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  1. #1
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    [EN] How Warren Buffett Made $1.5 Billion on GE



    Thomas Gryta
    Aug 15, 2017


    The billionaire investor’s Berkshire Hathaway Inc. loaned GE $3 billion in the depths of the financial crisis – a time when the industrial conglomerate was straining under the weight of its massive financial services business and tight credit markets.

    Under the terms of the 2008 deal, Buffett loaned the money in exchange for getting $3.3 billion paid back, plus $300 million in annual dividends, and a warrant that allowed him to buy $3 billion in GE stock for $22.25 a share for five years.

    In 2011, GE paid off the loan by paying Berkshire $3.3 billion and had already shelled out three full years of dividends at $300 million apiece. Together, they accounted for a profit of about $1.2 billion.

    In 2013, as his warrant to buy the GE stock was to expire, GE settled so Berkshire wouldn’t have to shell out the $3 billion to buy the stock, which was then trading above the $22.25 exercise price. Instead it gave Berkshire 10.7 million shares, which was equal to the total amount he would receive over the $22.25 exercise price of the warrant.

    Mr Buffett sold all Berkshire’s shares in this year’s second quarter, according to a newly released regulatory filing. We don’t know when exactly they were sold, but the shares were valued at $315 million at the end of March.

    Add in about $30 million in regular dividends paid over the time he held the shares, and the $1.2 billion in profit from 2011, and Berkshire got a total of about $1.545 billion in cash for lending $3 billion for three years. Not a shabby return.

    https://blogs.wsj.com/moneybeat/2017...billion-on-ge/
    Última edição por 5ms; 15-08-2017 às 20:28.

  2. #2
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    Versão para otários: Warren Buffett dumped all his GE stock

    Warren Buffett has had enough of GE.

    David Goldman
    August 15, 2017

    Buffett's investment company, Berkshire Hathaway, dropped its remaining 10.6 million shares of General Electric sometime in the second quarter, according to a regulatory filing. As of June, Buffett's investment had been worth $315 million.

    The timing of the sale was pretty solid. Those 10.6 million shares would have been worth $46 million less today than three months ago.

    2017 has been particularly rough on GE. The stock has cratered 20% since January. In June, CEO Jeff Immelt resigned after 16 years on the job. And the company continues to offload struggling legacy businesses as it tries to stay relevant in the digital age.

    Still, Buffett made hay off the investment. He poured $3 billion into GE in 2008 when the company was hit hard by the financial crisis.

    GE's stock grew about 40% during the time Berkshire held stock in the company. Even better: GE pays a huge dividend, helping pad Buffett's profit.

    Though Berkshire no longer owns any of GE, Buffett couldn't completely break up with his old investment. Berkshire bought 17.4 million shares of GE spinoff Synchrony Financial during the past quarter. The stake is worth about $518 million.

    Synchrony was formerly GE Capital, General Electric's lending arm that helped make GE the worst performing component of the Dow Jones Industrial Average of the 21st century.

    Shares of GE (GE) hardly budged Tuesday morning, but Synchrony (SYF) shares jumped 6% in premarket trading.

    A spokeswoman for GE declined to comment on the news.

    http://money.cnn.com/2017/08/15/inve...ric/index.html




    "Warren Buffett managed to make more than $1.5 billion by investing in a stock that has rewarded few in recent years."

    WSJ
    Última edição por 5ms; 15-08-2017 às 20:53.

  3. #3
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    Top trend following hedge funds lose out in 2017

    Maiya Keidan
    August 15, 2017

    Big computer-driven hedge funds such as AQR Capital Management, Aspect Capital and Two Sigma lost money in the first seven months of 2017, with human stock-pickers making better returns.

    The average hedge fund made 4.8 percent from the start of the year to July 31, Hedge Fund Research data shows, but a lack of market direction, June's sharp reversal and low volatility has made trading more difficult for automated funds.

    "Trend-followers are looking for long, drawn-out, directional moves and look to ride that trend as long as possible," Tom Wrobel, Director of Alternative Investments Consulting at Societe Generale, said.

    "When there's a sharp reversal – like in June – they lose money because it goes against the established position."

    Returns on hedge funds betting on macroeconomic trends were down by 1.4 percent on average to July 31 after losses of between 1.2 and 1.8 percent in three out of the first seven months of 2017, HFR data showed.

    Losses may have been exacerbated by lower market volatility as trend-following funds typically put on larger positions in such conditions, a strategy that would have backfired for them when trends reversed.

    Among the biggest losers was AQR Capital Management's $16 billion managed futures strategy, which lost 6 percent in the first seven months, data compiled by BarclayHedge and reviewed by Reuters revealed.

    Two Sigma's Compass Fund, which has $2.5 billion in assets under management, lost 4.4 percent over the same period, while

    London-based Aspect Capital's flagship $3.9 billion diversified fund lost 3.4 percent, the data showed.

    AQR, Two Sigma and Aspect Capital declined to comment.

    Winton Capital, the fund set up in 1997 by David Harding, was down 0.8 percent, a source close to the firm told Reuters. Harding helped fund the "remain" campaign in Britain's European Union referendum last year.

    And Leda Braga's Systematica Investments' BlueTrend, which was founded in January 2015 after spinning out of former hedge fund BlueCrest Capital, was down 6.4 percent.

    However, some computer-driven trend-following funds bucked the trend, including Braga's Systematica Alternative Markets programme, which made gains of 11.2 percent, a source with knowledge of the firm told Reuters.

    Also successful during the period were the five main trend-following AHL funds run by Man Group, which all delivered returns of between 0.5 percent and 10 percent over the same period, according to its website.

    Man Group is the world's biggest listed hedge fund.

    http://www.reuters.com/article/us-he...-idUSKCN1AV1KA

  4. #4
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    Goldman expands algorithmic corporate bond trading

    Focus on automating smaller-size trades to cut costs and free up dealers for bigger tansactions.

    @FTMarkets
    2017-08-16


    Goldman Sachs has expanded its algorithmic corporate bond trading programme, greater than trebling the variety of securities it quotes since final summer time to greater than 7,000 — and is now eyeing an growth into areas corresponding to junk bonds later this 12 months.

    It comes as each banks and traders, corresponding to hedge funds and asset managers, are specializing in automating smaller-size trades, in a bid to chop prices and liberate sellers for bigger transactions.

    The financial institution’s algorithm scrapes publicly-available pricing knowledge for 1000’s of bonds to mechanically generate agency, tradable costs for traders. Earlier this 12 months it broke into the ranks of the top-three sellers on MarketAxess in US funding grade odd-lots — outlined as smaller slivers of debt beneath $1m, in keeping with Goldman Sachs.

    MarketAxess, a preferred bond trading venue, declined to share the info, which isn’t public. Other massive contributors within the odd-lot market are stated to be Millennium and Wells Fargo.

    “It is hard to get the trader’s focus on those odd-lots,” stated Mike Nappi at Eaton Vance, who added that Goldman has develop into an essential trading associate for purchasing and promoting smaller bits of firms’ debt. “It’s made for machines. If you are a bank you want your traders focused on bigger trades.”

    Amy Hong, head of market construction technique for world credit score at Goldman, stated: “Our trading desk receives thousands of inquiries every single day, and GSA [Goldman Sachs Algorithm] has allowed us to address these types of inquiries in a systematic and automated fashion that enabled our traders to focus more on more challenging situations.”

    The bond market has confirmed extra resistant than equities to efforts to electronify and automate trading, given the huge variety of bespoke securities that usually solely commerce often.

    Other main market makers for oddlots haven’t made the identical transfer into automation. Michael Healy, co-founder at Millennium Advisors, says his agency makes use of expertise to help merchants pricing bonds, however that execution nonetheless requires human intervention.

    “The way dealers win more trades, oddlots or otherwise, isn’t by adding incremental automation. You do it by simply pricing more bonds, more aggressively — the same way dealers have always gained market share,” he stated.

    But funding banks and asset managers are investing aggressively in overhauling the bond trading structure, as stricter laws because the disaster have clipped the wings of financial institution trading desks and pissed off traders used to the service they offered earlier than the disaster. Goldman Sachs itself reported a dramatic decline in mounted earnings trading revenues for the second quarter.

    More than 80 per cent of US corporate bond traders now use some type of digital trading, in keeping with a 2016 survey by Greenwich Associates, having greater than doubled over the previous decade.

    The GSA initiative is spearheaded by Goldman Sachs’ Systematic Market Making group for mounted earnings, currencies and commodities, shaped in 2016 and led by Konstantin Shakhnovich, a associate since 2010.

    Ms Hong stated that the SMM group deliberate to “further enhance the algo’s capabilities and expand its scope” as a part of its broader effort to overtake corporate bond trading.

    https://t.co/eVEwBqNali

  5. #5
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    Trading Firm DRW to Buy High-Frequency Trader RGM

    RGM becomes the latest firm to succumb to a wave of consolidation that has whittled down the ranks of high-frequency trading, or HFT, firms. These firms use sophisticated computer algorithms to trade in and out of financial assets in fractions of a second.

    Alexander Osipovich
    Aug. 16, 2017

    Electronic-trading firm DRW Holdings LLC has agreed to buy high-frequency trader RGM Advisors LLC, the latest sign of how the long period of low volatility is shaking up the high-speed trading world and forcing out the weaker players.

    Chicago-based DRW said Wednesday it is acquiring Austin, Texas-based RGM, though it declined to disclose the purchase price. DRW, whose roots are in futures trading, is buying a firm with an expertise in stock trading. The deal is expected to close in September, DRW said.

    RGM becomes the latest firm to succumb to a wave of consolidation that has whittled down the ranks of high-frequency trading, or HFT, firms. These firms use sophisticated computer algorithms to trade in and out of financial assets in fractions of a second.

    High-speed traders flourished in the years after the financial crisis, but more recently they have hit a rough patch. Revenues at HFT firms from U.S. equities trading were an estimated $1.1 billion last year, down from $7.2 billion in 2009, according to research firm Tabb Group.

    A big reason for the slump has been a lack of volatility, which eroded profit opportunities. HFT firms make more money when markets swing up and down, because big price moves create brief dislocations between markets that ultrafast traders can exploit.

    A costly high-tech arms race in which HFT firms relentlessly compete to shave tiny fractions of a second off data transmission times has also hurt their bottom lines.

    Founded in 2001, RGM made around $800 million in trading profits over its lifetime, but this year it has been losing money, prompting its owners to accelerate efforts to find a buyer, a person close to the firm said. RGM has also cut staff to around 70 employees, down from more than 100 a few years ago.

    Besides DRW, the firm also held talks in recent weeks with Hudson River Trading LLC and IMC Financial Markets, this person said.

    RGM was founded by three men: Robbie Robinette, who had studied physics at the University of Texas at Austin; Richard Gorelick, a lawyer by training; and Mark Melton, a software developer with a specialty in artificial intelligence. They named the firm “RGM” after their initials, launching operations in Mr. Robinette’s living room.

    The firm made $17 on its first day of trading in December 2001, which its founders used to buy three margaritas, according to an interview with Mr. Robinette posted on RGM’s website. RGM eventually expanded into futures, currencies, fixed income and European and Japanese equities.

    During its peak years after the financial crisis, RGM accounted for as much as 5% of U.S. equities trading volume, a person close to the firm said. The firm decorated its downtown Austin offices with cartoonish images of robots and was once among the more visible firms in the secretive HFT industry.

    Mr. Gorelick, who is also the chief executive, defended high-speed trading when it came under attack in Michael Lewis’s book “Flash Boys.” He also testified on Capitol Hill last year to lobby against proposed regulations for algorithmic trading firms.

    DRW, which trades on more than three dozen exchanges around the world, is among the big players that have scooped up struggling competitors. In 2015, it bought Chopper Trading, a smaller Chicago firm.

    DRW was founded in 1992 by Donald Wilson Jr., a futures trader who got his start in Chicago’s rough-and-tumble trading pits. About a quarter of DRW’s business involves HFT, while other ventures include Bitcoin trading and real-estate investment.

    Mr. Wilson went on trial in New York federal court in December to face civil accusations of market manipulation by the Commodity Futures Trading Commission. The regulator says he directed a scheme to manipulate a little-known interest-rate contract in 2011—allegations that Mr. Wilson and his firm deny. Both sides are still awaiting the verdict. If the CFTC wins, it could result in a lifetime trading ban for DRW’s founder.

    In 2013, The Wall Street Journal reported that RGM had held talks with Chicago-based Allston Trading LLC about a possible merger. The deal never came to fruition, people familiar with the situation said. Allston declined to comment.

    The next year, RGM closed its London office. It moved to liquidate what remained of its European trading subsidiary last November, U.K. company filings show.

    Both DRW and RGM are privately held firms that trade their own capital and don’t manage money for outside investors.

    https://www.wsj.com/articles/trading...rgm-1502891004

  6. #6
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