If any class of financial-services firm should have become extinct in 2008, it's the hedge fund. Hedge funds bled $154 billion in 2008, according to Lipper Hedgeworld, with 1,500 hedge funds closing shop, as reported by The New York Times.
Amazingly, however, 659 new hedge funds launched amid this financial bloodbath, and these new hedge funds are looking to build high-performance trading platforms on the cheap, a trend that bodes well for Marketcetera.
Hedge funds need to save money. Who knew?
It's important to remember that today's aren't yesterday's spendthrift hedge funds. I spent the morning with a friend who left a large financial-services firm to join a small, $250 million hedge fund in June. He represents a new demographic in the hedge fund world, one that cares about fund performance and cutting fund costs.
A lot of hedge funds still in business saw their top traders leave when the economy imploded, only to set up new funds. These new independents couldn't make money at the old firms because their performance was so underwater, it would take years to get back enough in positive gains to start cashing in on performance fees. Meanwhile, fund sizes under management began shrinking, with redemptions and fees getting slashed in the process.
This means a new breed of leaner hedge fund is rising, hedge funds that arguably could spend lavish sums on trading platforms but learned enough from the market implosion to save money wherever possible.
Marketcetera fills this need, particularly now, with its hosted offering. I've covered the company before but continue to be impressed by its speed of innovation.
The company launched Marketcetera 1.0 in January 2009, then hit version 1.5 in April 2009 (adding support for multiple traders and some key data feeds and real-time analytics), and now, in June 2009, the company's open-source trading platform is sitting on the NYSE's high-performance cloud.
Pretty impressive.
Equally impressive is where the company expects to take open source next, as can be seen in this YouTube video. The proprietary-software industry serving hedge funds and other financial services companies just got a wake-up call.
Follow me on Twitter @mjasay. Perhaps if enough people follow me, I'll be able to afford to lose an investment in a hedge fund.
As I walked through the war zone that is Wall Street yesterday on my way to a Red Hat meeting, I assumed the worst. I scanned the rooftops for Paul Cormier, Red Hat's EVP of Products and Technologies, ready to catch him if leaped. I scanned the cardboard boxes along the pavement, expecting to see Red Hat CTO Brian Stevens claiming a cozy spot on the curb. Finally, I dug through dumpsters in search of Jim Whitehurst, Red Hat's CEO and no stranger to market meltdowns as the former COO of Delta Air Lines.
They were nowhere to be seen.
Instead I found Whitehurst, Cormier, and Stevens waiting for me in Room 616 of the Red Hat Enterprise Linux-fueled New York Stock Exchange, which managed to process a massive sell-off of equities over the past week without skipping a beat. Indeed, on a day that saw the Dow Jones industrial average crater by 508.39 points, RHEL kept the NYSE humming.
(Credit:
NYSE)
Perhaps this wasn't something to celebrate, but it's a testament to the power of Red Hat's software, and a painful reminder to Microsoft that its software is not ready for the heaviest enterprise loads, given its own .Net-inspired crash of the London Stock Exchange last month. Microsoft urges us to "get the facts" about Windows performance. Don't worry, Microsoft: we got them.
But it wasn't to poke fun of Microsoft that I spoke with Red Hat. Instead, it was to see how a faltering economy is hurting or helping its business, find out why there aren't more Red Hats, and to learn why enterprises continue to turn to Red Hat even as budgets tighten and implode.
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If anyone out there persists in believing that Linux isn't ready for serious prime time, NYSE Euronext's dependence on Red Hat should finally lay that silly notion to rest. As announced, the New York Stock Exchange Euronext dumped its proprietary UNIX heritage (AIX, HP UX, Solaris) for the freedom, flexibility, and performance of Linux.
As NYSE Euronext's CIO noted:
With the combination of speed, cost, reliability, and functionality pushed to the limit, we have to out perform the competition in each category, and our competition is getting better all the time. Linux as an operating system has been the fastest growing with respect to these requirements, and we're not limited by what's in front of us. The quality of the Linux platform is greatly important to us and Red Hat Enterprise Linux has exceeded our expectations....
Red Hat is almost like water, it's pervasive within our architecture. Red Hat is extremely strategic and without it, most of our computers wouldn't be running.
Linux isn't a price tag. It's a strategic decision to go for superior performance, flexibility, value, and innovation. The NYSE Euronext could have spent its money anywhere, but didn't. It went with Red Hat Enterprise Linux. Linux is the new prime time.
UNIX...? Not so much.
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