Venture Landscape

  • Thoughtful analysis of the venture landscape given the current state of public markets from Redpoint ventures.
  • The background is – public high performing SaaS firm valuations have fallen below their 10 year average now (see chart).
  • Past public market corrections led to 10 quarters of decline in venture dollars invested of varying severity. The great recession, for example, saw a 30% fall.
  • Currently many companies in private markets (particularly at late stage) are in “price discover” mode in fundraises with everyone trying to figure out market price – rounds are taking longer to get done and “willingness to pay” spreads are wide

Japanese Equities

  • Fundamentals in Japan are improving.
  • Japanese companies bloated their balance sheets with low-yielding cash and unproductive assets. This has meant that companies delivered just 3% return on capital compared to 6% fo the developed world for the majority of the past four decades.
  • Returns look to be improving according to GMO, the change is structural and not cyclical, and the result of improving margins and not improvement in inefficient balance sheets.

Composer

  • One of the coolest tools I have come across is Composer
  • Composer is an automated trading platform that allows savvy investors, like readers of Snippet Finance, to easily build a portfolio of hedge fund-like strategies.
  • Instead of struggling to implement strategies yourself, Composer breaks the strategy creation process into building blocks that can be infinitely combined using a no-code visual editor
  • Once you create a strategy and invest in it, Composer will automatically execute trades on your behalf based on the strategy’s logic.
  • If you’re not ready to create a strategy from scratch, you can choose from a collection of vetted ready-made strategies. 
  • Composer makes the kinds of strategies that are used by top hedge funds as easy to access as individual stocks.
  • Investing in securities involves risks, including the risk of loss. Borrowing on margin can add to these risks. Composer Technologies Inc., SEC Registered RIA. Snippet Disclaimer.

Hedge Fund Correlation

  • Hedge fund returns have become gradually more correlated to the S&P 500*.
  • This is bad for diversification and when combined with falling alpha, as described in this post, is worrying.
  • *This chart shows the 10-year trailing correlation of hedge fund returns (measured by a 50/50 weighted after fee return of Barclay Hedge Fund and HFRI Fund Weighted Composite Indices) vs. S&P 500.
WordPress Cookie Notice by Real Cookie Banner