Wed, Aug 20, 2014
A A A
Welcome Guest
Free Trial RSS
Get FREE trial access to our award winning publications
Industry Updates

The Midway Market Neutral Fund returned an estimated 2.15% in March, 7.41% YTD

Friday, April 09, 2010
Opalesque Industry Update - The Midway Market Neutral Fund returned an estimated 2.15%, net, in March, which brings our year-to-date net return to 7.41%, with minimal leverage. Midway’s rolling 12 month net return is 64.7%.

The prevailing environment requires careful study of potential policy changes. This is as essential for effective risk and portfolio management as is the study of individual mortgagor behavior. We believe that attentive study and selection will continue to yield interesting opportunities.

Market Commentary
The state of the housing remains largely unchanged. The Freddie Mac survey rate of 30 year fixed rate mortgages averaged 4.97% in March. The Case-Shiller index of housing prices declined 0.4% month over month for January. Housing prices may have appeared to have reached a local bottom in the past two months. Existing homes sales have declined from their high “tax rebate levels” in the Fall of 2009 and are again at recession levels (4.37 mil. annualized). They are expected to pick up again in April due to the extension of the tax rebate. Signs of the pick up can be seen in the February pending sales figures which increased 8.2% over January. Pending sales that are completed are reported as existing sales one or two months later.

The Obama Administration announced significant changes to its Home Affordable Modification Program (HAMP) in March. To date the number of permanent modifications resulting from the program has been modest (170K), although the program has picked up steam in recent months, and the number of trial modifications is now at 835K. The Treasury Dept. estimates that at least 3-4 million homeowners are in need of assistance. Some of the key changes to the program include 1) temporary assistance for unemployed homeowners while they search for employment, 2) a requirement that servicers consider principal write downs, 3) improvements to reach more borrowers with HAMP modifications, and 4) increased incentives to provide homeowners with foreclosure alternatives, such as deeds in lieu and short sales. The Administration has consistently stated that their goal is to offer assistance to 3-4 million homeowners by the end of 2012; their actions give every indication that they will do so.

The Federal Reserve’s $1.25 trillion mortgage-backed securities purchase program ended in late March. The program was started in November 2008 after the spread between 10 year Treasury’s and 30 year fixed rate mortgages doubled to nearly 250 basis points. The basis has widened only slightly since the program ended, reflecting the strength of the market for mortgage backed securities. We fully expect the Fed to continue executing an orderly strategy as it withdraws from the market.

Economic Commentary
This past month’s economic indicators continue to signal recovery. While the unemployment rate remained unchanged at 9.7%, nonfarm payroll employment increased a respectable 162K in March. Industrial production showed modest y/y growth for the second consecutive month (+1.7%). Economic activity in the services sector, as measured by the ISM non-manufacturing composite index, was at its highest level since June 2007 (Mar.2010 Index = 55.4). Inflation remains under control, with virtually no change in the CPI from January to February.

With a broad spectrum of economic indicators suggesting that a recovery is underway, a key question remains unanswered. How long will it take for the economy to reach full employment? The March non-farm payroll employment change was an important step in the right direction, but it was a very modest step. A total of 8.2 million jobs were lost from January 2008 through March 2010. Unless the pace of employment growth picks up dramatically over the next year, it will take 3 or 4 years for the employment to return to the level of January 2008.- KM Corporate website: Source

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. Investing – Hedge funds feasting on Apple again, Top U.S. hedge funds up Walgreen shares; lose some taste for Apple, A look at how some of the top investors, hedge funds spent the second quarter, Blockbuster movies fuel big wins for hedge fund investors, Top hedge funds flock into Allergan amid bid backed by Ackman, Soros Fund Management exits stake in some tech companies, Jana buys FMC stake, adds to AIG, exits Sirius in quarter[more]

    Hedge funds feasting on Apple again From Forbes.com: Robert Citrone and Phillippe Laffont are two of the most prominent Tiger Cubs, hedge fund managers who once worked for legendary money man Julian Robertson’s Tiger Management. Both of them had a rough start to 2014 and sold the bulk of

  2. Legal – Pershing Square sues U.S. over Fannie Mae and Freddie Mac, Elan investors sue SAC over insider-trading losses, Lawsuit loss by hedge fund is just a cost of doing business[more]

    Pershing Square sues U.S. over Fannie Mae and Freddie Mac From WSJ.com: William Ackman's Pershing Square Capital Management LP, which has taken sizable stakes in the common shares of Fannie Mae and Freddie Mac, filed a lawsuit Thursday against the U.S. government challenging its bailout

  3. Private equity follows hedge funds into reinsurance for long-term capital[more]

    From Artemis.bm: It’s not just hedge funds that are entering the insurance and reinsurance market in search of so-called long-term capital to put to work in their strategies, private equity firms targeting the space are also seeking opportunities to add assets under management. The entry of large pr

  4. North America – New York City’s next hot neighborhoods targeted with property funds[more]

    From Bloomberg.com: New York’s real estate world is filled with tales of ordinary people who bought property decades ago and saw values skyrocket to the millions. Seth Weissman is seeking investors to get in early on the next hot neighborhoods. The veteran of Goldman Sachs Group Inc. and hedge

  5. Investing – George Soros bets $2bn on stock market collapse, Warren Buffett's Berkshire reveals Charter stake, cuts DirecTV, Hedge funds lusting to cash out of MGM, Top hedge fund managers are buying Ally Financial, Hedge funds dumped 5m Herbalife shares in Q2, Paulson & Co hedge fund ups Puerto Rico real estate bet, Netflix Inc., Citigroup Inc, Google Inc are top new picks in Tiger Management’s 13F[more]

    George Soros bets $2bn on stock market collapse From Newsmax.com: Billionaire investor George Soros has increased his financial bet that U.S. stocks will collapse to more than $2 billion. The legendary hedge fund manager has been raising his negative bet on the Standard & Poor's 500 Inde