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MoneyScience's Blog

The Secondary Market for Hedge Funds and the Closed Hedge Fund Premium

July 18, 2011 Comments (0)

By Tarun Ramadorai
 
Abstract
Rational theories of the closed-end fund premium puzzle highlight fund share and asset illiquidity, managerial ability and compensation, and fees as important determinants of the premium. Several of these attributes are difficult to measure for mutual funds, and easier to measure for hedge funds. This paper employs new data from a secondary market for hedge funds, discovers a closed hedge fund premium which is highly correlated over time with the...

The Value of Investment Banking Relationships: Evidence from the Collapse of Lehman Brothers

July 18, 2011 Comments (0)

By Chitru S. Fernando, Anthony D. May and William L. Megginson
 
Abstract
We examine the long-standing question of whether firms derive value from investment bank relationships by studying how the Lehman collapse affected industrial firms that received underwriting, advisory, analyst, and market-making services from Lehman. Equity underwriting clients experienced an abnormal return of around -5%, on average, in the seven days surrounding Lehman’s bankruptcy, amounting to $23...

Hedge Funds and Chapter 11

July 18, 2011 Comments (0)

By Wei Jiang,  Kai Li and and Wei Wang
 
Abstract
 This paper studies the presence of hedge funds in the Chapter 11 process and their effects on bankruptcy outcomes. Hedge funds strategically choose positions in the capital structure where their actions could have a bigger impact on value. Their presence, especially as unsecured creditors, helps balance power between the debtor and the secured creditors. Their effect on the debtor is manifested in higher probabilities of...

Tim Harford: Trial, error and the God complex

July 18, 2011 Comments (0)

Economics writer Tim Harford studies complex systems -- and finds a surprising link among the successful ones: they were built through trial and error. In this sparkling talk from TEDGlobal 2011, he asks us to embrace our randomness and start making better mistakes.

Why Economics Needs the History of Thought - Bruce Caldwell

July 15, 2011 Comments (0)

Via the Institute for New Economics Thinking comes this interview:
Who is going to teach fields like economic methodology and the history of economic thought if these fields aren't taught to current graduate students? Bruce Caldwell is filling this hole in the graduate curriculum. The Hayek scholar is ramping-up the Center for the History of Political Economy at Duke University to educate a generation of future professors – a generation that is well-versed in the history of...

Unburnable Carbon – Are the world’s financial markets carrying a carbon bubble?

July 14, 2011 Comments (0)

New Research by Carbon Tracker reveals that:

Already in 2011, the world has used over a third of its 50-year carbon budget of 886GtCO2, leaving 565GtCO2
All of the proven reserves owned by private and public companies and governments are equivalent to 2,795 GtCO2
Fossil fuel reserves owned by the top 100 listed coal and top 100 listed oil and gas companies represent total emissions of 745GtCO2
Only 20% of the total reserves can be burned unabated, leaving up to 80% of assets technically...

Technology and the Modern Trader

July 14, 2011 Comments (0)

We missed a few cool articles while we were redeveloping the site and this piece by James Somers over at the Atlantic is definitely worth a read:

The modern trader is playing the most sophisticated, dynamic, immersive game in the world. Here's how it works -- and why your job might be the next to turn into a massively multiplayer experience....My friend's has six distinct screens. They're arranged as a row of two above a row of four in a bowed-out fan pattern that looks basically like a...

Hedge Funds Take in $8.1 Billion in May, Fifth Straight Inflow. Year-to-Date Inflow of $75.0 Billion Marks Heaviest since 2007.

July 11, 2011 Comments (0)

Hedge Funds Take in $8.1 Billion in May, Fifth Straight Inflow. Year-to-Date Inflow of $75.0 Billion Marks Heaviest since 2007.
CTAs and Funds of Funds Take in Money Despite Poor Performance. Multi-Strategy Funds Remain Popular, while Fixed Income Funds Continue Remarkable Run.
New York, NY – July 11, 2011 – The hedge fund industry posted an inflow of $8.1 billion (0.5% of assets) in May 2011, report BarclayHedge and TrimTabs Investment Research.  The inflow marks the...

Comment - Why Banks are under-taxed and what to do about it

July 11, 2011 Comments (0)

By Harry Huizinga, Wolf Wagner - Reproduced with Permission from Voxeu.org
What new policies should be included in financial and regulatory reforms? This column argues that banks are under-taxed along many dimensions and analyses a proposed broad tax on financial-sector income.

The banking crisis of 2008-2009 was very costly to national public finances – in some countries, it was ruinous. As governments try to regain their fiscal footing, the spotlight naturally turns to the...

High Frequency Trading and the Race to Zero - Speech by Andrew Haldane, BoE Executive Director for Financial Stability

July 9, 2011 Comments (0)

In a speech at the International Economic Association Sixteenth World Congress in Beijing, Andrew Haldane – Executive Director for Financial Stability and member of the interim Financial Policy Committee – outlines how dramatic shifts in the structure and speed of trading have increased abnormalities in the pricing of securities. This new topology of trading has potentially increased systemic risk. He then discusses several policy options to manage the impact of these...