Hedge Funds Research Articles

Wealth Creation or Extraction in Capital Structures: The Case of Toshiba and Hedge Funds

The scientific status of an economic theory is either as an idealistic prescription (normative theory) or as a depiction of a factual reality (empirical theory). This issue is important to the status of macro-economic models to distinguish between capital structures which add to economic productivity or diminish productivity. The methodology of this research is to improve macro-economic models mathematically by raising their algebraic equations to vector equations and graphing the equations in a systems-dynamics flow models. To apply this approach empirically, we analyze a recent historical event in 2022 in Japan, wherein global hedge-funds invested in the Japanese corporate conglomerate Toshiba to take it apart (privatize it). In this vectorized modeling approach, the traditional Harrod-Domar-Solar macro-economic algebraic model is thus generalized to distinguish between the normative goal of investments to increase productivity in an economy or to extract wealth. This research shows how to model such differences in capital structures—wherein their capital flows increase or decrease productivity in an economy.

Divest or engage? Effective paths to net zero from the U.S. perspective

The aim of this article is to critically review and evaluate two ESG-based investment strategies—divestment and engagement for alignment of investment portfolios with climate change mitigation goals of the United Nations. The article compares both approaches in terms of their effectiveness of decarbonization, using the case study method. First, the case on fossil fuels divestment by Harvard Management Company is analysed. The second case study discusses shareholder engagement endeavors by Engine No. 1 hedge fund and its investment in ExxonMobil. The findings indicate that divestment may have non-immediate impact on corporate behavior and carries political and legal retribution risks. Engagement, on the other hand, presents itself as a more plausible option as it takes less time to deploy and, therefore, can produce more immediate and impactful results. Nevertheless, both divestment and engagement can play mutually supportive roles in addressing climate change by the investment industry.

ТРАНСФОРМАЦІЯ СИСТЕМИ ІНСТИТУТІВ СПІЛЬНОГО ІНВЕСТУВАННЯ В УМОВАХ ГЛОБАЛЬНИХ ВИКЛИКІВ

The paper provides comprehensive analysis of investment funds and their specific under economy transformation, supported by internationalization and globalization of economic systems. Main historical phases and milestones of investment funds development were outlined. Definition was provided to investment companies, as well as major organizational forms were defined on mechanisms to accumulate and distribute financial resources. Types of investment companies were classified. Specific of investment strategies was underlined on their impact on investment portfolio. Particular attention is paid to new forms and types of investment institutions, such as hedge funds and exchange-traded funds. The history of their formation and stages of development, including the specified features of their functioning and shortcomings of this type of institutes, are highlighted. The proposed periodization of the formation of joint investment institutes. The positive and negative impact of JII on interna- tional financial markets is determined. Important components of the article are the analysis of panel analytical data by years and countries of the world, provided to confirm the main theses, as well as the definition of the main trends in the development of joint investment institutions. The leading countries in terms of assets of joint investment institutes and the structural composition of open investment funds have been determined. Stock funds dominate, followed by bond funds. The assets of US investment funds and the financial assets of institutional investors and the GNI of the US for 2011–021 were analyzed. The regional struc- ture of investment funds was studied. US investment funds make up 56% of the global volume, European – 29.9%, together 85.9%. The structure of joint investment institutions was analyzed for the 3rd quarter of 2022. The main share of JII in the USA is made up of stock funds 48.2% (money market funds – 14.3%), in the EU this figure is 31.7% (money market funds – 8.1%). The dynamics of the growth of the assets of institutional investors in the USA is characterized, by a significant increase that has been revealed since 2019 in comparison with the period 2011–2017. The investment funds of the USA and Europe continue to play a decisive role in the joint investment market.

Do hedge funds with above average fees really outperform?

Do hedge funds with above average fees really outperform?

State of Alternate Investments in India

In recent years, alternative investments in India have been slowly gaining importance, which reflects investors' rising desire for more diversity and better returns. The term "non-traditional investment routes" refers to a broad variety of investment vehicles, such as private equity, hedge funds, real estate, commodities, and even cryptocurrencies like bitcoin and ethereum. It is clear that the alternative investment environment in India is maturing as a result of the growing engagement of institutional investors, high-net-worth individuals, and family offices. The introduction of Real Estate Investment Trusts (REITs) and Infrastructure Investment Trusts (InvITs) has provided opportunities for investments in real estate and infrastructure, which have played a pivotal role in the growth that has been fostered as a result of regulatory shifts and government initiatives, both of which have played a critical role in the growth that has been fostered. Additionally, the introduction of fintech platforms has made it simpler for ordinary investors to access alternative investments, further democratising the asset class. This has led to an increase in the number of people investing in alternative investments. It is important to note that the alternative investing sector in India is still undergoing development; hence, investors need to exercise extreme caution and ensure that they are well-informed in order to successfully navigate the more complicated and less liquid markets. In general, the market for alternative investments in India is thriving, showing signs of promise, and is well positioned for sustained expansion in the years to come as the sector continues to develop and diversify.

How do We Capture Long-Horizon Factor Timing? Measures and their Application to Hedge and Mutual Funds

How do We Capture Long-Horizon Factor Timing? Measures and their Application to Hedge and Mutual Funds

The Decline in Hedge Fund Performance Persistence

The Decline in Hedge Fund Performance Persistence

Did the Game Stop for Hedge Funds?

Did the Game Stop for Hedge Funds?

Performance Persistence and the Implied Volatility Smile of the Commodity Options Contracts. We Examine Hedge Funds Contracts of Wheat, Corn, Live Cattle, Soybean Oil, and Lean Hog

Performance Persistence and the Implied Volatility Smile of the Commodity Options Contracts. We Examine Hedge Funds Contracts of Wheat, Corn, Live Cattle, Soybean Oil, and Lean Hog

Global Macro and Managed Futures Hedge Fund Strategies: Portfolio Differentiators?

Global Macro and Managed Futures Hedge Fund Strategies: Portfolio Differentiators?

Do Hedge Funds Exploit Material Nonpublic Information? Evidence from Corporate Bankruptcies

Do Hedge Funds Exploit Material Nonpublic Information? Evidence from Corporate Bankruptcies

EXPLORING HEDGE FUNDS: A COMPREHENSIVE LOOK AT THEIR HISTORY, CURRENT STATUS, ANALYSES, AND EMERGING TRENDS

This research paper provides a foundational overview of the hedge fund industry. Focusing on the historical evolution and fundamental principles of hedge funds, the paper aims to familiarize readers with the industry's key aspects and current trends.

ETF Rebalancing, Hedge Fund Trades, and Capital Market

ETF Rebalancing, Hedge Fund Trades, and Capital Market

Do Agency Problems Predict the (Under-) Performance of Private Hedge Funds?

Do Agency Problems Predict the (Under-) Performance of Private Hedge Funds?

Activist Directors: Determinants and Consequences

This paper examines the determinants and consequences of hedge fund activism with a focus on activist directors, i.e., those directors appointed in response to demands by activists. Using a sample of 1,969 activism events over the period 2004–2012, we identify 824 activist directors. We find that activists are more likely to gain board seats at smaller firms and those with weaker stock price performance. Activists remain as shareholders longer when they have board seats, with holding periods consistent with conventional notions of “long-term” institutional investors. As in prior research, we find positive announcement-period returns of around 4–5% when a firm is targeted by activists, and a 2% increase in return on assets over the subsequent one to five years. We find that activist directors are associated with significant strategic and operational actions by firms. We find evidence of increased divestiture, decreased acquisition activity, higher probability of being acquired, lower cash balances, higher payout, greater leverage, higher CEO turnover, lower CEO compensation, and reduced investment. With the exception of the probability of being acquired, these estimated effects are generally greater when activists obtain board representation, consistent with board representation being an important mechanism for bringing about the kinds of changes that activists often demand.

Anomalies as New Hedge Fund Factors: A Machine Learning Approach

Anomalies as New Hedge Fund Factors: A Machine Learning Approach

AI APPLICATIONS IN BLOCKCHAIN TECHNOLOGY

Blockchain technology is one of the most important and hot topics because of the last bull run in 2021 and the dramatic increase of knowledge in this sphere. Many famous hedge funds and big companies are investing in the cryptocurrency sphere to diversify their portfolio, and mostly all the CEOs of technological giants (e.g. Google, Tesla, Twitter, etc.) consider blockchain as a “future of financial systems”. This sphere covers not only the finance sector but also any direction where centralized authorities participate. With appropriate consensus mechanisms created and in case they are proven to work from both efficiency and security aspects, any type of central-ized service may become decentralized empowering people to have more control on tools that they are using. Despite its power of usage; we can also consider blockchain goals and tasks from Artificial intelligence (AI) perspective. Blockchains are a great source of high-quality data, which we can use to solve various complex and exciting problems. Due to the huge amount of data that AI models provide, there is a need for data scientists and techniques to analyze data fast, and effectively and build pipelines to extract newly generated data from the blockchain. This article will provide a possi-ble set of problems AI tries to solve, and our study case, where its usage would be helpful.

Performance Persistence and the Implied Volatility Smile of the Commodity Options Contracts. We Examine Hedge Funds Contracts of Wheat, Corn, Live Cattle, Soybean Oil, and Lean Hog

Performance Persistence and the Implied Volatility Smile of the Commodity Options Contracts. We Examine Hedge Funds Contracts of Wheat, Corn, Live Cattle, Soybean Oil, and Lean Hog

Hedge Fund Activist Role in Mitigating Agency Conflicts: Evidence from Loan Provisioning Choices in U.S. Banks

Hedge Fund Activist Role in Mitigating Agency Conflicts: Evidence from Loan Provisioning Choices in U.S. Banks

Hedge Fund Performance, Classification With Machine Learning, and Managerial Implications

Hedge Fund Performance, Classification With Machine Learning, and Managerial Implications