28JAN09:
Q1-09 DOW: 8900
Q2-09 DOW: 7250
Q3-09 DOW: 5810
Q4-09 DOW: 3960
CITI NATIONALIZED
OBAMA GETS SICK 27AUG09:
Mini Crash 21SEP09 Predicted correctly:
Bailout=Bonuses
Demise of Bear Stearns
Demise of Lehman Bros.
Demise of AIG
Subprime would cause problems
Date of 2007 crash
CRAs were to blame
G20 riots were a party
Northern Rock run
Northern Rock Nationalization
HBOS and RBS demise
UBS really was Useless
Being nearly hit by a yellow cab last week got my pulse racing.
Today's news has done the reverse. MAN tell us 10% of hedge funds will die, although it has been well known in the industry the attrition rate is about 30% so this is quite bullish I guess. We see an ex Citadel man launch a new fund, a well known manager throw in the towel, and learn that prop desk traders make the best hedgies. Dictator's and I tell you the USD is worthless and I reveal that last year FiNTAG netted just under USD1000. Stockpickr.com which started at the same time with the same idea netted USD10m. Boy, am I a loser...
I have been asked to speak at a conference (or was it sit on a panel and look authoritative?) as Finbar Taggit and this is causing me a dilemma. Once I am outed, the fun stops and you all go back to reading dealbreaker (not if you work at Bear Stearns of course) and hedgeweek. But then at least I wouldn't have to get up at 6am GMT to write this stuff anymore (even worse when I am travelling - many a time I am writing this at 3 in the afternoon or 2 in the morning) and could get a nice column in the New York Times that pays me the same as the advertising revenue I get from this.
And apparently my identity is being sold on the internet too with 25 million other Brits. Welcome to the digital age.
telegraph says " Data on 25m benefits claimants lost in post "
More than one in 10 of all hedge funds will go out of business this year as the rate of failure doubles, the head of Man Group, the world's biggest listed hedge fund manager, has predicted.
Peter Clarke, chief executive, said the knock-on effect of the crisis in credit markets was also making it harder for hedge fund start-ups, with a drop of close to one-third in new fund launches.
There have been many high-profile hedge fund blow-ups this year as a result of the credit squeeze, and advisers to the industry predict more to come.
However, Mr Clarke said in a video interview on FT.com that most of the closures involved “quiet withering” of funds that did not perform well enough to maintain investor interest, rather than sudden collapses.
“Historically the hedge fund world has seen somewhere between 5, 6, 7 per cent attrition rate in terms of funds closing or ceasing business, [and] I would expect to see that, and this is a pure guess of course, maybe reaching twice that,” he said.
Fintag says A strange comment taken out of context? Why would MAN, who are a fund of funds primarily, talk down the hedge funds that it relies for business? Either way, the attrition rate is about 30% so I guess if its down to 10% then this is good news.
Think about it. Most hedge funds get a 2 year seed deal. Performance is not the key here. Those who succeed raise AUM. The more investors, the more investors will follow. The bigger you are, the safer investors will feel. 1 out of every 3 new hedge fund start up fails. Don't believe me? Buy a copy of Eurekahedge and get your IT geek to compare it to a copy of 2 years ago and see what I mean.
Copper Arch Capital LLC, a $1 billion hedge fund, is liquidating because its founder, former Morgan Stanley (MS.N: Quote, Profile, Research) executive Scott Sipprelle, wants a "new challenge," according to a letter sent to investors on Nov. 5.
Sipprelle, who agitated for the breakup of Morgan Stanley in 2005 under then-CEO Philip Purcell, said the firm is not liquidating because of poor returns. It said its long-term record for long-short equity investing has been "very good," according to the letter.
"We have achieved multiyear compound returns far in excess of the market averages over a variety of challenging investing climates," Sipprelle said in the letter.
Sipprelle said all funds in New York-based Copper Arch will be distributed to investors after Dec. 31.
Copper Arch declined to comment. The fund's annual returns could not immediately be determined, but Sipprelle said they were not always above-market.
"Certainly there have been times (like the present petro-Google market) where we have looked hopelessly out-of-step," he said.
Sipprelle, 44, did not say in the letter what he plans to do next. A source close to the matter said Sipprelle is not retiring but will take time off.
Fintag says ...or sometimes they fail because the principals have had enough.
bloomberg says " Sipprelle to Close Copper Arch Hedge Fund After Returns Fall "
Shares in Swiss-based bank UBS AG fell to a near 2-1/2 year low on Tuesday on renewed fears the group may have to make more hefty writedowns for exposure to assets hit by the subprime crisis.
Speculation also swirled in Zurich that UBS, which ranks eighth in the FTSE Global Banks index by market value, might be forced to cut its dividend, or even resort to a capital increase to protect its Tier 1 capital as a result of any writedown.
UBS shares fell as much 3.6 percent in morning trade to 48.70 Swiss francs, a level not seen since June of 2005, but by 1200 GMT they had recovered and were trading 0.2 percent up at 50.70 francs.
"Although UBS confirmed again last week that it would have a profitable fourth quarter, rumours are growing today again about a further writedown worth $9 billion," said analysts at Vontobel in a note.
At the height of the morning selloff, trading in UBS stock was briefly stopped by the automatic trading system after it suffered a sharp price fall, though a Swiss stock exchange spokesman played down the significance of the interruption.
"It's a safety valve ... it occurs automatically when the difference between the last transaction and the next one would be more than 2 percent," said the spokesman. "It's a mechanism which allows traders to reconsider their positions in the order book."
UBS shares, which hit a record 80.90 francs in February, have been under pressure since revelations surfaced in May of big losses stemming from exposures to subprime-related structured products and collateralised debt obligations (CDOs).
Fintag says How can UBS have a profitable quarter but then be writing down such a large sum a bit later on? Maybe because the auditors are forcing them too?
Do you believe the balance sheets of Banks are telling the truth? Well given most of the big banks are struggling to adhere to Tier 1 capital adequacy ratios, I think the answer is a resounding no.
Anand Parekh, who left Citadel Investment Group under something of a cloud, has raised $1.5 billion for his own hedge fund.
Parekh's new Chicago-based shop raised the capital from Deutsche Bank, and is seeking additional investment before launching the fund, Reuters reports. It will pursue a multi-strategy, multi-asset class investing course.
Parekh left Citadel a year ago, amid rumors of the hedge fund giant's imminent collapse. His global stock trading group had underperformed Citadel's other business groups in the months leading up to his departure.
Prior to joining Citadel in 2003, he was head of the North American structuring group at Deutsche Bank.
Fintag says Of course if you start a hedge fund with over a billion USD and come from a top house, the AUM will just fall into your fund despite Parekh being a second rate trader. Investors like brand names and the comfort that they are just another sheep following other sheep to a place of comfort.
Investment banks' proprietary trading desks have proved they provide a better training ground for hedge fund managers in Europe compared with traditional asset management firms.
Hedge funds run by managers who were former prop traders generated an annual investment return 4.5 percentage points above those run by former asset managers, on average, according to a survey of 20 European firms by Financial News.
They also performed better on a risk-adjusted basis.
The 10 funds run by former prop traders made an annualized net return of 20.7% on average. The ratio of these funds' return to their volatility averaged 1.9. The 10 funds run by former asset managers made an average annualized net return of 16.2, with a return to volatility ratio of 1.6.
But investors are being offered hedge funds run by other hedge fund managers. The three largest hedge funds raised this year were the $3.5bn (€2.4bn) raised by former GLG Partners director Philippe Jabre; $900m raised for the Samsara fund run by Ajay Gambhir, who joined MPC Investors from JP Morgan; and $900m raised by Talaris, run by Nicholas Andine after he left Gandhara Capital.
Two of the largest funds launched last year, SRM Global and Montrica, were raised by former prop traders, while the third was raised by Cevian Capital, an investment firm founded by private equity specialists.
Fintag says This seems so obvious to me. Anyone who has been a prop trader uses the banks or clients money with a limited downside - your job. So many rookie prop traders learn to take huge hedged risks and make a lot of money. The longer they do it, the more valuable they are to their employees. But they are never paid enough so leave for Hedge Funds.
Hedge Funds set up by reasearch analysts, academics, HNWIs are bound to fail and usually do.
The insurance industry could face a $6bn (£3bn) bill for claims against directors relating to the sub-prime mortgage lending crisis.
William Sturge, a partner at law firm LG, said legal action is expected to trigger many directors and officers' (D&O) insurance policies.
" The crisis has escalated from the mortgage providers to the investment banks, and fund managers trading in bonds," he said. "D&O claims across the market could be significantly greater than previous estimates - perhaps twice the $3bn figure quoted by Bear Stearns in September."
David Small, an insurance analyst at Bear Stearns, said the bank had not revised its forecasts although "obviously there are more companies that will fall under the criteria than when we initially published our estimate ".
He said the benign D&O market was about to turn as the credit crunch is "the first big issue which has come up since the tech bubble burst".
Fintag says Parasites.
independent says " Freddie Mac seeks emergency funding after posting $2bn loss "
The last potential bidder for Northern Rock came forward today with an offer that will leave virtually nothing for shareholders.
JC Flowers said that it would inject just over £1bn of new equity into the crisis-torn bank and had secured £15bn of backing from a number of blue-chip banks, most of which could be used to pay off emergency loans from the Bank of England almost immediately. But it is understood Flowers' proposal would see it make only a 'nominal' offer to shareholders which some people suggested could be as low as 10p a share.
With at least one other bidder looking set to withdraw, sources said Sir Richard Branson's Virgin Group had emerged as the front-runner to rescue Northern Rock. The news came as the shares plunged, leading to at least half a dozen brief trading halts as the Stock Exchange introduced emergency auctions.
The shares, which had opened at 104.2p, having fallen 21% yesterday, at one point dived to an all-time low of 60p. At that level, Rock would no longer be a FTSE 350 company, never mind its current FTSE 100 status. Howard Wheeldon of broker BGC said...
Fintag says Yesterday I said the spread was about 15 to 30p. How wrong could I have been ... however, my fortune teller gives me 15p as the final sale price and a 3% increase in income tax.
In a mini-profile of a hedge fund manager, James Altucher, and his investment Web site Stockpickr.com, BusinessWeek reports that Mr. Altucher eschewed a tantalizing offer from a large hedge fund to bring his investment strategy — and that of Warren E. Buffet and George Soros — to the masses.
Last year, before he founded Stockpickr, which allows investors to piggyback on the portfolios of professional investors like Mr. Buffett and Mr. Soros, Mr. Altucher received an offer from a much larger hedge fund willing to give him more than $100 million to invest. The move would have allowed the hedge fund manager to leverage the strategies that he had perfected.
The catch, says BusinessWeek: The enthusiastic multitasker would have to give up everything else on his plate — appearances on CNBC, columns in the Financial Times and TheStreet.com, and writing books, such as “Trade Like a Hedge Fund” — to concentrate on the new fund.
But Mr. Altucher refused, choosing instead to found his website. His move didn't go unnoticed; in April, he sold his controlling stake to TheStreet.com in a deal that valued the venture at about $10 million.
Fintag says Altucher set up stockpickr a couple of weeks after FiNTAG (before we became a blog site). He put a lot of money into it and stole many of my ideas - as did Google and Yahoo. He ended up with a USD10m trade to his old mates at the street.com and I have to get up every morning and write this rubbish.
I tip my hat.
Sometimes I am just too nice.
Things may change. Having decided the prime brokers front run my positions, I will soon be posting my daily positions for all to see and trade off. Hopefully somebody will pay me some good money so I can go to the gym and work on my six pack instead.
IRAN BLASTS DOLLAR AT OPEC SUMMIT — CALLS DOLLAR “WORTHLESS”
In a stunning example of a stopped clock being right, Iran's President Ahmadinejad assails the dollar, suggesting OPEC should break the petrodollar link:
“They get our oil and give us a worthless piece of paper,” Ahmadinejad told reporters after the close of the summit in the Saudi capital of Riyadh. He blamed President Bush's policies for the decline of the dollar and its negative effect on other countries.
Oil is priced in U.S. dollars on the world market, and the currency's depreciation has concerned oil producers because it has contributed to rising crude prices and eroded the value of their dollar reserves.
“All participating leaders showed an interest in changing their hard currency reserves to a credible hard currency,” Ahmadinejad said. “Some said producing countries should designate a single hard currency aside from the U.S. dollar . . . to form the basis of our oil trade.”
He was unsurprisingly echoed by statements from Mini-Mahmoud, Venezuelan dictator Hugo Chavez.
Fintag says Looks like I am in good (not) company.
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