Since the global credit crisis of 2008, the central banks of various nations have been using various utilities (i.e. non-existent interest rates, quantitative easing and expanding their definitions of conservative debt) to prop up asset values to protect the banking industry according to Frank Brosens, co-founder and risk manager at Taconic Capital Advisors in New York. These actions reduced asset price volatility and hedge funds' opportunities to produce alpha. This is now ending. The last three months of 2014 saw increased volatility and portfolio managers are predicting it to continue in 2015.
Managers with different strategies are seeing good investments:
- Long/short
- Joel Greenblatt, managing principal and co-chief investment officer of Gotham Asset Management in New York, believes there are "..good opportunities on the short side with currently very expensive stock prices if the market drops."
- Eric Mindich, CEO of Eton Park Capital Management in New York, is long in Japanese and Chinese markets. Both countries will benefit from cheaper oil prices and valuations are very low in China.
- Global macro - Kenneth Tropin, chairman of Graham Capital Management in Rowayton, Connecticut, is monitoring the quantitative easing initiated by Japan's and European central banks, the improvement in the US economy and unrest in various political hotspots around the world.
- Multi-strategy - Michael Hintze, CEO and senior investment officer of CQS (UK), sees short trades based on geopolitical situations (i.e. Ukraine and Russia), failling oil prices and terrorist activities.
- Credit - Several fund managers are positioning their funds on different themes. The most interesting one is from Paul Twitchell, partner and global head of event strategies of Whitebox Advisors. He is looking at energy-related distressed debt. He is interested in "...supplying secured debt to energy companies at a certain price..."
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