In earlier days, the commodities markets were dominated by large trading houses and a small percentage of speculators. The trading houses used the markets to buy and sell their products and hedge their risks.

Now the world of commodities is completely different . Hedge funds, pension funds and mutual funds are a growing force in market participation. This year alone, contracts held by investors rose by 12% through October and are 17% higher than June 2008, as reported by the Wall Street Journal (subscription required).

Continue reading Investors Are a Growing Force in Commodities

Investors Are a Growing Force in Commodities originally appeared on BloggingStocks on Wed, 08 Dec 2010 11:00:00 EST. Please see our terms for use of feeds.

Interest rates are the top concern among global financial services firms in the pension risk management business.

According to a new survey by Aon's (AON) human capital arm, 58% of the big players in the pension risk management space cite this factor as the biggest issue facing defined benefit pension plan sponsors from the present to 2013. Longevity risk is next, with 21% of the responses, followed by equity markets at 15% and inflation at 6%.

Continue reading Aon Survey: Interest Rates Are the Greatest Pension Risk

Aon Survey: Interest Rates Are the Greatest Pension Risk originally appeared on BloggingStocks on Tue, 09 Mar 2010 13:00:00 EST. Please see our terms for use of feeds.

States are facing a shortfall of $1 trillion to pay for pension and health care to retirees, according to the Pew Center. Orin S. Kramer, chairman of the New Jersey Investment Council, told Bloomberg the number is closer to $2 billion.

Whether it's $1 trillion or $2 trillion, the problem is gigantic. What this means is that states must raise the cash to cover any shortfall. According to the Pew Institute, states have saved $2.35 trillion and owe $3.35 trillion.

Here are the states which owe the most:

Continue reading States Missing $1 Trillion Needed for Pensions and Retiree Benefits

States Missing $1 Trillion Needed for Pensions and Retiree Benefits originally appeared on BloggingStocks on Fri, 19 Feb 2010 10:30:00 EST. Please see our terms for use of feeds.

Continue reading Pensions Consider Insurance Securitization Finance Because You Refuse to Die

Pensions Consider Insurance Securitization Finance Because You Refuse to Die originally appeared on BloggingStocks on Mon, 15 Feb 2010 14:40:00 EST. Please see our terms for use of feeds.

Continue reading Insurance Companies to See Hot Cat Bond Market

Insurance Companies to See Hot Cat Bond Market originally appeared on BloggingStocks on Mon, 08 Feb 2010 09:30:00 EST. Please see our terms for use of feeds.

Its sights set on the United States and Asia, South Korea's $30 billion sovereign wealth fund is hunting for equities. Korea Investment Corp. (KIC) doesn't see bonds outperforming stocks over the long term, which is what has prompted the move.

Once the reallocation is executed, equities will account for half of KIC's "traditional" investments. Today, it stands at 40%. High quality equities and fixed income securities comprise 90% of KIC's portfolio, with the rest, one would gather, consisting of "non-traditional" investments.

Continue reading Korean sovereign, pension funds preparing to load up on equities

Korean sovereign, pension funds preparing to load up on equities originally appeared on BloggingStocks on Tue, 21 Jul 2009 15:00:00 EST. Please see our terms for use of feeds.

Three separate requests filed in Indiana by pension funds and consumer groups have asked the U.S. Supreme Court to stop the sale of Chrysler to a group led by Fiat. The groups filing the complaints hope to buy some time while challenging the deal. Some believe that this case could set a precedent for General Motors, which is trying to employ a similar "quick-sale" strategy as Chrysler. Late Friday, an appeals court stayed the closing of the sale until this afternoon, which gave the pension funds and opponents the weekend to make their plea to the Supreme Court.

The three pension funds argued that the sale of Chrysler unlawfully rewarded unsecured creditors, like the union rather than secured lenders. The funds hold roughly $42 million of Chrysler's $6.9 billion in secured loans. Lawyers for the pension funds argued, "the need for the court to review the profound issues presented by Chrysler's novel bankruptcy sale far outweighs the cost of delaying [a sale]."

Continue reading Indiana consumer groups want high court to block Chrysler sale

Indiana consumer groups want high court to block Chrysler sale originally appeared on BloggingStocks on Mon, 08 Jun 2009 11:30:00 EST. Please see our terms for use of feeds.

In order to end the two-year-old inquiry by New York Attorney General Andrew M. Cuomo into its pension business, the Carlyle Group has agreed to pay $20 million and make broad changes to its practices. Carlyle, one of the world's largest private equity firms, will no longer use intermediaries, known as placement agents, to secure investment business from public pension funds, and it will curb its campaign contributions to elected officials who oversee pension funds.

"This is a revolutionary agreement," Cuomo said Thursday. "I believe it totally changes the way people operate: It ends pay-to-play, it bans the selling of access, it puts the political power brokers out of business."

Continue reading Carlyle to pay $20 million to end New York pension probe

Carlyle to pay $20 million to end New York pension probe originally appeared on BloggingStocks on Fri, 15 May 2009 13:00:00 EST. Please see our terms for use of feeds.

The Wall Street Journal reports (subscription required) that "The Securities and Exchange Commission is expected to propose a federal rule that would ban investment advisers from managing public pension-fund money after contributing to the campaigns of state pension fund overseers."

The move comes in response to several pension fund scandals that have emerged in recent months. New York Attorney General Mario Cuomo, along with the SEC, is investigating allegations that former state comptroller Alan Hevesi was effectively selling pension fund business.

Continue reading SEC cracks down on 'pay to play' investment advisers

SEC cracks down on 'pay to play' investment advisers originally appeared on BloggingStocks on Sun, 10 May 2009 14:10:00 EST. Please see our terms for use of feeds.

Continue reading Doomsday Scenario: Bain eats onion, no-name groceries hot, pension fund fracas

Doomsday Scenario: Bain eats onion, no-name groceries hot, pension fund fracas originally appeared on BloggingStocks on Wed, 11 Mar 2009 15:40:00 EST. Please see our terms for use of feeds.

The New York Times Co.

Continue reading New York Times has pension drama

New York Times has pension drama originally appeared on BloggingStocks on Thu, 29 Jan 2009 11:00:00 EST. Please see our terms for use of feeds.

University endowments and pension funds for government employees and teachers are big investors in venture capital partnerships. Now, thanks to the decline in the stock market, these endowments and pension funds have too big a proportion of their portfolios invested in illiquid venture capital and private equity funds. So they are trying to sell those interests -- and I am guessing they will fail to do so or take big losses when they do.

Two of the biggest funds are above their limits. Consider the largest university endowment -- Harvard Management Company -- which had $36.9 billion as of June 30. Harvard has reportedly hired a bank to sell its private equity investments that make up 13% of its portfolio for fiscal year 2009. The largest state pension fund, Calpers, has a 10% target for private equity -- which includes venture capital and LBOs -- and because of falling stock values, its private equity share exceeds the target by 3%.

The forced sale of these private company ownership stakes is not good for the venture capital industry, which saw investment fall 6.9% in the third quarter. There might be some demand for the illiquid shares of venture-backed startups from corporate venture capitalists. But with an initial public offering market in hibernation and VCs telling their portfolio companies to cut way down on their burn rates, it looks like this largely lost decade for IT innovation will end with a nuclear winter.

Peter Cohan is President of Peter S. Cohan & Associates. He also teaches management at Babson College and edits The Cohan Letter.

Plunging markets to hurt endowments, pensions, venture capital originally appeared on BloggingStocks on Mon, 27 Oct 2008 11:58:00 EST. Please see our terms for use of feeds.

Continue reading As Dow rebounds somewhat off lows, caution is advised

As Dow rebounds somewhat off lows, caution is advised originally appeared on BloggingStocks on Mon, 15 Sep 2008 11:41:00 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.

On the other side of argument, one which argues that market forces set the price, some cotton merchants themselves were trading aggressively; a little-used exchange rule suddenly required merchants to unwind sell orders; and financial investors, including pension and hedge funds, started to enter the market, which generated an eight-fold jump February 19-26 in net buying, The Journal reported, citing CFTC data.

Continue reading Cotton price spike mystifies traders, prompts inquiry

Cotton price spike mystifies traders, prompts inquiry originally appeared on BloggingStocks on Wed, 13 Aug 2008 12:20:00 EST. Please see our terms for use of feeds.

Continue reading Hedge funds reduced positions in oil futures as prices rose, probe started

Hedge funds reduced positions in oil futures as prices rose, probe started originally appeared on BloggingStocks on Mon, 02 Jun 2008 14:57:00 EST. Please see our terms for use of feeds.

U.S. regulators Friday disclosed a broad nationwide investigation into potential oil-market manipulation and said they are expanding surveillance of energy markets, The Wall Street Journal reported Friday.

The Commodity Futures Trading Commission announcement of an ongoing and widening inquiry occurs amid a 4-year rise in crude oil prices in which gasoline, diesel, and heating oil prices hit record highs, Reuters reported Friday.

Oil closed Friday up 73 cents to $127.35 per barrel. Oil has risen about 100% in the past 12 months.

Many Congressional officials and consumer groups have been arguing for a systematic investigation into futures prices, asserting that institutional investors and other speculators have manipulated oil prices and driven them "artificially higher."

Others, including economists and oil executives, argue that the price increases have more to do with the sector's bullish fundamentals, including inadequate crude oil production growth amid rising demand.

Oil Analysis: Strong evidence suggests that the bulk of oil's 4-year bullish run is rooted in fundamentals, with the reduction in the global safety cushion -- the spare oil between daily global oil supply and demand -- accounting for today's near-record oil prices. Still, that's not to say a rigorous inquiry would not yield compelling data or new insights. One area of interest that the inquiry will explore: whether oil storage operators have issued misleading information about oil in their tanks to profit from oil trades, Reuters reported Friday.

Regulators to probe possible price manipulation in oil market originally appeared on BloggingStocks on Sat, 31 May 2008 10:10:00 EST. Please see our terms for use of feeds.

Continue reading Calpers' investments in commodities to impact the U.S. economy

Calpers' investments in commodities to impact the U.S. economy originally appeared on BloggingStocks on Thu, 28 Feb 2008 15:03:00 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.