New MasterCard Stake and Secret Holdings for Warren Buffett's Berkshire Hathaway

Warren Buffett's Berkshire Hathaway is reporting a new, but relatively small, stake in MasterCard.

It's not, however, publicly reporting some "confidential information" on its just-released 13-F filing with the SEC.

As of the end of the first quarter on March 31, Berkshire reports adding 216,000 shares of MasterCard to its U.S. stock holdings.

At today's closing price of $279.15, that stake is worth just over $60 million.

Current price: [MA  Loading...      ()   ]

That's not much by Buffett standards and it is likely the stake was bought by Berkshire's new portfolio manager Todd Combs.  He specializes in financial stocks.

Berkshire also reports a miniscule reduction in its holdings of ConocoPhillips, selling just 8,000 shares, a change of -0.02748 percent. Current price: [COP  Loading...      ()   ]

But that's not the whole story.  The filing notes that some information has been omitted from the document released to the public.  Buffett's Berkshire sometimes asks for, and receives, SEC permission to keep some holdings secret, usually as the company is building a stake.  That's designed to discourage copycat buyers who could drive up the price of Berkshire's future purchases.

Current Berkshire stock prices:

Class B: [BRK.B  Loading...      ()   ]

Class A: [BRK.A  Loading...      ()   ]

For more Buffett Watch updates follow alexcrippen on Twitter.

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How To Become A Hedge Fund Manager

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Home Page > Finance > Investing > How To Become A Hedge Fund Manager How To Become A Hedge Fund Manager Posted: Aug 17, 2008 | Views: 39,408 |

Becoming a hedge fund manager certainly has its perks... if you are successful. The King of the Hedgies is currently John Paulson who raked in £1bn for a years work shorting the sub prime markets and others certainly are not poor.

Can you do it?

The answer to that question is a yes and no. Just like it is possible for everyone to be a sports star. If you have the right physical capacity, the mental toughness and the commitment you can get to the top of your game, and of course, there is an element of luck in everything.

The first thing to know about hedge funds is what they are. There are many resources on the web that will go into chapter and verse but the simple explanation is that, typically, a hedge fund is a set up as a company, lets call it XYZ Ltd, which is set up in a tax efficient jurisdiction such as the Caymans or BVI, for example.

The company generally has two classes of shares (it can have more) one are mangement shares (so you own the company) and the other shares are investors shares (which carry no voting rights).

This company will have various service providers such as:

Prime brokerage: Prime brokers provide a range of customised services to hedge funds. Current services include handling trade execution, clearing and settlement, providing financing and technology services, risk management and operational support facilities, securities lending, and making introductions to sources of capital.

Fund Administration: Some hedge hedge funds conduct administration internally while others choose to outsource certain functions such as their accounting, investor services, risk analysis or performance measurement functions to third party administrators. Some outsourcers offer independent pricing of a fund's portfolio of securities.

Custody: Hedge fund assets are generally held with a custodian, including cash in the fund as well as the actual securities. Custodians may also control flow of capital to meet margin calls.

Of course there will also be a manager of the fund. Assuming you are the one looking to set the fund up, that would be you.

This all sounds a little complicated but there are plenty of administrative services that could put this set-up together for you for around $70,000.

The set up, however, is not the problem. Getting money into the fund is.

Lets say you have a fund set up, you have even managed to get yourself a fund management company properly licensed, you are ready to go as a newly fledged hedge fund manager. Problem now is that you have to get money into the fund and this is where your problems start.

The continuing fees from your administrators above are payable on an annual basis so your overhead is there. Covering these overheads will be the fees you get from your fund. Fees are the now notorious '2 & 20' meaning that there is a 2% annual fee and 20% of the profits.

Lets say your overheads are £100,000 per annum, you will need at least £5mn into your fund for the annual fee to cover your overhead. In anyone's language, that is a large chunk of change. To get this you will need to prove to potential investors that you know what you are doing.

Sarah Butcher, editor of eFinancialCareers.com agrees. "You can't just be someone off the street and set up a hedge fund," she says. "Investors want to put their money with someone who has a track record."

When speaking with investors you need to be able to show them your performance and the strategies you use. Gaining this experience is the key.

Going the traditional route you will either train with an investment bank or directly with a hedge fund company. Investment banks are looking for someone with a good degree, maybe in maths or physics, they want someone who is tough minded, a quick learner and someone who has the capacity to make trading decisions based around sometimes complex structures.

Finding your way directly into hedge funds can be hard, they are notoriously secretive. By far the more tradional route is through working as a trader with an investment bank.

So if you have missed the boat as far as becoming a new boy at an investment house are your dreams of becoming a hegde fund trader over?

Not quite. The thing about managing money is that people are looking for performance. If you can show a track record of performance then people will want to invest money with you. You clearly have to have the capacity for enjoying the stock market, so you probably have been buying and selling stocks but you will need to learn more about other market instrument such as futures etc.

You can do this by opening an account at a reputable trading house and downloading their trading system. They will provide you trade ideas and the explanations behind them and they will help you develop your portfolio operating on trades similar to what the hedge funds do. If you immerse yourself in this type of trading, making profits on your own portfolio, then you are creating a track record. If you are successful enough then you may get to the point where you believe you have the capacity to start a fund.

We are not saying it is easy, it most certainly is not, but not being a 20 year old with a first from Oxford does not necessarily limit your potential career as a fund manager. It is a long hard slog to get anyone to believe that you are credible but the rewards are there if you get to that stage.

The billionaire boys have spent years perfecting their art in most cases and now have the ear of huge amounts of money, but don't give up becuase you can't work in an investment bank.. remember 'money follows performance'.

If you would like to see if you have what it takes there are several platforms you can download for free and test out your skills. This online trading system is something you may want to consider if you are trading.

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The author has spent 20 years in the financial services industry trading everything from physical commodities to futures. Currently writes for a variety of sites including online trading sites and general market information sites.

Questions and Answers Ask our experts your Investing related questions here... Ask 200 Characters left How many hours do hedge fund managers work? Do hedge funds beat the market? How is a hedge fund structured? Rate this Article 1 2 3 4 5 vote(s) 16 vote(s) Feedback Print Re-Publish Source:  http://www.articlesbase.com/investing-articles/how-to-become-a-hedge-fund-manager-524909.html Article Tags: hedge fund manager, hedge funds, becoming a fund manager, investment, financial, money Related Articles Latest Investing Articles More from David Brown Emerging Hedge Fund Manager Sentiment Survey Declares Technology As Best Investment

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Commodities Hedge Funds Hit Hard In June | FINalternatives

Commodities Hedge Funds Hit Hard In June | FINalternatives

How to Trade Commodities

The key to successful investing is developing your knowledge in the markets and to take things slowly and methodically. Commodities trading is no different. It is an exciting market which, if you are preapred to put in the time and effort, can be very lucrative, but always be aware that risks lurk in the shadows just like any other investment. 

Physical Trading

Physical commodities trading is buying and selling the actual commodity itself not some sort of derivative instrument like a futures contract. There are obvious downsides to this method namely storage costs, insurance costs and shipping costs.

The physical market, for our purposes, focuses on those commodities that are easily stored, bought and traded for the average investor. These are such things as Gold, Platinum, Palladium and Silver.

The most popular method of trading such items on a retail basis is in the purchase of coins. There are many companies on the web that provide services for the purchase of coins for collectors and speculators.

The internet, of course, has given investors many options for the purchase, storage and trading of gold coins however, our favourite example of trading gold on the web is Bullion Vault. They allow the purchase and storage of gold in small quantities and have an efficient trading system. They hold $290mn of gold for clients and appear to have a very good reputation.

Leverage

If you didn't know the term 'leverage' before the current financial mess, you do now. For those who need a refresher, here is how it works. Let’s say you buy £100,000 of gold and whomever you buy it off only needs you to put down a 10% deposit, £10,000. Let’s say gold goes up 10%. You now have gold worth £110,000, if you sell it now you pay back the £90,000 you borrowed and you get your original £10k back along with your £10k profit. Basically you have turned a 10% gain in the price to a 100% gain on your investment.

Obviously if the price dropped 10% you lose your money, hence the mess that some are in at the moment.

Physical Commodities on Leverage.

There are still some companies around that provide leverage on physical commodities across a range of products, however, the costs associated with trading, such as interest on loans, storage and insurance fees have made the product less attractive to the active trader. Having filled a gap in the market for some time the product was overtaken by some of the instruments mentioned below.

ETFs (Exchange Traded Funds)

More accurately described as 'Exchange Traded Commodities' these instruments  take into account all the fees such as storage etc associated with trading. They trade like shares are liquid.

An Exchange Traded Commodity is an investment vehicle that tracks the performance of an underlying commodity or basket of commodities. ETCs work on exactly the same principle as ETFs – with the ETC tracking the performance of a single underlying commodity or a group of associated commodities. Single commodity ETCs follow the spot-price of a single commodity, whilst 'index-tracking ETCs' follow the movement of a group of associated commodities, such as cattle, energy or livestock.

ETCs offer the commodities trader a number of inherent advantages without the associated vagaries of trading an individual stock:

Direct exposure to the commodities markets – the value of your investment will rise and fall in direct proportion to the price of the underlying commodity.

Liquidity - ETCs are ‘open ended’ securities, which are created and redeemed on-demand. This means that the supply of ETCs is unlimited and that price changes will accurately mirror developments in the price of the underlying commodity.

Stamp duty & CGT - ETCs are not shares and so trades are exempt from stamp duty. Furthermore, ETCs can be traded within ISA accounts, allowing you to shelter your profit from Capital Gains Tax.
Low dealing costs - ETCs are traded on the regular stock exchange, making them both accessible and affordable – they can be traded through your share dealing service for a commission.

Portfolio diversification – ETCs give broad representation across entire commodity sectors and different geographic regions.

Futures

A futures contract is an agreement to buy or sell your chosen commodity at a specific date in the future - at today’s prevailing market price. These markets are highly liquid and the contracts can be sold on again at any point before the final delivery date, i.e. the day when the farmer or miner will deliver the raw materials to the person holding the contract.

The producers and end-users are still present in today’s markets, but it is the traders and speculators who are now responsible for most of the volume that keeps the market liquid.
The main benefit of trading futures is that you are making a direct investment into the underlying raw material and your future profit or loss is entirely dependent upon fluctuations in the underlying commodity price.

Going back to leverage, most futures trading is done ‘on margin’, which dramatically increases potential profits (and losses, remember).

Shares

Exposure to the commodities market can be gained from buying and selling companies whose business it is to mine, distribute or trade in commodities that you are interested in.

The shares are, generally, liquid and accessible for trading, the problem, however, is that there are many other factors that could effect the share price that may not have anything to do with the underlying commodity. These could be management issues, cash flow, macro economic issues and geo-political issues.

CFDs and Spread betting.

CFDs and Spread betting are easily accessible trading instruments which are essentially derivatives of many of the above, however spreads and dealing costs can be harsh to investors.

Technical Phrases

You will hear such phrases as 'contango' and 'backwardation'.

Contango is a term used in the futures market to describe an upward sloping forward curve (as in the normal yield curve). One says that such a forward curve is "in contango" (or sometimes "contangoed").

Formally, it is the situation where, and the amount by which, the price of a commodity for future delivery is higher than the spot price, or a far future delivery price higher than a nearer future delivery.

Backwardation is a futures market term: the situation in which, and the amount by which, the price of a commodity for future delivery is lower than the spot price, or a far future delivery price lower than a nearer future delivery. One says that the forward curve is "in backwardation" (or sometimes: "backwardated").

Commodities trading has many aspects that set it apart from trading other markets and for those that become learned in the trading of the instruments it can be lucrative. Commodity traders over the last few years have seen huge swigs in price which have lead to large profits (and no doubt some large losses).

Currently the global market in commodities is in a state of flux. Gold, for example, is seen as a safe haven against inflation and uncertain times, hence it recent volatility.

Having worked in commodities for some years it was always noted that volatility is our friend, whether a price is going up or down there is money to be made, when commodities are flat there is not much action and the cost of trading out ways the potential profits.

For the foreseeable future volatility is definitely here to stay. Stock market issues and global recessionary fears on the one side and continued development of emerging markets using vast amounts of the world resources on the other, will see volatility in this market for many years to come. This, therefore, as a market to learn about and trade ,is a very interesting and potentially lucrative proposition.

As with all trading, however, there is a very real possibility that trading commodities, especially on leverage, could lose your portfolio a lot of money and you should be aware that it is highly risky. Do not risk more money than you can afford to lose and make sure you have a system that allows you to use limits and stops to contain this risk.

The online trading system available from HF Markets allows you to trade all of the above with assistance, if required, from a professional regulated broker who can guide your initial trading strategies and help you become familiar with trading this exciting area of investment.

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Trading Independence

Trading Independence - Commodity Trader Commodity Futures Market News Trading Independence By Mathew Bradbard on June 30, 2011 7:06 PM | No Comments | No TrackBacks

June has come and gone ...to all a happy Independence day...see you in July. Crude should finish slightly higher but again today prices were unable to take out the 18 day MA; in August at $96.25. On a trade above that level our next target would be the 40 day MA at $98.80. At this juncture we're assuming an interim bottom was established this week just above $90 in the August contract. As RBOB and heating oil trade higher we feel they could propel Crude back near $100/barrel. Wild trade in natural gas today with a 21 cent trading range... at the end of the day a bullish engulfing candle should mean higher ground. We're thinking another 5% from here and have advised longs in September. In the last two weeks indices have gone from over sold to overbought and at this point we feel the 2% advance in the last four days is too much. We will likely be selling into this strength as we anticipate a return to 1275 in the coming weeks.

The dollar has lost ground the last four sessions and we maintain a trade back under 74.00 in the coming weeks. The commodity currencies remain the standouts and the Loonie is the pick of the litter in my opinion. On their lows August live cattle completed a 38.2% Fibonacci retracement...we expect a trade to the 2o day MA another 2% from current pricing. Lean hogs posted a 2 1/2 week low doing minor chart damage so expect more downside. Bearish engulfing candle in gold with a settlement below $1500/ounce. As long as $1485 holds in August on a settlement basis we suggest remaining in bullish plays. We hold small long overexposure with some clients in silver but we would like to see a settlement above the 9 day MA in the coming sessions to be convinced the downside is behind us. That level is just above $35/ounce in September.

Cocoa advanced to a two month high and has gained nearly 7% this week. We continue to work out of long for clients thinking we're nearing an interim top. It appears we're seeing triple top in the making in sugar as prices broke just over 2% today. Our clients shorts are under water but if you stay the course we should see a significant break in the immediate future. Remember we were at 23 cents just over one month ago and that remains our target in October. Bearish is an understatement in terms of the reaction by grain traders to this morning's USDA report with corn and wheat trading down their respective price limits. We suggest buying corn closer to $6/bushel as prices will likely be limit lower (45 cents) tomorrow. Some clients are long soybean oil and wheat and though painful today we feel will be profitable in the next two/three weeks. The numbers today were bearish corn but my interpretation was neutral to mildly friendly in the other grains and talking to farmers I think the USDA has discounted the less than ideal weather way too much. We advised clients today to offset any short exposure in 30-year bonds and 10-yr notes. If they want to keep exposure in this complex we advised moving to the short end of the curve in December 2012 contracts.

Risk disclosure: The risk of loss in trading commodity futures and options can be substantial. Past performance is no guarantee of future trading results.

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Farmland investment the next big portfoilo

Last Updated : 15 June 2011 at 16:25 IST

By Joshua K Cohn
Many investment professionals, including the legendary Jim Rogers, believe agriculture commodities are only in the early-to-middle innings of a major "super cycle" of increasing prices.

The argument for this is fairly simple. The number of people in the world is increasing, and projected to reach nearly 9.1 billion by 2050 according to the United Nations. Meanwhile, the amount of arable farmland has been decreasing.

In addition, as with many major trends in the world today, a large reason behind the rapid run-up in food prices is China's development. As investors we always want to be on the correct side of global macro trends, and whatever China needs or is buying lots of, we want to own as investments.

The question is what are the best ways for making money from the agricultural sector? One way is to invest directly into agriculture stocks such as farm equipment maker John Deere (DE), global seed giant Monsanto (MON) or fertilizer company Potash Corp of Saskatchewan (POT).

Another method is to invest in agricultural futures through Exchange Traded Funds (ETFs) such as AIGA on the London Stock Exchange or DBC in the US which tracks an entire basket of agricultural commodities including corn, soybeans, wheat, cotton, sugar, coffee, cattle and pigs. These commodities ETFs try to track the spot price of the various commodities they include.

The advantage of these stocks or ETFs is that they are easily trade-able by anyone who has an online brokerage account. The disadvantage, however, is that they are still financial instruments, and as such can fluctuate widely in price.

One option most individual investors tend to overlook is direct investment in farmland. In many ways, a farmland investment is more secure, stable and tangible then putting money into stocks.

Farmland allows investors to still benefit from the global trends in agriculture we have discussed, whilst providing much greater stability then agriculture stocks or commodities which can fluctuate wildly.

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Hedge Fund Ad-ban.. Causing More Problems Than Its Worth?

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Home Page > Finance > Investing > Hedge Fund Ad-ban.. Causing More Problems Than Its Worth? Hedge Fund Ad-ban.. Causing More Problems Than Its Worth? Posted: Aug 18, 2008 |Comments: 0 |

If ever there was an argument for the advertising ban on Hedge Funds to be lifted it is this one. Over three years a brazen group of New York scam artists raised about $30 million from unsuspecting investors by posing as principals of a successful hedge fund and then fled with the loot.

Investments from $5,000 to $500,000 were obtained from college professors and educated professionals. It took the group a little more than three years, from early 2003 September 2006 to raise the $30 million.

A grand jury empaneled by Michael J. Garcia, the U.S. Attorney in Manhattan, is said to have handed up a sealed indictment in the case, according to a lawyer hired by 10 of the victims, who said that the FBI was investigating the matter.

The criminals are clearly to blame here, however, this is a problem that, in our opinion, is caused in part, by the regulators themselves.

There is a scam out there that is based on "Prime Bank Guarantees" or "Medium Term Notes" that has taken billions from investors with promises of astronomical returns. The SEC web site says:

"Lured by the promise of astronomical profits and the chance to be part of an exclusive, international investing program, investors are once again falling prey to bogus "prime bank" scams. These fraudulent schemes involve the purported issuance, trading, or use of so-called "prime" bank, "prime" European bank or "prime" world bank financial instruments, or other "high yield investment programs" ("HYIP"s). The fraud artists who promote these schemes often use the word "prime" – or a synonymous phrase, such as "top fifty world banks" – to cloak their programs with an air of legitimacy."

The thing that allows the bogus 'brokers' and 'investment managers' of this fraud to operate is that they have created a veil of secrecy over the whole operation. The SEC says:

"Promoters claim that transactions must be kept strictly confidential by all parties, making client references unavailable. They may characterize the transactions as the best-kept secret in the banking industry, and assert that, if asked, bank and regulatory officials would deny knowledge of such instruments. Investors may be asked to sign nondisclosure agreements."

This 'secrecy' is what perpetuates the fraud. Simply put, the peddlers of this scheme will tell you that when you do your research that you will find everyone denying the existence of the scheme. They will say that those not in the industry don't know about it because there would be outrage that rich people could make so much money and those in the industry will deny it because they either aren't high enough up or are trying to keep it a total secret. They will also tell you that a minimum investment of $10mn is the norm, but they have split up that $10mn to allow their investors in.

This secrecy is the perfect cover, and I speak from personal experience, 15 years ago as an investment pup, to my eternal shame, I got caught in a the same scam.

So we have an 'investment' that is supposed to be super secret, has a minimum investment and is not advertised anywhere. Do elements of this ring any bells?

Simply put, the regulators are perpetuating the 'secrecy' of hedge funds by not allowing advertisement of the funds. Their rules about only being able to invest a certain amount of money did not protect the people in this case who invested $5000, did it? Something tells me the scammers did not check to see what the net worth of the investors was either.

How would advertising funds have helped? As with everything, the fact that advertising is allowed generates an awareness of a particular industry. How many of you knew how to play poker before the online casinos plastered the web with advertising? My limit was 'Snap', now I am a stone cold poker shark.

By the very nature of advertising and, therefore, informative web sites, brochures etc etc, this kind of fraud would be more difficult to perpetrate because the veil of secrecy would be lifted for all to see.

Of course, there will always be criminal elements who will attempt to subvert whatever rules are out there but the regulators throughout the world don't need to make it easy by perpetuating a secrecy myth that can be exploited by the criminal element.

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The author has spent 20 years in the financial services industry trading everything from physical commodities to futures. Currently writes for a variety of sites including online trading sites and general market information sites.

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