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The Robin Hood Coop, an Activist Hedge Fund
Fri, 11/20/2015 - 13:02
Now here is an improbable idea: an activist hedge fund. Out of Tampere, Finland, comes the Robin Hood Asset Management Coop, which legally speaking, is an investment cooperative. It is designed to skim the cream off of frothy investments in the stock market to help support commoners. As the website for the coop describe it:
We use financial technologies to democratize finance, expand financial inclusion and generate new economic space. Robin Hood’s proposition is no different than it was 600 years ago in Sherwood: arbitrage the routes of wealth and distribute the loot as shared resources. Today we just use different methods to achieve the same: we analyze big data, write algorithms, deploy web-based technologies and engineer financial instruments to create and distribute surplus profits for all. Why? Simply, we believe a more equitable world is a better one.
The Robin Hood Coop currently has 808 members from some 15 countries, and manages about 651,000 euros in various stock market investments. Started in June 2012, the coop has generated over 100,000 euros for its members and to its common pool, which is used to support commons projects. Robin Hood reports that in its first year, it had “the third most profitable rate of return in the world of all the hedge funds.”
Anyone can join the coop for a 30€ membership fee, which entitles members to invest a minimum of 30€. Members can then choose eight different options for splitting any profits (after costs) among their own accounts, Robin Hood Projects and the general Robin Hood Fund. Most members choose a simple 50-50 split of profits to themselves and Robin Hood Projects. For the past two full years of its operations, the project has been profitable. (As of November 19, however, net asset value was down 6.38%.) Robin Hood says that its operating costs are quite low compared to normal asset management services provided by banks.
The enterprise is driven by Robin Hood’s “dynamic data-mining algorithm,” which it calls “Parasite,” because it tracks actual transactions in US stock markets and mimics the best market actors. The coop’s website explains: “The parasite listens to the feed of the NYSE, watching for traders and what they trade. Then it competency ranks traders, identifying ones that are constantly making money on specific stocks. When it sees that a consensus is forming among such competent traders, it follows.” Robin Hood appears to be out-performing many leading hedge funds and reaping impressive returns, and it provides a modest but welcome source of income for some commons projects.
I do have my doubts about the transformative impact of the project. Is it really changing the system, and is it “stealing” anything from the King’s forests? It seems to be playing by the King’s rules, albeit more successfully than many other players. What’s different is its channeling of its gains to commoners and commons-based projects rather than to the 1%. This has great value in its own right while bypassing the philanthropic or nonprofit intermediaries who often don’t really see or care about the commons.
As a financial enterprise, the Robin Hood Project has a rather unusual interest in “art, politics and finance” – and more broadly in subjective experience and cultural theory. The project’s website features a page for n-1 publications, a book publisher whose authors include Susan Sontag, Michel Foucault, Felix Guattari, and other cultural critics. In an interview on the website, Chairman of the Robin Hood Board, Akseli Virtanen, invokes Jacques Derrida, Gilles Deleuze, and Italian theorists such as Christian Marazzi and Maurizio Lazzarato. Not the usual bedtime reading of financiers.
Virtanen explains that the Robin Hood Coop is a cultural experiment in creating new forms and subjectivities by using the financial apparatus in paradoxical and “monstrous” ways. This has apparently prompted some reporters to question the very existence of the Robin Hood portfolio. Virtanen responds by citing audit reports from Ernst & Young, legal registration papers, and other such totems of trust. He adds:
“Robin Hood sounds like a ponzi scheme, a fake, or it could be a private group of aggressive entrepreneurs ready to take advantage of the naïve cultural people. It could be a hoax, a scam, or just an ‘art project’. It definitely parasites also the old ideal of community and cooperation. It is unallowable, impossible and disgusting… a monster... but it corresponds to our subjectivity.”
I confess that I had trouble following some of Virtanen’s reflections about the cultural significance of the Robin Hood Coop. Still, he makes some good points: The very idea of “value” IS a flimsy social construction, and Robin Hood is eager to provoke us to think about that. Why should we trust the official documentation about financial value when it is itself so abstract, arbitrary and almost theological?
The truth is, the meaning of value is elusive and socially contingent, and capitalist totems of value are in many respects laughable. No wonder conmen like Bernie Madoff could so easily exploit gullible investors. The trusted representations of “value” are so remote from the real economy and actual value that they can be easily manipulated to defraud people.
So Robin Hood has funded some worthy projects with the yields from its portfolio, and it has considered an impressive array of applicants. Its criteria: “Only projects that are bigger than only for themselves can be selected -- projects that open up the common space, that produce the commons.” Projects must be “generative and expansive, generating growth in subjectivities, in possibilities, in organization, in sharing, in scale, in mobility, in access, in independence, in desire. They should make our existential territory more habitable.”
Among the recent projects funded are Casa Nuven, an autonomous, self-managed space in Rio de Janeiro, Brazil, with 5,000 euros, as well as the P2P Foundation’s project with the Catalan Integral Cooperative and Commons Transition in Spain, with 4,000 euros. Check out the many applicants for Robin Hood funding here.
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