30SEP08:
31DEC08 INDICES:
FTSE100:3550
DOW30:7550
# HEDGE FUNDS:4425 30JUN08: Oil to be USD200 by 30OCT08 USA Inflation to be 7.5% by 30OCT08
...oops 23APR08:
Next Rights Issue:
HBOS...yes
All & Lec ...
...1 Nil. 17APR08: Oil to be USD127 by 30SEP08
...16MAY08 losing my touch 27FEB08:
2 Banks go bust by 30JUN08
BS down, Lehman (a bit late I know) 20NOV07: Northern Crock to be sold for 15p
Nationalized 01NOV07: Oil to be USD103 EOM
...peaked too soon 08OCT07:
SEC to fine Goldman for pricing issues
...still waiting 15JUN07: ML to buy-out BS
JPM got there first 06JUN07: The Big Crash: 17OCT07
...well it's here
Banks are issuing policy statements asking employees to refrain from using the comment section on blogs. Is this the end of the internet as we know it?
Thank goodness for iPhones, Blackberrys and other internet mobile devices. When I am stuck in a taxi or conducting a very dull meeting, I will whip out my 8830, wait 15 minutes to load up my favourite sites and quite happily comment about something that warrants a witty remark, email the latest stalker on facebook or spread some thin gossip about to information addicted hacks. That is what these devices are for isn't it? Much cheaper than long lunches. Of course running my own mini empire, we have a complete free for all policy where anything goes.
And at the end of each month, our IT geeks send out a summary report to all employees showing them what they have been up to on the web. Markets live on rumour, denial and false hopes and blogs are the best way to get a feel for the true market sentiment. If we find employees have not been on "financial" sites, we threaten to limit their time on the internet during the working day. It works well. Benign dictatorship.
The markets are happy at the moment but the blogs are not; market corrections take time. Today's news is bored of the latest swing in the Dow and concentrates on unemployment, inflation, IPOs and distressed managers.
Investors are running scared, with State Street Global Markets' (SSGM) Global Investor Confidence Index falling from 6.1 points to 82.6, its second monthly reverse.
The group declared monetary loosening had failed to provide relief in the wake of the credit crisis. “It is now more than a month since the US Federal Reserve cut both the Fed funds and discount rates by 50 basis points, but investor confidence is more fragile than ever,” it said.
In the US the decline in confidence has been especially pronounced, SSGM said, with the North American Index notching up a decline of 13 points for October, after falling 10 points in September.
“This is by far the biggest two month fall in any of the indices, including the Global series that dates back to June 2000,” confirmed SSGM. “It is also the lowest reading of North American investor confidence since February 2006.”
It attributes the declining confidence both to the oft-bemoaned credit crunch and the worsening broader macro-economic environment, particularly in the US, a “slow motion train crash in housing (which) is accelerating.”
SSGM said a lower than expected Philadelphia Fed manufacturing index and rising jobless claims are “the first tentative signs that the bombs that have been dropping on housing and financial markets might be beginning to cause collateral damage to the real economy.” Futures markets indicate a further rate cut on 31 October is twice as likely as believed last week.
Fintag says Investors panic - Markets give them the middle finger.
Och-Ziff Capital Management reported an increase in assets under management in advance of its planned initial public offering.
The New York-based hedge fund said its assets under management rose 3.4% to $30.1 billion, as net inflows offset a decline in the value of its funds. In the third quarter, investors added $1.2 billion to funds, as the markets knocked off $146.5 million. In spite of the negative performance, Och-Ziff said that recent market troubles did not substantially hurt its funds.
The firm, one of the largest hedge funds in the U.S., plans to list on the New York Stock Exchange next month. It hopes to raise $1.1 billion in the share sale.
While investors continue to flock to the firm, increasing compensation costs may raise eyebrows: The firm posted a $140.5 million net loss in the first nine months of the year, compared to a $135 million profit in the same period last year. Still, revenues rose 11% to $731.8 million.
Fintag says We watch this with interest. Personally I think it will do well because people want it to do well and not because it will be a good investment. Hedge Fund managers are people businesses. When people leave, the business dies hence the massive increase in compensation.
The US Treasury is poised to examine Bear Stearns' $1bn cross-investment with Chinese investment bank Citic in the interests of national security.
Bear Stearns headquarters in New York Centre of inquiry: the Bear Stearns headquarters in New York
The Treasury, through its Committee on Foreign Investments in the United States (CFIUS), will work with several state departments - including Justice, Commerce, State and Defence - to investigate whether the deal raises cause for concern.
It is understood that Bear will have to make appropriate CFIUS filings as part of the regulatory process to have the deal approved. The bank must provide information on the deal and say how it impacts its shareholder base, as well as give specific information on Citic itself.
CFIUS was overhauled in the wake of the Dubai Ports World debacle, when the Middle Eastern port operator had to sell the US assets it bought as part of its takeover of P&O due to a protectionist outcry.
Although banks and financial institutions are not typically deemed to be assets of national security, CFIUS's remit is wide-ranging. It is, for example, looking at Borse Dubai's potential investment in Nasdaq.
More recently, Republican politicians including senator Jon Kyl have asked CFIUS to review Chinese firm Huawei's plans to buy a stake in US technology company 3Com.
Fintag says The Treasury have followed my query yesterday that this is back door imperialism. The power of commenting and emailing.
China will be the world's largest economy in 2008 (so says the IMF) and protectionism will be the new order. If 700 million Chinese people earn less than USD2 a day, what would happen if their wages were doubled? Before you know it, all those goods they make for us Westerners would be consumed by the locals and we will be in a world where the West services and the East makes goods.
I wonder who will win. Hopefully I will be dead then and my children are fluent in Mandarin.
RBS TAKES AIM AT COLLAPSED $6.6BN CHEYNE SIV PORTFOLIO
Royal Bank of Scotland is in talks to buy the investment portfolio of Cheyne Finance, the collapsed $6.6 billion (£3.25 billion) structured investment vehicle (SIV).
Receivers at Deloitte said yesterday that RBS planned to transfer the assets from Cheyne to a new SIV, which would be funded in part by the troubled vehicle's existing investors.
“The action follows detailed discussion with a number of different bidders over the past few weeks and after consultation with the informal creditors' committees,” Deloitte said.
Goldman Sachs, the investment bank, was thought to have been one of four banks that were interested in the SIV.
RBS's bid is understood to have been sufficiently high to repay owners of Cheyne's commercial paper and make some repayments to the holders of the SIV's mezzanine debt.
Last week Cheyne became the first fund of its kind to stop making payments to investors holding its commercial paper because the SIV had breached insolvency tests. The decision by the High Court to allow payments to stop is thought to have helped the receivers to finalise a sale because it let them reach an agreement with all Cheyne's debt-holders.
Deloitte has been trying to dispose of Cheyne's assets since the start of September, when the SIV was hit by the closure of the market for asset-backed securities.
Much of the securities held within SIVs are backed by mortgages or collateralised debt obligations, both of which were affected by problems in the American sub-prime mortgage market and subsequent global credit crisis. Many investors, fearful of the quality of the SIVs' assets, refused to roll-over the short-term debt that they had lent to the funds, depleting the vehicles' resources as they paid out to lenders.
Fintag says But Why? RBS have a lot on their plate re ABN AMRO. Is it perhaps they have exposures to this SIV? Or are they acting as big dicks?
SOUTH AFRICAN HEDGE FUNDS HAVE POTENTIAL TO DOUBLE
South African hedge funds have the capacity to more than double the assets they now manage, according to a survey by Novare Investments (Pty) Ltd.
Hedge fund assets in Africa's biggest economy have swelled fourfold in the two years ended June 30 to 26 billion rand ($3.8 billion), according to the survey of more than 72 South African hedge fund managers. Including mutual funds that use hedge fund methods, assets are 29.6 billion rand, the survey found.
``Existing hedge fund managers with open funds have enough spare capacity left to take an extra 30.5 billion rand from investors,'' Carla de Waal, who helps manage a $250 million fund of hedge funds at Novare, said in an interview from Cape Town today. Hedge funds started in the past 12 months have 11.4 billion rand in capacity, she added.
At least 17 hedge fund managers started new boutiques, small funds focusing on specific strategy, while 33 new funds were launched over the 12 months, De Waal said. Most new funds were started within existing asset-management companies, whereas in ``previous years most new hedge funds were started by managers who left large asset mangers,'' she said.
Funds of hedge funds, which pool money and then farm it out to other managers, are still the largest investors in hedge funds, accounting for 60 percent of the assets, De Waal added. High net worth individuals are the second-largest investors, holding 18 percent of hedge fund assets, while foreigners hold only 1.2 percent, she said.
Fintag says Except the South African currency, ZAR, is protected and it is near impossible for Westerners to access this Lord of Flies country.
Both Trader Daily and The New York Post have reports that rumours coming out of Merrill Lynch suggest that there are likely to be 'substantial' additional losses announced by the firm Wednesday, when it unveils its third-quarter numbers. Merrill came out a couple of weeks back and acknowledged that, because of the recent market turmoil, it will write-down around $5.5bn in the period and will post its first quarterly trading loss for some six years.
Fintag says These things take time. November is always a month of carnage and we have only had 8% layoffs (source:dealbreaker) - all banks lay off 10% every year (source:fintag) so inf act the banks are doing very well and jobs are safe as houses ...
Morgan Stanley recently--today-- informed its employees that it is no longer acceptable to “use firm computers to comment on blogs.” The first Morgan Stanley employee ballsy enough to post a comment on this post (we'll check the IP address to confirm it's not some punk JPM banker) wins something pre-tay, pre-tay, pre-tay good (okay fine--it's drinks with Keith Hahn, on Carney, who owes him. Because he spotted him for lunch one time a few months back. Why, what were you thinking?).
Fintag says Dealbreaker is on a good run at the moment. A strong long term buy meez things. It needs more pictures though.
Delphi, which is negotiating terms of a recovery deal with several hedge funds, said it had pushed back its expected exit from Chapter 11 to next year.
According to a Securities and Exchange Commission filing, Delphi, which makes auto parts, pushed back a continued hearing on its disclosure statement to Nov. 8 from Oct. 25 so that it can incorporate potential plan changes.
Delphi, based in Troy, Mich., said in an announcement Friday that the court disposed of 10 pending objections to the plan at an Oct. 3 hearing.
In the meantime, Delphi said that it needed this “brief adjournment” to continue to negotiate any amendments to the disclosure statement with key stakeholders, including Appaloosa Management, which is leading a consortium that plans to pump $2.55 billion into the company, a former General Motors unit.
Fintag says Real news.
THAMES RIVER PREPS L/S PROPERTY FUND; SEEKS ADDITIONAL CAPITAL FOR FOFS
Thames River Capital is set to launch a real-estate long/short fund later this year, adding a Pramerica Real Estate Investors veteran to its property team in advance of the offering.
“It's a property long/short fund investing in pan-European real estate securities,” said Michael Warren, an investment director at Thames River. “It will look at the property market from the point of view of a long/short book of equities and it will also take a directional view.”
The Thames River Longstone Fund's opportunistic mandate will allow it to invest in public property companies and real estate investment trusts in European markets including Eastern Europe and Russia. It is aiming for annual returns of 12% to 15%, and charges 2% for management and 20% for performance, with a $100,000 minimum investment requirement. The fund is set to launch on Dec. 1.
Fintag says I have spoken to a lot of people about property derivatives and property hedge funds and I am not convinced. Morley / ORN Capital threw in the towel quite recently and unless it trades REITS and property unit trusts, then I don't quite get it. Swaps are the big trade but with LIBOR exceeding yields then I guess as an asset owner you could lock in some yields but the spreads are too large and frankly I cannot see how you can make money as the demand just isn't there. Still, like all latest flavors it is best to sell first then work out how to run it later.
Our new fund, the Fintag Enhanced European Real Estate Hedge Fund is being launched later this month.
Index-based investing is the future for hedge funds investors, a prominent hedge fund indexing firm says.
The Credit Suisse Index Co. notes that passive strategies have become de rigueur in the world of traditional asset management, "and the same will hold true in the hedge fund market."
According to a new industry white paper produced by CS Index, hedge fund indexation is cost efficient and transparent, and solves many of the problems facing hedge fund investors and prospective hedge fund investors: "diminished alpha opportunities, complexity, cost efficiency, diversification, transparency and simplified reporting."
Unlike direct hedge fund investing, index-based portfolios do not require "a significant resource and time commitment" to find top managers, nor do they add an additional layer of fees to find them, as funds of hedge funds do. Plus, according to the report, "only a handful of the largest fund of hedge funds outperformed the Credit Suisse/Tremont Hedge Fund Index for the three-year period ended December 2006."
Fintag says Well they would, wouldn't they. Imagine if they had said indexation was a dead business model?
The need has never been greater for hedge funds and funds of funds pursuing long-term, sustainable growth to establish and maintain relationships with investors and have the proper business infrastructure and systems in place and operating. The concentration of investor assets in a relatively few number of hedge funds and funds of funds can be traced, in part, to those firms' ability to convince investors they have such a framework and are able to demonstrate robust investment processes backed by a comprehensive set of solid, enforced risk management tools. While larger, well established firms will continue to attract the lion's share of assets, their competition will continue to emerge even as barriers to entry increase.
Fintag says Awards season is here - again.
4 comments
JPMorganPersonWhoIsInThe10PercentClub said ...
I am afraid my bank has stopped me from making comments on blogs.
24 Oct 07 - 07:43 gmt
anonymous said ...
7.9 billion write down - big deal.
24 Oct 07 - 13:33 gmt
finbar said ...
More hidden away I am sure.
24 Oct 07 - 14:02 gmt
At Credit Suisse We Can Blog said ...
Merrill, Wachovia, Bank of unAmerica are all in the same sinking boat. The M-LEC is going to be empty pretty soon. Good to see the Dow going up again.
facebook profile
free e-mail subscription
feedburner feed
Investors are running scared, with State Street Global Markets' (SSGM) Global Investor Confidence Index falling from 6.1 points to 82.6, its second monthly reverse.
The group declared monetary loosening had failed to provide relief in the wake of the credit crisis. “It is now more than a month since the US Federal Reserve cut both the Fed funds and discount rates by 50 basis points, but investor confidence is more fragile than ever,” it said.
In the US the decline in confidence has been especially pronounced, SSGM said, with the North American Index notching up a decline of 13 points for October, after falling 10 points in September.
“This is by far the biggest two month fall in any of the indices, including the Global series that dates back to June 2000,” confirmed SSGM. “It is also the lowest reading of North American investor confidence since February 2006.”
It attributes the declining confidence both to the oft-bemoaned credit crunch and the worsening broader macro-economic environment, particularly in the US, a “slow motion train crash in housing (which) is accelerating.”
SSGM said a lower than expected Philadelphia Fed manufacturing index and rising jobless claims are “the first tentative signs that the bombs that have been dropping on housing and financial markets might be beginning to cause collateral damage to the real economy.” Futures markets indicate a further rate cut on 31 October is twice as likely as believed last week.