Hell, while others were stockpiling water, flashlights, and board games in preparation for Hurricane Irene, the hedge fund Tudor Investment was crunching numbers. According to BusinessInsider Paul Tudor Jones' investment firm employs a weather derivatives analyst.
Weather derivatives are fairly new, the first one traded in 1997 and the CME introduced the first exchange-traded weather futures contracts in 1999. The main buyers aren't hedge funds, they are insurance companies, farming conglomerates looking to insure against freezes and bad crops, electric companies, etc.
But because weather derivatives are non-correlated (the Euro crisis didn't stop Irene) and provide a considerable amount of yield, investors in the space have grown recently to include direct investments from pension funds and hedge funds. Some hedge funds, like ~$2.5 billion Nephila Capital for example, specialize in reinsurance and weather risk…..
Find out more at http://www.businessinsider.com/tudor-investment-corp-reacts-to-hurricane-irene-trade-weather-derivatives-2011
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