23APR08:
Next Rights Issue:
HBOS...
All & Lec ...
HBOS yes ... 17APR08: Oil to be USD127 by 30SEP08
...16MAY08 losing my touch 27FEB08:
2 Banks go bust by 30JUN08
BS down, whose next? ... 20NOV07: Northern Crock to be sold for 15p
Nationalized 01NOV07: Oil to be USD103 EOM
...peaked too soon The Big Crash: 17OCT07
...well it's here 08OCT07:
SEC to fine Goldman for pricing issues
...still waiting 15JUN07: ML to buy-out BS
JPM got there first
Ever used a mouse without being able to use your index finger? I never realised how important this part of the body is. Maybe I should insure it; especially as the insurance companies need all the premiums they can get.
Despite some senior economists believing the USA is not in recession, it is during this time of the business cycle we all scratch our heads and look at what are recession proof industries?. Currently, computer games (GTA for example) are in that list as well as games consoles, basic food stuffs and first aid equipment. Any others?
So how did I sprain my finger? I was prodding a stock chart on a Bloomberg terminal and just prodded it too hard. I can only blame myself although in a world where our actions are always the responsibility of governments to sort out (ooo look, the UK is going to bail out reckless lenders. What about my savings? My pension? My finger?), I will be sending a letter to Bloomberg threatening to sue them unless they pay for me to have a 2 week vacation in the Caribbean to rest my finger.
Yesterday I reported on struggling private schools in the UK. As far as I know, nobody has looked into this. As usual, fintag is always setting the stories for the media and I look forward to reading an in depth article in this weekends newspapers. If so, you read it here first.
Enough gloating. Today we look at inflation, the useless Fortress, AIG and Sprott.
GLOBAL INFLATION RISKS HAVE REEMERGED AS MAJOR THREAT TO THE WORLD ECONOMY SAYS IMF
Global inflation risks have reemerged as major threat to the world economy according to the IMF. The prospect for continued relatively strong growth in emerging and developing economies suggests that demand growth for energy and commodities will remain solid, even as global growth is slowing, IMF First Deputy Managing Director John Lipsky said on Thursday.
The IMF warning coincided with another record rise in crude oil to over $123 a barrel in New York and high fuel consumption businesses reviewed their hedging strategies as the prospect of $200 a barrel for oil loomed.
Also on Thursday, the European Central Bank and Bank of England left interest rates unchanged despite increasing signs of slowing economic growth
Fintag says I wonder what Ben "Milk Nurse" Bernanke thinks of that?
Strangely the Bank of England has an exhibition on Inflation running at the moment. I expect Mervyn KIng has to go in occasionally to remind himself what his duties are. He should invite Bernanke over.
The Fortress Investment Group, a hedge fund and private equity firm, reported a quarterly loss on Thursday.
Fortress, one of a few publicly traded hedge and private equity firms, said its first-quarter net loss was $69 million, or 74 cents, after payments to its principals, in contrasted to profit of $62.1 million a year earlier.
Pretax distributable earnings, which analysts follow more closely, stood at $58 million in the first quarter, below Wall Street estimates and barely a quarter of last year's $220 million.
Fortress shares fell 91 cents, or 6.25 percent, to close at $13.65 on the New York Stock Exchange, where the company listed its shares in February 2007.
Demand for the company's hedge and private equity funds cast the earnings numbers in a more positive light, some analysts said.
Fintag says Remember the days of upward sloping curves?
SRM, the hedge fund that was Northern Rock's biggest shareholder, has joined forces with 150,000 small investors to mount a legal action against the Government over the nationalisation of the stricken bank.
The Monaco-based fund and the UK Shareholders Association have requested a judicial review of the Government's compensation scheme for shareholders, which they argue has been rigged to leave investors with nothing.
They have asked the High Court to investigate the conduct of the Treasury, the Bank of England and the Financial Services Authority in providing lender-of-last-resort backing to Northern Rock in September as well as the period leading up to nationalisation in February.
The litigants will seek to cause maximum discomfort for the authorities by asking for minutes of meetings between the authorities to be made public, as well as the report on Northern Rock produced by Goldman Sachs for the Treasury.
Fintag says Go for it. We are behind you all the way.
There were reports out today that Drake Management LLC (a hedge fund) is shutting down its largest hedge fund and may plan to start another. This is a classic example of what exactly is wrong with hedge funds.
A hedge fund manager is paid an incentive bonus if the fund that is being managed is able to achieve returns greater than some benchmark. In other words, the fund manager shares in the profits when profits are good but doesn't share in the losses. This type of incentive program encourages risk taking as the fund manager will do very well if the risk pays off but doesn't suffer the pain of a big loss.
If I was running a hedge fund (and didn't have any morals), I would do exactly what many of the hedge funds are doing. First, maximize the leverage of the fund by borrowing the maximum amount of floating rate debt. Second, take the equity and debt proceeds and invest in something with a high yield. If nothing changed for the worse, the fund would be very profitable and I as the manager would get a huge bonus check. Investors would be very pleased with their above average returns and won't think twice about my huge compensation. The typical investment strategy would be to invest in some high yield debt while borrowing at a lower floating rate debt. Another investment alternative is to borrow in a currency where interest rates are low and invest the proceeds in a currency where the interest rates are high e.g. borrow in Japanese Yen where the interest rates are near zero and invest in Latin America where the interest rates are much higher. If the foreign exchange rates don't move too severely against the fund manager, the strategy will be very profitable as some returns in Latin America are in the double digits.
Fintag says Given nearly all Hedge Funds are run poorly, this is an oxymoron [Editor: No it's not. It is factual]
Help for homeowners having trouble paying their mortgage is being announced, ahead of figures expected to show a rise in repossession claims.
More free legal advice for those at risk of repossession and specialist training for debt advice agencies is being outlined by the government.
Figures published later are set to show more people facing the first stage of the repossession process.
But experts say the situation is far from that seen in the early 1990s
Fintag says That is it. I am writing to the UK government to seek compensation for having a sprained finger. It is depriving me of working properly and writing this blog and entertaining the masses [Editor: Time to short porn sites too].
Why are we (that is us tax payers) helping out reckless debt lovers? What next? Helping gamblers out?
With Investment Banks being bailed out, why don't a few ailing estate agents or small boutique shops demand compensation from the government for the economy turning against them? Why not go the whole hog and turn into a Socialist state where nanny government helps you out all the time? [Editor: The USA and Europe are already are].
We need McCain and Cameron to sort us out asap. Thankfully Boris Johnson, the new London mayor, will help us but the wait is driving me mad. [Editor: This site is politically impartial. I am afraid we may have to fire you]
The credit crisis has taken its toll on the performance of 130/30 funds—which have 130% exposure to long positions and 30% to shorts—but so far investors appear to be giving them the benefit of the doubt.
Most 130/30 funds available to UK investors enjoyed net inflows in the first three months of the year despite of negative returns over the period, according to analysis by Financial News.
A cross-section of UK funds offered by asset managers including JP Morgan, Resolution, Threadneedle and UBS disclosed that most of their UK 130/30 fund returns were negative in the first quarter, according to data provider Morningstar, and many underperformed the relevant equities benchmarks.
However, investors—including retail investors, who are notoriously wary of investing in funds reporting negative returns—still pushed assets into many of the vehicles.
JP Morgan Asset Management is ahead of the pack, with four 130/30 funds available in the UK and a fifth reportedly on the blocks. It distributes two European equities and two US equities funds.
Fintag says I thought these had all died off because the performance was so shocking. Looks like they have survived. The alternatives, hedge funds, are even worse so maybe 130 / 30 isn't as bad as I had been led to believe.
Imagine launching a fund. It loses money but people still want to invest in it? Is this the new paradigm?
financial times says " Wary hedge funds opt for a conservative approach "
One of HSBC's most actively managed fund divisions has been reducing its exposure to commodities, expecting a major correction in the high-flying sector.
The $2.7 billion Absolute Return Service, part of HSBC Investments, now holds only around 2 percent of its portfolio in commodities, down from a high of around 17 percent earlier this year.
In an interview with Reuters on Wednesday, Charlie Morris, head of absolute return, said commodity prices had risen to unsustainable levels.
"We are waiting for a full on commodity correction," he said, adding that the risk return for investors in commodities was now higher than for equities.
Fintag says Watching with interest. The com bubble is very tight.
In Financial Armageddon, I noted an Infrastructure Report Card by the American Society of Civil Engineers (ASCE) that called for $1.6 trillion to be spent over a five-year period to bring the nation's infrastructure to a good condition. My point was that this was another in a long list of multi-trillion dollar obligation that were undermining the economic and financial wellbeing of the United States. A commentary in the Financial Times by John Gapper expands upon what decaying roads, rail networks, bridges, dams and the like mean for our future in "On the Pot-Holed Highway to Hell."
Fintag says Sorry to say but we reported that the USA was a Third World Country last September.
Always glad to be first with the news.
BANKERS' BONUSES EXPECTED TO PLUNGE BY 40 PER CENT IN WAKE OF CREDIT SHOCK
City bonuses will plummet by 40 per cent this year as turbulence in the credit markets begins to hit the pockets of London's high-earners, a British think-tank said yesterday.
In its biannual report on London's economy, the Centre for Economics and Business Research (CEBR) predicted that this year's bonuses - to be paid in early 2009 - will total £5.07 billion, down from 2007's near-record £8.51 billion payout. In 2006 £8.8 billion was paid to London's financiers. “[Our] research suggests that the pin-striped brigade will feel it in their pockets for some time to come,” the CEBR said. Bonuses would not recover until 2011, when the CEBR forecasts a £9.04 billion total.
Last week Mervyn King, the Governor of the Bank of England, hit out at bankers' salary packages. Mr King told the Commons Treasury Select Committee that the remuneration structures in some banks had encouraged a dangerous level of risk-taking that had helped to push the world into a liquidity crisis.
“Banks have come to realise they are paying the price for having designed compensation packages, which provide incentives that are not, in the long run, in the interests of the banks themselves,” he said.
Fintag says Is this news? Is it good news or bad news?
Personally, any incompetent banker that gets any sort of bonus is bad news. When are the authorities going to force banks to be transparent in how they allocate bonuses?
Contrary to popular belief, bonus pool allocations are not scientific. The bosses take the first cut and pro rata the rest using criteria like tenure, rank, and if you look good and give good [Editor:Censored]
The White House's top economist said he's confident the U.S. economy hasn't dipped into recession, and expressed optimism that stimulus checks could bolster growth in the current quarter, earlier than expected. [lazear] Associated Press Edward Lazear, Chariman of the Counciil of Economic Advisers, briefs reporters March 7.
"The data are pretty clear that we are not in a recession," Council of Economic Advisers Chairman Edward Lazear told a meeting of editors and reporters from the Wall Street Journal and Dow Jones Newswires.
Battered by the housing crisis and rising energy prices, the economy grew at an anemic 0.6% rate in the first three months of the year, the same pace as in the fourth quarter of 2007. Despite the still-positive growth, many economists believe a recession already is under way.
But the official declaration of a recession would likely be made after the fact by the National Bureau of Economic Research. And Mr. Lazear said just two areas of the economy are showing the type of deterioration that the NBER would consider recession range: retail sales and manufacturing. NBER says a recession is marked by a significant decline in economic activity, lasting more than a few months and seen in real gross domestic product, real income, employment, industrial production and wholesale-retail sales.
In addition, job declines so far have been well below those of the 2001 recession, itself a mild one, he noted.
Fintag says A brave and deluded man.
PRIME BROKERS TO RAKE IN OVER US $11B FROM HEDGE FUNDS
Growing enthusiasm for hedge funds, paired with a profitable fee structure and positive returns, has given the hedge fund industry the capital to extend its influence. As the snowball effect of assets and profits turns into an avalanche, competition for hedge funds' business continues to grow fiercer.
According to a TABB Group study of 61 U.S.-based hedge funds—representing approximately 15% of the total U.S.-based hedge fund assets—in the first quarter, prime brokers “will reel in more than $11 billion revenues from hedge funds in 2008, a 15% increase over 2006.”
“TABB Group estimates industry revenues generated from financing, stock loan, custody and other prime services will surpass other institutional business lines by 2010, in particular the cash equity business, which is hovering around $12 billion a year,” wrote co-authors Matthew Simon and Monica Schulz.
Fintag says The headline should have read:
Prime Brokers To Rape Over US $11B From Hedge Funds
SPROTT HEDGE FUND MAY RISE AFTER RAISING C$200 MILLION IN IPO
Sprott Inc. may rise after the mining and energy hedge fund run by investor Eric Sprott raised C$200 million ($197 million) in the biggest Canadian initial public offering in five months.
The 20 million shares were sold at C$10 each, in the middle of the expected range of C$9.50 to C$10.50 a share, the Toronto- based money manager said in a Canada NewsWire statement late yesterday. The offer is scheduled to close on May 15.
Fintag says Nice.
hfr says " Lyxor launches investable hedge fund indices "
bloomberg says " AIG's Loss, Capital Needs Renew Doubts About Sullivan's Tenure "
wsj says " Some Winners in the Tumult Are Emerging "
24 comments
anonymous said ...
Is that the new look for summer? I prefer black underpants myself
09 May 08 - 07:35 gmt
SoapWatcher said ...
Latest installment from GLG-Enders - Head of Middle East Marketing resigns (eFinancial News). Will the last person to leave the building please switch off the lights……..
09 May 08 - 08:34 gmt
recession proof said ...
what about condoms???
09 May 08 - 08:47 gmt
anonymous said ...
rather amusing that all of the glg stories focus on investors heading out the door to follow superstar genius investor coffey to his new fund..rather ignores the fact that he is down 19% YTD. This alone is enough to prompt redemptions. Looks like his luck has run out and questions how much he will be able to raise for his go it alone venture.
09 May 08 - 08:47 gmt
ozgerbobble said ...
What's the incentive for Coffey to perform? I suspect Ms Chabarek raised a lot of money for Coffey's funds from Middle Eastern investors who may well bail out now. To play devil's advocate I would also say that in the last couple of years Coffey rode the rising EM wave very well but it isnt quite so easy to make monster returns there now.
09 May 08 - 08:59 gmt
anonymous said ...
Moving AUM from $200mn to $7bn in a couple of yrs in a rising market does wonders for your performance...the wizard of oz indeed
09 May 08 - 09:02 gmt
anonymous said ...
there isn't an incentive for coffey to continue to massively outperform but surely there is an incentive for him not to massively underperform as he is at the moment. Reputations are hard won and easily lost and all that.
09 May 08 - 09:32 gmt
anonymous said ...
Fintag - sorry if this sounds incompetent but I want to email you a chart I just created on HF performance which you will like. Where Can I send it?
09 May 08 - 11:27 gmt
Finbar said ...
you can send it to info @ fintag.com
09 May 08 - 12:12 gmt
GLG Spy said ...
GLG-Enders: Coffey is a crook and is running off to Jabre. Nobody walks away from $250m - mark my words, it will all come out
09 May 08 - 12:23 gmt
anonymous said ...
I don't care what anybody thinks; GLG have loads and loads of really big bloomberg screens.....and cafe...they must be good....
09 May 08 - 13:28 gmt
anonymous said ...
Losing Ms. Chabarek is a huge blow for GLG. She is widely regarded both internally and externally as the most talented member of their marketing team. She will not be short of offers or be easily replaced.
09 May 08 - 13:47 gmt
anonymous said ...
I wonder how Manny conducted her exit interview?
09 May 08 - 16:35 gmt
anonymous said ...
SC: I am leaving MR: Fcuk off then SC: I will MR: Bye
09 May 08 - 17:28 gmt
anonymous said ...
Here are some GLG-Ender actors: Whose next to be written out?
Alison Joanne Craven
Antonio Manuel Da Silva Dos Santos
Atif Khan
Benjamin Toby Charles Funnell
Brent Kevin Hadfield
Carl James Esprey
Christophe Yves Michel Akel
Christopher Alexis Hallas
09 May 08 - 17:40 gmt
anonymous said ...
Fergal Gearoid Doyle
Francisco Eduardo Gochez
Georges Gedeon
Gregory John Coffey
James Francesco Berger
Jonathan Christopher Howard
Julien Jacob
Kenji Arakawa
Kolbe John Irving
Laurent Jeanmart
Louisa Joan Cox
Luca Giammetti
Mark Daniel Jones
Mark Michael Kontkowski
Matthew Christopher Evans
Natalie Laurence Benjamin-Pinel
Neil Robert Hobson
Nicholas David Burnham
09 May 08 - 17:43 gmt
anonymous said ...
Noam Gottesman
Oliver Coleman
Olivier Dubost
Paul Andrew Harvey
Peter Steven Harnett
Philippe Isvy
Pierre Philippe Alexandre Lagrange
Purav Anil Asher
Raffaele Costa
Raja Janakiraman
Richard Andrew Ieuan Griffiths
Richard Linton Green
Richard Thomas Clarke
Robert Anthony Donald
Sarah Jane Barton
Simon Paul Joiner
Simone Ever Arbib
Stephen John Holliday
09 May 08 - 17:43 gmt
anonymous said ...
Steven Peter Desmyter
Taras Chaban
Till Heimlich
William James Luke Lewis
09 May 08 - 17:45 gmt
anonymous said ...
These names taken from the FSA website. But where is Manny Roman? Looks like he isn't FSA approved?
09 May 08 - 17:49 gmt
anonymous said ...
So let me get this straight. In a matter of a month they've lost their best trader and their best marketer. Can someone remind me why people are still invested with them again????
10 May 08 - 11:07 gmt
I Hedge Truth said ...
fin...hope you stayed short AIG these last 6 weeks...we kept adding to our position as it traipsed higher merrily, and we were nicely rewarded yesterday...we closed 50% of our position and are holding the rest for a test of the lows that we expect this week in aig around 37 or so...
still short all the other big financials....
10 May 08 - 15:01 gmt
anonymous said ...
MR is almost certainly approved in the 'significant influence' functions, as a CEO or as a director, CF1 or CF3
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Global inflation risks have reemerged as major threat to the world economy according to the IMF. The prospect for continued relatively strong growth in emerging and developing economies suggests that demand growth for energy and commodities will remain solid, even as global growth is slowing, IMF First Deputy Managing Director John Lipsky said on Thursday.
The IMF warning coincided with another record rise in crude oil to over $123 a barrel in New York and high fuel consumption businesses reviewed their hedging strategies as the prospect of $200 a barrel for oil loomed.
Also on Thursday, the European Central Bank and Bank of England left interest rates unchanged despite increasing signs of slowing economic growth