Larry Swedroe: Hedge Fund’s & Undervalued Stocks

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Random Walker
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Larry Swedroe: Hedge Fund’s & Undervalued Stocks

Post by Random Walker » Thu Oct 11, 2018 8:20 am ... nopaging=1

“The evidence from the study “Hedge Funds and Stock Price Formation” demonstrates both that hedge funds appear to have the ability to identify mispriced stocks, and their actions improve the price discovery function, increasing market efficiency.

However, it also shows that all the alpha is going to the hedge fund sponsor, which is exactly what economic theory posits—economic rents (excess profits) should go to the scarce resource, which is the ability to generate alpha.”


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Re: Larry Swedroe: Hedge Fund’s & Undervalued Stocks

Post by nedsaid » Mon Oct 15, 2018 12:29 am

One reason I am not concerned that markets will become less efficient with the rise of indexing is that there is lots of money still out there in hedge funds. Reason two would be the rise of factor investing even with more passive techniques. Reason three is that active management in retail funds will never go away.
A fool and his money are good for business.

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