Thu, Aug 24, 2017
A A A
Welcome Guest
Free Trial RSS
Get FREE trial access to our award winning publications
Industry Updates

Hedgebay Trading: secondary market hits six month high, but correct valuation of assets remains a problem

Monday, November 15, 2010
Opalesque Industry Update - Valuation problems will continue to haunt market despite improvement, warns Hedgebay

The highest average trade price in six months may signal the return of stability to the secondary hedge fund market, according to the October edition of the Hedgebay index.

October’s average of 81% is the second consecutive monthly rise shown by the index, after averages of 74% and 78% in August and September respectively. Though still some way off the YTD peak of 91%, October’s figures show that the hedge fund market is moving steadily in the right direction. The last six months have been characterised by volatile trading patterns, and Hedgebay believes that some consistency in trading will be welcomed by hedge fund investors:

Elias Tueta, co-founder of Hedgebay, commented:

“The patterns we see in secondary market trading are so often based on investor sentiment. It is extremely difficult for investors to be secure about committing to trades when price valuation is so volatile, as it has been over the last six months. The steady rises over the last couple of months may bring a bit of added confidence to investors for the rest of the year.”

However, Tueta warned that price volatility will continue to occur as along as correct valuation of assets remains a problem for secondary market users. Many investors have admitted that they have no mechanism for discovering a fair trading price as they have no insight into underlying value. This has seen many investors choosing to hold their assets rather than trading, which has limited the extent of the recovery the market has been able to make. Hedgebay believes that for the market to reach a stage of full recovery, managers will need to provide greater transparency into the value of the underlying assets:

“At this stage, trading is being determined to too great a degree by forces external to the actual price of assets. Liquidity demands, portfolio construction and other legacy issues have all played a role in the price that trades are being made at. These factors are all dependent on the individuals trading, rather than the basic statistics of valuation, and this is why we have seen such drastic price changes of late. Investors are still too limited by a lack of firm valuation to predict whether recent price rises could be a lasting condition. Until a means of fair valuation has been established in the market, uncertainty will remain.”

Trading on the SMI continued its recent pace, with brisk volume recorded throughout the month. With trading once again taking place across the full range of asset classes, the indications are that investors are managing their portfolio positions as the end of the year approaches. In contrast to the SMI, Hedgebay’s Illiquid Asset Index, which measures trading in gated or suspended funds, recorded a considerable drop to 34.50%. After the notable stability of recent months’ trading, this month’s price difference suggests that the presence of leverage has had a negative effect on trading this month and that the market is not as stable as originally thought.

(press release)


About Hedgebay Trading Corporation
As the first and largest secondary hedge fund market provider, Hedgebay - founded in 1999 - can rely on historical illiquidity data dating back several years. The IAI and SMI primarily target investors in hedge funds, such as fund of hedge funds, pension funds, endowments, foundations, insurance companies, family offices, wealth managers and HNWIs. However, Tueta believes that the index also provides pertinent information for the wider global investment and financial services industry, including leverage providers, regulators, investment banks and prime brokers.

For nearly a decade Hedgebay Trading Corporation has provided hedge funds with a market to trade positions by matching buyers with sellers. Since its launch, Hedgebay has provided secondary market data to registered users of its website www.hedgebay.com


Bg

What do you think?

   Use "anonymous" as my name    |   Alert me via email on new comments   |   
Today's Exclusives Today's Other Voices More Exclusives
Previous Opalesque Exclusives                                  
More Other Voices
Previous Other Voices                                               
Access Alternative Market Briefing

 



  • Top Forwarded
  • Top Tracked
  • Top Searched
  1. Opalesque Exclusive: Altegris and Artivest partner on distribution for alternative funds suite[more]

    Bailey McCann, Opalesque New York: California-based investment firm Altegris has partnered with New York-based alternative investments platform Artivest on distribution for $1 billion in alternative funds. The partnership also launches Artivest's capabilities to offer alternative solutions to acc

  2. Investing - Buffett's Berkshire Hathaway will not increase its Oncor offer, Travel-tilting hedge funds are investing in airlines and online travel agencies[more]

    Buffett's Berkshire Hathaway will not increase its Oncor offer From Reuters.com: The energy unit of Warren Buffett's Berkshire Hathaway Inc said on Wednesday it will "stand firm" on its $9 billion offer to acquire 80 percent of Oncor Electric Delivery Company LLC and will not increase it

  3. Investing - David Tepper sells airline stocks, except Delta[more]

    From Forbes.com: Head of successful hedge fund Appaloosa Management, David Tepper shied away from airlines in the second quarter after upping his bets in the first three months of the year, according to his portfolio filing released this week. Tepper sold all of his position in United Continen

  4. Opalesque Exclusive: Update: Emerging long-biased hedge fund expands coverage[more]

    Benedicte Gravrand, Opalesque Geneva for New Managers: Left Brain Capital Management, which manages Left Brain Capital Appreciation Fund

  5. Investing - Silchester International Investors buys 5% stake in bookie William Hill, Hedge funds split over Microsoft, Top hedge funds are bullish on these 3 mega-cap stocks, Hedge funds betting demise in small-cap stocks will get worse[more]

    Silchester International Investors buys 5% stake in bookie William Hill From Thisismoney.co.uk: A leading investment fund has put its cash behind under-pressure William Hill. Mayfair-based Silchester International Investors has bought 5 per cent of the bookmaker's stock - which has almos