niche

Big get bigger in prime brokerage

Jim Kim — Mon, 07 Jul 2008 16:08:59 -0400

We noted recently that if you want to make it in prime brokerage--and you're not Goldman Sachs or Morgan Stanley--you need a niche. The thinking goes that more hedge funds were moving toward multiple primes, allowing room for smaller firms to pick off some assets. But with the implosion of Bear Stearns, which was once a top prime player, there has been something of a flight to quality, notes MarketWatch. Goldman's Securities Services business racked up a record $985 million in revenue in the second quarter, up 36 percent from a year earlier. Morgan Stanley also fared well. This may something of an emotional response. Hedge funds needs are fairly diverse, and they still seem more than willing to spread assets around if they see value.

For more:
- here's the MarketWatch article

Hedge fund deals heat up

Mon, 12 May 2008 06:59:55 -0400

If there is one part of the tepid deals market that is perky right now, it would be the hedge funds niche. According to Jefferies Putnam Lovell, hedge funds have accounted for 40 percent of deals in the investment industry. That's up from about 32 percent in 2007, and demand is said to heating up. Buyers are more than hungry for alpha, which means innovative firms. If you've got a decent track record and a salable strategy, quantitative or other, you'll get some looks. Funds of funds also are thought to be in demand. These sorts of releases are self-serving in a way, but it does point to an interesting situation: Despite a lot of upheaval, the concept of a hedge fund is more attractive than ever.

For more:
- here's the release

Indy researcher makes a splash

Tue, 02 Oct 2007 06:59:54 -0400

If you're an independent research outfit and you want to make a splash, it helps to have defined niche. The environment certainly counts, as such issues increasingly factor into investment decisions. Asset4 has drawn attention with its environment data platform. It is part of Goldman Sach's Hudson Street initiative. And Merrill Lynch has just bought a stake in the Swiss company. Merrill also has a deal to use Asset4's data for its proprietary financial models. The rise of Asset4 is a great example of the type of research outfit that is thriving. You need more than a stable of analysts covering companies in traditional ways. You need higher value services that address real analytical needs.

For more:
- here's the release

Quant hedge funds all alike?

Mon, 13 Aug 2007 06:59:54 -0400

People have been fretting about whether hedge funds in general are too closely correlated. Returns have correlated enough even before the current malaise started to spark concerns by the Federal Reserve Board among others. The New York Times offers an interesting piece about the relatively closed universe of quant fund managers. They all seem to know one another. Many trained with each other. And there's a lot of cross pollination at the top firms. Does all this lead to funds that are anything but dissimilar? They all seem to be creaking in concert right now. Maybe the models really share the same sauce, if you know what I mean. The dirty little secret of the niche. We'll see how they perform going forward, but you would have to think that human override will have to kick in soon. It's gut check time. Hopefully, we'll see some signs of less correlation going forward.

For more:
- here's the article from The New York Times

Nasdaq to launch new ETF market

Wed, 04 Jul 2007 20:01:34 -0400

The Nasdaq of course latched onto the exchange-traded fund bandwagon fairly early, the QQQ remains a big seller. It currently accounts for more than half of all ETF trading volume. To grow its position, the exchange is launching a new service for ETFs and index-linked notes, according to Financial News Online. The goal is to provide a venue for new ETFs that do not have the massive volumes of the likes of the QQQ. ETFs continue to proliferate--Nasdaq estimates there are up to 300 new ETFs in the wings--but the newer products are fairly niche oriented. They need some incubation and would likely be attracted to venues set up to handle really low volumes. The service will offer liquidity providers that will support funds early on.

For more:
- here's the article from Financial News Online

SPOTLIGHT: Student Loans

Tue, 29 May 2007 20:01:32 -0400

USA Today takes a look at private loans. Amid the furor over federal loans, private loans have gone unnoticed. But this niche is growing much faster, and the rates tend to be higher. Article

Community banks on the rise?

Wed, 09 May 2007 20:01:35 -0400

Fortune notes that the FDIC added 191 new banks and savings entities in 2006. That's about double the number in 2002. Of course, the big boys dominate the industry in terms of assets. But community banks still constitute about 93 percent of all domestic banks. Publicly traded community banks have fared exceedingly well; many are seen as merger candidates. Behind a lot of this activity are private equity and hedge funds that have identified the niche as a lucrative one. The key seems to be finding a niche, whether ethnic, business or other, and then exploiting it to the fullest. Collectively, these guys have emerged as real competitors for the big national and regional banks--who will have to pay up to buy them.

For more:
- here's the Fortune article

Wanna make some real money? Try London

Mon, 26 Mar 2007 20:01:36 -0400

We've spent some time discussing the rise of London as a financial center. New York pols are worried about it, that's for sure. For traders anyway, it's a hot destination. And why not? According to one recent survey, traders in London made up to 50 percent more in 2006 than traders in New York. In specific, the pay disparity among derivatives traders seems more acute. Most locals are still nodding to Sarbanes-Oxley, of course, but also the time zone advantage that London seems to enjoy. Is this a cause for concern? Well, it would have been nice if the U.S. carved out a stronger niche as a derivatives trading venue, but I am not convinced this is reflection of long-term erosion of the quality of the U.S. markets. The debate will rage.

For more:
- here's an article from The Times

SPOTLIGHT: Citigroup-Ecount

Wed, 28 Feb 2007 19:01:32 -0500

In buying Philly-based Ecount, Citigroup picks up a prepaid card company, a fast-growing niche in the payment market. Citigroup's Global Transaction Services group will offer cards to its corporate and government clients. Article

KBW earnings strong, good omen for boutiques

Tue, 20 Feb 2007 19:01:35 -0500

When it comes to boutiques, you've just got to have a defined niche. Keefe Bruyette & Woods is a great example of that. In the financial services sphere, it has built up a substantial brand that was evident in its most recent earnings. It reported 87 cents a share vs. the estimated average of 35 cents a share. Revenue was up 32 percent from the previous quarter. All this reflects a really busy investment banking environment in the financial services industry. So the vaunted boutique trend of last year really boils down to individual companies. Companies that can dominate a market stand to do well. Companies trying to be generalists may have a tough time against some awesome competition.

For more on KBW:
- here's an update from The Street