Baby Got WACC
Not any more. Every year, the Columbia Business School MBA students poduce the Business Schol Follies. This year, Sir Banks-A-Lot brings a hilarious spoof of the rap song Baby Got Back in Baby Got WACC.
The finance classroom meets the outside world (and vice-versa). Back away slowly from the computer with your hands up and your mind open, and with luck nobody gets hurt.
Labels: Current Events
All About Alpha interviews Tom Schneeweis of UMASS on hedge funds, alpha, and risk. Here's the money quote: "I really do believe that most hedge fund managers want to believe they are wizards. When in reality, all they are doing is accepting certain types of risk. "Enough blogging - my grading beckons.
According to this Fortune magazine article on the distribution of PE firms, the majority of PE funds are well under$1 Billion in size - in fact, the average fund (once the top ten are excluded) has an average size of $180 million, if you don't count the top 10 firms.
Here's an overview of hedge funds (in PDF format), compliments of Michael Covel.
Private Equity & Hedge FundsEnough blogging - I've cleared out my bloglines account, and it's time to get back to something productive.
First off, there are a troika of pieces on PE-bond relationships: Accrued Interest breaks down the implications of takeovers for bondholders, Floyd Norris at NY Times discusses how debt is used to fund payouts in PE deals, and Marketwatch relates the woes of bondholders in LBOs.
Via FT Alphaville: activist hedge funds are using the Web to convince shareholders to their way of thinking.
According to this Financial Times piece, Hedge Funds are taking positions in bankrupt firms.
Curious about who the big dogs are in the PE worked? LBO wire reports.
Felix Salmon discusses "Debt arbitrage". He's been writing some great pieces lately - time to update my links.
Mark Hurlbert at presents the latest insider buy/sell ratios - they're still mildly bullish.
New York Magazine has a (fairly typical) piece on how top executives are making TOOOO MUUUCCCHHH MONEY (both coming and going).
MarketBeat reports on "accelerated share repurchases.
Barry Ritholtz at The Big Picture presents a bit of a history lesson and examines Historical Bear Market Contractions
CXO Advisory Group reports on some interesting pieces. One describes historical patterns of the value premium (the additional return earned by high book/market firms over their low book/market peers), and another examines factor models and finds that "A model combining market return, liquidity and coskewness ... explains individual stock returns in 35 out of 40 years.
Joe Carter has his latest installment of the Yak Shaving Razor series up at Evangelical Outpost.
Craig Newmark links to a corporate finance version of the old "you have two cows" joke.
We hold this truth to be self-evident: farting makes kids laugh.Of course, the Unknown Wife wasn't nearly as pleased. But I am a hero with the kids for at least a day or two (and yes, I have another Walter book for tonight's story).
We were just talking in class about the "neglected firm" effect, where firms with less (or no) analyst coverage earn higher risk-adjusted returns. CXO Advisory Group just highlighted a paper on a variant of this phenomenon. In "Media Coverage and the Cross-Section of Stock Returns", Fang and Peress find "stocks with no media coverage outperform stocks with high media coverage, rebalanced monthly, by 0.23% per month (3% per year) after adjusting for market, size, book-to-market, momentum and liquidity factors.
And in another piece, CXO reports on a paper by Hur and Sharma titled "Stock Market Returns and Size Premium". This paper indicates that the "Size Premium" (where smaller firms earn abnormal risk-adjusted returns is driven by down markets. In other words, small firms earn a "fair" risk adjusted return in up markets, buy have positive risk adjusted returns in down markets.
Private Equity and Corporate Finance:
The Wall Street Journal reports on the increasing trend where companies use leveraged recapitalizations as "do it yourself LBOs" in "How Borrowing Yields Dividends For Many Firms" (note: online subscription required).
For those who can't get enough of the world of Private Equity, there's a blog called BlogginBuyouts (HT: Abnormal Returns)
David Tufte at VoluntaryXchange links to the Movie Cliche of The Day
Labels: Link Dump
The University of Dayton will host the sixth annual R.I.S.E. (Redefining Investment Strategy Education) Forum from March 30 to April 1, 2006. R.I.S.E. is the first forum of its kind to bring students, faculty, and Wall Street together in an interactive learning environment to discuss a range of issues facing tomorrow’s leaders in the financial services industry. More than 1,200 participants, including undergraduate and graduate finance students and professors from universities around the world, will join professionals and internationally renowned industry leaders in what is the world's largest student investment conference.