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Yahoo
04-07-2025
- Business
- Yahoo
Quant Hedge Funds Ride Whiplash Markets to First-Half Riches
(Bloomberg) -- From Treasury market reversals to trade threats, the first half of 2025 was dominated by policy upheaval and Wall Street angst. The dollar famously fell, while commodities and risky assets were whipsawed. But inside the markets where the world's biggest quants operate, a funny thing happened: Time-honored trading patterns prevailed. Foreign Buyers Swoop on Cape Town Homes, Pricing Out Locals Massachusetts to Follow NYC in Making Landlords Pay Broker Fees NYC Commutes Resume After Midtown Bus Terminal Crash Chaos Struggling Downtowns Are Looking to Lure New Crowds What Gothenburg Got Out of Congestion Pricing Markets rewarded the strong over the weak, widening the gap between winners and losers amid a return to what AQR Capital Management's Cliff Asness has called 'basic rational investing.' That wide dispersion, as the industry calls it, proved fertile territory for systematic hedge funds, which scored some of the strongest returns so far in 2025. Strong performers included Marshall Wace's TOPS, Renaissance Institutional Equities Fund and AQR Delphi Long-Short Equity, which all climbed about 11%, beating broader hedge-fund performance. Voleon Composition, a machine-learning hedge fund, gained 12.8%, while Two Sigma Spectrum was up 7.6%. 'Some companies are doing better than others again,' said Richard Mathieson, managing director at BlackRock, whose equity market neutral fund is up 8% this year. 'So for that process where you're taking a fresh up-to-date view in every security in the market and building it into a portfolio, the opportunity set is just a lot more compelling.' Systematic stock strategies managed to thrive against a backdrop of rapid-fire market shocks from January through June, a stretch that saw the S&P 500 stage its biggest reversal since 2009 and commodity volatility surge to the highest in three years at one point. Treasuries lurched from their longest winning streak since 2016 in February, before succumbing to the worst weekly drop in 24 years just a little more than a month later. These quants made money not by avoiding the upheavals, but by riding a market where stocks started moving more independently. The question now is whether that investing edge will hold, as calmer markets and resilient economic data — with Thursday's jobs report landing stronger than expected — push the S&P 500 to fresh all-time highs. All told, 2025 is extending a renaissance for computer-driven stock traders, following the so-called quant winter — the years leading up to the pandemic when few strategies paid off beyond buy-and-hold bets on Big Tech. While their trades can vary, quants typically spread their bets more widely, and slice and dice stocks based on some quantifiable characteristics and historical patterns. That means they're more likely to win in a year like this, with less concentration in mega-caps and different shares dancing to their own beat. For another lens into that, a strategy that bets on US single stocks being more volatile than the overall index has gained 3.5% this year, according to a Premialab index aggregating bank swap products. In terms of commonly used factors — or quant characteristics often used to sort portfolios — momentum, which simply bets on recent winners, was up for a seventh straight quarter, according to a Bloomberg index. That's a sign that for all the market drama, the internal patterns within stocks have been far less fickle. There are some signs that this might be starting to crack, with momentum dropping the most since March this week as investors rotated into laggards. Fading fears of an escalating trade war have revived investor appetite for risk in the past month, fueling a rotation out of so-called quality and low-risk stocks. 'There are fundamental shocks that are affecting individual securities in different ways,' said Andrea Frazzini, head of global stock selection at AQR. 'Combined with the higher volatility and dispersion we've seen, it really means that we can take more risk, we can get closer to our model and we have an easier time to implement our views.' In stark contrast were quant trend followers that need sustained momentum to profit. The cohort, which trades futures across assets, saw their worst half-year performance since 2000, dropping 10.1% so far in 2025, a Societe Generale index shows. The Systematica Bluetrend Fund slid 17% and Man AHL Alpha fell about 7.6%, while Transtrend lost 17.5%. (The fund was impacted by positions in less mainstream markets, such as within commodities and currencies, executive director Andre Honig wrote in an email.) The rotation out of US stocks — which saw shares outside the nation return about three times the S&P 500 — was also reflected in quant performance. Unlike in previous years, AQR's equity models have been scoring stronger returns outside the US, Frazzini added. The firm's Adaptive Equity strategy rose 15.5% in the first-half, while its Delphi trade, which favors lower-risk companies, benefited from the flight to quality earlier. At Man Numeric, Man Group's quant equity unit, Jayendran Rajamony says other than strength in factors like momentum, it can be hard to generalize performance thanks to the growing use of idiosyncratic signals at each fund. The Man Numeric Quantitative Alpha fund was up 18.7% in the first-half. Even with their computer-driven precision, quant programs may still need occasional human intervention, especially when policy shocks, like tariffs, fall outside the bounds of historic patterns. 'One can argue that some very bold new policy thinking simply cannot be captured,' Rajamony said. 'Intervention as a form of managing risk I think is needed to make sure these portfolios navigate an environment like this.' Representatives for Marshall Wace, Renaissance Technologies, Voleon, Two Sigma and Systematica declined to comment. --With assistance from Lu Wang. (Updates table with additional funds. Previous version corrected the full name of Voleon's fund in third paragraph and table.) SNAP Cuts in Big Tax Bill Will Hit a Lot of Trump Voters Too America's Top Consumer-Sentiment Economist Is Worried For Brazil's Criminals, Coffee Beans Are the Target How to Steal a House Sperm Freezing Is a New Hot Market for Startups ©2025 Bloomberg L.P.
Zawya
04-07-2025
- Business
- Zawya
Platinum prices have limited upside after June's stellar rally
LONDON - Platinum prices have limited room to rise further after a record quarterly rally, analysts and traders said, with Chinese imports expected to soften and South African output to recover against a backdrop of still-muted auto sector demand. Prices of the metal surged 36% in the second quarter as a rise in Chinese imports and a drop in supply from major producer South Africa followed earlier heavy flows into NYMEX exchange stocks on fears platinum would be hit by U.S. import tariffs. In June alone, prices jumped 28% as hedge funds and speculative traders piled in, notching their strongest month since 1986 and hitting an 11-year high of $1,432.6 an ounce. "Platinum has broken out of a decade-long range, and, in doing so, has put itself on the radar of professional and retail investors alike who now think 'Hey, this is really undervalued fundamentally'," said Tai Wong, an independent metals trader. "But there has been a lot of volatility at the highs, and the market will want to see bigger demand from China and/or exchange-traded funds for a sustained move higher," he added. After strong deliveries of platinum to NYMEX stockpiles between December and March on fears the metal would be hit by April's reciprocal U.S. tariffs, tight near-term availability led lease rates to spike, forcing industrial users to buy instead of borrow. While platinum group metals were eventually excluded from the April tariffs, another probe ordered by Trump in mid-April into potential new tariffs on all U.S. critical minerals imports meant uncertainty continued. Meanwhile, data from the world's largest PGMs producer South Africa showed mined output of the metals fell 24% in April, capping what Morgan Stanley referred to as "exceptionally weak" production data for the first four months of 2025. China's platinum imports were also strong in the quarter, at 10 metric tons in April and 10.5 tons in May. That followed research from industry group WPIC showing Chinese platinum jewellery fabrication rose 26% in the first quarter. Put together, those factors made up "an explosive mixture for higher prices", one trader said. BULLS RUNNING OUT OF PUFF But explosions tend to be short-lived, and analysts question whether there is enough underlying support to sustain a stronger rally. Metals Focus sees the global platinum market in a deficit of 529,000 ounces this year, but the resulting reduction in above-ground stocks will still leave them at 9.2 million ounces, equal to 14 months of demand - a fairly comfortable buffer. While uncertainty over U.S. trade policy on platinum lingers, raising import tariffs for the metal would ultimately be counterintuitive, says Wilma Swarts, director of PGMs at Metals Focus, as North American supply falls short of the region's demand. Platinum lease rates, which touched 22.7% in June, have since fallen back to 11.6%. Mine supply in South Africa meanwhile is expected to show signs of recovery in the second half, with overall global mined output seen down just 6% in the year as a whole. "There were definitely some challenges with the rains, power and water disruptions in southern Africa between January and March, but nothing major or out of ordinary," said Johan Theron, spokesperson for Impala Platinum. And strength in physical demand for platinum in China only lasted until prices topped $1,050 in early June, according to one trader. China's June import data, due on July 20, is expected to show a decline after very strong platinum deliveries in the previous two months. That leaves the platinum market vulnerable to one of the last decade's most bearish factors - waning demand from the auto sector, which uses the metal as a component in catalytic converters for combustion-engine cars. CAR TROUBLE Long-term pressure on the platinum group metals from the expansion of electric vehicles persists, while global trade disputes have further dampened the auto sector's mid-term outlook. Auto production forecasters have removed as much as 10 million units from production projections over the next four years, and lower vehicle production will lead to weaker PGMs demand, Metals Focus said. The consultancy is forecasting auto sector platinum demand to decline by 2% this year after a 3% fall last year. Nornickel, the world's largest palladium producer, says any further rise in platinum prices could lead catalyst producers towards more substitution of the metal for palladium. Price spreads between the two metals of more than 30% would encourage that, it said. Platinum was 22% more expensive than palladium on Thursday. But while analysts and traders are cautious about further gains in platinum prices, they are not expecting them to correct. StoneX analyst Rhona O'Connell said some of China's high April-May platinum imports could be in part a bargain-hunting exercise. "China is renowned for buying material that is out of favour," she said. "And although the electrification of the vehicle fleet is advancing apace, the internal combustion engines and the diesel sector are still in place." Analysts see prices stabilising at levels above those seen before the rally, supporting miners' margins as the market heads for a third year of structural deficit. (Reporting by Polina Devitt and Anushree Mukherjee; Additional reporting by Felix Njini and Anastasia Lyrchikova; Editing by Veronica Brown and Jan Harvey)
Yahoo
04-07-2025
- Business
- Yahoo
Mizuho Boosts Visa Price Target, Cites Expanding Card Usage Potential
Visa Inc. (NYSE:V) ranks among the best FAANG stocks to buy according to hedge funds. Mizuho analysts raised their price target for Visa Inc. (NYSE:V) from $359 to $425 while upgrading it from Neutral to Outperform on June 5. The analysts emphasized that Visa's cash-to-card conversion rate, which has historically made a substantial contribution to the company's volume growth, has the potential for continued growth. tanuha2001 / The analysts stated that since the epidemic, spending has moved away from card-based categories, which has had an impact on Visa's growth. However, this trend has begun to shift, and there is hope that the U.S. cash-to-card conversion runway will be longer than previously thought. Visa's performance in areas like Canada and the Nordics, where card penetration is above 90%, comes as additional proof of possible expansion beyond personal consumption expenditures. In expectation of better volume growth in the United States, the analysts raised their projections for fiscal years 2026 and 2027. Visa Inc. (NYSE:V) is a global payments technology company that operates one of the world's largest electronic payment networks. While we acknowledge the potential of V as an investment, we believe certain AI stocks offer greater upside potential and carry less downside risk. If you're looking for an extremely undervalued AI stock that also stands to benefit significantly from Trump-era tariffs and the onshoring trend, see our free report on the best short-term AI stock. Read More: and Disclosure: None. Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Yahoo
02-07-2025
- Business
- Yahoo
JPMorgan Holds Neutral on Netflix, Citing Balanced Risk/Reward Despite Strong Growth Potential
Netflix Inc. (NASDAQ:NFLX) ranks among the best FAANG stocks to buy according to hedge funds. On June 13, JPMorgan reaffirmed its $1,220 price target and Neutral rating for Netflix Inc. (NASDAQ:NFLX). The firm clarified that the reason for its previous May 19 downgrade to Neutral was not concerns about Netflix's dominant position in the streaming market, but rather that 'the risk/reward in NFLX shares has become more balanced' after considerable stock price growth. Photo by Thibault Penin on Unsplash Investors have consistently resisted JPMorgan in three areas since the May downgrade: the expectation that the second half content slate might be 'the strongest 6-month period ever,' the beginning stages of advertising with potential for stronger monetization, and forecasts that estimates will rise in response to pricing power, advertising growth, and content strength. That said, despite its growth potential, JPMorgan upheld its assessment that Netflix Inc. (NASDAQ:NFLX)'s shares are 'well owned and the risk/reward is less compelling,' weighing the company's solid fundamentals against its current valuation measures. Netflix Inc. (NASDAQ:NFLX) is a well-known global streaming platform that provides limitless access to a vast collection of films, TV series, and video games on devices with internet connections. While we acknowledge the potential of NFLX as an investment, we believe certain AI stocks offer greater upside potential and carry less downside risk. If you're looking for an extremely undervalued AI stock that also stands to benefit significantly from Trump-era tariffs and the onshoring trend, see our free report on the best short-term AI stock. Read More: and Disclosure: None. Sign in to access your portfolio
Bloomberg
30-06-2025
- Business
- Bloomberg
Wall Street Backs Los Angeles Wildfire Lawsuits, Chasing Billions
The Los Angeles wildfires have generated potentially thousands of new clients for lawyers and prospects for billions in fees. Wall Street wants in on the action, too. The chance at a piece of strong returns has encouraged investment banks, hedge funds and debt investors to vie for contracts to fund the litigation, according to people involved in transactions. That's in addition to firms solely dedicated to funding lawsuits, which has grown into a $16 billion industry in the US over two decades.
