Cover Story
By Salvatore Russo, Christopher Burrows, Filip Malaric
Investing in private partnership structures such as hedge funds, private equity and private real estate can be a fruitful and exciting endeavor, especially when venturing into asset classes that lack competition and efficiency. An important qualification to remember when beginning due diligence on a partnership is that no investment is perfect. Each one has its own risks, however esoteric or idiosyncratic, and risks change over time, as do the operations and other intricacies of investment management.
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Cover Story
By Amy Bensted
The past year could be characterized as a year in which the unexpected happened, with perhaps the Brexit result and Donald Trump’s triumph in the U.S. presidential election the pinnacle of a series of unpredicted events. As markets struggled to respond to these surprising outcomes, volatility increased and hedge funds, following two years of returns below 5%, were able to capture some upside, adding 7.4% during the course of 2016.
By Garrett Baldwin
Malachite Capital’s niche strategy fueled a 22.3% return in 2016. Co-founder Weinig explains why niche strategies are attracting capital over long-short and macro-driven funds.
By Steven Lord
Wall Street research has always been a bit of an enigma to many financial industry participants. On the one hand, anything produced by a sell-side firm is ultimately conflicted by the very business of the firm publishing it.
By Garrett Baldwin
In March, Modern Trader profiled a number of financial technology firms that are making it easier for investors to obtain information and make actionable trades. In April, we profile AlphaSense, a unique search engine that can make the lives of hedge fund analysts and portfolio managers much easier.
By Garrett Baldwin
Investors looking for alternative alpha have found a unique source for the road ahead. It’s called Priomha Group, an Australian gambling hedge fund that has shown remarkable results during the last seven years.
By Denise Shull
For years traders thought the key to success was eliminating emotion from trading; that is as simple as eliminating oxygen. Traders can’t separate out emotions, they need to harness them.
Sell
By Joseph Parnes
Core Laboratories N.V. is a provider of reservoir descriptions, production improvements and reservoir management services within the petroleum sector in the United States, Canada and internationally.
Buy
By Daniel Shaffer
Natural gas prices declined from a peak in February 2014 to a low in March 2016. What’s interesting is that the commercials (hedgers) were increasing their net-long position in the same period, anticipating a rally that didn’t occur. The commercial net-long position peaked in June 2015, which put more pressure on prices as positions were liquidated into the March 2016 low.
Trend Following
By Daniel P. Collins
OPEC’s bid to regain market share by starting a price war didn’t work so well. Will a disciplined production cut work?
Trading Techniques
By James Cordier
Weak fundamentals in crude oil coupled with solid overhead resistance makes for a solid options play in crude.
By Bramesh Bhandari
A simple leading technical oscillator found on nearly all charting software packages can be a key to providing confirmation
trading signals.
Technique
By Jeff Greenblatt
Gann methodology is like an onion that needs to be peeled. The more you study, the more you learn.
By Paul D. Cretien
Finding a market’s shadow provides a great opportunity to create profitable spread trades.
After the Bell
By Liam Durbin
This algorithm earned me an "A" in this class. And it worked so well, that I put it online to see if people would pay for the computer-picked horses. At the time the dot.com explosion was reaching its peak, so it certainly seemed feasible. A small business was born.
By Futures Staff
Evanston-Ill.-based Mettle Sports seeks to change the face of soccer in the United States with its “2,000 pitches U.S.” campaign to place at least 2,000 street soccer pitches across the United States in the next three years.
Forex Trader
By Ashraf Laidi
In September 2015, this column argued that Federal Reserve hikes are largely negative for the U.S. dollar once a tightening regime begins. Let’s look at how the U.S. dollar responded to each of the last three Fed tightening cycles (1994-1995, 1999-2000 and 2004-2006) as well as the existing one. One common theme was found.
Patterns
By Suri Duddella
While consolidating markets don’t offer obvious trends, the price balance between bulls and bears leads to the bounded range in which price levels of support and resistance are formed in parallel to each other. This bounded range results in a rectangular channel pattern (or box pattern).
Futures
By Daniel P. Collins
The FTSE Russell Index family and its crown jewel, the Russell 2000 Index, are the best-traveled indexes in the world. The Russell 2000 is a mid-cap benchmark equity index. It is arguably the last Home Run standalone product launched by the Chicago Mercantile Exchange and it is coming home, as CME Group and Russell announced in April that the 2000 will once again be traded exclusively on Globex as of July 10.
Options
By Dan Keegan
The recent bombing of a Syrian air facility by the United States sent a little jolt into the crude oil market. While Syria is not a big oil producer, it is in the same neighborhood of the largest concentration of oil production in the world. At the onset of the Gulf War in the summer of 1990 the WTI January futures contract rose from $18.40 (July 9) to $38.10
Industries
By John Blank
Semiconductors as a sector are as good as gold; perhaps better than gold. These tech stocks should be your focus if you want to invest in long-term growth potential.
COT
By Andy Waldock
Typically, the net and total positions of both groups grow as a directional move develops until the speculative space becomes overpopulated and the commercial traders’ value-based outlook on their market is proven correct. This process has been ongoing in March, as 26 out of the 39 markets that we follow have moved into periods of contracting position sizes among the speculative and commercial trading population.
ETFs
By Matt Litchfield
Coal’s fall from grace is a well-known story and has had a predictable impact on the one-and-only coal ETF (a telling fact on its own); from its peak in April of 2011 to the inevitable trough in January of 2016.
Spin-Offs
By Joe Cornell
The spin-off investment strategy has beaten the S&P by an average of 10% per year over the last decade. Timely tips from our spin doctor...
Earnings
By Christine Short
A perfect storm of macroeconomic events during the last three years resulted in increased volatility in the energy sector. What began as a seemingly insignificant downturn in the summer of 2014 turned into the cratering of the energy markets by the summer of 2015, particularly crude oil.
Fed Funds
By Steve Beckner
After making just three modest interest rate hikes since abandoning a seven-year stay near zero, the Federal Reserve can scarcely be accused of having a tight credit stance. As the rate-setting Federal Open Market Committee reiterated when it took the federal funds rate up 25 basis points in mid-March, “monetary policy remains accommodative.”
Paper Trade
By Art Collins
You have seen “too good to be true” system performance claims, which usually turn out to be just that, even with supporting data. Here is how data can be massaged.
Cycles
By John Rawlins
The Cycle Projection Oscillator is a technical tool that uses complex algorithms to filter multiple cycles from historical data, combines them and gives a graphical representation of their predictive behavior. The CPO methodology employs proprietary statistical techniques to obtain cyclical information from price data. Other proprietary frequency domain techniques then are employed to obtain the cycles embedded in the price.
Tracking Stock
By Staff Writer
In our December 2016 issue, we told the story of how fintech firm Estimize has attempted to replicate a successful market model, where hedge funds got sell-side analysts to rank stocks within a sector to produce more accurate forecasts.
Bar Charts
By Hillary Choo
Just in time for the Kentucky Derby, the Mint Julep is a cocktail worth betting on, especially as we lead into the spring and summer seasons. A cocktail said to have been born in the South at least 200 years ago, the combination of classic American whiskey, bright mint syrup, crushed ice and served in a glass fit for the job, is also a drink that’s easy to make at home, and very rewarding once finished.
Record High
By J Burr Vannatta
Two models could changes things for musicians and benefits investors willing to take on risk. Launching a band and touring is like launching a start-up. There is a need for up-front capital to cover front-loaded costs like writing and recording music, travel, equipment and supporting a crew
Closing Tick
By Ron S. Geffner and Richard L. Shamos
On Dec. 19, 2016, after years of mounting stress due to investor redemptions, key staff of Platinum Partners were arrested and its funds were placed into liquidation. Prior to this, many believed Platinum Partners had about $1.7 billion in assets under management and a stellar track record; this is now unclear.
Trading Calendar
By Daniel P. Collins
When it comes to seasonal tendencies June is not a sexy month. There are scores of articles, White Papers and cyclical research on the January effect, sell in May theories, December window dressing and the odd habit of market crashes in October, but June is left out.
