On a Saturday morning last December, Bill Ackman was scrolling through Twitter when an article in The New York Times caught his eye. “The Children of Pornhub,” by Nicholas Kristof, told how unauthorized sex — and rape and torture — videos were being spread across the internet on a website called Pornhub, one of the most popular in the world.  

Ackman, who has four daughters, was outraged when he read how one teenager ended up a Pornhub victim after sending a naked video of herself to a boy she had a crush on. Harassed and humiliated, the young girl attempted suicide. 

“In your mind replace the victims with your daughter or son,” the hedge fund manager and CEO of Pershing Square Capital Management wrote when he retweeted the article. “We could fix this problem.”

Then he swung into action. Ackman’s first step was to call Bradley Myles, the former CEO of anti–human trafficking nonprofit Polaris, whom Ackman had met through...

All it would take for bitcoin to reach a value of $500,000 would be for institutional investors to allocate just 5 percent of their portfolios to the cryptocurrency, according to Cathie Wood.

The high-profile founder of ARK Investment Management believes that allocation is realistic, given that institutions have approximately that amount of their portfolios invested in categories such as emerging markets. A five percent allocation would amount to about $2 trillion flowing into bitcoin. (One bitcoin is now worth almost $40,000.)

Speaking at the Robin Hood Investors Conference this week, Wood said her case is bolstered by the increasing number of people in developing countries who view cryptocurrencies as an insurance policy against governments confiscating their wealth, either directly or indirectly through inflation, as well as through capital controls. Wood said “smart countries” will ultimately get behind bitcoin, according to an attendee...

David Tepper isn’t a fan of Facebook or many social media platforms, but that doesn’t mean he’s staying away from buying the stock and other technology names.

Speaking at the Robin Hood Foundation’s annual investors conference, Tepper, founder of hedge fund firm Appaloosa Management, said that for any investors who believe Treasuries will stay close to their current yields for some time, the FAANG stocks — the top tech names — have been cheap. In fact, when asked what stocks he would hold if he knew he had to hold on for 10 years, Tepper answered that Amazon would be one. 

Later on in Tepper’s interview by fellow hedge fund manager Paul Tudor Jones, the Appaloosa founder said he’s “shitload long” oil stocks and some commodities, according to a person who attended the conference.

Tepper argued that while some investors may rightly hate oil because of its environmental impact, the cheapest stocks right now, by almost any measure, are...

Bitcoin’s journey began in 2009 when it was initially valued at around one cent per coin.  In 2010 it got to $1, and has since risen as high as $64,000 in a journey that has been remarkable.  The meteoric rise in its price has been accompanied by extraordinary volatility. The price surge, which is so dramatic that it is best viewed on logarithmic charts, has been punctuated by three deep bear markets: dropping 93% in 2010 and 2011, 83% in 2013 and 2014, and 82% in 2018 and 2019.  In 2021, bitcoin has retreated about 50% from its highs.

Part of the reason for bitcoin’s volatility is its perfect inelasticity of demand.  No matter where the price moves, the supply of bitcoin increases at about the same, pre-ordained pace.

Bitcoin’s supply is perfectly inelastic and increases in supply are slowing with time.

Bitcoin’s latest bear market began at the end of April when prices peaked at around $64,000 per coin.  Since then, prices have fallen...

On a Saturday morning last December, Bill Ackman was scrolling through Twitter when an article in The New York Times caught his eye. “The Children of Pornhub,” by Nicholas Kristof, told how unauthorized sex — and rape and torture — videos were being spread across the internet on a website called Pornhub, one of the most popular in the world.  

Ackman, who has four daughters, was outraged when he read how one teenager ended up a Pornhub victim after sending a naked video of herself to a boy she had a crush on. Harassed and humiliated, the young girl attempted suicide. 

“In your mind replace the victims with your daughter or son,” the hedge fund manager and CEO of Pershing Square Capital Management wrote when he retweeted the article. “We could fix this problem.”

Then he swung into action. Ackman’s first step was to call Bradley Myles, the former CEO of anti–human trafficking nonprofit Polaris, whom Ackman had met through...

For Canada’s Public Sector Pension Investment Board, the fiscal year that ended on March 31 was its best in ten years, performance-wise.  

According to a Wednesday announcement, PSP posted an 18.4 percent net return for the fiscal year 2021.  

Now, as its most recent five-year plan comes to a close, the fund — and chief investment officer Eduard van Gelderen — have revealed the fund’s future priorities, which include taking a top-down investment approach, embracing big data, and considering what a hybrid workplace could look like.  

PSP Investments is in a good position already: over the ten-year period, the 8.9 percent annualized return beat its benchmark by 1.1 percent per year. The five-year return — 9.3 percent — exceeded the benchmark by 1 percent per year.  

As global asset management industry recovers from the Covid-19 pandemic, Moody’s has shifted its outlook for investment managers from negative to stable. 

In its June 2021 global asset management report, the credit rating company revised its outlook on the asset management industry, attributing the change to the strong market rebound after March 2020, the recovery of organic growth rates, and the resulting recovery in investor risk appetite. The report, which was published Wednesday, also noted that, as a result of strong market performance, asset managers’s revenue and profit margins have recovered from the pandemic crash. 

“The industry has been resilient through the pandemic,” Rory Callagy, associate managing director at Moody’s Investors Services and lead author of the study, said in an interview. “Private markets provided a lot of that support, but there are also positive trends in the operating fundamentals.” 

In...

On a Saturday morning last December, Bill Ackman was scrolling through Twitter when an article in The New York Times caught his eye. “The Children of Pornhub,” by Nicholas Kristof, told how unauthorized sex — and rape and torture — videos were being spread across the internet on a website called Pornhub, one of the most popular in the world.  

Ackman, who has four daughters, was outraged when he read how one teenager ended up a Pornhub victim after sending a naked video of herself to a boy she had a crush on. Harassed and humiliated, the young girl attempted suicide. 

“In your mind replace the victims with your daughter or son,” the hedge fund manager and CEO of Pershing Square Capital Management wrote when he retweeted the article. “We could fix this problem.”

Then he swung into action. Ackman’s first step was to call Bradley Myles, the former CEO of anti–human trafficking nonprofit Polaris, whom Ackman had met through...

Investors need to rethink the relationship between interest rates and value stocks, according to research from Acadian Asset Management published on Wednesday. 

Challenging the widespread narrative that rates are directly related to the performance of value equities — low interest rates are to blame for disappointing performance and vice versa — the report argues that forces including the economy, policies, and market sentiment also play a crucial part in how rates bode well or poorly for the strategies. 

“Depending on how value is defined, and how value changes its colors over time, you need to pay attention to how value is exposed to different parts of the environment currently,” Vladimir Zdorovtsov, director of global equity research at Acadian, told Institutional Investor. 

Citing the TMT bubble, the technology, media, and telecommunications sector, as an example, the report highlighted how market sentiment...

Nate Anderson’s Hindenburg Research, the short activist firm that burst onto the scene last fall with an exposé of electric truck maker Nikola, is back with its fourth big takedown of a special-purpose acquisition company.

This time Anderson has set his sights on DraftKings, the online gambling site which went public in one of the hottest SPAC deals of 2020. His firm alleges that DraftKings has “extensive dealings in black-market gaming, money laundering, and organized crime.”

Although the company “has been heralded as the key SPAC ‘success story,’” Hindenburg wrote on Twitter, “we think it represents the dying embers left by yet another Wall Street loophole.”

Last year, DraftKings went public in a three-way merger with SPAC sponsor Diamond Eagle Acquisition and a Bulgaria-based gaming technology company called SBTech.

Nearly three-quarters of fund managers believe inflation will be short-lived, according to Bank of America’s latest investor survey.

The survey, which was published Tuesday, found that 72 percent respondents view the current state of rising inflation as “transitory.” Still, fund managers don’t believe inflation has peaked yet, with net 64 percent of survey respondents predicting higher inflation in the next 12 months. 

The survey, which included 224 participants with a total of $667 billion in assets under management, aggregated responses from June 4 to June 10.

According to BofA, economic expectations among survey participants have peaked. Three-quarters of investors said they expect a stronger economy, a percentage that indicates investors’ “cruising altitude” when it comes to the market, according to David Jones, investment strategist at BofA Securities.

A year after the Covid-19 market crash, endowments, foundations, and aggressive risk takers have experienced the strongest recoveries, according to outsourced chief investment officers whose clients include major investors across fund types.

Out of all outsourced investments tracked by the Alpha Nasdaq OCIO Broad Market Index, endowment and foundation portfolios “came roaring back” with a trailing one-year average net-of-fee returns at 35.8 percent, said Brad Alford, founder of Alpha Capital Management. The “aggressive asset allocation index,” an index that factors in OCIO strategies with a 0 to 20 percent allocation to risk-mitigating asset classes, touted the strongest performance with a 46.3 percent trailing one-year return. 

The Alpha-Nasdaq indices started in 2019 and aggregate responses from anonymous OCIOs that “represent the broad OCIO market” and “appropriately reflect the nuances across sub-categories, such as plan type and...

Thinking about adding more leverage to your portfolio? It may not be worth it, according to new research.  

An academic paper published in May shows that both institutions and individuals that take on leveraged investment positions tend to underperform, despite the added risk. 

The research comes at an interesting time: the recent blow-up of Bill Hwang’s heavily leveraged family office Archegos Capital has regulators scrutinizing the investment strategy — and what happens to it when a margin call takes place.

“There are many examples of institutions that became financially distressed due to huge losses caused by high leverage,” the paper stated. “These findings, overall, show that high leverage does not lead to high returns for investors, but reduces returns: investors pay for leverage.”

Across the globe, consumers’ desires are shifting — and that has implications for investors.

A decrease in the consumption of basic goods, like food and personal hygiene products, may present new opportunities for investors in emerging markets, according to a recent paper from investment firm Polen Capital.

“We believe the investment opportunities in emerging markets are hard to overstate,” portfolio manager Damian Bird and analyst Pamela Macedo wrote in the paper. “A McKinsey study estimates that by 2025 consumers in emerging markets will spend an estimated USD 30 trillion annually, a future it calls ‘the biggest opportunity in the history of capitalism.’”

For their study, Bird and Macedo compiled macroeconomic and industry-specific data from global industries over the past 20 years. They first noted a shift away from the “classic consumer product S-curve,” a visualization that illustrates historical trends of consumers in...

With a handful of technology and growth stocks dominating popular benchmarks, many passive investors have a high degree of concentration risk hanging over their portfolios.

But one of the most common alternatives to capitalization-weighted indexes may fall short of protecting investors. 

Michael Hunstad, head of quantitative strategies at Northern Trust Asset Management, said his firm began examining the issue after getting a flurry of questions on the subject from asset owners and consultants. He said clients had been asking whether or not equal weighting could solve the concentration problem for investors in passive strategies that weight stocks based on their market capitalization, which is the most common methodology for index funds.

Concentration arises when a group of stocks — say technology names — sectors, or styles significantly outperform or underperform other groups. This over- or underperformance throws indexes out of...

On Tuesday, New York-based law firm Wigdor LLP announced that Guzel Ganieva, who made accusations against Black on Twitter in March, has sued him for defamation, intentional infliction of emotional distress, and gender-motivated violence.

AQR Capital Management co-founder Cliff Asness’s stubborn loyalty to value investing is finally paying off.

While many of AQR’s funds are in the black this year, one need look no further than AQR’s risk premium fund to see some of the biggest gains. 

This year, the AQR Style Premia Alternative Fund, a publicly traded risk premium mutual fund, has gained 19.3 percent through April 23. That fund fell 19.23 percent last year, according to a private database.

AQR is also outperforming some of its quant peers. 

When a raincloud breaks over a portfolio manager’s office, it may bring a mental fog that can cloud market performance.

Unpleasant weather — like snow, rain, clouds, and wind — can have psychological and physiological impacts on institutional investors, resulting in slower processing of earnings news and an amplified “post-earnings announcement drift” among a firm’s top investment professionals, according to a study from Stony Brook University professor Danling Jiang, Troy University’s Dylan Norris, and George Mason University’s Lin Sun. The post-earnings announcement drift, known as the PEAD effect, refers to the tendency for a stock’s cumulative abnormal returns to drift for a long period of time following an earnings announcement. 

Previous research suggests that unpleasant weather induces feelings of pessimism, anxiety, fatigue, and difficulty concentrating, the authors said. For institutional investors, these moods can delay...

Past behavior is often called the best predictor of future behavior, but it’s well known that incentives drive behavior. Too often allocators believe these incentives come purely from dispassionate compensation structures and contractual protections at their investment managers. Although alignment of interests is indeed important, human beings are not machines. The key to true motivation and self-fulfillment at work comes from something deeper. 

According to Daniel Pink, author of New York Times bestseller Drive, there is a serious mismatch between what businesses believe about motivation and what science knows. Business thinks that compensation, an extrinsic motivation, is the most effective means of compelling desired behavior. Pink argues that it is instead somewhat like a sugar high — effective at providing a short-term jolt but not capable of incentivizing over the long term. He cites some interesting studies that seem to support his...

Amid the the market volatility and economic uncertainty of the pandemic, compensation for professionals in private equity and venture capital continued to rise. 

In Benchmark Compensation’s annual survey of industry professionals, 68 percent of respondents said they earned between $150,000 and $1 million last year, marking the highest percentage to report earning more than $150,000 since the company began publishing the annual report 14 years ago, the firm said in a press release Tuesday.

The 2021 report also marks the seventh consecutive year of gains in private equity and venture capital compensation. Overall, the study found that respondents working in private equity earned more money than those working in venture capital, but respondents working in hybrid firms earned the highest levels of compensation as vice presidents and managing directors. 

The report was based on a survey of hundreds of workers, from partners to...

Proponents of ESG argue that there are not just moral benefits to investing according to environmental, social and governance goals: ESG funds also outperform their peers.

But those excess returns may really be coming from another source, according to research from Scientific Beta.

Scientific Beta, set up by EDHEC-Risk Institute in 2012 and now majority-owned by Singapore Exchange, has found that 75 percent of the outperformance of ESG strategies cited in popular academic studies on the subject was due to their exposure to the quality factor, which can be cheaply accessed through systematic funds. Quality is a well-known premium, or source of return, that academic research has shown outperforms the market over long-term economic cycles.

In a report not yet published but seen by Institutional Investor, Scientific Beta deconstructed the reported ESG performance gains to account for the potential contribution of sector tilts, factor...

Consulting firm Aon has prevailed in a lawsuit alleging that it had bungled the wind-down of a Florida-based health foundation’s pension plan.  

On Friday, a federal judge ruled that Foundation Resolution Corp.’s allegations that Aon committed ERISA violations and investment mismanagement were unfounded.

This closes a nearly two-year-long case in which Foundation Resolution — previously been known as Citrus Memorial Health Foundation — had alleged that the investments Aon selected as a part of its plan termination process had resulted in “millions of dollars of losses.” Foundation Resolution had accused Aon of “deceptive, imprudent, and incompetent performance of its obligations as a fiduciary,” in its amended complaint, which its legal team filed in July 2019. 

The nonprofit had specifically sued Aon for violation of ERISA, or the Employee Retirement Income Security Act; professional malpractice; and breach of contract....