In reviewing the most interesting financial news of the week, one headline stood out in particular: "Motley Fool Answers: What Do Hedge Fund Managers Do?"
This is a topic near to my heart, and it just so happens that the traditional Gadfly recap of the week's worth of financial news provides plenty of answers to that eternal question. So the Gadfly Fool will save you a click and tackle that question right here.
What many hedge fund managers spend their time doing these days is trying to sweet-talk pensions and insurance companies out of pulling their money from their funds. And if there's time between calls, maybe they ball up their fists and curse Jack Bogle for starting the index-investing craze 40 years ago, robbing the industry of $1 trillion in booty and never missing an opportunity to troll them at every step along the way.
As for today, that's easy. Hedge fund managers on the equity side appear to simply have hit the "buy" button, or perhaps preordered their robots to hit it, at approximately one microsecond after the disappointing employment numbers came out at 8:30 a.m. Then, presumably, they headed straight to the Hamptons or Nantucket to board up their beach-house windows, or ordered their robots to board them up.
That's not to say hedge fund managers are all running sweatshops when it comes to robot labor. The quant fund in this article, for example, gives its currency-trend robots off for 364 days a year! Another thing hedge fund managers are doing these days is scrambling to find geeks who know a thing or two about "wavelets" and differential equations, as this article shows.
It's not all boring math and computer science, though. Some hedge fundies have fascinating hobbies. For example, Business Insider reported how at Bridgewater Associates, they like to make videos. Lots and lots of videos, some of which "look like something Facebook or Google would produce." They even tape their meetings and then spend hours every week studying one another's meetings in what's known as "management principles training."
Actually, never mind, because that sounds more boring than studying differential equations and wavelets, whatever the heck those are.
However, Bridgewater isn't the only hedge fund where you can find aspiring recording artists.
For example, a former trader at Visium Asset Management recorded some 125 conversations with colleagues, and the FBI promptly got busy studying them. Talk about "management principles training!"
Steve Mnuchin is another example. He transitioned from hedge fund manager into Hollywood mogul. And lo and behold, now his entire life is following the arc of a screwball comedy: One minute he stops by Trump Tower on a whim and knocks back a little Trump-brand wine, and the next thing he knows he's The Donald's campaign finance manager and his phone is ringing off the hook with calls from Max Abelson wanting to know if he really does "put the ‘douche’ in fiduciary."
Also, hedge fund bros like to "Netflix and chill" like the rest of us. Except for the quants, that means obsessing over a million-dollar prize to improve Netflix's viewer-preference algorithm. So if the "The Big Short" shows up at the top of everyone's list of recommendations, you know who to blame.
Getting back to that Motley Fool take about what hedge fund managers do, one of the Fools offers: "I also think of hedge fund managers in French cuff shirts drinking three-martini lunches and talking about leveraged buyouts and spreads on orange juice futures."
That seems reasonable enough. However, as the Wall Street Journal reported, the frozen concentrated orange juice market has virtually disappeared. And that's disappointing to those of us who would love to trade futures in their entire breakfast. Personally, I would enjoy speculating on Cap'n Crunch futures, or playing the seasonal contango in Crunch Berries.
Anyway, this week some hedge fund managers blessed us with a little rain during the summer news drought by reigniting a never-ending feud.
Herbalife shares sank last Friday on reports that Carl Icahn's brokers had been shopping around his stake in the company to Bill Ackman, who's been on a famous short-selling crusade against the stock. But then Icahn came out of his corner swinging, saying Ackman was full of baloney and that he actually bought 2.3 million more shares of Herbalife, sending the stock soaring almost 5 percent on Monday.
And this should be a lesson for all of us that making money isn't the only thing that matters in life, or even investing. There are more important considerations: like seizing every possible opportunity to smite thy enemy.
These two guys are to the business pages what Anthony Weiner is to the tabloids' front pages: the gift that keeps on giving.
So on behalf of the financial press, I'd like to thank them for that by presenting them with this Trade of the Week.
This column does not necessarily reflect the opinion of Bloomberg LP and its owners.
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