Two actors portraying hedge fund managers in the movie “The Big Short” were nominated for a golden globe. Best performance by an actor in a motion picture – Comedy or Musical. Spoiler alert: nothing funny or musical about this movie.
Call me old fashion but I failed to see the humor in millions of Americans losing their homes and millions more losing their jobs because of Wall Street fraud. I found it despicable that some hedge fund managers made billions on this tragedy.
Fast forward to present day and nearly 3 trillion dollars are invested in the hedge fund industry. Computerized trading strategies has helped reap the biggest profits for some the industry’s largest players. Fully six of the top eight money makers for 2015 use quantitative analysis approaches to generate profits.
Quantitative trading consists of strategies which rely on mathematical computations and number crunching to identify trading opportunities. Price, trading volume, price to earnings ratio and discounted cash flow are just some of the more common data inputs used in quantitative analysis. The transactions are usually large in size and may involve the purchase or sale of hundreds of thousands of shares and other securities.
Tops among the hedge fund managers were Ken Griffin at Citadel and James Simons at Renaissance Technologies, both of whom reeled in $1.7 billion according to the year’s Institutional Investor‘s Alpha Rich List of the top hedge fund managers.
Nearly half of hedge funds lost money, according to Institutional Investor, and some familiar names on the Rich Lists of years past were missing, including John Paulson of Paulson and Co., Leon Cooperman of Omega Advisors, and Daniel Loeb at Third Point.
These industry leaders, however, did make the list, and qualified for the top 10:
Hedge funds hot hands
|1. Ken Griffin||Citadel||$1.7 billion|
|1. James Simons||Renaissance||$1.7 billion|
|3. Ray Dalio||Bridgewater||$1.4 billion|
|3. David Tepper||Appaloosa||$1.4 billion|
|5. Israel Englander||Millennium Mgmt||$1.15 billion|
|6. David Shaw||D.E. Shaw||$750 million|
|7. John Overdeck||Two Sigma||$500 million|
|7. David Siegel||Two Sigma||$500 million|
|9. O. Andreas Halvorsen||Viking Global||$370 million|
|10. Joseph Edelman||Perceptive Advisors||$300 million|
Source: Institutional Investor’s Alpha
Now add the fact that the world’s wealthiest investors are benefiting from a broken U.S. tax code. Hedge fund managers’ profits are treated as long-term capital gains, which means they’re taxed at no more than 15 per cent. Any wonder why the 1% are getting richer and the American middle class is disappearing.
Americans are so angry that this man could be the next President.