Recently, short-sellers faced losses as Meta’s stock soared, causing billions of dollars at stake against Mark Zuckerberg’s technological empire.
According to financial analytics provider Ortex, short-sellers incurred losses of nearly .3 billion in their positions compared to Meta’s on February 2nd, after the tech firm presented better-than-expected financial results.
Following the results, where the firm announced its first quarterly profit based on strong revenue growth, Meta’s stock surged by over 20%.
the current share birth resulting in a near 0 billions of dollars increase in its value in a single day, which is the biggest one-day value rise in the markets in history.
Read Credit Suisse Shorts Book 0m Profit
Equity group senior market analyst Farah Morad told Financial News, “Meta’s impressive earnings and market cap surge indicate a noteworthy performance, especially in light of the disappointing ad sales reported by competitor Alphabet.”
She said, “In 2024, Meta’s development trajectory seems promising as the company allocates a significant portion of its capital budget, between bn and bn, towards investments in AI.”
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What factors contributed to the losses faced by short-sellers on February 2nd, aside from Meta’s stock rally?
Meta’s stock rally wasn’t the only thing that caused losses for short-sellers on February 2nd; traders faced losses of over 0 million in Microsoft stock as the company’s shares rose by nearly 3%.
Following the surge in Meta’s stock, investors also became optimistic about social media platform Snapchat’s shares, which rose by over 5% on February 2nd, resulting in short-sellers facing losses of over 0 million.
After Meta’s latest leap, Mark Zuckerberg’s total wealth increased by billion in a single day. According to Bloomberg, he is now the fourth richest person in the world with a fortune of 0 billion.
While Meta’s stock has surged by over 37% this year, Morad suggested that investors should keep an eye on some less successful aspects of the business.
How are investment firms, especially hedge funds, embracing artificial intelligence, and what areas of their operations are expected to be significantly affected by AI, as highlighted in the report by the Alternative Investment Management Association?
Morad said, “Although Meta has performed well in many areas, challenges remain for the Meta-verse, especially with regards to consistent losses in Reality Labs.”Investment firms quickly embrace artificial intelligence and aren’t shy to provide their personnel with novel tools.
According to a report by the Alternative Investment Management Association, nearly 86% of hedge funds have allowed their employees to use some form of generative AI.
Pursuant to the poll, the most expected to be “majorly affected” by AI include study, technology, regulation, and investor relations, with 158 hedge fund managers controlling a total of billion in funds.
Check out how hedge funds are jumping on the ChatGPT bandwagon – here’s what you need to know!
ChatGPT, an AI-powered language model, gained fame after its launch in November 2022. According to Bloomberg’s report, amidst increasing acceptance, major financial institutions like Bank of America, Citi, and Goldman Sachs have restricted their employees from using such tools.
What are hedge funds doing to train their employees to use new technology such as AI, and what hurdles do they face ?
a look at most current AIIM information, hedge funds had a different perspective of the world’s largest bank.
Hedge funds are not only permitting employees to use AI tools; they want their future employees to be skilled in emerging technologies.
Nearly three-quarters of companies said it’s crucial for prospective hires to have experience using AI tools, with 11% of hedge funds already having at least one in-house AI specialist.
While hedge funds are primarily using tools like ChatGPT for summarizing documents and research, there’s a belief that technology will have a significant impact on portfolio management, with 20% stating so.
Read how hedge funds are offering ,000 per month to BridgeWater trainees.
The possible effect of AI upon investment choices might change the hedge funds field, enticing the wealthy investors with offers of up to The possible effect of AI upon investment choices might change the hedge funds field, enticing the wealthy investors with offers of up to The possible effect of AI upon investment choices might change the hedge funds field, enticing the wealthy investors with offers of up to The possible effect of AI upon investment choices might change the hedge funds field, enticing the wealthy investors with offers of up to $0 million to make correct choices. million to make correct choices. million to make correct choices.
With gaining approval, hedge companies encountered obstacles in training their staff in AI.. Referring to AIIM’s report, only 15% of hedge funds managing assets of over billion are capable of training their employees on the use of AI tools, highlighting some significant hurdles.
Please email Mohammed Jafar without any ideas or news for this story.Star players in the hedge fund world used to bring about significant changes and sometimes even hit grand slams, like John Paulson did when he shorted the U.S. housing market before the 2007-09 financial crisis and made billion.
However, in recent years, swing-for-the-fence hedge funds haven’t been big winners. Instead, the best returns have come from multi-strategy, multi-manager hedge funds, mockingly referred to by competitors as ‘pod shops’.
Firms like Citadel and Millennium Management continually tweak their companies’ strategies and roster of portfolio managers around the clock. Whatever separates them from other single-strategy shops was their constant profit.
At Citadel, annual returns have ranged from 15% to 38% over the past five years, as founder Ken Griffin and his cohorts have shifted capital among dozens of teams – some playing interest rates, commodity plays, or finding quantitative patterns, others betting on long-term or specific stock declines. Meanwhile, over the same period, returns at Millennium have ranged from 6% to 26%.
Read about Ninety One’s lone female fund manager rising again
Cruel risk control protects these multi-strategy firms from deep losses and the whims of the broad market. This combo of high returns along with low risk has drawn quite a bit of the new capital watching into the hedge fund sector over the last year. Multi-strategy funds now manage nearly 0 billion.
But lately, Wall Street is wondering if hedge funds have reached peak pod.
In 2023, several multi-strats saw significant declines in returns. The average fund in the class returned 5.4% – so much so that the Nasdaq Composite and the S&P 500 returned 45% and 26%, respectively. Poor performers among the multi-strats may face further scrutiny. This category employs a quarter of hedge fund industry and pays top dollar for talent, then passes those costs onto investors through high fees.Whenever revenues fall, customers might object to about the expenses.
what goldman research told about financial news?
Goldman Sachs researchers told financial news service Barron’s that pension funds and other asset allocators have become slightly less enamored with multi-strategy funds. While about 21% of respondents to Goldman’s survey want to pair their investments with multi-strats, an approach that aims to reduce their risks, that figure increased from 4% in 2022 to 8% last year. “Raising capital for new multi-strats might become challenging.
When Millennium’s former top executive, Bobby Jain, planned to launch his own fund last year, news reports suggested that his Jain Global Management aimed to start with a billion fund – a hedge fund record. However, since starting to raise capital seriously this year, the new multi-strat’s goal is now to launch in July with between billion and billion.
Hedge fund research firm PivotalPath’s CEO, John Kapalis, says, “Investors are feeling fully allocated.” “It’s not necessarily negative, but there’s less interest in adding these positions.”
Top performers in the category have no trouble attracting more investors .Actually, they are refund money. Citadel, after its 2023 windfall, is returning billion, boosting its assets to billion. Quant multi-strat DE Shaw Group is returning all profits from its largest fund after a 9.6% surge in 2023.
Since its launch in 1990, Citadel’s flagship Wellington fund has averaged 19.6% annually, compared with 10.7% for the S&P 500. The company now manages nearly billion, similar to Millennium. While hedge funds, contrary to single-strategy enthusiasts, follow the cold ideal of good returns but low volatility.
Co-founder of multi-strat quant firm AQR, David Kabiller, says, “Hedge funds are expected to provide diversified returns, whether the S&P goes up or down.” “Multi-strategy outperforms single-strategy for the tortoise. Whoever wins in finance is the most compatible player.” AQR’s oldest multi-strat fund increased by 18.5% last year and has seen steady growth in its profits.
Hedge funds operated quite differently
What led to the shift from single-manager hedge funds to large-scale multi-strategy platforms, and what are some key features of these multi-strat shops?
When Griffin and Englander were starting their funds in the 1990s, the favored approach among hedge funds was for a star investor to start a standalone firm and specialize in a preferred strategy. Pension funds and endowments created diverse, uncorrelated portfolios by allocating their money among various single-strategy firms. Fund-of-fund firms spread the capital between talented specialist firms, creating a market of hare and tortoise traders.
A multi-strat executive who began his career with traditional long/short funds says, “Single-manager firms have taken a deep dive into fundamental research.” “But they haven’t thought much about risk management.” The era of single-manager stars ultimately took a hit, scaring investors. Tiger Management’s investors pulled billion from Julian Robertson because his bets went sour during the 2000 tech bubble.
Amaranth Advisors folded in 2006 after losing $6 billion on natural gas bets. Paulson’s record has been uneven since his big shorts. In the past decade, committed capital for hedge funds has largely shifted to large-scale multi-strategy platforms. Alongside Citadel and Millennium, notable multi-strat shops operated by New York Mets owner Steve Cohen include Point72, among others such as Balysany Asset Management, ShawField Strategic Advisors, Validus Fund Management, Islet Capital, ExodusPoint Capital Management, and metric-driven companies like AQR and DE Shaw.
Despite differences in detail, multi-strat shops share essential features. They allocate their capital around teams of in-house portfolio managers. Within a single hedge fund, there may be dozens of specialized portfolio managers who share a common infrastructure for technology, trading, data, finance, and support services. Based on portfolio performance and opportunities, top bosses add or reduce capital to place timely bets.
Old-school asset allocators cannot keep up with such skill. Citadel’s CEO Gerald Beeson says, “Any given day we can quickly gather a team of specialists from around the world and ask, ‘What are you seeing?'” “Then we can react promptly and move forward to change the situation.”
These companies apply risk discipline that many traditional hedge funds lack. Portfolios remain market-neutral – designed so that returns are unaffected by market swings – and unexpected risks are scrutinized for various risk types. Losses are cut quickly. A 5% downturn can prevent new capital from being allocated to the portfolio. A 10% decline could cost a portfolio manager their job.
Some platforms are more tolerant of losses than others, but a word you often hear is “Darwinian.” After a two-year hiring process, ShawField’s returns slowed. When negotiations with Millennium fell through, ShawField laid off 15% of its staff in November. Its flagship fund closed 2023 just 4.8% up.
Due to the imperative to avoid losses, the bias of multi-strat managers towards courage may be less than that of older hedge fund managers, who were associated with companies like Apple when they were outside the mainstream, or those who spent money revealing shoe leather companies – which handled securities and exchange. The agency charges others of stealing & rejects the inmates.