“The CFO wants to know why our stock is down when it should be up.”

That’s the essence of conversations I had yesterday with two investor-relations officers. It’s tempting to suggest asking Al Gore about why things that should be up are instead down. But that’s an old joke. And it won’t make you more valuable in the IR chair.

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We were on the bikes at dawn in Denver where on the oval at Washington Park it was 45 degrees as the sun rose.  That’ll wake you up!

Speaking of waking up, did you read Sebastian Mallaby’s article in the weekend Wall Street Journal called “Learning to Love Hedge Funds?” Going back to the first hedge fund in 1949, run by Alfred Jones, Mallaby contends that hedge funds represent the optimal risk-management model.  Government tries to prevent bad things from happening. Hedge funds, where owners put their money at risk and earn returns when profits are produced, view risk as a pathway to opportunity, but one marked by prudent insurance, or hedges, against downside.  Jones produced cumulative returns of 5,000% from 1949-1968, Mallaby notes. Continue reading →

Sorry to keep you waiting two extra days this week! We were in San Diego, where June Gloom outside contrasted with the festive mood filling the Manchester Grand Hyatt for NIRI National 2010, the annual gathering of IR professionals.

Attendance jumped from last year. A few new firms joined the lineup on the boulevards in the exhibit hall. One first-time attendee working in corporate governance said as we sat by the fire pit Monday night and watched the party crowd and the live band and the oddity of the evening, a young woman rolling around on the pool in a giant see-through inflated ball, “You NIRI folks are the nicest conference goers I’ve ever met.” Continue reading →

Does it feel like the beatings will continue until morale improves?

What’s happened today is straightforward: Investors and counterparties – think of it like vacationers and providers of trip insurance – sorted out imbalances. The debits and credits were entered on ledgers last week with monthly options expirations. Yesterday, true-ups hit Asian and European markets. Today they rippled through ours.

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Global Statistical Arbitrage is not nearly so good a name for a rock band as the one my lovely Karen quipped after cleaning the glass on a patio door where the cat presses her nose: Snot Mark.

Snot Mark is also a tempting description for what’s happening behind share prices and volume, at least at times. But Global Statistical Arbitrage is more accurate, and widespread. Continue reading →