03 May 2016

Hedge Funds Under Attack as Steve Cohen Says Talent Is Thin

In less than seven days, hedge funds have been subject to a three-pronged attack by some of the biggest names in finance.

Steve Cohen, the billionaire trader whose former hedge fund had racked up average annual returns of 30 percent before pleading guilty to securities fraud three years ago, became the latest critic of the business, saying he’s astounded by its shortage of skilled people.

“Frankly, I’m blown away by the lack of talent,” Cohen said at the Milken Institute Global Conference in Beverly Hills, California, on Monday. “It’s not easy to find great people. We whittle down the funnel to maybe 2 to 4 percent of the candidates we’re interested in. Talent is really thin.”

02 May 2016

Machine Learning For Stock Trading Strategies

The idea of using computers to trade stocks is hardly new. Algorithmic trading (also known as algo trading or black box trading which is a subset of algo trading) has been around for well over a decade and rapidly gaining in popularity. Here’s a look at algorithmic trading as a percentage of market volume:

Source: Morton Glantz, Robert Kissell. Multi-Asset Risk Modeling: Techniques for a Global Economy in an Electronic and Algorithmic Trading Era.

01 May 2016

Nine things you need to know about working for systematic macro hedge funds

1. Systematic macro funds use a simple three stage investment process which can be used to trade globally 24 hours a day

1. Collect huge datasets from a diverse range of sources;
2. Analyse the date to find persistent patterns; and finally
3. Encode trading rules into a computer-based program to profit from the identified patterns.

2. Systematic macro hedge funds aren’t limited to trading one particular product or market

3. Systematic macro hedge funds are mostly about identifying and following trends

4. They also look for ‘counter-trends’…

5. And for ‘relative value trends,’ and for ‘seasonal trends’

27 April 2016

Flow Traders 2015 Annual Report

Flow Traders recently released their 2015 annual report. They made a profit of €$97.3M off a revenue of €$304.7M. A net profit margin of 32%.

Flow Traders mainly engages in prop ETP trading globally. The company wide average compensation is €338K per employee. Some interesting snipplets below.

Flow Traders is founded in Netherlands, while the corporate HQ for Virtu is in US. Not surprisingly, both earn the most of their income from their home country/continent.

23 April 2016

Updated Prop Trading

Added North Point Global, Solitaire Asset Management. Removed Aurelia Traders.

22 April 2016

Singapore Raids Brokers; Exchange Reports Irregularities. Singapore Charges Ex-Banker Following 1MDB Probe.

Looks like the local authorities may be (?) finally getting serious going after the behind-the-scenes shenanigans. Many critics have long indicated that Singapore is a key center for money laundering and a tax haven. Signs are there for all to see, conscious decisions by the government to create the eco-structure to attract the money to the island republic. Cue the F1, casinos, private banks, lavish infrastructure projects such as the new stadium, Marina Barrage, Esplanade, Sentosa Cove, tons of new art museums, private hospitals all of which sprung up within a span of a few years. Along with it, sky high property prices

12 April 2016

Virtu Financial 2015 Annual Report

The 10-K for Virtu Financial has been filed recently, offering us a glimpse into the professional market making and trading outfit.

The firm made a profit of US$197.5M for 2015 off a total revenue of $796.2M. A 24% net profit margin. The "Brokerage, Exchange and Clearance Fee" amounts to $232.5M. Some interesting details on their market making and trading activities are mentioned in the report.

27 February 2016

Warren Buffett's Shareholder Letter, Annotated

The 2015 Berkshire Hathaway annual shareholder letter written by the venerable Warren Buffet is out. The link above is to the annotated version from Bloomberg.

As usual, it is chock-full of super-excellent information on everything related to Berkshire's amazing portfolio of businesses, commentary, analysis and views of industries and the economy.

26 February 2016

The Highest-Earning Hedge Fund Managers & Traders

The Highest-Earning Hedge Fund Managers & Traders

Forbes annual list of top earning hedge fund managers & traders for 2015 is out. The top 10 are:

1) Ken Griffin / Citadel LLC : $1.7 Bil
2) James Simons / Renaissance Technology : $1.65 Bil
3) Steve Cohen / Point72 Asset Management : $1.55 Bil
4) David Tepper / Appaloosa Management : $1.2 Bil
5) David Shaw / D. E. Shaw & Co., LP : $700 Mil
6) John Overdeck / Two Sigma Investments : $600 Mil
7) David Siegel / Two Sigma Investments : $600 Mil
8) Israel Englander / Millennium Management, LLC : $550 Mil
9) Ray Dalio / Bridgewater Associates : $500 Mil
10) George Soros / Soros Fund Management LLC : $300 Mil

20 February 2016

Modern day Stratton Oakmont ala Wolf of Wall Street at ANZ Banking Group

ANZ Banking Group is making a mark in finance and trading for Australia. Happening inside the trading room is the modern day equivalent of the fat bonuses, sex, drugs and partying culture similar to the infamous brokerage Stratton Oakmont portrayed in the movie 'The Wolf of Wall Street'.

Explosive details of the inner workings have come to light as two traders sued the bank on termination grounds for inappropriate behavior. The news and commentaries flowing out from this scandal is good enough to have a new movie titled "The Wolf of Wall Street - Alive and Down Under".

Snippets of the explosive reports below:
"What a waste, it should have been sprinkled on a birthday cake," a senior ANZ markets trader said after a "white substance" was found in the male toilet of the bank's dealing room floor, according to court documents filed by Etienne Alexiou.
The bank mentioned seven instances of lewd and sexually explicit comments about "gang bangs" and having girls eat sushi off him while naked made by Mr O'Connor via his Bloomberg chat terminal.