Two weeks ago I met with a near billion-dollar hedge fund in their Texas office. Funded primarily from the principals’ personal wealth (they hit it big with one of the top technology firms of all-time), their firm was seeking insights into trend following. They want to invest with trend following traders, but they are having a hard time wrapping their arms around a strategy (trend following) not rooted in fundamentals.
The three executives I met with at this hedge fund were more comfortable with a trader who traded one market alone. They liked the idea that a trader might be able to fundamentally know everything he could about that one market. They liked the idea of that type of skill compared to trend following skill. The trend following skill of reducing all markets to the common denominator of price just did not connect with them.
My gut says they will eventually put money with trend following traders. This group is very bright and they are doing extreme due diligence on trend following trading. Unlike some who dismiss trend following, these folks will get it since they are willing to learn something new.