Here is one you should know. According to the Wall Street Journal, a hedge-fund firm affiliated with “The Black Swan” author Nassim Nicholas Taleb, gained more than $1 billion in a week based on investments on extreme events in financial markets.
Universa Investments LP was up over 20% on Monday, when the Dow Jones Industrial Average collapsed more than 1,000 points. Here is how: Universa and other Black Swan funds bank on market volatility and gain when there are sharp market downturns.
A black-swan in finance is something extreme and highly unexpected, like the financial crisis. Mr. Taleb popularized the term in his best-selling 2007 book.
Similar Black Sawn funds gained double-digit percentage gains in the past week, largely on Monday. Capstone Investment Advisors LLC is up 52%, or nearly $100 million, for August through Wednesday, nearly all of it coming from gains last Friday through Tuesday, according to a person familiar with the matter. Black Eyrar, a fund of London-based 36 South Capital Advisors LLP, was up in the double-digit percentages for August through Friday, according to the Journal.
Universa, looks for cheap, shorter-dated options on the S&P 500 and other investments it expects to rise in value amid a notable downturn. It is all legal.
Jeffrey Newman represents whistleblowers.