July, 2008

Here's a brief Q&A with Robert J. Shiller, author of soon-to-be-published 'The Subprime Solution'.

Larry MacDonald submits: Plenty of gloomy books have appeared on the current financial crisis and various aspects thereof. I found 13 of them (as listed below) a few weeks ago while digging around for some summer reading. I was tempted to read several of them — but as it turned out, some work assignments came along and cut into the time set aside for leisure reading. Besides, I wasn’t sure if I really wanted to immerse myself too deeply in any more bad tidings than what was already coming out in the news. It’s been plenty enough on its own.

Re-release of 2008 Recruiter Database!


We have released a new and improved version of the 2008 Recruiter Database. You just have to log in (or register if you haven't already) to view it and click on "Recruiter Database" in the green welcome block to see it. This list is more extensive than the one up previously and also includes websites (where all the data was compiled) and location.

Welcome to WallStreetOasis.com's latest This Week in Finance newsletter, where we profile the hottest investment ideas, substantive market data, incisive financial blogging, and the best under-the-radar research Wall Street has to offer.

Investments: I want my money in Hedge Funds!

As more and more assets flow into hedge funds (some estimates have total AUM reaching $4 trillion by the end of this year), it is strange to notice the lack of availability of these investments to retail investors. Granted, hedge fund related strategies are more complex, but given the growing allocations by large pools of traditionally long-only money (pension plans, endowments, foundations), is it that far-fetched to assume that individual retirement accounts should allocate some percentage to alternative investments (and specifically, hedge funds)? I would argue no, and that, in fact, as this need becomes more apparent, the availability of products that allow this type of exposure will begin to grow at a rapid pace. As of yet, however, it is hard for the retail investor to gain access to the asset class.

This begs the question of what is currently available. Though far from perfect, there are a few options. Firstly, there are the stocks of publicly traded companies whose main revenue stream comes from hedge funds. These companies include Och-Ziff Capital Management Group (OZM), GLG Partners (GLG), and Fortress Investment Group (FIG). As these are public companies, you can track the performance of their underlying funds through required filings (usually available on their webpages), keeping in mind that performance isn't always the main driver of the stock price - interest rates, sentiment, asset-growth, and industry trends, among other factors, can all contribute to gains or losses on the stock irregardless of performance. Greenlight Reinsurance (GLRE), while technically an insurance company, invests the vast majority of its float in the Greenlight Capital hedge fund, thus tying a large amount of its income to the performance of the hedge fund, given normal payouts over time.

There are also mutual funds and ETFs that offer hedge fund style investing - that is, the ability to go long and short. MSN has a listing of the best performing long-short mutual funds, while About.com has a few "bearish" mutual funds, which are either completely short or short-biased.

Finally, there are so-called "short-extension" strategies, which are starting to be offered to the investment public. The most popular of these strategies is the "130/30" where $100 of stock is bought and $30 of stock is shorted, from which the proceeds are used to buy $30 more of stock on top of the original $100, keeping a net exposure of $100 but using leverage to enhance returns and provide access to gains on short positions as well as long. A list of available 130/30 funds can be found here.

Research of the Week: Forecasts

In nearly all categories of investments, understanding the expectations built into the economy is key to gauging sentiment and understanding why certain valuations persist. Gathering as much information as possible with regards to the future of key economic data points, including growth and interest rates, is always the best way to go about estimating what to expect in the near-to-middle term. In that light, SIFMA has just released its semi-annual economic outlook. Wachovia posts an economic review and forecast publication monthly. The latest can be found here.

Blog-Wrap: A bad sign

GigaOm examines the growing number of sales on Craigslist. With both garage sales and overall items for sale growing at alarming rates, one can only infer that the need to sell off assets by more and more citizens is driving this surge, indicating further economic hardship in the U.S.

TWIF Notes: In the news this week

Merrill Lynch sold off a large chunk of its "toxic" CDO exposure, giving Lone Star Funds a great deal just to continue the long process of cleaning up its balance sheet. The bigger question is how many other banks will follow suit, and in what size?

Land lines continue to lose market share but not necessarily for the reasons you may think.

Duke Realty Corporation (DRE)
Q2 2008 Earnings CallComplete Story »

M/I Homes Inc. (MHO)
Q2 2008 Earnings CallComplete Story »

AvalonBay Communities, Inc. (AVB)
Q2 2008 Earnings Call TranscriptComplete Story »

Essex Property Trust Inc. (ESS)
Q2 2008 Earnings CallComplete Story »

Jeff Pietsch submits: This July, the major U.S. equity indices put in a yo-yo performance reflecting an apparent near-term apex in energy prices and significant federal intervention in support of the Financial complex. The S&P 500, Dow Jones Industrials and NASDAQ 100 cash indices posted mixed results of -0.99%, +0.25% and +0.66%, respectively.

ProLogis Inc. (PLD)
Q2 FY08 Earnings CallComplete Story »

Acadia Realty Trust (AKR)
Q2 2008 Earnings CallComplete Story »

Equity Residential (EQR)
Q2 2008 Earnings CallComplete Story »

Mack-Cali Realty Corporation (CLI)
Q2 2008 Earnings Call TranscriptComplete Story »

The Dow Jones Industrial Average may have tumbled 205.67 points to close at 11,378.02 on Thursday, and the regional banking sector may continue to take hits on fears of mortgage-related losses, but billionaire activist Carl Icahn had reason to celebrate. ...

Critics of fair-value accounting shouldn't ask Treasury Secretary Henry Paulson for support....

Online employment firm Monster Worldwide Inc. [MNST] made a bevy of announcements in conjunction with its second quarter earnings this afternoon, including an acquisition of Trovix Inc., a maker of employee recruiting search software,...

Diversified industrial parts manufacturer Kulicke & Soffa Industries Inc. [KLIC] on Thursday announced a plan to acquire Orthodyne Electronics Corp. and divest another business, in what looks like a bid to...