Podcast: TradingScreen Top Hedge News – Week of 08/13/2012

This is an overview of top news covering the hedge fund space and hedge-fund related news. looking back on the week of 08/13/2012.

Would you rather read than listen? Then, here you go:

It was the best of times. It was the worst of times. In some portfolios it’s both.
How the heck can you possibly put your money in both Facebook and Gold? Are you even allowed to do that? It’s like voting Democrat AND Republican in the same election.

Recent regulatory filings gave the investing public a look at the holdings of some of the world’s largest hedge fund managers, showing some major hedge fund managers holding large holdings in both Facebook and gold at the same time.

How to explain this investment schizophrenia? Perhaps it was the ultimate hedge straddle, in which major hedge fund managers envision a world where we are either roaming the post-apocalyptic wasteland with our pet dingo fighting for gasoline and gold ingots, or one where unprofitable social media sites hit ever higher valuations.

To be sure, the regulatory filings reflect holdings from more than a month ago, and lockouts prevented many early investors from dumping their holdings, so Facebook may already have been un-friended by many prior holders. This has been borne out somewhat, with shares of Facebook hitting a new low yesterday after a lockout period expired, putting it in contention for the worst-performing IPO in the history of capitalism. Which means you might want to start boning up on the answers to those important questions… like who runs barter town?

Thar She Blows
In this world, some fearful captains of finance sail away from the whales, while other intrepid hunters sail towards them. As the case of the so-called London whale continued to unfold this week, a story in Reuters revealed that several major hedge fund players were buying into JP Morgan even as the heavy losses incurred on a wrong-way credit derivatives bet were yet to be tallied. Jim Chanos, John Paulson, and Jamie Dinan saw the 22 percent decline JP Morgan’s in the second quarter as a buying opportunity. Since then most of those intrepid hunters, and other players such as Soros, have substantially reduced their holdings. The move bucked what was a general uptick in financial services firms, which were up 15 percent for the year as a sector.

Rage Against The Machine
Some hedge fund managers are taking a closer look at the computer models that they use to trade debt futures. Apparently, some hedge funds doubt the long-term value of traditional “safe-haven” debt issued by governments like the US, Germany and the UK, which have seen prices and yields defy the gravity of their current fiscal situations. Some hedge funds, such as AHL, are saying that historical data going back 30 years may not provide enough of a sample to understand what lies ahead. Score one for Nassim Nicholas Taleb – and in your face, Skynet.

Whitman Concludes Testifying In His Own Defense
Finally, a good deal of coverage on Doug Whitman taking the stand. The move by the founder of Menlo-California based Whitman Capital LLC was a bit of a hail-Mary play, according to legal analysis in Forbes. The government has lost exactly none of its insider trading cases since it initiated a crackdown on the industry. And Whitman is the first to take the stand in his own defense in these trials. Like a good hedge fund manager, perhaps Whitman knows something that the experts don’t about running his own defense. Or perhaps he needs to add A Few Good Men to his Netflix list at Lompoc.

Here are some other significant pieces of coverage that didn’t make it in to the podcast:

Ray Dalio of Bridgewater Associates buys up shares of Brazil ETF 

Mitt Romney’s Hedge Fund Bundlers