Is Trend Following Still Trendy?
Hehemyer Capital Management, LLC, (HCM) a division of Hehmeyer Trading + Investments (HTI), continues to expand their focus on managed futures and recently hired Ed Waller as Executive Vice President. Ed's focus will be sales and marketing of the HCM products as well as finding undiscovered trading talent. HCM's focus is "niche" style trading strategies, non-correlated with the traditional asset class and long-term trend followers. This includes short term strategies, many of which are market sector specific including both discretionary and systematic styles.
Ed and Chris Hehmeyer met during their college years while both attending Sewanee- University of the South. Ed graduated with a History major and minor in Creative Writing, but his career path led him to the commodities markets for two reasons; his family was in the agricultural business and he was very intrigued by the trading opportunities on the futures exchanges. He started his career working for Charles McVean, renowned commodities trader, who later founded McVean Trading, a registered commodity trading advisor. In the early to mid 90's, Ed worked for Refco,spending time in the United States as well as Europe involved in marketing and capital raising initiatives. In the late 90's, Ed co-founded Crescent Capital, an independent introducing broker with a primary focus on raising capital for managed futures. Ed kept in touch with Chris through the years and joined HTI earlier this year.
We sat down with Ed to ask him some questions about his new role at HTI, what he is doing in the managed futures space and how the industry has changed since he started his career in the agricultural markets.
How has the industry changed?
"Traditionally managed futures products follow long term trends, where you buy and hold a position for a long time, or "stay with the trend." However, this strategy has not been working as of late. Liquidity is waning in the markets, the converstion from floor to electronic trading, which as been going on for the past decade has put an emphasis on algorithms, and trading is much more short term. Long term trend following has fallen out of favor due to the lackluster performance.
HCM focuses on "niche" style trading strategies, which include shorter term strategies, many of which are market sector specific including both discretionary and systemic styles., This is a "sweet spot" in the industry. What's happened is trends have compressed and they may only exist for seconds so we have had to adapt to the markets today. Also, the markets are more scientifically driven with a more detailed analysis.
What types of products will you be focused on at HCM?
"Porfolio's that offer non-correlation to the traditional stock and bond portfolio and are not correlated to long term trend followers. We will be constructing portfolios that offer market sector opportunities as well as custom portfolios for specific investors. I feel investors are looking for new investment opportunities to diversify their existing portfolio and to manage their risk.
Who is your target investor?
"The target investors are single and multi-family offices, high net worth investors and eventually institutions. We would also like to work with wealth management groups and eventually target this investor group in Europe and Asia."
What is about the derivatives industry that captivated you all those years ago?
"Someone told me once that the smartest people in the markets are in the commodities business. The derivatives industry is an intellectually stimulating business and if you came from the floor, you came from the culture where your word was your bond. When you made a deal with someone you shook hands and trusted the guy. The people in this business have character, integrity and honor."
What are you most excited about in this new role?
"This is an exciting time and I am thrilled to be part of the Hehmeyer team. We have big plans to grow the business and I know we can reach our targets. With Chris at the helm and Roxanne Bennett, Managing Director, whom I have known for over 25 years, overseeing our growth, I am confident we can help people manage their risk by constructing managed futures portfolios. It's not just a job we are tasked with here at Hehmeyer. We love this business and it really is our life."
If you would like more information about Hehmeyer Capital Management's Managed Futures offering, please visit our website.