This website uses cookies to ensure you have the best experience. Learn more

Hedge Funds Essay

809 words - 4 pages

Title: A Hedge Fund manager’s New Groove
Date: November 2, 2010
Section: Money and Investing methodology
According to the Wall Street’s journal article, a former manager of hedge funds has made a lot of money by switching to the high long term decision from his shorting stock. William Von Mueffling made a surprising announcement by saying that he would close his hedge funds and return about $3.5 billion to investors. Williams Muefflling’s firm contillion capital management of New York only managed an unattractive piece of business of business worth $1 billion in long only assets for a very long period of time. Due to his fortune he currently manages more money than he did while he was ...view middle of the document...

Mr. Von Muffling’s firm last less money compared to other hedge funds firms. However, his clients decided to withdraw their funds in anticipation for a larger hedge funds bubble. He explains that this withdrawal was a result of the fact that hedge funds face a harsh reality when loses continue to linger. These losses cannot be recovered easily which means that the firm will not be able to earn big fees. Some of the reasons why hedge funds that specialize in short term selling have the worst performance is because of the macroeconomic reasons such as the low interest rates that continue to affect the prices of stocks. Mr. Contillion’s strategy includes searching for companies that have an above average returns on its equity for shareholders with relatively cheap prices. The companies are able to survive inflation and also have exposure to currencies in various parts of the world. Some of the stock that Contillion capital management holds includes Intertek Group PLC which manufactures a wide variety of products, Colgate Palmoure Company and the Heineken Brewery Company.
In trying to run a business, the financial manager faces three basic decisions which include what productive assets a firm should buy, how the firm should finance the productive assets purchased and how the firm should manage its day to...

Other Papers Like Hedge Funds

Testbank of Foundations of Financial Markets and Institutions, 4e (Fabozzi/Modigliani/Jones)

5107 words - 21 pages : 2.12 the general characteristics of asset management firms 4) Which of the below is NOT one of the types of funds managed by asset management firms? A) Deregulated investment companies B) Insurance company funds C) Separately managed accounts for individuals and institutional investors D) Pension and hedge funds. Answer: A Comment: Types of funds managed by asset management firms include: regulated investment companies; insurance

Student Essay

3933 words - 16 pages A hedge is an investment position intended to offset potential losses/gains that may be incurred by a companion investment. In simple language, a hedge is used to reduce any substantial losses/gains suffered by an individual or an organization. A hedge can be constructed from many types of financial instruments, including stocks, exchange-traded funds, insurance, forward contracts,swaps, options, many types of over-the-counter and derivative


2672 words - 11 pages 10 Business Snapshot 1.1 Hedge Funds CHAPTER 1 Hedge funds have become major users of derivatives for hedging, speculation, and arbitrage. A hedge fund is similar to a mutual fund in that it invests funds on behalf of clients. However, unlike mutual funds hedge funds are not required to register under U.S. federal securities law. This is because they accept funds only from ®nancially sophisticated individuals and do not publicly o€er their

Managing Assets

2310 words - 10 pages issues currently affecting the industry: • Consolidation • Institutionalization of Hedge Funds • Pension and asset pooling • Regulation • SAS 70 Hedge funds: navigating new complexities Senior executives from 100 of the top global hedge funds offer their thoughts on hedge fund maturity, operational risk, regulation, fees, service providers, and people. Read their views and our analysis of the issues facing managers and

Hedging Dozier Industries

1191 words - 5 pages the contract at the current exchange rate, £1,057,500 x 1.4370 $/£ = $1,519,627.50 Dozier would accepting a reduction in the revenue from the contract of $1,519,627.50 - $1,493,995.23 = $25,632.27 or $25,632.27 / $1,519,627.50 = 1.69% That is a bigger reduction in the value of the contract than the forward market hedge. So if that is Dozier's use of funds, the company would be better off using the forward market. On the other hand

Arbon Sale

5159 words - 21 pages brokerage documentation, for a hedge fund manager to be Shariah compliant and to borrow shares of stock from a prime broker and then sell those shares into the market. It is for this reason that hedge funds are widely understood to be non-compliant with Shariah norms. It is for this reason too that it is widely believed that hedge funds will never become Shariah compliant. It is perhaps this mistaken belief that has led some product providers to

Aifs Case

1329 words - 6 pages a foreign currency, mainly in the Euro (EUR) and the British Pound (GBP). AIFS’s currency is exposed to changes in the foreign exchange rate, therefore their gain or loss is determined by the appreciation or depreciation of the American dollar in the foreign market. In order for AIFS to protect its assets they need to hedge their currency in forward contracts and options to reduce currency exposure risks. There are three types of currency risks


1223 words - 5 pages $1,111,111 × 3.02 = NZ$3,355,556 × $.30 = $1,006,667] Question 3 If the firm uses a forward hedge, it will receive 400,000($1.50) = $600,000 in 180 days. If the firm uses a money market hedge, it will borrow (400,000/$1.09) = 366,972 pounds, to be converted to U.S. dollars and invested in the U.S. The 400,000 pounds received in 180 days will pay off this loan. The 366,972 pounds borrowed convert to about $543,119 (computed as 366,972 × $1.48

Institutional Costs

560 words - 3 pages Trading costs for financial institutions are very high. Sometimes, a portfolio of well selected securities that would otherwise produce high returns, in fact ends up with subpar performance because the execution and implementation of their trading strategies is way too expensive. A great deal of research exists on the performance of hedge funds, mutual funds, pensions and the like, however, the performance of trading desks, a key financial

Mitigating Exchange Rate Risk

559 words - 3 pages involved in finance. Ponzi scheme The unethical research behavior was involved was the hedge funds scheme were he would have to sell or liquidate holding from one hedge funds to keep down pressure on the stock prices. When doing this it will keep the negative pressure off the stock exchange. Berine had celebrity connections from Kyra Sedwick, Kevin Bacon, Tom hanks, and many more people that invested in the hedge funds at first they were

Aifs Case Analysis

743 words - 3 pages regardless of how the exchange rates arep fluctuating, AIFS could not transfer rate changes into an increase in their price. Since AIFS does their banking with 6 different institutions, and maintains good, close relationships with each, AIFS is able to hedge with their lines of credit for each bank, rather than depositing funds in these banks to complete the transactions. This saves AIFS in transaction costs and the number of transactions since the

Related Essays

Hedge Funds Essay

2971 words - 12 pages Hedge Funds: A liability for the economy? Sander van Bentum 362107 Max Wielitsch 385533 Dhr. B. Tims 17-10-2013 Table of Contents Introduction 3 Risks for the investors 4 The creation of risks to financial institutions 5 The excess volatility risk 6 Transparency 6 Unlevel playing field 7 Hedge funds and financial bubbles 7 The role of hedge funds in crises 8 Conclusion 10 Bibliografy 10 Introduction

Alternative Investments Essay

4991 words - 20 pages Assessment M.Sc. Global Banking & Finance Alternative Investments Lecturer: | John Diamondopolus | Module: | Alternative Investments | Submitted by | Josip Sestan, Chetanna Chukwudum | Submitted: | 06.04.2014 | Content Tables III Figures III Abbreviations IV 1 Overview of Hedge Funds Strategies 1 2 What are Emerging Markets and why are they so important? 2 3 Why do Hedge Funds invest in Emerging Markets 6 4 DWS

Hedge Fund Essay

1596 words - 7 pages Hedge Funds 1. Hedge Funds Versus Mutual Funds Mutual funds are regulated under the SEC Act 1933 and the Investment Company Act of 1940 and they must invest according to the stated goals in the prospectus. They are adjured to avoid ‘style drift.’ Hedge funds are not open to the general public. The primary investors are institutional investors but they are open to high net worth individuals. Most require minimum investments of

Week 4 Mnf Essay

665 words - 3 pages Week 4 Homework 1) What is your new value for the money market hedge? Would this affect your initial decision from reading through section 11-2d? Discuss the drawbacks from using different hedging technique. When looking at the numbers of the different hedges I found that the call option and forward contract did not change due to the increase in interests rates however the money market hedge did. The discount borrowing rate seems to be the