Some hedge funds are poised to make serious money off of Trump's shocking win
Thomson Reuters
But some hedge funds positioned themselves for this outcome - and might end up performing better than they did after Brexit.
"It's a surprising outcome, but I suspect that our [profit and loss] will be even better than 'Brexit day after," Nancy Davis, founder of macro hedge fund Quadratic Capital, wrote Business Insider early Wednesday just as the voter tallies started to favor Trump.
"We do well with any sort of unexpected move," Davis told Business Insider. "We did very well following the Brexit vote, and we did so today following the US election."
Quadratic's strategy doesn't place binary bets on outcomes, but rather uses options that "perform well during times of uncertainty," she said.
Other funds expect to make money, even if the political implications are hard to swallow.
"I expect to make money today - though it will be one of the most bittersweet up days in my memory," said Josh Packwood of New York-based Lucus Advisors.
Thomson Reuters
"The truth is that emotional markets can create great investment opportunities for those of us who have a process in place which allows us to be disciplined, unemotional, and consistent in focusing on the long-term drivers of return," Valerie Malter, CEO of Matarin Capital Management, wrote to Business Insider.
Malter said that Matarin, which invests in equity markets, has "benefitted from staying neutral to political risk."
The strategy involves "buying great businesses, at inexpensive valuations, with shareholder friendly leadership, and with catalysts in place for short-term outperformance, and hedging out the rest."
Markets, for their part, expected Hillary Clinton to win, and the world's biggest hedge fund, Bridgewater Associates, predicted before election results came in Tuesday that a Trump win would sink markets.
Heidi Gutman / CNBC
Schonfeld Group Holdings, meanwhile, reduced its leverage - or borrowed money - that it was using coming into the vote on Tuesday, said CIO Ryan Tolkin.
"We had some distrust for the polls, especially in the wake of Brexit," Tolkin said. "We definitely came into the event with less exposure."
Packwood at Lucus Advisors said he expected a swift and volatile decline in the market, and that there are two possible scenarios under which that decline doesn't become a long-term bear market. He said:
- "People wake up next Monday and realize America is still here. We are still here. That the President of the United States is only so influential and that Trump has made a lot of enemies in the House and Senate that might make it difficult for him to implement the few number of fantastical initiatives that he has actually discussed in any coherent detail.
- "Trump removes the orange face paint and reveals to the world that the past 30 years have been an enormous production. He completely changes his tone and surrounds himself with respected advisors."
"I view #1 as decently probable," he said. "I view #2 as nearly impossible."
- 2 states where home prices are falling because there are too many houses and not enough buyers
- US buys 81 Soviet-era combat aircraft from Russia's ally costing on average less than $20,000 each, report says
- A couple accidentally shipped their cat in an Amazon return package. It arrived safely 6 days later, hundreds of miles away.
- 9 health benefits of drinking sugarcane juice in summer
- 10 benefits of incorporating almond oil into your daily diet
- From heart health to detoxification: 10 reasons to eat beetroot
- Why did a NASA spacecraft suddenly start talking gibberish after more than 45 years of operation? What fixed it?
- ICICI Bank shares climb nearly 5% after Q4 earnings; mcap soars by ₹36,555.4 crore
- Nothing Phone (2a) blue edition launched
- JNK India IPO allotment date
- JioCinema New Plans
- Realme Narzo 70 Launched
- Apple Let Loose event
- Elon Musk Apology
- RIL cash flows
- Charlie Munger
- Feedbank IPO allotment
- Tata IPO allotment
- Most generous retirement plans
- Broadcom lays off
- Cibil Score vs Cibil Report
- Birla and Bajaj in top Richest
- Nestle Sept 2023 report
- India Equity Market