Stocks bleeding red are generally a good play for a short seller, who is betting on falling values. Yet activist investors do not wait for rattled markets the likes of which befell markets on Wednesday to sell short a particular company’s stock. Embedded in their sales pitch are well-crafted theories that attempt to challenge Wall Street’s sell-side mentality and, with that, reap a potential cash windfall.
Sahm Adrangi, founder and chief investment officer of Kerrisdale Capital, is among a group of small social media savvy funds who pitch some of their research to the public. Before stocks sank on Wednesday, Adrangi had been pounding the media circuit to get his message out about satellite communications company Globalstar (GSAT), which, he says, has no equity value.
As world leaders gather this week for the annual International Monetary Fund and World Bank autumn meetings, Ebola will be top on the list of priorities. Apart from the human toll, the economic impact will be felt for at least a couple of years, said David Evans, senior economist of the World Bank’s Africa Division.
“What we see is that in the short run, by the end of this year, Guinea, Liberia, and Sierra Leone are likely to be about $359 million poorer than they would have been in the absence of the Ebola outbreak,” Evans told the Global Markets Forum ahead of the meetings. “With our estimates of the impact of West Africa alone, even in a less tragic case, the lost GDP is likely to run into the billions. And in a worse case, we have even higher numbers (more than $40 billion).”
A healthy dose of fear has re-entered financial markets in the final three months of the year. The Chicago Board Options Exchange VIX, a widely tracked measure of market volatility, rose to a two-month high on Wednesday.
Varying news reports offered threats from the Ebola virus and a stagnating European economy as tangential reasons. Perhaps another point is many investors view the U.S. Federal Reserve’s pending decision to raise interest rates as a rumbling train far off in the distance that they now hear headed their way. Closer to the horizon are headlines that can no longer lean on “Fed easing” to explain away rising asset prices and a rising stock market.
Investors anticipating the first Friday of the month for the release of nonfarm payrolls data were thunderstruck when a week-long string of high performing data ended with a thud. The U.S. Labor Department reported that a mere 142,000 jobs were added to the labor force, close to 100,000 jobs less than expected by many economists.
The disappointing jobs data much like the impossibly optimistic report of a 4.2 percent rise in second quarter U.S. gross domestic product late last month are both indications of an economy that has yet to fully iron out an even recovery.
Bond market investors with millions to spare are not apt to buy debt without first examining the fine print, or at least have a team of financial experts and lawyers do it for them.
Yet many investors fail to do the same due diligence when looking to shelter money, invest it for future generations or just plain spend it, when it comes to purchasing artwork, says one art preservationist.
Oil traders who bet on rising prices were hit with a double whammy on Tuesday in the way of announcements from the top two energy data agencies. The still-nascent U.S. shale energy revolution is upending eons-old geopolitical events and it still seems to be in the early days.
Global energy watchdog the International Energy Agency revised lower its outlook for oil demand this year back to 2012 levels as the U.S. Energy Information Administration (EIA) said July U.S. oil production rose to its highest in more than a quarter century.
The long, lazy days of summer haven’t stopped economic recovery from plugging along in the U.S. Unlike winter, which was mostly blamed for a negative gross domestic product reading at the beginning of the year, some June U.S. economic data is coming out strong.
On Tuesday, the industry group the Conference Board, said its Consumer Confidence Index for June rose to its highest level since October 2007. Economists pegged this on an improving labor market, which is not without its lumps.
Activist investing has been among the best performing hedge fund strategies this year. These investors buy a company’s stock and may agitate its management for a change. They may sell the stock short, expecting its share price to fall before they can replace management or board members to facilitate any change.
Many investors feel this is counterintuitive to being an equity holder in a company. Some are plainly critical of the practice.
The largest Wall Street investment banks reported good earnings this week, many beating analysts’ expectations, but the devil remains in the details.
Banks are in the middle of implementing global regulations designed to create a safer framework under which they operate and avoid an encore of 2008. Still, these financial institutions are not as forthcoming as they should be in disclosing key elements that would help measure their resilience, Mayra Rodríguez Valladares, managing principal of MRV Associates and a bank regulation expert told the Reuters Global Markets Forum during a LiveChat this week.
Twitchy investors who fear the S&P 500 stock index will correct its meteoric rise after posting historic highs on Tuesday have yet to show up in the widely-watched index that measures investors’ confidence in markets.
The Chicago Board Options Exchange (CBOE) volatility index or the VIX, known as the “fear gauge” that measures the short-term volatility of S&P 500 stock index options, has steadied around 10 percent at multi-year lows.