John At The Center

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This is a tough time for any company selling premium-priced services to hedge funds… Monitor110, a NYC startup that analyzed raw, unstructured internet content to help hedge funds make decisions, is shuttering. The announcement was made in a memo sent out by CEO W. Brendan Carley that’s been posted on the company’s site (via SAI). The company had raised over $20 million from DFJ, DFJ Gotham and Acadia, having last raised $11 million in late 2006. In May, Monitor110 went out for a new round but was unable to complete it, hence the closure. The service tracked information from over 50 million sources (message boards and the like), with the aim of distilling news and measuring sentiment in a manner useful to traders.

Rafat adds: Wow, that was really quick. This was one of the most hyped financial information startups in 2006, and both the founders had these deep-thought blogs which dissected the fin info economy, and predicted the demise of traditional sources such as Bloomberg and Reuters with some elan. Oh well…

A year from now, will we be talking about galloping inflation or a plunge into deflation? I think the odds favor deflation, or at least lower inflation. Housing is in free-fall, and with the European economy weakening, we are looking at the prospect of sharply slowing global growth. The economists at Deutsche Bank regard this as one real possibility:

http://www.businessweek.com/the_thread/economicsunbound/archives/2008/07/deflation_now.html?campaign_id=rss_blog_economicsunbound

The Astonishing Growth of Bank Deposits

Paul Kedrosky finds this chart of total US bank deposits in a WSJ story about FDIC insurance. But step back a minute: just look at how total deposits have grown over the past ten years!

“There are certain parts of our business that are more affected than others, but that isn’t dependent upon whether our data is distributed electronically or via print. It’s more dependent upon how many people have lost their jobs in that particular segment. That’s what’s impacting content providers’ ability to gain revenue. And I think if you look at our specific experience, print has eroded more quickly than we thought it would erode in this economy as opposed to electronic net growth.”

There seems to be a growing level of agreement that 130/30 is different than simply adding together a “100″ portfolio (e.g. an ETF) and a “30/30″ portfolio (e.g. a market neutral fund).  Some practitioners have pointed to the “untrimness” of being long and short some of the same stocks (e.g. Jacobs & Levy – see related posting).  But others such as First Quadrant’s Jia Ye have argued that adding a short-extension will not always be optimal even for the alpha-producing manager due to the potential volatility of the information coefficient (see posting).

Today, guest contributor Srikanth Iyer, Senior VP and Senior Portfolio Manager, Global Systematic Strategies at Guardian Capital LP puts these two ideas together by exploring whether a so-called “integrated” 130/30 portfolio is always optimal.

130/30 “Combined” vs. “Integrated”: The Tail Wagging the Dog

http://allaboutalpha.com/blog/2008/06/05/is-an-integrated-13030-portfolio-always-better-than-a-combined-one/

The AllAboutAlpha.com “Hall of Fame” contains a who’s who of academics, entrepreneurs and researchers in the field of investment management and hedge funds.  But one group we have not included in the Hall are hedge fund managers themselves – the ones who actually make money from the ideas and theories espoused by financial innovators and thinkers.

Thankfully, our good friends at Alpha Magazine have just launched their own hall of fame, appropriately called the “Alpha’s Hedge Fund Hall of Fame“.  It will contain several great write-ups on hedge fund legends such as:

• Louis Bacon, Moore Capital Management
• Steven Cohen, SAC Capital Advisors
• Kenneth Griffin, Citadel Investment Group
• Alfred Winslow Jones, A.W. Jones & Co. (posthumous)
• Paul Tudor Jones II, Tudor Investment Corp.
• Seth Klarman, Baupost Group
• Bruce Kovner, Caxton Associates
• Leon Levy, Odyssey Partners (posthumous)
• Jack Nash, Odyssey Partners
• Julian Robertson Jr., Tiger Management Corp.
• James Simons, Renaissance Technologies Corp.
• George Soros, Soros Fund Management
• Michael Steinhardt, Steinhardt Partners
• David Swensen, Yale University