| Pine Street Capital | | | FINA5290 Derivatives Analysiss Individual Assignment 1. What is a hedge fund? How do hedge funds differ from mutual funds? Hedge funds are investment vehicles that explicitly pursue absolute returns on their underlying investments. Hedge Fund incorporate to any absolute return fund investing within the financial markets (stocks‚ bonds‚ commodities‚ currencies‚ derivatives‚ etc) and/or applying non-traditional portfolio management techniques including‚ but
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Pine Street Capital Discussion and Analysis 1 PINE STREET CAPITAL – WHAT RISK TO HEDGE & WHAT TO BEAR? Hedge: market related risks 1. Currently managing a market neutral fund ($32 AUM) In the past the market risk was hedged by shorting or short-selling representative shares of the market index In the past the market riskunder was The alternative hedged by shorting hedging the consideration was or shortselling representativehelp of put market risk with the shares of the market the market
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Background Pine Street Capital is a market-neutral hedge fund in the technology field and is facing market risk and has to decide which way to use in order to hedge the risk. It can either use short selling of NASDAQ or options hedging strategy. Each strategy has its own advantage in different economic conditions. As the fund has just gone through a volatile period in NASDAQ’s history‚ PSC has to choose between two choices. Choice 1: Continuing to hedge market risk by short selling Choice 2:
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Established in January 1999‚ Pine Street Capital (PSC) was a market-neutral hedge fund that specialized in the technology field‚ facing market risk and trying to decide whether and which way to use in order to hedge equity market risk. They choose technology sector because the partners of PSC felt that they have enough ability to evaluate this sector and specially be good at picking out-performing stock. Short-selling of NASDAQ and options hedging strategy are the two major hedging choices for PSC
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Hedge Fund A Hedge Fund is a portfolio of investments hoping to reduce the risk of investment and expanding the maximum return an investment could bring. A firm instead of individuals usually manages it. Usually‚ hedge funds are only offered to a number of investors and requires a large amount of initial minimum investment‚ it’s usually 1 million dollars in the USA. Adding on‚ investors are usually required to keep their initial investment in the fund for at least a year. Hedging is usually
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|[pic] |Quantitative Financial Analysis | | |2 credits | | | | | |BU.230.710.51
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Hedge Funds Class London February 2007 February 9‚ 2007 SECTION 1 Class Agenda Agenda ♦ 9:00 - 10:30 ♦ 10:30 - 10:45 ♦ 10:45 - 12:15 ♦ 12:15 - 1:30 ♦ 1:30 - 2:15 ♦ 2:15 – 3:00 ♦ 3:00 - 3:15 ♦ 3:15 - 4:00 ♦ 4:00 - 4:45 ♦ 4:45 - 5:00 Hedge Fund Basics Coffee Break Basics Continued Lunch Continued Hedge Fund Services Coffee Break Fund of Funds Stuart Trueman Joe Troccolo Tamera Hodges Joe Troccolo Joe Troccolo Hedge Funds & Corp Finance Laurent Charbonnier Wrap-up / Optional Exam
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Hedge Fund Strategy - Equity Long-Short An equity long-short strategy is an investing strategy‚ used primarily by hedge funds‚ that involves taking long positions in stocks that are expected to increase in value and short positions in stocks that are expected to decrease in value. You may know that taking a long position in a stock simply means buying it: If the stock increases in value‚ you will make money. On the other hand‚ taking a short position in a stock means borrowing a stock you don’t
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| Long Term Capital Management and the Hedge Fund industry | | | | | | Introduction The Hedge fund industry is surrounded by much controversy and debate; and that for many years. Lack of oversight‚ excessive returns‚ unclear impact on the market and more‚ are all subjects of concerns for market participants and the public. According to Priya Jestin on Hedge Fund Street‚ “on an average day‚ between 18 and 22 percent of all trading on the New York Stock Exchange is related
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Hedge Fund Strategies Problem Set: Backtesting the Carry Trade (Macro Strategies) Prof. Andrea Frazzini In this problem set‚ you backtest the currency carry trade using the data provided in the accompanying Excel spreadsheet. You can do the problem set using Excel or any other program of your choice. Please answer in the space provided (no more than three pages for questions 1-6). 1. For each month of the sample‚ rank the countries based on their interest rate (hint: Excel has a function
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