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Opening Bell: 3.10.17

Hedge funds descend on Mar a Lago; Warren Buffett gets schooled; the CIA has a dank meme division; and more.
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(Getty Images)

(Getty Images)

A Brand Name for a Hedge Fund Happy Hour: Trump’s Mar-a-Lago (NYT)
President Trump’s members-only club, which has been called the winter White House, is the location of a “meet and greet” hedge fund event organized by the Palm Beach Hedge Fund Association. David S. Goodboy, the association’s founder and the event organizer, is hoping that Mr. Trump will stop by. “He is invited. Whether he comes or not is in the air,” Mr. Goodboy said. “I hope so,” he added. “It would be great P.R. for us.”

The $2.5 trillion investor behind a statue of a girl on Wall Street is tackling its own gender problem (BI)
State Street, like many money management firms, has a gender problem of its own. And while it has a better record than many, both in its industry and across corporate America, it recognizes it needs to do more. Women make up only one in five employees at the company's investment unit, for instance. Only three of the firm's 11 board members are women.

Wall Street’s Volatility Pioneer Searches for Latest Fear Trade (WSJ)
When describing ambiguity, Mr. Brenner borrows a line from Donald Rumsfeld, the former Defense Secretary: Volatility measures the “known unknowns,” or the uncertainties about which one can measure probability. Ambiguity reflects the “unknown unknowns,” where the probabilities themselves are a mystery.

Hedge-Fund Trump Bump Turns to Slump (WSJ)
The start of 2017 has proved painful. Kenneth Tropin’s Graham Capital Management, which runs $13 billion in assets, has lost 3.7% in one of its portfolios. Greenwich, Connecticut-based Tudor Investment Corp., founded by Paul Tudor Jones, lost 2% in its Global fund in the first two months of the year. Louis Bacon’s Moore Macro Managers fund was flat this year to mid-February.

Bonfire of Wall St analysts burns some big names (FT)
At the same time that Mike Mayo was losing his job, another analyst covering the banking sector also suffered the same fate. Paul Miller, who worked until Wednesday at FBR Capital Markets, is more pessimistic on the future of the industry: “There’s just not a lot of money in sell-side research for [independent] broker-dealers any more because the bulge brackets give it away and it’s a loss leader for them. I’ve seen this coming and I’ve been preparing.” Mr Miller, 55, plans to take some time off and plot his next move.

[Bonus quote: Mayo went a bit further in a New York Post profile, comparing himself to Cézanne. (“We didn’t know whether to laugh or cry,” says a fellow analyst of that analogy.)]

Does Warren Buffett Not Understand Risk-Adjusted Returns? (Bloomberg)
I’m guessing that rich people are not dumb, and that there are reasons to invest in hedge funds other than just beating the market. First, it's important to realize that when you invest in an index fund, you get not just the return of the index, but the volatility of the index. Professional money management doesn’t necessarily offer better absolute returns, but what it should offer is better risk-adjusted returns.

‘Betting on Zero’ Review: Herbalife Opponents Doc Details A Total No-Win Situation (IndieWire) As the pool of perspectives deepens to include financial industry experts and more impartial journalists, Ackman becomes less of an altruistic figure and someone shown as having the same propensity for self-promotion as those he’s railing against. In saving its perspective twist for Ackman rather than Herbalife itself, Braun makes a sneaky point about the power of primacy and the allure of a squeaky clean image.

A look at the CIA’s internal dank meme division (Ars Technica)
CIA developers used movie and game references for a number of project names, including "Ricky Bobby"—a backdoor for intelligence collection designed to be dropped from a USB stick inserted by a CIA "asset" named for Will Ferrell's role in Talladega Nights. Ricky Bobby sent its data to a listener called "Cal"—named for John C. Reilly's character in that film, Ricky Bobby's teammate and friend. An "implant" for Apple iOS devices (effective on iOS versions 7 through 8.2) is named "DRBOOM," after a character from the card game Hearthstone: Heroes of Warcraft.

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Source: AP

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Hartford Bows to Paulson Wish to Exit Annuity Business (WSJ, earlier) Bowing to pressure from hedge-fund titan John Paulson, Hartford Financial Services Group said Wednesday it would exit its annuity business and weigh a sale of a large portion of its life-insurance operation. The move will allow Hartford to focus on its property-casualty unit, where the company got its start more than 200 years ago, as well as its group benefits business and its "high return" mutual fund operation, Chief Executive Liam McGee said in a statement. The announcement marks a substantial change of strategy for Hartford, which has long resisted calls to separate its life insurer from its property-casualty arm. Mr. Paulson, whose hedge fund is Hartford's largest shareholder, became the latest to push for such a move when he took to the company's fourth-quarter-earnings call in February to criticize management and urge them to "do something drastic" to boost the share price. Bernanke As Professor Tries To Buff Fed's Image (NYT) Mr. Bernanke, one of the most powerful men in Washington, has agreed to moonlight as a college professor, delivering four lectures on central banking over the next two weeks. He also will read some student papers...“It always surprises you to realize that this guy actually exists and he’s not just on TV,” said Max Sanders, a 19-year-old from New York. “It’s a once-in-a-lifetime opportunity to hear lectures from him,” said Noah Wiviott, 21, of New Jersey. “He clearly knows what he’s talking about.” Not everyone, however, found him convincing. Yuqi Wu, a 20-year-old student from China, said she did not agree with Mr. Bernanke’s criticism of her government’s monetary policy. “I definitely support the Chinese government’s position,” she said. Buffett Seizes Lead in Bet on Stocks Beating Hedge Funds (Bloomberg) Warren Buffett made a friendly bet four years ago that funds that invest in hedge funds for their clients couldn’t beat the stock market over a decade. So far he’s winning. The wager that began on Jan. 1, 2008, pits the Omaha, Nebraska, billionaire against Protégé Partners LLC, a New York fund of hedge funds co-founded by Ted Seides and Jeffrey Tarrant. Protégé built an index of five funds that invest in hedge funds to compete against a Vanguard mutual fund that tracks the Standard & Poor’s 500 Index. The winner’s charity of choice gets $1 million when the bet ends on Dec. 31, 2017. Banks Seek Delay On Volcker Rule (WSJ) The Volcker rule, which restricts banks' ability to trade with their own money, is set to take effect July 21, whether or not regulators have a final rule in place, according to the 2010 Dodd-Frank financial overhaul law. Federal Reserve Chairman Ben Bernanke said last month that regulators likely wouldn't have a rule in time. A group representing banks and others involved in bundling and selling loans is warning that deals worth hundreds of billions of dollars may need to be shut down because of wording in the law requiring compliance with a rule that doesn't yet exist. Cops arrest Occupy Wall Street protesters in Union Square (NYP) Cops shut down Union Square and kicked out a large crowd of Occupy Wall Street protesters last night, arresting nine demonstrators last night and this morning, just days after larger clashes at the group's former encampment downtown. I love lava lamp (Politico) Another amusing exchange as Mitt Romney walked past a Chicago Google employee with a big blue lava lamp (turned off) on his desk: "That's a big lava lamp, congratulations," Romney said. Wilbur Ross: Long-Term Bond Bubble Getting Ready To Burst (CNBC) "I think the greatest bubble that is about to burst is the 10-year and longer Treasury, because the idea that inflation is gone forever and for all time, and therefore these artificially low rates can last, is silly," the president of W.H. Ross & Co. said in an interview. Bernanke: Fed Is Ready To Act If Europe Falters (Reuters) "In the past few months, financial stresses in Europe have lessened, which has contributed to an improved tone of financial markets around the world, including in the United States," Bernanke said in testimony prepared for a House hearing Wednesday. Bernanke stresses, however, that a full resolution of the crisis "will require a further strengthening of the European banking system; a significant expansion of financial backstops, or “firewalls,” to guard against contagion in sovereign debt markets." Greece Names New Finance Minister (WSJ) Greek Deputy Finance Minister Philippos Sachinidis will be the country's new finance minister, replacing Evangelos Venizelos, the prime minister's office said Wednesday.

Mmm...sunscreen. (Getty Images)

Opening Bell: 8.23.16

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