Main News

 

Crude hit a record of $89.47 and may be contributing to the weak dollar. Contrarians are starting to declare a bubble.
http://online.wsj.com/article/0,,heard_on_the_street,00.html?mod=djemheard

 

Hedge fund disclosure may not solve the market's problems
Thu, 18 Oct 2007, 06:28
International Herald Tribune/Bloomberg
Transparency is the aspirin of the political and regulatory worlds. Whatever the problem, one small dose of disclosure will often fix it. The latest patient? Hedge funds, those lightly regulated private pools of capital whose power and influence have ballooned in financial markets over the past few years. Amid a clamor for more rules governing the funds, if regulators and trade groups in Britain get their way, we may soon find out more about how the funds work. We will know their strategies and the companies they are investing in. But is that fair or wise? A certain amount of secrecy may well be what made hedge funds so successful. If you get rid of that, you will either drive the whole industry offshore or kill it.

 

Cheyne Finance SIV won't pay debt as it falls due
Wed, 17 Oct 2007, 19:10
Bloomberg
Cheyne Finance Plc, the structured investment vehicle managed by hedge fund Cheyne Capital Management Ltd., will stop paying its debts, a receiver from Deloitte & Touche LLP said. Deloitte is negotiating a refinancing of the SIV or a sale of its assets, according to an e-mailed statement today. Cheyne Finance's debt with different maturities will now be pooled together, rather than shorter term debt being repaid sooner, Neville Kahn, a receiver from Deloitte said today in a telephone interview.

 

UP AND DOWN WALL STREET DAILY  By RANDALL W. FORSYTH
Foreign Investors Flee Crumbling U.S. Credit Market
As the subprime market melted down in August, foreigners yanked billions out of the U.S. No wonder a superfund cleanup is needed.
http://online.barrons.com/article/SB119257144070861091.html?mod=djemBF

 

Hedge Funds Can't Reveal Secrets and Do Business: Matthew Lynn
Source: Bloomberg
Transparency is the aspirin of the political and regulatory worlds: Whatever the problem, one small dose of disclosure will often fix it. More... <http://www.hedgefund-index.com/newstoday.asp>

 

The Subprime Blame Game: Where Were the Realtors?
It is a scene millions of Americans have been in -- sitting next to a real estate agent at closing to sign the papers for a new home. Often, the buyer has spent months with the agent. And to hear agents tell it, they are indispensable guides through the hazardous home-buying terrain. How is it, then, that millions of borrowers took on toxic subprime mortgages that could cost them their homes? Why did their agents not warn them off? While much criticism has been leveled at subprime lenders and mortgage brokers, some experts say that real estate agents have managed to escape their share of blame for the subprime mess.
http://knowledge.wharton.upenn.edu/article/1824.cfm

 

US subprime mortgage crisis impact on Hong Kong 'insignificant' - Chan
Forbes - NY,USA
HONG KONG (XFN-ASIA) - The US subprime mortgage market crisis in the US has not had any systemic implications for Hong Kong's financial sector and its ...
See all stories on this topic

 

UP AND DOWN WALL STREET DAILY  By RANDALL W. FORSYTH
New Credit Storm Clouds Form
The first credit storm passed, but market barometers detect new hurricanes forming,
http://online.barrons.com/article/SB119265492134962430.html?mod=djemBF

 

INVESTORS' SOAPBOX AM
Housing Starts Data Should Get Worse
A big inventory overhang and tighter mortgage lending practices spell further trouble, says Calyon Securities.
http://online.barrons.com/article/SB119265479798962446.html?mod=djemBF____________________________________

 

TD Asset Management Inc. announces 1-year portable alpha returns
Trading Markets (press release) - Los Angeles,CA,USA
... Inc. ("TDAM") and Diversified Global Asset Management ("DGAM") are pleased to announce returns of the following turnkey portable alpha solutions, ...
See all stories on this topic

 

Citigroup sees P-note measures deterrent to new hedge fund flows
The Hindu Thu, 18 Oct 2007 12:32 PM PDT
Mumbai, Oct. 18 The Securities Exchange Board of India’s (SEBI) measures on participatory notes could have a negative impact on incremental foreign flows into Indian equities in the next three to six months, said Citigroup Global Markets in a report released on Thursday.

 

Hedge Funds' Love Puts India in a Tight Corner: Andy Mukherjee
Source: Bloomberg
Investors got a rude shock yesterday. It seemed like India, the second-best-performing equity market in the past month after Chinese stocks in Hong Kong, was spurning their love. More... <http://www.hedgefund-index.com/newstoday.asp>

 

Hedge Funds and Managed Futures As Asset Classes
by Franklin R. Edwards & Jimmy Liew
This study examines the performance of hedge funds and managed futures as alternative asset classes from 1982 through 1996. It concludes that an investment in a portfolio of either hedge funds or managed futures makes both an attractive stand-alone investment and a performance-enhancing portfolio asset. Including these investments in diversified stock and bond portfolios typically increases the Sharpe ratios of those portfolios by 22.7 to 45.4 percent. Hedge funds and managed futures are complementary asset classes: both enhance portfolio performance but for different reasons. In addition, as asset classes, managed futures and hedge funds have earned positive risk-adjusted returns. Finally, an analysis of performance persistence suggests that some hedge fund managers possess superior skill. More... <http://www.hedgefund-index.com/s_mfutures.asp>

 

The anatomy of a crash: What the market upheavals of 1987 say about today -- [at FT.com]
By John Authers FT.com
10/18/2007 1:30:22 PM

 

 

Hedge fund clones: key issues in distinguishing between them While the ability to replicate hedge funds is still being widely debated, the last few months have seen one hedge fund clone launch after another. Partners Group, which is considered the pioneer in this area, launched its Alternative Beta Strategies at the end of 2004. Partners were followed by Rydex Investments and AlphaSwiss in 2005, and Merrill Lynch and Goldman Sachs in 2006. In September 2007, more than 20 hedge fund replicators were on the market. More...

 

130/30 funds: What is behind the commercial offensive? High-conviction funds, beta-one funds, short extension funds, limited-shorting funds, long-enhanced funds, active extension funds, hedge-fund lite: there is a wide range of terms for what is most frequently called 130/30. This paper examines some crucial points related to these funds: their theoretical foundation, the optimal level of shorting, the distinction between the quantitative and fundamental approaches, whether these funds are natural extensions of long-only funds, and finally the risk of neglecting their risk. More...

 

The unit's quarterly earnings fell by $1. 33 billion, or 93%, and revenue fell 44% from a year ago as sales and trading-revenue declined. 
... READ FULL STORY >>>

 

Those who ignore history are condemned to repeat it but those who rely on history are condemned to blow up. Similarly those who believe in the ability of conventional economics or mathematics to model the emotional, non-random and illogical processes underlying financial markets are headed for problems. Also inadequate penalties for excessive risk taking often lead to bigger trouble later. Even if stock markets round the world continue to rally investors would be well advised to have lots of shorts, own plenty of puts and a substantial weighting in other truly UNCORRELATED sources of return. It's called hedging or managing your risk.

_____________________________________

Yield Curve Corner

 

US Stocks Drop on Bernanke Comments; Banks, DR Horton Fall
Bloomberg - USA
Inc. Bernanke said in a speech last night in New York that it's too early to gauge how much the housing downturn will affect spending by consumers and ...
See all stories on this topic

_________________________________________________________________________

Natural Disaster Corner

 

Climate Prediction  http://www.nws.noaa.gov/predictions.php

World Meterological Organization http://severe.worldweather.org/

Tornadoes: http://www.disastercenter.com/tornado.htm

Great Sat Pictures of events: http://www.osei.noaa.gov/Events/Current/FSHSaustralia291_MO.jpg

 

_________________________________________________________________________

Iranian Situation

 

 

 

Olmert to Discuss Iran With Putin
Time Magazine Thu, 18 Oct 2007 6:17 AM PDT
Israeli Prime Minister Ehud Olmert flew to Moscow on Thursday in a surprise visit to discuss Iran's nuclear program with Russian President Vladimir Putin, who just returned from talks with Iranian leaders in Tehran

 

Iran hangs 9 convicted of murder
AP via Yahoo! News Thu, 18 Oct 2007 4:56 AM PDT
Iran hanged eight men and one woman on murder charges, an official newspaper reported Thursday.

 

Afghan arms shipment came from Iran: NATO general
Reuters via Yahoo! News Thu, 18 Oct 2007 4:00 AM PDT
A shipment of hi-tech roadside bombs intercepted in Afghanistan originated in Iran, the commander of NATO-led troops said on Thursday, adding it was hard to believe Tehran's military did not know about the arms.

 

India's stockmarket briefly tumbled after regulators proposed restricting capital inflows from derivatives sold offshore, which would affect a sizeable chunk of foreign portfolio investment. The government blames a surge of cash from abroad for driving up the rupee. See article

 

New York Times: Iraq has agreed to award $1.1 billion in contracts to Iranian and Chinese companies to build a pair of enormous power plants, the Iraqi electricity minister said. Word of the project prompted serious concerns among American military officials, who fear that Iranian commercial investments can mask military activities at a time of heightened tension with Iran.

 

_________________________________________________________________________

Opalesque’s Corner

 

- No Alpha-No pay: New CALPERS proposal could shake up industry
- New Launches: Former AbCap managers set up Bridge Asset Management, Barings launched emerging markets long/short equity hedge fund, Barings launched emerging markets long/short equity hedge fund, Da Vinci is preparing healthcare hedge fund, looking for seeders, Former Moore Capital trader to launch hedge fund in London, Emeralt Investments launches new Emerging Europe hedge fund, Dreyfus to launch 1030/30 fund
- Lyxor AM launches new emerging market ETFs including first UK-listed Russian ETF
- BlackRock profits jump fourfold despite credit squeeze
- Absolute Capital calls on investors to vote on restructuring
- Comment: Why transparency may not solve the market`s problems
- Cheyne Finance SIV may not be able to pay its debts, Cheyne Finance has become the first SIV to stop repaying its short-term debt, PayPal Money Market Fund has subprime exposure
- SIVs fueled debt boom, Treasuries rise for third day on speculation over housing slump, IAFE NYC event: Perspectives on the current financial crises - Will this keep happening?, Subprime superfund: fears are misplaced, Survey shows healthy correction in commercial real estate market
- S&P: Sub-prime ratings downgrades continue,  S&P`s ratings services report: Despite pressure, the U.S. dollar is still the predominant international currency, IMF says dollar `overvalued`, Moody`s report: Emea conduits have $40bn of exposure to US sub-prime, Lawyers argue investors cannot sue rating agencies
- September performance update of the EDHEC Alternative Indexes
- Dow Jones indexes launches Global Select Dividend Index, JPMorgan`s new stock index that applies strategy typically used by hedge funds
- California wants to register HF managers,  NY State governor plans no HF tax hikes, wants to demonstrate competitiveness, Democrats prepare plan to collect HF manager taxes, New CFTC commissioners on the virtues of the principles-based regulatory approach
- Hedge-fund rockers to play for A Leg To Stand On tonight
- People: New global head of sales and marketing at HSBC, Deutsche AM appoints climate change strategist
- Legal News: Refco Trusts file lawsuit against former Refco insiders seeking recovery of more than $400m, Jail Eustace, PAAM receiver demands, More Eustace cunning stunts, Former CFO of Ohio BWC admitted to accepting bribe to support risky HF, Update: Salander Gallery accused of defrauding,  Tobias aide says hedge fund manager was murdered
- Buyer revolt against escalating prices in London may be a guide for NYC`s November sales
- Northern Rock: the evidence so far and next steps
- Germany plans to tighten rules on concert parties
- Norwegian hedge fund manager loses 200 million NOK on ill-fated Norske Skog bet
- Investors panic as India proposes new legislation, trading temporarily suspended, Opalesque Exclusive: Proposed changes - likely to become law on 25th October 2007, Bull run is brought to the ground, Hedge funds` love puts India in a tight corner
- Beijing regulators may allow arbitrage between shares traded on the mainland and in HK, Update: China Citic Bank denies reported plan to buy stake in Bear Stearns
- Tokyo Hedge Fund Symposium
- Tech Update: New FinAnalytica CognityFoF release expands tail risk management and relative performance measures for multi-manager portfolios
- Activist News: Carrousel brings brand of aggressive shareholder activism to Australia, Millbrook plans proxy contest for seats on Brink`s board
- News Briefs: Watson Wyatt tops UK investment consultant league table, Eastern Europe to reap its own subprime crisis, Inflation could hit Gulf growth, Libya starts to deploy $40bn sovereign wealth fund, ICBC eyes Middle East expansion
- ...And finally: NYC woman finds python in the toilet
- Logon: http://www.opalesque.com/main.php?act=archive

_________________________________________________________________________

Misc. Items of Interest

 

The Sarkozys' Puzzling Loss of L'Amour
BY NICHOLAS WAPSHOTT - Staff Reporter of the Sun
If the talk around Paris is correct, today President Sarkozy will announce he is separating from his wife, Cecilia. And if not today, then sometime soon. Certainly few expect the couple to celebrate their 11th wedding anniversary next Thursday....

_____________________________________________________________________

Funnies, Facts, Quotes, etc….

 

abscond b-SKOND, intransitive verb:

To depart secretly; to steal away and hide oneself -- used especially of persons who withdraw to avoid arrest or prosecution.

 

s1931:  American inventor Thomas Alva Edison died in West Orange, New Jersey.

1922:  The British Broadcasting Company, Ltd., was established, to be replaced by the British Broadcasting Corporation (BBC) in 1927.

1898:  Puerto Rico was turned over to the United States following the Spanish-American War.

1854:  The Ostend Manifesto was declared, by which three U.S. diplomats communicating to Secretary of State William L. Marcy advocated U.S. seizure of Cuba from Spain.

1469:  Isabella I, queen of Castile, married Ferdinand II, king of Aragon.

 

_________________________________________________________________________

Conference, Courses, Books, Papers

 

Great Research Sites:

 

Merrill Lynch research Link to full report including important disclosures see example

 

John Mauldin’s Weekly Analysis

 

James Altucher’s Website:

 

Other useful sites:

 

_________________________________________________________________________

Index Corner

 

The CSFB/Tremont Hedge Fund Index www.hedgeindex.com.

The Cogent Dynamic Averages http://www.cogenthedge.com/home/inv_strategy.asphttp://www.cogenthedge.com/home/inv_strategy.asp

The Dow Jones Indices: http://www.djhedgefundindexes.com/index.cfm?event=viewPremiumContent (free registration)

HFRX Indices https://www.hedgefundresearch.com/hfrx_reg/index.php?fuse=login&1170880431

_________________________________________________________________________

Regulatory Info

 

 

_________________________________________________________________________

Disclaimer

 

The information contained in this document does not constitute an offer or solicitation to sell any security or other type of vehicles to or by anyone in any jurisdictions, nor should it be regarded as a contractual document. Under no circumstances should the information provided on this document be considered as financial advice, or as a sufficient basis on which to make investment decisions. The information contained herein has been gathered by Investor DNA, LLC from sources deemed reliable as of the date of publication, but no warranty of accuracy or completeness is given. Investor DNA, LLC is not responsible for and provides no guarantee with respect to any of the information provided herein or through the use of any hypertext link. Past results are no indication of future performance. All information in this newsletter is for educational and informational purposes and does not constitute investment, legal, tax or accounting advice. All materials are the property of the respective publishers, as referenced by header and appropriate hypertext links.