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On the heels of topping the Americas large-cap list for most shorted stock of 2023, Tesla was the most crowded security in January, with a score of 99, according to the latest Shortside Crowdedness Report from Hazeltree.

The report is a monthly listing of the top 10 shorted securities in the Americas, EMEA, and APAC regions in the large-, mid-, and small-cap ranges.

In a statement, Tim Smith, Managing Director of Data Insights at Hazeltree, said: “2024 has started the way 2023 ended, with similar concentration of interest in many of the same securities and sectors, with the exception of the APAC region where there appears to be more movement among the top shorted securities.”

Energy companies Chevron (94) and Exxon Mobil (84) closely followed Tesla in the Americas large-cap rankings, alongside Apple (84) and Charter Communications (84). Albemarle Corporation had the highest institutional supply utilisation (23.59%)

In the mid-cap category, semiconductor developer Wolfspeed was the most crowded security (99), while Bloom Energy Corp had the highest institutional supply utilisation (69.14%).

In the small-cap category, solar energy company Sunnova Energy remained the most crowded security (99), while battery manufacturing company Enovix displayed the highest institutional supply utilisation (86.52%).

In the EMEA large-cap category, luxury goods conglomerate LVMH was the most crowded security for the fifth consecutive month (99), and Universal Music Group had the highest institutional supply utilisation (5.99%), while in the mid-cap category, French rail manufacturer Alstom was the most crowded security (99) and had the highest institutional supply utilisation (80.75%).

Irish video game company Keywords Studio (99) was the most crowded security in the EMEA small-cap category for the second consecutive month, while health & fitness club Basic Fit had the highest institutional supply utilisation (77.56%).

In the APAC large-cap category, Takeda Pharmaceutical was the most crowded security (99), with Aeon leading in institutional supply utilisation (21.22%), while computer manufacturing company Daifuku was the most crowded security (99) in the mid-cap category and IHI stood out with the highest institutional supply utilisation (33.46%).
In the APAC small-cap category, Webjet was the most crowded security (99), while Takara Holdings had the highest institutional supply utilisation (26.31%).

The data contained in the report comes from Hazeltree’s proprietary securities finance platform data, which tracks approximately 15,000 global equities across the Americas, EMEA, and APAC. The data is aggregated and anonymised from the contributing Hazeltree community, which includes approximately 700 asset manager funds.

Genesis Global, a software provider geared towards financial markets organisations, has launched a web version of its multi-asset class middle-office solution, Trade Allocation Manager (TAM).  

According to a press release, the web version of TAM is a scalable, cloud-native solution that integrates with other web services, reduces deployment costs and improves updates and maintenance cycles. TAM, which was introduced in 2018 and is built on the Genesis Application Development Platform, acts as a centralised application that automates trade matching, allocation, confirmation and other middle-office processes for equities and fixed-income products. The solution can be hosted, deployed on premises or via cloud.

In a statement, Niketta Postlethwaite-Williams, Senior Product Manager at Genesis Global, said: “The steady stream of innovation in the Genesis platform delivers an expanding array of functional and business componentry, AI-driven services and UI tools from which we draw to make TAM a modern and adaptable middle-office solution. With the web version, clients benefit immediately from the capabilities we add to TAM.”

She added: “Bringing all asset classes, markets and regions into a centralized middle-office solution is one of the most important things a firm can do to improve operational efficiency and enhance its compliance posture.
“Having a single, unified middle office also positions financial firms to benchmark their post trade processes. TAM provides extensive metrics for performance analytics.”

Luis Stuhlberger, the CEO and CIO of Verde Asset Management, a Sao Paolo-based hedge fund managing BRL24bn ($4.8bn) and one of the country’s largest independent asset managers, is looking to China’s smaller companies after the selloff in China’s equity market at the start of 2024, according to a report by Bloomberg citing an investor note. 

The note reveals that Stuhlberger’s flagship fund built a long position — via options — on an unnamed Chinese small-cap index. Both wager size and the index name were not disclosed.

In the note, the hedge fund described the move as a “small, opportunistic position” in light of Chinese stocks having a “horrendous” January and helping to send other assets lower, including Brazil’s benchmark Ibovespa index.

Since its founding in 1997, Verde’s flagship fund is up over 24,300% in terms of local currency after fees, and has seen almost double the annual return of the Ibovespa index. Last month, however, the fund fell 0.28% after fees, underperforming the 0.97% gain for the CDI rate — the benchmark for local hedge funds.

Chinese small-caps have struggled in 2024 due to growing concerns about the country’s economy and despite their popularity with Chinese retail and institutional investors last year. The CSI 1000 Index fell 15% this year and has underperformed blue-chip benchmarks, reflecting investors’ bets that measures to revive the market will prioritise larger firms. According to the report, structured derivatives and quantitative funds are seen to have amplified the recent selloff.

Like Stuhlberger, more investors are using options to capture potential upside in Chinese shares, according to the report. This shift can be seen in exchange-traded products, which track Chinese stocks and have just recorded a spike in option volume as traders prepare for a bounce in battered shares. Bank of America and EPFR data cited in the report also revealed that Chinese stocks just recorded their biggest weekly inflow on record, partly driven by state-backed investors.

Soaring energy supplies coupled with subdued demand means that a further slump in EU carbon permits is on the cards, according to a report by Bloomberg citing veteran hedge fund manager Per Lekander, CEO of Clean Energy Transition.

The report quotes Lekander as saying in a telephone interview that the price of carbon permits is “going way lower”.

“The fundamental demand of carbon in the near term is going to be extremely weak,” he said.

Prices have already dropped by 30% so far this year with increases in supplies of renewable power, falling gas prices and a recovery in nuclear and hydro plants combining to curb pollution — a key driver of demand for emission permits in Europe.

European industrial companies purchase carbon permits to account for each ton of emissions they release into the atmosphere. An acceleration in the development of solar energy plants — sparked by Europe’s recent energy crisis — has seen prices plummet from previously soaring levels.

Combined with an increase in the supply of permits available at auction, Lekander is predicting carbon could slump as low as €35. On Wednesday, benchmark carbon futures for December fell to €55.41 a ton, the lowest level seen since March 2022.

Goldman Sachs & Co has achieved a greater than 99% same day affirmation rate and a significant improvement in settlement rates for transactions leveraging the Depository Trust & Clearing Corporation’s CTM’s Match to Instruct (M2i) workflow in Q4 2023.

In addition, Goldman Sachs was able to achieve a 38% reduction in same-day affirmation exceptions and a 64% reduction in US settlement fails by value, when matching and affirming trades with investment manager counterparties who also use CTM’s M2i.

CTM’s M2i workflow aims to significantly increase same day affirmation (SDA) rates on DTC-eligible securities when a trade match occurs between an investment manager and executing broker. DTCC says that clients utilising CTM’s M2i workflow benefit from central matching and auto-affirmation capabilities that are typically more efficient than local matching and affirmation by custodians.

Today, most CTM investment managers leveraging M2i to match and affirm their US trades achieve a near 100% affirmation rate by 9:00pm ET on trade date, achieving the level of straight through processing necessary to meet their counterparties’ T+1 SDA requirements and cut-off times.

As the financial services industry prepares for the upcoming US move to T+1 settlement on 28 May, 2024, firms are looking closely at their post-trade processes to increase automation and to remove inefficiency. Goldman Sachs & Co, a self-clearing broker dealer, implemented CTM’s M2i workflow in Q4 2022 as part of their broader strategy to improve settlement efficiency and create a streamlined post trade experience for clients. They performed an impact analysis across the investment managers leveraging the M2i workflow and observed an increase in same-day affirmations.

CTM, part of DTCC’s ITP suite of products, is a central matching service for cross-border and domestic transactions across multiple asset classes that has become a global best practice.

Aaron Weiner, a Managing Director at Coatue Management, the $40bn hedge fund founded by Philippe Laffont, will leave the firm at the end of the year to start his own hedge fund, according to a report by Bloomberg citing people with knowledge of the matter. 

Coatue has already notified its investors of Weiner’s pending departure.

Weiner is still based at the firm’s New York office, where he leads healthcare and tactical solutions and has worked on investments in companies including Reify Health, Infinitus Systems, Cadence Solutions, DNA Script and Entos.

Prior to joining Coatue in 2021, Weiner worked at Blackstone and The Goldman Sachs Group.

Pershing Square Founder Bill Ackman is set to launch a new US investment portfolio that will offer retail investors access to an investment strategy that mimics his existing hedge fund but with lower fees and faster access to capital, according to a report by Reuters.

The report cites a regulatory filing as revealing that Pershing Square USA will be listed on the New York Stock Exchange and available to anyone who can invest in the US, including pension funds, endowments and retail investors who are normally excluded from hedge funds.

There will be no minimum investment for the new fund, which will charge a flat fee of 2% every year after the first year, far lower than the 15% to 30% performance fees charged by many hedge funds.

Ackman could potentially tap his 1.2m followers on social media platform X for capital for the fund which will also allow investors to withdraw their cash more quickly than typical hedge funds. Easier access to capital is likely to appeal to state pension funds and other institutions as well as retail investors.

The new, which will be structured as a closed-end fund that raises money through an initial public offering, with its shares then trading on the exchange, will be managed by Ackman, Ryan Israel, the firm’s CIO, and other members of the Pershing Square investment team.

LiquidityBook, a provider of cloud-native buy- and sell-side trading solutions to hedge funds and other sophisticated clients, has appointed trading technology industry veteran Jason Morris as its new President.

Morris previously spent nearly eight years at Enfusion, where he served as the Global Head of Corporate Development, and before that, as President, with responsibility for overseeing the company’s sales, marketing, product, operations, finance and HR departments.

More recently, Morris served as Head of Operations & Payments at PlateIQ (now Ottimate), where he helped grow payments revenue.

Under Morris’ leadership, LiquidityBook plans to expand its reach into new markets and deepen relationships with key partners, while continuing to enhance its product offerings across all areas of its portfolio, order and execution management system and embedded FIX network.

The US Securities and Exchange Commission (SEC) is facing a legal challenge to its latest set of rules, which require hedge funds and private equity firms to detail quarterly fees and expenses to investors, according to a report by Bloomberg.

A lawsuit was filed a week after the rules’ adoption by industry groups, who are represented by former Secretary of Labor Eugene Scalia and include the American Investment Council, which argued that the rules would “fundamentally change the way private funds are regulated in America”.

The SEC’s response in court filings invoked the 2010 Dodd-Frank Act, which was enacted to restructure the financial regulatory system in the wake of the financial crisis, and described the rules as “a flexible and measured approach to resolve problems affecting investors and their stakeholders”.

Another set of rules adopted by the regulator — which is currently chaired by former Goldman Sachs veteran Gary Gensler — last August prohibits firms from allowing certain investors to cash out more easily than others.

The report described Gensler’s tenure as being characterised by a tightened grip on private funds and a desire for greater transparency in an industry known for opaque and complex layers of fees.

The court has not yet ruled on the case — in full, National Association of Fund Managers v. Securities and Exchange Commission, 23-60471, US Fifth Circuit Court of Appeals (New Orleans) — nor has the date been indicated.

This follows the SEC’s recent postponement of another set of rules which would introduce a requirement for hedge funds and proprietary trading firms to register as dealers.

LMAX Exchange, an institutional exchange for global FX, has connected with the Libre Liquidity Bridge (Libre) service from 4OTC, a provider of low latency connectivity services for digital assets and FX.

Libre will enable liquidity providers to stream FX liquidity on LMAX Exchange venues with ultra-low latency.

The service will also provide connectivity to LMAX Exchange execution venues globally, including London (LD4), New York (NY4), Singapore (SG1) and Tokyo (TY3). This enables the company to streamline connectivity management, attract more liquidity onto the exchange, and minimise the time taken to onboard new liquidity providers.

Activist investor Blackwells Capital (Blackwells), a shareholder of The Walt Disney Company (Disney), has reaffirmed its support for the entertainment giant’s current CEO Bob Iger in a proxy statement filed with the US Securities and Exchange Commission (SEC).

In connection with its nomination of Jessica Schell, Craig Hatkoff and Leah Solivan for election to Disney’s board of directors at the company’s annual shareholder meeting, Blackwells has also released an open letter to “fellow shareholders”.

In a press statement, Jason Aintabi, Chief Investment Officer of Blackwells, endorsed his firm’s candidates while questioning the suitability of a rival slate of nominees from Trian Asset Management.

“Jessica Schell, Craig Hatkoff and Leah Solivan bring invaluable expertise and experience to Disney’s board as it faces the challenges and opportunities of a generational transformation,” he said. “Voting for Blackwells’ nominees will ensure the Board has the support it requires across critical areas: media and content, real estate and asset optimisation.”

Aintabi went on to describe the Trian nominees, including the firm’s Founder Nelson Peltz, as “uninspiring”.

In the open letter, Blackwell’s wrote: “If elected, our three nominees for the board have pledged to continue to support Disney’s transformation efforts under the leadership of the current board and CEO, Robert A Iger. In addition to an approach of constructive collaboration, our three nominees will bring unique skills, expertise and perspectives to the board that draw on a range of experiences that the future of Disney depends on.”

Equity long-short hedge funds have seen nearly $150bn in client withdrawals over the past five years as investors have lost faith in their ability to capitalise on bull markets and protect cash during market downturns, according to a report by the Financial Times.

The report cites data from Nasdaq eVestment as showing that the strategy, one of the oldest and best known in the industry, has underperformed the US stock market in nine out of the past 10 years.

Designed to ‘hedge’ against overall market fluctuations through a combination of bets on both winning and losing stocks, past star stockpickers in the long-short space include some of the biggest names in the business including Tiger Management’s Julian Robertson, GLG’s Pierre Lagrange and Egerton’s John Armitage.

More recently though, big names including Chase Coleman at once-high flying Tiger Global and Lee Ainslie at Maverick Capital, have struggled while cheap index tracker funds have reaped huge gains from the bull market.

Despite a sharp rise in interest rates over the past two years long-short funds have continued to struggle gaining just 6.1 per cent on average last year, compared with the S&P 500’s 26.3 per cent gain.

Alternative asset, equity and fixed income fund managers have identified private equity, renewable energy and hedge funds as the alternative asset classes most likely to increased inflows in 2024, according to new research by fund management solutions specialist Carne Group.

Private equity was the top choice of asset managers when asked to identify alternative asset classes expected to see the biggest increase in fundraising this year. Just under a third (28%) of fund managers expected PE’s increase to be ‘dramatic’ when compared to 2023, while 50% anticipated a slight rise. Renewable energy meanwhile polled 30% and 31%, followed by hedge funds (27% and 29%).

Almost three-quarters (73%) of 200 fund managers surveyed across the UK, Germany, Switzerland, Italy, France, the Netherlands, Norway, Finland and Denmark, and collectively managing $1.577tn, expect the number of new funds launching within their own sector in 2024 to be higher than the previous year.

Despite waves of market volatility, 14% of fund managers pinpointed a dramatic increase in the number of fund launches this year. Similarly, two-thirds (62%) of fund managers anticipate the number of segregated accounts launched in 2024 to be higher than the previous year, with 14% expecting the total number to be significantly higher.

The majority (83%) of those surveyed also expect an increase in the flow of new capital into their funds and segregated accounts this year, with 8% eyeing significant growth.

John Donohoe, CEO at Carne Group, said: “Alternative asset classes have benefited greatly from recent stock market volatility, which has resulted in a desire for investors to diversify their portfolios more.

“Respondents noted that fund managers face a complex regulatory environment with an increasing focus on corporate governance, issues around reporting, fees and expenses as well as operational costs. This means they need to place an even greater focus on improving their levels of efficiency, whilst maintaining the highest levels of transparency and reporting for investors.”

Finally, just under a quarter (23%) of fund managers anticipated a dramatic increase in the use of third-party providers between 2024 and 2026, while 56% expected a slight rise. This shift to incorporating external expertise is attributed to the ability to launch different product sets, speed to market, and the assurance of stronger fiduciary management of the fund.

Donohoe added: “Our survey shows that the expertise of the investment team is the key selling point for asset managers. As complexity and cost pressures mount, managers will focus their efforts on investment management and distribution, and work with third-party providers to enable them to remain lean, agile and competitive.”

Vision One Management Partners, an activist hedge fund firm co-founded by former Canadian Prime Minister Stephen Harper and Carl Icahn protégé Courtney Mather, wants US department store operator Kohl’s to put itself up for sale, according to a report by Reuters.

The report cites unnamed people familiar with the matter as revealing that Vision One has expressed its concerns about the company’s future to management, having built a stake in the business.

As well as asking Kohl’s to launch a sale process, the hedge fund also wants board representation, according to Reuters’s sources.

Shares of Kohl’s, which operates more than 1,100 stores across the US and also has a retail partnership with LVMH’s beauty products retailer Sephora, ended trading on Tuesday in New York up 4.9% at $26.80 on the news, giving the company a market value of $3bn.

Amid dizzying wrong-way bets and paltry gains for those with an eye on China and Asia more broadly, funds Sino Vision, Ubiquant, Toroa Management and Long Corridor Asset Management all saw gains exceeding 25% in 2023, according to a report by Bloomberg. 

Their performances last year contrast starkly with a simultaneous 13% decline on the MSCI China Index of equities, as well as underscoring how some funds have delivered for investors despite increasing pressure facing once-dominant China-focused portfolios and Asia funds that capitalised on the world’s second-largest economy.

Sino Vision’s Greater China Market Neutral Fund put up 31.9%, propelled by AI-related bets in Taiwan, but has since lowered its gross exposure to China and Hong Kong since peaking in Q1 of 2022, according to a spokesperson cited in the report, due to fewer attractive opportunities.

Toroa Management’s Master Fund saw a 27.5% return, having relegated China to just one-sixth of its overall exposure as well as pivoting to industries such as advanced manufacturing, energy transition, electrification, automation and software primarily in South Korea and Japan — its biggest return drivers last year. When the $200m firm began trading in Q3 of 2021, its exposure to China was more than 50%. Toroa has also held short positions in suppliers of infant formula and liquor to China as well as real estate investment trusts in Japan.

Long Corridor Asset Management’s Alpha Opportunities Fund gained 26.7%, when about three quarters of its profit drew from trading in Greater China, which include the acquisition of Hong Kong-listed shares of PetroChina and Cnooc. In 2021, the latter was added to a sanction list by the Trump administration, causing international investors to dump their shares. Long Corridor subsequently began to buy Cnooc shares in 2022.

Their boons closely follow the shuttering of Chua Soon Hock’s Asia Genesis Macro Fund just last month, which saw a loss of nearly 19% due to a wrong-way bet that Japanese stocks would underperform Hong Kong and China peers in 2024.