are at about the point where the data would depart from the market’s “all clear” expectations if credit pressures are likely to resume with force.”
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The concept of entropy is one of the most useful terms for understanding just about everything. While it has its origins in natural law – thermodynamics, specifically – the concept holds true pretty much across all closed systems.

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“Like it or not, Fannie and Freddie alone are carrying out the secondary mortgage market policies that the Treasury wants performed and which the nation demands. The fact is, without Fannie and Freddie, the US would have no “conventional” secondary mortgage market where non-government guaranteed mortgage loans are securitized and sold throughout the world.”
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“- American International Group Inc.bondholders reaped at least $3.2 billion after the bailed-out company announced deals to sell its two largest non-U.S. life insurance divisions for $51 billion.”
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“Regrettably, once again US corporations, the Wall Street banks, are busy alienating the world against America’s interests through their unethical and shockingly predatory business practices. It will be interesting if Asia and South America pick up this theme of banning the Wall Street banks on ethical considerations from doing certain types of business in their regions.”
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Hedge Funds Favorite Currency

Survey Shows Dollar is Favorite Currency of Hedge Funds

A recent survey finds that the dollar is the favorite currency of hedge fund managers while sterling is the least favored currency.  57% of participating traders and hedge fund managers claimed the dollar as their favored currency bet, with the Brazilian real and Australian dollar trailing far behind in second place. One explanation for why funds prefer the dollar is that it is seen as a safe currency during economic turmoil and some managers are concerned that the economy may take a second dip.

Sterling enjoys the support of just 3% of respondents, according to the study, which was conducted in February.

Respondents to the monthly survey hold an average of $113 million in assets under management.

Managers who are bullish on the dollar do not generally believe that interest rates are set to rise significantly, the survey found. Instead, their preference for the U.S. currency could be based on its tendency to climb in times of economic stress.

“Managers who expect the global economy to double dip are likely to be bearish on rates and bullish on the U.S. dollar because of its safe-haven status,” the report said.

Two-thirds of fund managers expect the Greek debt crisis to spread to other euro-zone countries. Some 15% think that this will lead to the eventual breakup of the euro.  Source

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Tags: Hedge Funds Favorite Currency, hedge funds most preferred currency, hedge funds currency trading, hedge fund managers survey, hedge funds currencies, hedge funds bets

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Multi-Strategy Funds in February

Multi-Strategy Hedge Funds Beat Market in February

The S&P Stock Index outperformed hedge funds last month, posting a 3% return compared to hedge funds’ gaining less than 1%.  Those hedge funds that beat the market were typically multi-strategy.  It seems that funds with a very narrow focus have tended to struggle in the first two months of 2010 while many multi-strategy funds have continued last year’s exceptional performance.

Daniel Loeb’s Third Point Offshore fund was up 3.2% for February and 6.9% for the year through February, according to HSBC Private Bank; the fund is multi-strategy. And Brett Barakett’s multi-strategy Tremblant Partners fund–which gained almost 30% in 2009–was up 4.6% net of fees for the year through March 5, thanks to a very strong February, according to a letter sent to investors last week. A multi-strategy fund run by BlueCrest Capital Management LLP’s Michael Platt was up 1.1% during February, and is now up 4.5% for the year, according to HSBC. BlueCrest’s fund invests in many different instruments, including fixed income, while Tremblant and Third Point both invest primarily in global equities.

If there’s a general theme emerging for hedge funds in 2010, it’s that multi-strategy funds like Loeb’s and Barakett’s rode their diversity to gains, while funds with more narrow focuses, like energy or emerging markets, have, along with the markets they invest in, struggled.  Source

Related to: Multi-Strategy Performance February 2010

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Tags: Multi Strategy Performance February 2010, Multi Strategy Hedge Funds, Multi Strategy Funds, hedge funds using multi strategy, 2010 hedge fund strategies, hedge fund strategies 2010

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