BlackRock Betting Big Data Can Provide Boost

BlackRock Inc CEO Larry Fink is betting that a trillion points of data can help revive his firm's ailing stock-picking business.

Even though BlackRock replaced many of its fundamental active equity managers over the past few years, a number of the firm's stock-picking funds are underperforming.

Investors have pulled $7.5 billion from the funds over the past year, according to Morningstar.

To address this, the world's largest asset manager is taking the secret data sauce of its team of quantitative managers, academics and data engineers and feeding it to all of its portfolio managers, including its fundamental active equity team.

The goal: to arm its portfolio managers with data to give them an analytical advantage.

The information ranges from satellite images of cars in retailer parking lots to shipping trends to word search analytics in company earnings calls."

More at BlackRock betting big data can help revive its active equity funds

Wall Street Profit May Drop 37% Bitten by Laws, Congress

Wall Street’s profit may fall 37 percent this year, hurt during the second half by rising interest rates, legal costs and budget turmoil in Washington, New York State Comptroller Thomas DiNapoli said. DiNapoli forecast securities industry earnings at $15 billion in 2013 compared with $23.9 billion the year before, while employment has fallen near a post-recession low.

A drop in profit may crimp bonuses, which reached an estimated $20 billion for 2012, he said. “The political gridlock in Washington may take a bite out of the securities industry’s profits for the fourth quarter,” DiNapoli, 59, said in a statement. “Washington’s inability to resolve budget and fiscal issues is bad for business.”

An impasse over spending and raising the nation’s borrowing limit led to a partial shutdown of U.S. government operations this month, as Republicans in Congress fought with Democrats over paring back Obamacare. The resulting turmoil rocked equities and pushed prices higher in the $4.1 trillion market for federal debt. That may lower earnings in the securities industry, which helps drive the city’s economy, DiNapoli said. “Failure to resolve the federal budget and debt ceiling impasse could disrupt the economy and hurt New York City and New York state,” said DiNapoli, a Democrat. Congress put off both issues with short-term fixes setting new deadlines next year.

For more information - Wall Street Profit May Drop 37% Bitten by Laws, Congress - Bloomberg

 

Previously Unknown Inside Traders in Heinz Settle SEC Charges

The Securities and Exchange Commission announced that two brothers in Brazil have agreed to pay nearly $5 million to settle charges that they were behind suspicious trading in call options for H.J. Heinz Company the day before the company publicly announced its acquisition.

The SEC filed an emergency enforcement action earlier this year to freeze assets in a Swiss-based trading account used to reap more than $1.8 million from trading in advance of the Heinz announcement.  The SEC’s immediate move the day after the announcement ensured the illicit profits could not be released out of the account while the investigation into the then-unknown traders continued.

In an amended complaint filed today in federal court in Manhattan, the SEC alleges that the order to purchase the Heinz options was placed by Rodrigo Terpins while he was vacationing at Walt Disney World in Orlando, and the trading was based on material non-public information that he received from his brother Michel Terpins.  The trades were made through an account belonging to a Cayman Islands-based entity named Alpine Swift that holds assets for one of their family members.  Rodrigo Terpins purchased nearly $90,000 in option positions in Heinz the day before the announcement, and those positions increased dramatically by nearly 2,000 percent the next day.

The Terpins brothers and Alpine Swift, which has been named as a relief defendant for the purposes of recovering ill-gotten gains, have agreed to disgorge the entire $1,809,857 in illegal profits made from trading Heinz options.  The Terpins brothers also will pay $3 million in penalties.  The settlement is subject to court approval.

For more detail, visit SEC.gov | Previously Unknown Insider Traders in Heinz Agree to $5 Million Settlement

Investing is Complex - 10 Tax Mistakes

I am certainly not a tax expert, but agree witht this article - "Investing is a complex undertaking. The supply of investment alternatives is seemingly endless. Evaluating various alternatives can be quite difficult and very time consuming."

If you are investing on your own, without a tax advisor and an a financial advisor, please make sure that you are able to sort all of this out on your own.

Top 10 Tax Mistakes Made by Investors | Financial Planning

Investors Optimistic According to Fidelity Survey

Fidelity Investments surveyed customers with at least $250,000 in investable assets and the outcome was positive.

Survey results showed that more than three-quarters (77%) of high-net-worth investors expect to beat or match the market this year with approximately half (48%) feeling the stock market is appropriately valued and 17% feeling it is undervalued.

However, 70% of investors are concerned about the Federal Reserve reducing support for the bond market and, as a result, 88% of those investors are holding an average of 20% of their portfolio in cash for the opportune moment to invest.

Investors Optimistic According to Fidelity Survey 

Insider Purchases Highest in Four Years

I have always been intrigued by the investment action of corporate insiders, every since my first insider trading case over 20 years ago. Insiders do know more than the rest of us, and the correlation between their purchases and the price of their stock cannot be due solely to coincidence.

In any event, an interesting article in CNNMoney yesterday - insiders are buying their company's stock like mad.

Throughout the recent market turmoil, executives and directors of public companies have invested heavily in their own companies, according to a news report late Tuesday. Total insider buying in the United States reached $252 million in August, the highest level since 2003, according to the Financial Times. The month normally averages $186 million in such trades.

There is also a remarkable drop in insider sales.

Now if only someone would do the research and tell us which companies these insiders are buying......

Forbes 2007 Wealth Builder Guide

More for our investor readers than our brokers, Forbes has published its 2007 Wealth Guide. It is a collection of articles and commentary from leading investment authors on investments and other financial matters.