It's a stock market that's certainly capable of confounding and frustrating stock investors.

Given the above -- a climate in which the outlook for cyclical stocks, if not most stocks -- brightens and darkens like almost daily -- is there a refuge?

Oil might be one. The oil trade is back in vogue. Come to think of it, when was the oil trade ever really out-of-favor? Perhaps during the financial crisis' acute stage from December 2008 to March 2009, when oil briefly plunged to about $35 per barrel.

Continue reading Oil: The (Nearly) Risk-Free Investment

Oil: The (Nearly) Risk-Free Investment originally appeared on BloggingStocks on Fri, 08 Oct 2010 15:30:00 EST. Please see our terms for use of feeds.

Continue reading Managed Account Allocations to Surge in 2010

Managed Account Allocations to Surge in 2010 originally appeared on BloggingStocks on Wed, 10 Feb 2010 14:45:00 EST. Please see our terms for use of feeds.

The private equity market was hit hard by the financial crisis last year, but it's already on the road to recovery, according to a new report by Preqin (pdf).

From the first quarter to the second, this year, increasing returns and valuations have given investors a reason to hope, even though the industry's average return is down 24.1% for the 12-month period ending June 30, 2009. The negative return still outpaced the S&P 500, MSCI Europe and MSCI Emerging Markets indexes, the alternative investment research firm says, which returned -26.2%, -34.1% and -27.8%, respectively -- and the 12-month average improved from -30% for the year-long period ending March 31, 2009.

Continue reading Private equity returns off 24% but still ahead of the broader market

Private equity returns off 24% but still ahead of the broader market originally appeared on BloggingStocks on Sat, 12 Dec 2009 13:20:00 EST. Please see our terms for use of feeds.

For more than a third of private equity employees, employee compensation either stayed the same or declined. A recent report by alternative investment research firm Preqin estimates that 38% of private equity employees saw base salary freezes in 2009, and 6% of firms participating in the survey indicated that they were cutting salaries this year. Of course, this means that 56% kicked base salaries up this year, though the average increase was a mere 2%.

For the employees of 22% of the firms participating in the Preqin survey, the brush with a pay cut was close as these companies considered a freeze. But 40% haven't cut or never considered it.

Continue reading Salaries frozen, down at private equity firms this year

Salaries frozen, down at private equity firms this year originally appeared on BloggingStocks on Wed, 02 Dec 2009 12:00:00 EST. Please see our terms for use of feeds.

The clean technology private equity momentum continues. In New York, a group of partners has launched NewWorld Capital Group, a private equity firm that will focus on mid-market investments in clean energy infrastructure companies in the United States and selectively in Europe.

The new fund will work closely with Ambienta, a European environmental assets private equity firm in Italy. Both said they plan to collaborate on finding and analyzing investment opportunities -- with NewWorld taking care of the United States and Ambienta addressing Europe.

Continue reading New cleantech private equity fund launches

New cleantech private equity fund launches originally appeared on BloggingStocks on Tue, 27 Oct 2009 12:20:00 EST. Please see our terms for use of feeds.

It's not exactly a shock, but tangible confirmation is always nice. Alternative investment research firm Preqin found in a recent survey that institutional investors are happier with their hedge fund returns now than they were a year ago. But, the gaps between happy and sad aren't as wide as you might expect.

A September 2009 survey of institutional investors revealed that 62% say "hedge fund returns have met expectations," compared to 53% in October 2008, when the market was consumed by all kinds of calamity. Only 11% responded this year that "hedge funds have exceeded expectations," which is up slightly from last year's 9%. Remember, though the market hit its worst late last year, the problem was building momentum for a while. Participants who do not feel that hedge funds have hit the mark shrank from 38% last year to 27% this year. And 66% are confident or very confident that their hedge fund investments will reach their objectives.

Continue reading Hedge fund investors happier now than a year ago

Hedge fund investors happier now than a year ago originally appeared on BloggingStocks on Fri, 16 Oct 2009 12:40:00 EST. Please see our terms for use of feeds.

Has your broker repeatedly sold you on the "safe" investment vehicle, the mutual fund? Investing in a wide variety of prominent companies, with solid, long-term track records, mutual funds have been an easy-to-understand and popular investment choice for decades.

Mutual funds are hugely diversified, holding large stakes in recognizable names such as Google (NASDAQ: GOOG), Citigroup (NYSE: C), Walmart (NYSE: WMT), Starbucks (NASDAQ: SBUX), General Electric (NYSE: GE), Bank of America (NYSE: BAC), and Fannie Mae (NYSE: FNM).

Continue reading How do hedge funds differ from mutual funds?

How do hedge funds differ from mutual funds? originally appeared on BloggingStocks on Fri, 12 Jun 2009 13:00:00 EST. Please see our terms for use of feeds.

Continue reading Amid stock slump, states doubling-down on U.S. hedge fund investments

Amid stock slump, states doubling-down on U.S. hedge fund investments originally appeared on BloggingStocks on Thu, 14 Aug 2008 14:31:00 EST. Please see our terms for use of feeds.

About a year ago, when Blackstone (NYSE: BX) went public, investors were scrambling to get shares of the top-notch private equity firm.

Well, the IPO was certainly a mark of savvy timing (hey, isn't that what private equity firms are supposed to be good at?). But the stock price has steadily declined since, going from $38 to $15.25.

Yet, the fact remains that Blackstone continues to raise capital (a new $20 billion fund); has operations around the globe; has dealt with various market cycles since the mid 1980s; and has avoided problems such as subprime securities.

So, is this a time to buy the stock? According to a piece in the FinancialNews.com, it might be.

In fact, it looks like a variety of major pension funds, such as the Washington State Investment Board, are taking a look at the stock. They realize that there is still lots of money to be made from alternative investments. Keep in mind that sovereign wealth funds are also funneling their billions into the sector.

This is not to imply that there will be a quick turnaround in Blackstone's stock, but looking at the long term -- which is what pension funds do -- it seems that optimism is starting to bubble up.

Tom Taulli is the author of various books, including The Complete M&A Handbook and The Edgar Online Guide to Decoding Financial Statements. He also operates DealProfiles.com.

Time to load up on Blackstone stock? originally appeared on BloggingStocks on Thu, 06 Mar 2008 11:19:00 EST. Please see our terms for use of feeds.

There was lots of trepidation on the eve of Fortress Investment Group (NYSE: FIG)'s Q3 earnings report yesterday. After all, Blackstone (NYSE: BX) disappointed the Street.

Well, there was some relief (it also helped that there was a big rally in equities). The company, which operates private equity and hedge funds, posted a net loss of $38 million, or $0.52 per share in Q3. Although, if you strip various elements -- such as certain tax and compensation -- the firm earned $111 million, or $0.19 per share (which is known as pretax distributable earnings).

It was a relief that Fortress indicated there was little exposure to the subprime mess. If anything, the firm sees opportunities in the sector.

In fact, Fortress has some big plans. The firm is in the process of raising funds, with assets of $10 billion to $15 billion. The initiatives will range from infrastructure, commodities, emerging markets and Asian real estate.

What's more, Fortress had a nice realization on its Crown Castle investment. The original investment came in 2002, which involved an initial $120 million stake. The total proceeds since then? A cool $1.7 billion.

Yes, it's a reminder that the private equity business can be very enticing indeed.

Tom Taulli is the author of various books, including The Complete M&A Handbook and The Edgar Online Guide to Decoding Financial Statements. He also operates DealProfiles.com.

Fortress beats back the bears originally appeared on BloggingStocks on Wed, 14 Nov 2007 11:00:00 EST. Please see our terms for use of feeds.

A piece in The New York Times look at the increasing willingness of investors to get creative with their IRAs. Consider this amusing example:

BRIAN HARRIS makes a 30 percent annual return on his Roth individual retirement account, but his money is not invested in a soaring biotechnology stock or a hot currency fund.

Instead, Mr. Harris, a music teacher from Tucson, owns about 25 marimbas, xylophones and timpani. Using the money in his retirement account, Mr. Harris buys the instruments for less than $1,000 each. He then rents them to his students for up to $60 a month. The rental income flows straight back into the I.R.A.

Hmm .... While that sounds tempting, there are ample reasons for most investors to avoid these self-directed IRAs. For starters, you're unlikely to be able to achieve much diversification owning traditional real estate or similar assets in an IRA -- If you want real estate exposure, go with a portfolio of REITs. The idea of investing in racehorses through an IRA seems insane. This is supposed to be your retirement money!

The best bet for an IRA remains low-cost index mutual funds. There are plenty of places for more speculative and creative investments -- the IRA isn't one of them. In addition, unless you have a ton of money in your IRA, the transaction costs of alternative investment will probably be prohibitively high.

Should you get creative with your IRA? originally appeared on BloggingStocks on Sun, 21 Oct 2007 08:40:00 EST. Please see our terms for use of feeds.

The future of alternative investments: wine and art? originally appeared on BloggingStocks on Mon, 23 Jul 2007 08:45:00 EST. Please see our terms for use of feeds.

The Wall Street Journal is reporting on the development of the hedge fund clone concept being created by big Wall Street firms. These clones basically try to earn the returns of hedge funds without paying the normal 2/20 fee structure.

For those unfamiliar with it, 2/20 refers to an annual "management fee" of 2% and a performance ("incentive") fee of 20%. When compared to any index fund, and even mutual funds, these fees seem ridiculous. However, there are many funds in the hedge fund industry that do in fact justify these fees.

The goal of these funds is basically to mirror the hedge fund index, or a group of hedge funds pooled together to be more diversified than investing in a single hedge fund. While this strategy has its benefits in reducing volatility and the chance of a blow-up, it also has its downsides. According to my friend James Altucher, fund of funds manager and president of StockPickr.com:

"Hedge fund clones are fine because they are all mediocre (i.e., like the average hedge fund). The real reason to go into hedge funds is to find the next SAC."

Basically, the returns of the "clones" will not match the returns of the best and brightest hedge funds on the street, such as SAC, Moore, or Tudor.

While this seems like an interesting proposition, the minimum investments remain very high at this point so the concept doesn't really bring much to the table for investors who are not accredited. As the WSJ said, this seems like another investment for the yacht-club set.

Hedge fund clones: Who are they for? originally appeared on BloggingStocks on Sat, 21 Jul 2007 13:40:00 EST. Please see our terms for use of feeds.

Everything's big in Texas. Look at the state's Teacher Retirement System (TRS). In all, it has about $112 billion in assets.

Interestingly enough, the pension fund wants to devote about a third of its assets to alternatives, such as hedge funds and private equity funds. This is according to a story in the Wall Street Journal [a paid service].

Yes, when you take a look a the SEC filings of the Blackstone Group (NYSE: BX), Fortress (NYSE: FIG), and KKR, you will see that alternative investment can post strong returns.

Despite this, the TRS strategy is certainly gutsy. Keep in mind that alternative investments can be fairly illiquid. What if it gets tougher to do IPOs or get sound exits on these investments?

Or, what if there is a meltdown, as seen with the subprime hedge funds at Bear Stearns (NYSE: BSC)?

Even the pros can make big blunders. And it could be bad news for pensioners.

On the other hand, TRS's move is certainly good news for the private equity world. Simply put, there's likely to be many more assets under management -- and that means lots of juicy fees.

Tom Taulli is the author of various books, including the Complete M&A Handbook and the EDGAR-Online Guide to Decoding Financial Statements.

Teacher Retirement System doubles down on private equity originally appeared on BloggingStocks on Sun, 15 Jul 2007 11:10:00 EST. Please see our terms for use of feeds.

On tonight's MAD MONEY on CNBC, Jim Cramer said that he wants to address the board of Citigroup Inc. (NYSE: C) because they are sitting on a goldmine: Since the stock is unchanged since 2000, you have to question the whole financial services supermarket strategy, and Chuck Prince needs to go too. Cramer says the one-stop shop doesn't work and they can unlock value by breaking it up. He said it would go from $54 to $63, or 17% upside. This is on top of the $5 if Chuck Prince would leave, or if they could even do a restructuring. Cramer bought shares for his trust and here are the five units it would become: Consumer business; international consumer business; global markets; alternative investments; transaction services.

Cramer did note that this is not inevitable at all and he is not sure it will really happen. What he left out was that just last week Prince Alwaleed Bin Talal, its largest shareholder, just announced that he was opposed to breaking the company up for a longer-term strategy. I have been vocal about Chuck Prince needing to go as long or longer than Cramer, and while Prince Alwaleed Bin Talal gave a vote of confidence to Chuck Prince I am not yet inclined to believe that he won't fire him. It starts feeling like Cramer is giving any strategy that might make a self-fulfilling return for his holdings, although he wouldn't be the first to do that.

Jon Ogg can be reached at jonogg@247wallst.com; he does not own securities in the companies he covers.

Jim Cramer's Citigroup strategy originally appeared on BloggingStocks on Mon, 04 Jun 2007 20:10:00 EST. Please see our terms for use of feeds.

Tiger 21, the world's richest investment club, is cutting back on stocks. Comprised of 123 members with combined assets of $7 billion, the club is focused on investment education for high net-worth individuals (although one one might assume they already know a thing or two about money). The group sports an unusual portfolio:

• 30% stocks
• 28% real estate
• 15.6% fixed-income
• 8.8% private equity
• 9.6% alternative investments (e.g. hedge funds)
• 8% cash

While this may seem bizarre, the portfolio's construction is a result of the unique needs of rich investors, who rely on their investments for income. Very few are still working. It will be interesting to see whether smaller investors follow the lead of the wealthy in moving out of equities. If they do, the next few months could be a doozie for financial markets.

Big bucks investment club cuts back on stocks -- others to follow? originally appeared on BloggingStocks on Sat, 31 Mar 2007 15:10:00 EST. Please see our terms for use of feeds.