Released on: October 19, 2007, 6:53 am

Press Release Author: press24web.com

Industry:

Press Release Summary: Race for returns leads money managers to watch the weather.
Hedge fund managers, including Appia Capital, traders and analysts are keeping a
close eye on the weather - and not just to get an idea of what the weekend will be
like.

Press Release Body: In the never-ending quest to get a leg up on their competitors,
more professional money managers are looking to exploit weather fluctuations. Once a
tool used by utilities companies trying to get a handle on geographic demand,
private weather forecasts are increasingly being used by financial services
companies.
Appia Capital spokesman Harold Jenkins said "There\'s a thirst for this re-search. We
look beyond the short-term volatility and think six months ahead of time so that our
clients can make a play."
Of course, not everyone is convinced of the usefulness of private weather forecasts.
Cost and the amount of time it takes to manage the information also call into
question the usefulness of private weather forecasts for financial advisers. It\'s
more of an investment strategy that has to be actively managed. Appia Capital uses
[weather forecasting] extensively, and pay a lot of money for it. "Our biggest
transaction is green futures - wheat - and the flow of funds around correct
forecasts is in the hundreds of millions."
The firm has budgeted about $120,000 for weather research, which includes private
data, as well as information from the National Weather Service. It has three clients
who are big investors in wheat futures. So far, the weather analysis has given him a
70% success rate, and though it has proven useful to his clients, he said, the
market for the data is very select.
Aside from just looking at the way a chilly winter or an oncoming hurricane will
affect fuel prices; private weather forecasts can help professional money managers
predict seasonal demand at certain companies. For commodities traders, the reports
help predict whether drought or heavy rain are likely to wipe out crops - and
profits.


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