Discuss about the Trend of Hedge Fund Strategies.
The organization that we will analyze in this paper is Santos Ltd. The company is listed in the Australian stock exchange, and is classified in the EWnergy category of the bourse. The core activities of the company is exploration, and development of hydro carbons. The company is also involved in drilling of oil wells in Indonesia, Papua gunea, Malaysia among other countries. The company has other interests in a project known as GNLG that produces LNG. The company’s Chief finance officer is known as John Andrew Seaton. In this paper, we shall analyse on the role of a Chief financial offiucer to the company and how his roles affect the company’s future objectives (Ainslie, 2002).
The modern accounting department has changed in various companies. The chief finance officer is a the head of the finance department and therefore, all the issues relating to finances of the company are either approved and authorized by the chief finance officer. This position requires a person who is level headed, competent and has a vast wealth of experience in the accounting department to be ablwe to handle such a position. Most importantly, for a listed company such as Santos Ltd it is essential for the company to have a chief finance officer who is knowledgeable in matters financial as the shareprices can be affected by various factors in the market. Therefore, an experienced CFO ensures that the shareholders as well as the management are confident that the company’s financials will be handled in accordance to the various accounting standards and also have complied with the law.
Just as any other company, the Chief finance officer of Santos Ltd has got various responsibilities that make him one of the most important member of the company. First, the chief finance officer has controllership dutries. This includes ensuring that the company has has tightened its systems to prevent fraud that may happen in the company. Proper internal controls are instituted by the internal auditor together with the chief finance officer. There have been numerous scandals that have hit big companies including those that are listed (Barnes, 2009). A very common example is the accounting scandal that hit enron. Consequently, this scandals lead to the company being delisted from the stock exchange. To prevent the occurrence of such a situation it is necessary that proper measures are put in place to prevent fraud and therefore safeguarding the company’s assets including cash. The Chief finance officer ensures that propers and strong systems are put in ythe organization such that the shareholders are confident that there cannot be any loss of their money (Guizot, 2007). Most of the listed company’s use complex systems to perform in their accounting and finance department the major systems that are used and presumed to be strong are the SAPs. Hence this motivates the investors and the people who are potential customers to put more funds into the company.
The second role of a Chief finance officer is making all the decisions that relate to finances. There are many decisisons that the chief finanace officer does. This includes investment decision, financing decision and devident payout decisions. All these decisions are critical to the performance of the company hence the CFO should make them having in mind that any decision can affect the shareholders wealth negatively and make the price of the stocks to plummet. These decisions also affect the operations of the company as they affect the cashflow of the company.
The CFO is supposed to evaluate and assess all the projects that the company intends to undertake and advice the managegement as well as the board on the suitabiliuty of each project having analysed their returns as well as the capital outlay that is required for each project. Having said that it is important to note that the chief finance officer has a place in every meeting that is called upon by the board of the company as well as the management (Mak, 2006). The second decision made by the CFO is the financing decisions, The chief finance officer suggests the ideal capital mix that the company should use in its projects. Capital mix refers to the ratio of debt and equity that is used for various projects. This capital mix has several implications to the company. Thjis is because when a company uses more debt than capital it incurs less tax liability. On the other hand when equity is used the company does not incur any interest on debt so both ways there are advantages. This are the decisions that the CFO makes and advices the board accordingly regarding the most appropriate capital mix. The third decision is the dividend that is to be paid to shareholders. For every company the priority is to make the owners wealthier, hence when dividends are paid the CFO has to strike a balance between making the shareholders happy and ensuring that the company has not been affected in terms of cashflows. Dividends affects the acshflows and therefore a payout cannot be done when there is an impending project that requires capital.
The third role of a chief finance officer is administration and overseeing activities in the finance department. The chief finance officer heads the finance and accounting department therefore depending on the size of the company the CFO will either have to do some of this duties personally or delegate the functions to other members of the department such as the accountant or the accounts assistant. Such duties include payment of suppliers, receiving payments from the customers, negotiating on the payment periods of both the creditors and debtors. Processing of the payroll is also a duty that falls under the administrative functions of a chief finance officer. In companys that have a very large number of staff this duty is supposed to be undertaken by the Human resource officer, however, the CFO approves the funds that are meant to be used to pay hence he has a role in overseeing the process. Tax administration and advice is also a duty of the CFO(McCrary, 2005).
Corporations such as Santos limited have a very big finance department that is responsible for all financial requirements of the company. However, its head is the overall leader of the company finances and is responsible for varous activities and functions associated with finance and financial matters. The chief financial officer of santon company limited is responsible for increasing the wealth of the shareholders by adding the value of the shareholders investment. He is responsible of increasing the value worth of the company in form of financial diversification. Although its not easy being the financial manager of the company as big as santon, it has several responsibilities that make it a very crucial docket in the company.
A good experience and professional background ensures that the chief financial officer is competent in handling matters finance of the company as well as improving the liquidity of the company. The most important asset of a company in short term basis is the financial might or the cash flow of the company. Santo limited chief executive officer must ensure that the operating, financing and investing activities in the cash flow statements are balanced and the net cash flow statements is healthy for the companies operations. He/ she is responsible for directing or advising the management committees and the board of directors on the importance of a positive cash and cash equivalent of the company (Nelken, 2006).
The ultimate decision made by the chief finance officer assisted by senior and junior members of the finance department is to increase the return on investment of the shareholders through prudent management of the financial resources given to the company and to improve the profitability through good financial decisions. To make this decisions , the finance officer is responsible to cut down on unnecessary spending of the companys finances while increasing the financial investments through planned spending. Although cost cutting is a decision reached upon by the top brass of the company management, major decisions can be attributed to an efficient chief financial officer who knows the purpose and objectives of the company.
Financial decisions may include choices on investment to be placed by santon limited in Australia. The choices are placement of major finances in government stocks which are less risky and have a high reward and diversification strategies for the company. He is a decision maker and advices the board on the proper investment of finances so as to award the shareholders with best possible return on investments (Ross, Westerfield and Jaffe, 2002).
Santon limited has a very good chief finance officer who has kept the company as liquid as possible to compete with other established companies within the same industry. Taxation matters and dividend desisiona are also done in deliberation with the chief finace officer of the company (Ross, Westerfield and Jaffe, 2002). The government of Australia is very strict on matters taxation, therefore the company has hired the best chief financial officer from a pool of many experienced and well trained financial experts. It is in this regrd that the company has remained a good bet on profitabity due to well managed liquidity and credit risks by the same chief financial officer. Increased profitability levels is comensulate to high dividend levels of the company.
Market theories in a stron competitive market shows a market that is all rounded and there is all available information available in the system for decision making. Every invetsment manager and in a hedge fund must analyse the importance of every form of market efficiencies inorder to invest in the market.
Selecting portfolio in a pin by a fund manager
Investment of a pool of shareholders fund is guided by several factors among them; competition, market demand and supply of investment and the availabel amount of money to be invested. Other factors include the availability of risks associated with the investment and the return on ivestemnt on the investment. Market efficiencies plays a key role in all these factors of investments. The choices are placement of major finances in government stocks which are less risky and have a high reward and diversification strategies for the company
The second understands that occurs when contributions include past information and all public about their fundamental. And the latter also incorporates all data and nobody can get superior performance (Watanabe, 2010).
The news is not yet disclosed which will be incorporated in the price and expectation soon moved to its value. In that text, the markets are efficient in strong or full meaning.That is the real world, because all investors to seek out such data, not captured by the model of efficiency. Under this hypothesis, time, money and effort spent on analysis of the intrinsic value of the securities will be useless.
If there is indeed a day for the other, all equipment and research analysts of banks would be fired, because “the stock price is random and it is not possible to know in advance. Therefore, consuming research reports and daily purchase or investment newsletter subscriptions: all the news publicly available or paying for it is likely to be used to forecast stock prices (Watanabe, 2010).
This process is massive and occurs very fast and it is this dynamic which ends up making efficient markets. The efficiency per se does not exist, but it is a daily, decentralized task that fits millions of people around the world.
Market efficiencies shows how effective a specific market is. A strong market effiiciecy encourages massive investments and trading of finances by the chief finance officer of the company. It should be noted that weak and semi strong market efficiencies are also markets to be invested in but do not attrct as much as the strong market efficieny. This process is massive and occurs very fast and it is this dynamic which ends up making efficient markets. The efficiency per se does not exist, but it is a daily, decentralized task that fits millions of people around the world.
Corporations such as Santos limited have a very big finance department that is responsible for all financial requirements of the company. However, its head is the overall leader of the company finances and is responsible for varous activities and functions associated with finance and financial matters. The chief financial officer of santon company limited is responsible for increasing the wealth of the shareholders by adding the value of the shareholders investment. He is responsible of increasing the value worth of the company in form of financial diversification. Although its not easy being the financial manager of the company as big as santon, it has several responsibilities that make it a very crucial docket in the company.
A good experience and professional background ensures that the chief financial officer is competent in handling matters finance of the company as well as improving the liquidity of the company. The most important asset of a company in short term basis is the financial might or the cash flow of the company. Santo limited chief executive officer must ensure that the operating, financing and investing activities in the cash flow statements are balanced and the net cash flow statements is healthy for the companies operations. He/ she is responsible for directing or advising the management committees and the board of directors on the importance of a positive cash and cash equivalent of the company.
The ultimate decision made by the chief finance officer assisted by senior and junior members of the finance department is to increase the return on investment of the shareholders through prudent management of the financial resources given to the company and to improve the profitability through good financial decisions. To make this decisions , the finance officer is responsible to cut down on unnecessary spending of the companys finances while increasing the financial investments through planned spending. Although cost cutting is a decision reached upon by the top brass of the company management, major decisions can be attributed to an efficient chief financial officer who knows the purpose and objectives of the company.
Financial decisions may include choices on investment to be placed by santon limited in Australia. The choices are placement of major finances in government stocks which are less risky and have a high reward and diversification strategies for the company. He is a decision maker and advices the board on the proper investment of finances so as to award the shareholders with best possible return on investments.
Santon limited has a very good chief finance officer who has kept the company as liquid as possible to compete with other established companies within the same industry. Taxation matters and dividend desisiona are also done in deliberation with the chief finace officer of the company. The government of Australia is very strict on matters taxation, therefore the company has hired the best chief financial officer from a pool of many experienced and well trained financial experts. It is in this regrd that the company has remained a good bet on profitabity due to well managed liquidity and credit risks by the same chief financial officer. Increased profitability levels is comensulate to high dividend levels of the company.
Market theories in a stron competitive market shows a market that is all rounded and there is all available information available in the system for decision making. Every invetsment manager and in a hedge fund must analyse the importance of every form of market efficiencies inorder to invest in the market.
Selecting portfolio in a pin by a fund manager
Investment of a pool of shareholders fund is guided by several factors among them; competition, market demand and supply of investment and the availabel amount of money to be invested. Other factors include the availability of risks associated with the investment and the return on ivestemnt on the investment. Market efficiencies plays a key role in all these factors of investments. The choices are placement of major finances in government stocks which are less risky and have a high reward and diversification strategies for the company
The second understands that occurs when contributions include past information and all public about their fundamental. And the latter also incorporates all data and nobody can get superior performance.
The news is not yet disclosed which will be incorporated in the price and expectation soon moved to its value. In that text, the markets are efficient in strong or full meaning.That is the real world, because all investors to seek out such data, not captured by the model of efficiency. Under this hypothesis, time, money and effort spent on analysis of the intrinsic value of the securities will be useless.
If there is indeed a day for the other, all equipment and research analysts of banks would be fired, because “the stock price is random and it is not possible to know in advance. Therefore, consuming research reports and daily purchase or investment newsletter subscriptions: all the news publicly available or paying for it is likely to be used to forecast stock prices.
This process is massive and occurs very fast and it is this dynamic which ends up making efficient markets. The efficiency per se does not exist, but it is a daily, decentralized task that fits millions of people around the world.
Conclusion
Market efficiencies shows how effective a specific market is. A strong market effiiciecy encourages massive investments and trading of finances by the chief finance officer of the company. It should be noted that weak and semi strong market efficiencies are also markets to be invested in but do not attrct as much as the strong market efficieny. This process is massive and occurs very fast and it is this dynamic which ends up making efficient markets. The efficiency per se does not exist, but it is a daily, decentralized task that fits millions of people around the world.
References
Ainslie, L. (2002). Hedge fund management. Charlottesville, Va.: Association for Investment Management and Research.
Barnes, P. (2009). Stock market efficiency, insider dealing and market abuse. Farnham, Surrey, England: Gower.
Brealey, R. and Myers, S. (1991). Principles of corporate finance. New York: McGraw-Hill.
Guizot, A. (2007). The hedge fund compliance and risk management guide. Hoboken, N.J.: John Wiley & Sons.
Helbæk, M., Lindest, S. and McLellan, B. (2010). Corporate finance. New York: McGraw-Hill.
Horwitz, R. (2004). Hedge fund risk fundamentals. Princeton, NJ: Bloomberg Press.
Mak, D. (2006). Mathematical techniques in financial market trading. Hackensack, N.J.: World Scientific.
McCrary, S. (2005). Hedge fund course. Hoboken, N.J.: J. Wiley.
Moles, P. (2011). Corporate finance. Hoboken, N.J.: Wiley.
Nelken, I. (2006). Hedge fund investment management. Amsterdam: Elsevier/Butterworth-Heinemann.
Read, C. (2013). The efficient market hypothesists. Houndmills, Basingstoke, Hampshire: Palgrave Macmillan.
Ross, S., Westerfield, R. and Jaffe, J. (2002). Corporate finance. Boston, Mass.: McGraw-Hill/Irwin.
Ross, S., Westerfield, R. and Jaffe, J. (2005). Corporate finance. Boston: McGraw-Hill/Irwin.
Shain, R. (2008). Hedge fund due diligence. Hoboken, N.J.: Wiley.
Strachman, D. (2012). The fundamentals of hedge fund management. Hoboken, N.J.: John Wiley & Sons, Inc.
Watanabe, Y. (2010). The recent trend of hedge fund strategies. New York: Nova Science Publishers.
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