FX Concepts LLC, a currency hedge fund founded by John Taylor with about $3 billion under management, agreed to buy closely held financial research provider Track.com for an undisclosed amount.
Track.com, a subscription-based service, will operate as a wholly owned subsidiary of New York-based FX Concepts to broaden the hedge fund’s research platform. Bob Savage, chief executive officer and co-founder of Track.com, will join FX Concepts as chief strategist and bring over the firm’s three current employees. Financial terms of the stock deal weren’t disclosed.
“It’s going to help us widen our research internally and bring us into contact with more research professionals,” Taylor said today in a telephone interview. “It brings more ideas directly into contact with our research team. Plus my strategy has always been entirely quantitative and technical, while Bob is a fundamentalist.”
Taylor, 69, will maintain an active role in the firm’s research operation, though he said he foresees Savage, 49, eventually taking over full control. FX Concepts, founded in 1981 by Taylor, calls itself one of the oldest currency only hedge funds.
Track.com will also help address new regulations for research stemming from the 2010 Dodd-Frank regulatory overhaul, which will require electronic platforms for delivery and aggregation, according to a company statement.
It was becoming increasingly difficult for subscription research services to put out a quality product while also remaining profitable, according to Savage, who is based in New York.
“Ultimately, research belongs under something, either a broker-dealer or a money manager, because on its own, a subscription-based model is very strained,” Savage said in a Sept. 21 telephone interview. “The broker-dealer research model is not working out. I think you’re going to see more of a focus on research content from the hedge fund space.”
Ticonderoga Securities LLC, the New York brokerage that halted operations in January after an attempt to boost capital fell through, is an example of a firm that failed to implement a research platform, Savage said. The firm provided research and services spanning investment banking, sales and trading.
Savage and FX Concept’s Taylor share similar bearish views on the euro, the resilience of which has consistently surprised Taylor. He predicted in January 2011 that the euro would fall to parity with the dollar. In March, Taylor said that the euro would get there eventually, and would trade between $1.15 and $1.18 by May. The lowest it got in May was $1.2337.
“John and I agree that the only way that sustainability of the euro can last is if they get some growth,” Savage said. “The best way to do that is a weaker euro, ultimately. They’re going to need to use the euro as a competitive exports tool.”
FX Concepts is “somewhat positive” on the euro in the short term ahead of the U.S. presidential election, but sees it depreciating in 2013, Taylor said.