Looking Ahead to 2011: The Hedge Fund Industry Speaks (Part IV)

Dec 31 2010 | 10:24am ET

As 2011 approaches, we caught up with some industry experts to ask them what they thought next year has in store for the world’s financial markets in general, and hedge funds in particular.

Here, is the final installment of responses from hedge fund industry experts.

Graham StockGraham StockGraham Stock, Chief Strategist, Insparo Asset Management

“Africa and the Middle East look set to extend their recovery from the global crisis next year. Indeed, it is increasingly apparent that the two regions weathered the storm in remarkably good shape.

“For much of the Middle East and Africa...lack of access to capital has historically been an obstacle to growth, but good stewardship of their economies is now opening up opportunities for cautious bond issuance and equity fund-raising. We expect debut government eurobond issuance from Nigeria, Angola and Kenya over the next twelve months, and possibly also Zambia and Tanzania.

“We expect equity markets to be the main beneficiaries of the region’s strong growth outlook. We particularly favour consumer-facing sectors such as brewing and mobile telecoms in less saturated markets like Zimbabwe.”

Sal Gilbertie, Founder, Teucrium Corn Fund

“I believe the continuing growth in prosperity among the huge populations of emerging economies around the globe will result in unexpectedly high demand for basic commodities like food, energy and base metals in 2011 and beyond.
“Investors will react to this very real demand-pull scenario by allocating even more resources in their portfolios to the commodity sector. In my opinion, there is a very real possibility in late 2011 of supply shocks and extreme price volatility. The sheer size of the global population entering the industrialized nations’ equivalent of the ‘middle class’ in their respective countries is amazing. 
Robert S. Jersey, President and CEO, GarWood Securities

“As predicted by many last year, the large well established managers received most of the new investments from institutional clients as a ‘flight to size’. Now however, as some of those funds are nearing capacity the allocators are looking more broadly at emerging managers.

“We’re seeing a significant number of new fund launches in the past few months—many of our new clients are sub-$10mm long/short managers who are coming off of prop desks. We also have a range of managers seeking prime brokerage and other services who have been trading their own money and friends and family money for the past two years in order to build a track record prior to seeking institutional assets.

“In terms of trading strategies, we are seeing more high-frequency traders and greater volume in options as a way to generate alpha or as a hedge.”

Amit Shabi, Partner, Bernheim Dreyfus & Co.

“We believe the recent rebound in mergers and acquisitions is rapidly gaining momentum and we’re forecasting global deal activity to rise by as much as 36% next year, by comparison to 2010. This growth will take deal size up to $3 trillion.

“We are entering a new M&A cycle. We’ve seen a surge in hostile takeovers, which usually happens in the beginning of a new cycle, we probably have three to four years of M&A activity growing from now on. The U.S. market is definitely the one leading the cycle, normally there is a delay of 6 months to one year for the European economy and confidence to follow.”

Looking Ahead to 2011: The Hedge Fund Industry Speaks

Part I
- Rory Hills, Hilltop Fund Management
- Michael DeJarnette, NorthPoint Trading Partners
- Basil Williams, Concordia Advisors

Part II
- Troy Buckner, NuWave Investment Management
- Jack McDonald, Conifer Group
- Piers Denne, Future Capital Partners

Part III
- Jeff Holland, Liongate Capital Management
- Jonathan Neill, FPP Asset Management
- Don Steinbrugge, Agecroft Partners

Part IV
- Graham Stock, Insparo Asset Management
- Sal Gilbertie, Teucrium Corn Fund
- Robert Jersey, GarWood Securities
- Amit Shabi, Bernheim Dreyfus & Co.

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