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
London > New York according to a new report (probably sponsored by the mayor of London).
Long only Buffet smugly tells us buy and hold is the key to success - which is fine if you have billions of cash to play with.
A hedge fund sues the SEC for not allowing us to advertise or market our wares - if successful no longer will FiNTAG be required and Finbar Taggit can sail off into the sunset.
Bank of America and HSBC are today's loser banks.
Hedge Funds are in crisis: UK Non-domicile tax rule change is forcing us overseas; the Peloton tree crash has put more spotlights onto highly levered funds that invest in illiquid assets.
Hedge Funds are enjoying the sun: Another UCITS success story; Traditionalists love us to bits; our Art and Wine portfolios are worth more than ever.
GLOBAL FINANCIAL SERVICES CENTRE INDEX 2008: LONDON LEADS NEW YORK; DUBLIN'S INTERNATIONAL FINANCIAL SERVICES CENTRE MOVES UP TO 13TH RANKING
The latest Global Financial Services Centre Index report commissioned by the City of London Corporation says that London still retains its position as the leading international global financial centre, although the gap over New York has narrowed.
Since the last report in September 2007, the lead over New York has halved to nine points, with leading City figures citing the Northern Rock issue, proposed non-dom taxation changes and concerns about the overall taxation regime.
London is shown as the global leader with 795 points (806 in the second GFCI), over New York on 786 (787). Hong Kong is in third place, followed by Singapore 675 (697), Zurich 665 (666), Frankfurt 642 (649) and Geneva 640 (645).
Fintag says I don't understand how one of the most polluted places on earth can come in at number 3. I live in London but New York is by far the better place to be (see last newsletter for reasons why).
London:
Pluses Charles Dickens' street scenes; best restaurants in the world; watching fish swimming in the River Thames; fit men (best gay scene in the world - apparently); its the center of the world; too expensive for Americans
Minuses Takes 2 days to reach Canary Wharf by taxi; nobody speaks English in the restaurants; the average hedge fund office is the size of a closet where the air conditioning doesn't work and the windows rattle; you need to earn a million a year to live, drive and have fun here.
financial times says " Outlook worsens for Square Mile jobs "
The body that represents hedge funds in Britain has warned that thousands of the industry's top traders could be forced to quit the City unless the Government does a U-turn on its new non-dom tax rules.
A survey of more than 80 UK-based hedge funds by the Alternative Investment Management Association (Aima) shows that 60 per cent of those questioned will be affected by the changes that come into force in April.
London has powered to the top of the European hedge fund league table with 80 per cent of alter-native assets managed out of the capital - a position that has been put in doubt by the Chancellor's move.
"There is a real threat that key people will be forced to leave Britain," said Andrew Baker, deputy chief executive at Aima. "We've been really surprised by the speed of response and strength of feeling. We feel that the non-dom measure is policy on the hoof."
Fintag says Thankfully most hedge funds are set up so the manager can be anywhere in the world (in the UK we set up advisors and the manager tends to be in the Caymans, Isle of Man, Channel Islands, BVI etc etc). Moving offshore involves a simple novation of contracts.
Apparently 50% of UK Hedge Fund managers are non-dom.
The hard part is where do you go?
guardian says " They're tiny and unlikely to run for it "
An outpouring of negative economic and financial reports soured the mood on Wall Street Friday as banks and other lenders further tightened credit in their struggle to contain damage from losses on mortgages, business loans and related debt.
Shares sank, and investors fled to the safety of Treasuries as the Standard & Poor's 500-stock index fell 2.71 percent and the Dow Jones industrial average dropped 315.79 points, or 2.51 percent, to 12,266.39. Both indexes capped their worst four months since 2002.
Prices of municipal bonds, bank loans and high-yield debt all fell as well.
The markets for ultrasafe debt backed by the federal government and other nations were alone in posting gains. Some commodities, including gold, were also up.
“The drumbeat of economic news has been unrelentingly bad,” said Edward Yardeni, a normally upbeat investment strategist. “The recession scenario is looking more and more credible.”
Fintag says Uh? We have been in recession since last August!
Phil Goldstein, the hedge fund manager who derailed the Securities and Exchange Commission's attempt to require hedge fund registration, will sue the regulator to lift its ban on hedge fund marketing and advertising.
The long-standing ban on funds' soliciting money from the public has been interpreted to mean a hedge fund should release only very limited information about itself. This interpretation has come under pressure as hedge funds have grown rapidly and become widely covered in the media.
Mr Goldstein told the Financial Times: “We want to be able to have a website like any other business. The only websites required to pre-qualify people are hedge funds and pornography . . . gun shops are allowed to advertise, the Massachusetts state lottery is allowed to have a website. We want to be treated like any other business.”
Mr Goldstein said he would file in the next few weeks in the Washington DC district court, asking for a declaratory judgment that the SEC rule should be struck out.
Mr Goldstein, who runs the Bulldog Investors fund, said he had written to the SEC asking it to strike out the ban, threatening court action if he did not hear back by Friday.
The regulator had not responded by then. A spokesman for the SEC on Friday said it had no comment.
Fintag says Tis true. The main reason why Hedge Fund reporting is on the whole so inaccurate is because the media has such little information about what goes on. This is why FiNTAG is so successful.
Of course if the SEC (FSA et al) allow the Hedge Fund industry to market, promote and advertise, then no more will I be needed. Hedge Funds will be just another financial product.
So its a simple choice. If they win, I can spend the first hour every day down the gym instead of writing this. If they lose, I will not get that body beautiful that I always wanted and you lot can continue to enjoy my slightly dry and amusing start to the day [Editor: I wouldn't call it that].
finalternativessays " New Activist Hedge Fund Takes Its Fights Online "
Bank of America lost money in trading on nearly one in three days last year, a sixfold increase on the previous year and worse than any other Wall Street bank, according to regulatory filings.
The bank, whose chief executive Ken Lewis said last year he had “had about all the fun he could take in investment banking”, said in a filing with the US Securities Exchange Commission that it made money on 71% of trading days - compared with losing money 29% of the time, or on 72 days.
The filing said: “Excluding the discrete writedowns on our super senior collateralised debt obligation exposure, 21% of trading days had losses greater than $10m (€6.6m) and the largest loss was $159m.”
Fintag says I apologise. The new "Useless Banks of 2008" nominations are:
FEARS of a hedge-fund meltdown are rippling through the City, with dozens more funds said to be close to following Peloton into collapse.
Peloton began to liquidate its $9 billion (£4.5 billion) credit portfolio on Friday after coming under pressure from its bankers.
It is understood that as many as 6 of its 14 lending banks have seized assets from the firm rather than face up to losses of about $1 billion.
All of the fund's $2 billion of equity has been wiped out, sources said.
City sources fear the Peloton firesale will prompt banks to ask other funds to put up more cash to support their positions, forcing more to close.
Fintag says Peloton: Partners 1 Goldman Sachs 0. Walking away with hundreds of millions in performance fees seems like a great trade. Anyway, again we have been telling you since last August - 6 months of ranting - that our leverage belts have been tightened.
Don't these journalists read my newsletter? Well according to my log files and email subscriptions they do; perhaps they look at the pictures and forget the text.
But the worse is over. Liquid assets = no problem. Illiquid assets (and anything related to real estate) = margin calls, sleepless nights, wondering when it will all end.
marketwatch says " Muni hedge funds hit by margin calls, Pimco says "
THE sumptuous, Turkish-style low sofas in Peloton's Soho office provided little comfort to the hedge fund's founders, Ron Beller and Geoff Grant, last week.
After six sleepless nights spent trying to pull together a rescue deal, the two former Goldman Sachs bankers announced on Thursday night that they had been left with no option but to launch a fire sale of Peloton's flagship $2 billion (£1 billion) ABS Master Fund to pay off their bank loans.
It was a sudden bump back to earth. Only a month earlier, the same fund had been crowned the “New Fund of the Year” at the Eurohedge industry awards. Peloton's strategy of betting that US sub-prime mortgages would fall in value had clocked up gains of 87% over 2007.
US-born Beller accepted the award with a rousing message of thanks to his team for convincing him that “the sub-prime emperor had no clothes”.
Now it is Beller who has been stripped naked, losing half of his estimated $80m personal fortune through the fund's collapse.
He is fast becoming the poster boy for a crisis of confidence that threatens to engulf more of London's hedge-fund industry.
Fintag says Camera shy Calamity Beller has an incredible knack of being in the media. Let me tell you something - I have had the pleasure of being at the same dinner table and he is quite arrogant, overbearing and a "full of himself" chap. But then I guess you wouldn't have thought anything else?
Companies that depend on cheap credit to keep going are like hard-core heroin addicts, living each day from fix to fix. Once the drug -- or the borrowed money -- runs out, many either go through painful withdrawal or they end up in the gutter, lifeless. In "Junk Sales Mirror '91 Recession and Bankruptcies," Reuters details evidence that suggests the debt junkies are suddenly being forced to go cold turkey.
Bankruptcy lawyers: Sharpen your pencils. This could be a frenzied year in U.S. bankruptcy courts, according to signals flashing from the global junk bond market.
High-yield debt sales have sputtered so far in 2008 and are off to their weakest start in 17 years thanks to an anemic U.S. economy, a worldwide credit crunch and a pronounced absence of investor appetite for risky assets.
That's a striking change from the go-go days of the leveraged buy-out boom, when the world's less-creditworthy corporations found little difficulty raising funds through bond offerings. Now those companies are shut off from this vital source of fresh capital, a slump that typically precedes a surge in corporate bankruptcies.
"2008 will be a busy year for insolvency professionals," said Sam Gerdano, executive director of the American Bankruptcy Institute in Alexandria, Virginia. "Whether it's a record year remains to be seen."
Globally, less than $2 billion in junk bonds have been sold so far this year, all in North America. That marks the slowest start since the 1991 recession, when no junk bonds were sold in the first two months, according to Thomson Financial data.
Fintag says ...as usual, my favourite Oracle is spot on again.
WARREN BUFFETT'S ANNUAL LETTER TO SHAREHOLDERS 2008: COMPOUNDED ANNUAL GAIN - - 1965-2007: 21.1%
Fintag says Nice to see the Buffoon puffing out his chest. He didn't mention much about the Insurance Industry though - his great love too. I wonder if it's because following AIG's great results last week, all is not well?
CREDIT CRUNCH FUELS INVESTOR THIRST FOR ART AND WINE
Rollercoaster markets may have cooled investor appetites for shares or property, but interest in offbeat investments is booming as a growing number of art and wine funds compete to combine passion with high returns.
Downturns typically mean a slowdown in investments that are seen as discretionary, but industry watchers say the credit crunch has left the appeal of so-called "investments of passion" -- art, wine and collectibles -- largely untarnished.
Instead, they say, it brought home the need for investors to take on uncorrelated assets to offset the ups and downs of the mainstream equity and credit markets.
Investing in a Picasso (PSO-P.V - news) , a case of Chateau d'Yquem or a Bordeaux from the sought-after 1961 vintage is nothing new: wealthy enthusiasts have been filling their cellars and covering their dining-room walls for centuries.
But the specialised asset managers that have emerged in the past decade have brought sophisticated financial techniques to the pursuit, widening interest to include large institutional investors who are attracted by rising prices, and returns that can reach or exceed 20 to 40 percent a year.
In 2007, for example, the FTSE blue-chip index rose by less than 4 percent. The main index on Liv-ex, an independent trading and settlement platform for the fine wine trade, ended the year up just over 40 percent -- and with excitement still bubbling around the 2005 Bordeaux vintage, now being shipped.
"More and more people are looking at wine as an asset class, discovering it is uncorrelated to bonds and equities, that there are fund managers out there to help them capture those gains," said Andrew (NASDAQ: ANDW - news) della Casa, a director at the Wine Investment Fund, one of the sector's largest players with 35 million pounds ($69 million) of funds under management.
He said the credit crunch had allowed funds to demonstrate how resilient alternative assets were in a real downturn.
Fintag says The last few months have been stressful and my prized wine collection is a bit low. However, good to see my Banksy collection has kept its value.
The House of Commons Treasury Select Committee has criticised banks for ignoring warnings about risky lending, and hit out at regulators for not making sure that lenders listened to their concerns.
In its second report into the causes and lessons of the market turmoil, the committee said the system for regulator warnings was "deficient" and demanded it be strengthened to ensure that banks give proper consideration to regulators' warnings.
In evidence to the committee, the Governor of the Bank of England, Mervyn King, along with the chiefs of the Financial Services Authority, said they had given banks repeated warnings in speeches and reports in the first half of last year. The regulators had cautioned that banks were lending too freely and were over-dependent on abundant liquidity, using new credit products to unload risk.
Mr King blamed "hubris" within financial institutions for their lack of action, but the committee said it was not enough for the regulators to make speeches and hope someone would listen.
The MPs said the regulators should send a short letter to institutions highlighting major concerns to be discussed at board level. The Bank and the FSA should also require confirmation that the risks had been discussed and publish commentaries on the responses, the committee said.
Fintag says ...talking of which, the FSA has one of the most impressive collection of modern art I have ever seen owned by a government agency. Good to see they are prioritising.
S&P MAY DOWNGRADE 1,887 CLASSES OF ALT-A MORTGAGE SECURITIES
Standard & Poor's said on Friday that it may downgrade 1,887 classes of mortgage securities backed by so-called Alt-A home loans. The securities, made up of mortgages originated in 2006 and the first half of 2007, were put on CreditWatch with negative implications, the rating agency said. Alt-A loans were usually offered to more creditworthy borrowers than subprime mortgages, however, they required less information such as documents verifying home buyers' incomes. There's been a persistent increase in delinquencies on the loans underlying these securities, S&P said.
Fintag says And you thought subprime was bad - just wait for this to explode.
Traditional fund management groups are falling back on the expertise of the hedge fund industry in an attempt to prop up the struggling absolute return equity sector.
These funds, also known as equity long/short or market neutral, should have been shielded from the sell-off in long-only equity funds that has ravaged the asset management industry since markets turned last summer.
However, European absolute return equity funds suffered net outflows of €4.8bn (£3.7bn, $7.3bn) in the second half of 2007, some 22 per cent of sector assets, as investors lost confidence in the funds' ability to protect them from falling markets.
"Investor sentiment is very correlated to stock market movements regardless of the promises that are made by fund managers," said Diana Mackay, managing director of Lipper Feri Fund Market Information.
"Absolute return was a good story for a while just after the first China wobble [in February 2007]. Investors saw the potential for markets getting more volatile but then the subprime issue hit and investors got very bearish. "On the whole absolute return funds have not done so well and investors are not believing the promises right now."
FTfm reported in December that the average European absolute return fund had produced a negative return in 2007, according to Standard & Poor's and Morningstar, falling well below their targets of beating cash by between 100 and 400 basis points a year.
For some fund groups, the European Ucits III legislation - the latest in a line of directives on fund management from the European Commission - was not just a regulatory and compliance hurdle, but an opportunity to create new and innovative product ranges.
GSAM, the asset management arm of US investment bank Goldman Sachs, is a case in point. GSAM's London-based division was converting its Luxembourg funds to the new regime at the end of 2005, as new rules were being introduced, while drawing up proposals to test Luxembourg regulators with a raft of applications to approve equity, bond and commodity funds using derivatives in a variety of imaginative ways.
Even though 31 funds were eventually approved, GSAM's product design boffins secretly hope other more exotic suggestions will eventually see the light of day.
Paradoxically, it has been the previously sleepy fixed-income backwater that has provided the group with most scope for innovation. "The benefits of Ucits III are clearly evident in the fixed income space with more unconstrained and diversified strategies emerging," says Nick Phillips, head of third party distribution for Emea at GSAM.
Like other fund houses, GSAM has also used the freedom given by the new rules - allowing managers to take active positions with derivatives, rather than just using them for efficient management of portfolios - to develop alternative strategies like long/short equity funds, market neutral funds, commodity funds and portable alpha strategies.
A second European regulator has approved an investable hedge fund index as an eligible asset for funds operating under the European Union's Ucits III banner, potentially allowing retail investors greater access to the fruits of the hedge fund industry.
FTfm reported last week that Ireland had given the green light to Ucits funds based on the FTSE Hedge Global Index and the FTSE Hedge Momentum Index. Luxembourg has followed suit by approving the Greenwich Composite Investable Hedge Fund Index.
Launched by Connecticut-based Greenwich Alternative Investments in 2003, the investable index is based on 51 hedge fund managers across 16 investment strategies. It is designed to track the performance of Greenwich's non-investable global index, which features 2,700 managers.
Tom Whelan, chief executive, said Greenwich was working with "several" companies interested in creating products based on the index. He expected the first offerings to be launched this year.
"What we are seeing in general, not just with the Ucits initiative, is a lot of interest in the beta [index returns] of hedge funds.
Fintag says Come on down.
BUSH DEFICIT AT RECORD AS TREASURIES DETER PENSIONS
Philadelphia's $4 billion pension deficit is causing the city's retirement-fund manager to shun Treasuries at a time when the Bush administration needs him most.
Yields on 30-year U.S. bonds that fell to a record low of 4.10 percent this year are forcing pension funds to favor equities, corporate debt and commodities in an attempt to cover unfunded liabilities and meet return objectives of about 8 percent. Even the federal government's own Pension Benefit Guaranty Corp. said on Feb. 19 that it plans to shift $15 billion to stocks from debt.
Fintag says Oh dear.
1 comment
anonymous said ...
peloton falls off its bike..! Another of the 2005 $1 billion macro launches bites the dust..............
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