Event Driven Is Most Sought After Hedge Fund Strategy (Monthly Industry Report)

Below you will find Credit Suisse's latest monthly report on the hedge fund industry. This report is a bit different than other documents we post here at Market Folly because it is more-so focused on the industry in general as it details sections on the investor's perspective, risk management, and various marketing strategies hedge funds are using. This report is unique in that it also has an operational look at things and should be useful for those in the alternative investment space.

An interesting fact: event-driven is now the most sought after hedge fund strategy by investors, displacing global macro. In terms of long/short funds, Credit Suisse found that for every $100 of equity, various l/s hedgies have long exposure of $125 and short exposure of $87. This falls in line with what we've seen previously regarding hedge fund exposure levels.

Embedded below is Credit Suisse's monthly hedge fund industry report:



You can directly download the .pdf here.

For more great research on the hedge fund industry, we highly recommend checking out Goldman Sachs' look at the top hedge fund long & short positions. Additionally, head to our post on how hedgies have their shortest position ever against the euro.

The Next Financial Mania - BCA Research Special Report

Embedded below is an interesting special report from BCA Research. This particular global investment strategy piece is authored by Francis Scotland who is currently Director of Global Macro Research at Brandywine Global Investment Management LLC, a boutique multi-product investment fund. Before Brandywine, Francis founded the publication you'll find below and was its editor from 1996 to 2005 where he provided investment ideas and strategy recommendations.

This 'Next Financial Mania' special report focuses on bubbles and tries to carve out possible candidates for the next bull market. After all, we've seen historically that new bulls arise from the bear market ashes. Francis goes on to depict that there have been various bubbles throughout certain decades such as gold in the 1970's, Japan in the 1980's, the Nasdaq in the 1990's and most recently, crude oil. (Make sure you check out the recent technical analysis video on crude oil we posted up a few days back). Focusing on what possibly could be the next bull market, Francis identifies a few candidates. Firstly, he starts with ideas that are not necessarily the best candidates as he singles out the 'Electrification Of Transport,' 'Gold and Inflation,' and 'Energy and Commodities'. However, he disregards them for the time for a tentative conclusion of possible bull markets in emerging market equities and real estate. This piece is macro thinking and research at its finest as speculators attempt to identify and profit from the next major shift in the world and subsequent markets. We highly enjoy reading macro research and have often posted up the thoughts of hedge fund Clarium Capital, including their most recent research commentary, 'Save Now, Invest Later.' This is the first time we've posted up anything from BCA Research, so hopefully you enjoy the document embedded below:

*Update, the report was removed per request of representatives from BCA Research

However, persistent readers can attempt to download the .pdf here or potentially find a copy of it on Scribd. While there is some prudent research included within the report, the idea of emerging market equities as the next bull market is by no means a new theme. However, Francis builds up his rationale nicely so it's an interesting read. Overall, it's intriguing to speculate what trends will arise from this bear market's remains when it is all said and done. While Francis has focused on future trends, we also posted up a report for those of you who might be interested in current trend and strategies. Head to our post on Goldman Sachs' current long & short strategies to check those out.

Hedge Fund D.E. Shaw & Co's Market Insight: The Basis Monster That Ate Wall Street

In continuing with our coverage of hedge fund D.E. Shaw's Market Insights, we want to bring you another installment, this time focusing on 'The Basis Monster That Ate Wall Street.' Over the past few days, we've also covered D.E. Shaw's look at tracking asset class returns through the crisis, as well as their piece that focused on common trading mistakes and the consequences that follow.

This time they focus on the 'basis' between cash financial instruments and their derivative based equivalents. They note that this "cash-synthetic" basis has shifted drastically which has created both opportunity and risk. In the piece, they examine the various risks as well as how this basis can lead to distorted perceptions of the market.

Download this edition of D.E. Shaw's Market Insights here (.pdf).

Hedge Fund D.E. Shaw's Market Insight: Tracking Asset Class Returns Through the Crisis

In keeping with our theme of interesting hedge fund reports, here's an excellent 15 page report from hedge fund D.E. Shaw & Co entitled "Is It Better Yet? Charting the Course of Various Asset Classes Through a Global Financial Crisis." Just yesterday, we also posted up a theoretical and applicational piece from D.E. Shaw that focused on common trading mistakes and the consequences associated with them.

This time around, we're posting up a piece specific to this financial crisis as the 15 page document examines how various asset classes have performed in these hectic times. While the report was released back in July, it is obviously still timely given that we're not out of the woods yet. You can download D.E. Shaw's Market Insights here (.pdf).

Salida Capital Special Report: Chinese Metal Demand Poised To Correct?

Thanks to a reader in Toronto for the latest from hedge fund Salida Capital. This special report looks at Chinese metal demand going forward and their findings are interesting. RSS & Email readers will need to come to the blog to view the embedded document. Alternatively, you can try to download the .pdf here, assuming the link still works.

Enjoy the report:

Special Report - 2009-08-21 - China's Metal Demand