What type of strategy does Axe Capital use?
Of course insider trading, but are they basically a prop shop? Not quite sure what half of the office does there
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It seem they were more bottom up approach to trading. I don't recall an episode where they talked trading on a macro scale and I think it's to keep it vanilla for the viewers without confusing them and having them lose interest.
Let's take a look at their strategies, shall we? Commodities - Nigeria Play Long Equities - Long on that medical device Company that failed to get the permit Short Equities - Shorting Lumatherm Activism - Yumtime Quantitative - Taylor was developing this Distressed Debt - Sandicot Casino
You could successfully run a multi-strat with some of these strategies, but definitely not the last one. It's very clear that Axe's investment horizon is under a year, preferably under 2 quarters.
It's also clear that he has little to no understanding of distressed debt, and that the Sandicot play is all ego. Distressed debt implies a deep value approach (Oaktree, Baupost, Elliott). Axe Capital is clearly NOT a value fund. As they are based off of SAC Capital/Tiger Cubs, they're really more of a growth shop with short time horizons, which leads me to my second point. Distressed debt plays take years, sometimes a decade+. Look at Singer's tie-up with the Argentinian government; this battle lasted 15+ years. At the minimum, most distressed debt plays take several years. In one scene, Wags laments that 2 years is way too long. For a solid risk-adjusted return, you'd never find Klarman/Singer saying anything of a sort. Simply put, this strategy has no place at Axe Capital.
Also, the idea that Axe Capital has never had a down quarter is beyond asinine. Even SAC had down quarters in its heydey. Frankly this is ridiculous, just as is the idea that one down quarter will suddenly cause clients to flee. Capital isn't as sticky as people assume in the HF world, but for an excellent decade long track record, only a brain-dead client would leave that quickly on a single down quarter.
Seeing as they are based off of SAC, I'd say their main strategy is L/S Equity, and apparently the rest are subject to the ego-driven whims of Axe even while they have no core competency. Understand SAC did dabble in other strategies, but not to the level of what Axe Capital is doing, and at least the strategies aligned better.
Impressive.
uh wasn't sandicot basically insider information gone wrong? I thought the distressed play only came in because he got fcked by the asshat commissioner.
Just out of curiosity, how could there be many topics that non-quantitative trading is dead but still HF's manage to get away with it? Or how does that work?
Non-quantitative trading as we know it is dead. There will always be a small amount of humans in the mix, but nothing like S&T's heydey around 2005. A couple of the guys are just there to monitor things & make some sensitive trades, and there are a few, top-tier human traders, but this is a tiny amount of what the pool used to be.
Most of the guys at Axe Cap on the investment side aren't supposed to be traders, they're analysts/PMs. Although given the 1-2 quarter time horizon, 'trader' isn't too far off IMO.
They cater to investors that have a low tolerance for risk. I've never seen a firm take risk management as seriously as Axe Cap in the show.
"Poorly written melodrama?"
That show would be so much better on Netflix or HBO
Why so, what would have been changed?
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