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
We have had some fun with GLG, but now the joke is on us. 130/30 funds, which are by there very nature a long only fund with short bits to help dullard long only managers move into the 21st Century, are in my book a complete farce. GLG are also a farcical hedge fund manager with a chaotic management structure and its star trader leaving for Switzerland. Well now the 'twixt shall meet.
Today we look at 2 million leaving the UK, Buffet buying hand bags for his son Howard in Berlin and replicators replicating replication.
A bank hires a risk manager and another admits putting most of its balance sheet into Citi.
Erin Callan refuses my advances and my watch collection is worth more.
Gamblers move into the hedge fund space.
p.s. re: Virgin Atlantic publicity shot: If you are reading this as a google alert, could you send me a couple of upper class tickets from London to San Fran as I fancy a trip in the summer (I love the fog).
GLG Partners has been awarded a mandate from the asset management division of Banca Fideuram to manage three UCITS III 130/30 accounts, which are expected to be funded late in the third quarter with initial assets of approximately $3 billion.
Noam Gottesman, GLG's co-chief executive officer, said: "We have had a close relationship with Banca Fideuram, which currently has $250 million invested with GLG.”
Tommaso Corcos, chief executive officer of the asset management division of Banca Fideuram, added that the new mandate will give its investors access to “hedge fund like flexibility.”
The management fees charged for the 130/30 products will be set at institutional levels, according to the firms.
Fintag says I have curled up onto the floor and am hitting myself with a large stick.
Question is that this mandate has been paraded around for quite a while and a number of very large hedge groups turned it down because the margins were so low. Is this a case of taking on the assets to compensate for the assets that are leaving later this year when Coffey marries Jabre?
I have to be cynical, sorry.
CREDIT SUISSE INDICES TO MIMIC STRATEGY PERFORMANCE
Credit Suisse has launched the Long/Short Equity Replication Index. This is the first in a planned suite of Alternative Index Replication (AIR) products designed to replicate the performance of major hedge fund strategies.
The index aims to capture the risk/return characteristics represented by the Credit Suisse/Tremont Long/Short Equity Hedge Fund Index. Index values are finalised daily and quoted on Bloomberg.
Fintag says So they have created a replication index that replicates a Credit Suisse investible index. What next? A 130/30 replication index on a GLG managed account? I just don't get it. It is all smoke and mirrors and an attempt to fool the investors that headline fees are minuscule.
hf hotel says " Deciphering Global Hedge Fund Statistics "
BUFFETT ARRIVES IN EUROPE FOR $35BN SHOPPING SPREE
As shopping trips go, this could be a big one. Warren Buffett, the billionaire US investor who controls Berkshire Hathaway, touched down in Germany yesterday to begin a four-day European tour he hopes will enable him to invest some of the $35bn (£18bn) cash pile on which the investment company is currently sitting.
Having told Berkshire investors last month that "we're nowhere near as prominent in Europe as we should be", Mr Buffett hopes what he describes as a "deferred shopping tour" will put that right.
The "Sage of Omaha" began his trip meeting executives from privately owned German companies in Frankfurt yesterday and moves on to Lausanne in Switzerland today. Tomorrow, he flies to Madrid, before heading back through duty-free in Milan on Thursday.
Mr Buffett said yesterday that he was most interested in medium-sized businesses, particularly family-run concerns because such enterprises often took a much longer-term perspective than executives with shareholders to answer to.
"We're looking for companies that have at least $50m to $75m in pre-tax profit - the bigger the better," Mr Buffett said. "It would be a good choice for them to contact us if they wanted to."
Fintag says He won't find anything of interest in the UK. All the best companies have gone off shore thanks to the inept unelected Prime Minister that we currently have. It is so bad here, I could even accept Hilary Clinton as a Broen replacement. Anybody except Brown.
naked capitalism says " Buffett: US Probably Less Than Halfway Through Effects of Credit Crisis "
Bank of America today has appointed a head of trading risk analytics after reporting more than $7bn (€4.5bn) in writedowns over the past two quarters.
Greg Ransom will monitor risk management strategies across the bank's trading desks. He will report to Paula Dominick, chief operating officer of global markets at BofA.
Ransom has worked three years at the bank. He previously served as head of equity research a role that the bank has filled with Michael Rietbrock.
Reitbock previously worked for Caxton Associates, where he managed a portfolio including global real estate and securities tied to the travel industry. Reitback also worked for Citigroup/Salomon Smith Barney for 12 years where he covered the lodging and gaming sectors.
Fintag says Imagine running a bank without a Risk Manager? It beggars belief. Banks are about managing risk. Shocking.
financial times says " Look out for tell-tale hedge fund interest "
WACHOVIA, FIFTH THIRD HAD LOSSES IN CITI HEDGE FUND
Wachovia Corp (WB.N: Quote, Profile, Research) said on Monday it has had significant losses from a Citigroup (C.N: Quote, Profile, Research) hedge fund, joining Fifth Third Bancorp (FITB.O: Quote, Profile, Research), which disclosed its loss in an April lawsuit.
Wachovia spokeswoman Christy Phillips-Brown said a $315 million write-down the bank disclosed earlier in May was related to investments in Citigroup's Falcon Strategies hedge Fund. Wachovia, the fourth-largest U.S. bank, made the investments through its bank-owned life insurance portfolio.
Fifth Third said in a lawsuit filed on April 17 that it had invested $612 million in Falcon. The bank is looking to recover $323 million in damages from the two AEGON NV (AEGN.AS: Quote, Profile, Research) subsidiaries that had been managing its bank-owned life insurance portfolio.
Citigroup, Aegon and Fifth Third could not be immediately reached for comment.
Fintag says Shocking. No wonder Wachovia has fired more employees (as a percentage of total employees) than any other bank except Citi.
I wonder if Wachovia needs to hire a risk manager too?
The Wall Street Journal ran a profile over the weekend of Erin Callan, the 42-year old chief financial officer of Lehman Brothers, just in time for the six months semi-versary of her promotion to the c-suite. Many on Wall Street were skeptical of Callan stepping into the role. She started out with several strikes against her: she started her career as a lawyer, she has very little formal hardcore financial accounting experience and her frequent appearances on television had led many to suspect she was more of an extremely well-paid spokesperson than a hands-on executive. Oh, and there's this whole women-on-Wall Street thing too.
Fintag says Good grief, I forgot to mention this weekend highlight. I have asked her to marry me, but have had no reply yet. Maybe I need to ditch the sportscar.
Even now, delusional, usually conservative commentators like to harp on about how wonderful things are in this country -- the greatest story never told! That is despite the fact that everywhere you look, there are numerous signs that things aren't going well for ordinary Americans. Aside from those who can't afford to have health insurance, fill up the tank with gas, or own a home, there seems to be a growing number of individuals who are having a hard time satisfying basic needs. In "New Breed of American Emerges in Need of Food," USA Today's Richard Wolf details a disturbing development.
Philomena Gist understands why it hurts so much to be on food stamps. After all, she's got a master's degree in psychology.
"There's pride in being able to take care of yourself," says the Columbus, Ohio, resident, laid off last year from a mortgage company and living on workers' compensation benefits while recovering from surgery. "I'm not supposed to be in this condition."
Neither are many of the 27.5 million Americans relying on government aid to keep food on their tables amid unemployment and rising prices. Average enrollment in the food stamps program has surpassed the record set in 1994, though the percentage of Americans on food stamps is still lower than records set in 1993-95. The numbers continue to climb.
Gist, 51, is the new face of hunger in the USA. She says she spent most of her adult life working as a mental health counselor before deciding to try real estate. "I'm a professional person," she says.
A British polling and market research firm plans to use its expertise to help a new hedge fund make the right bets.
YouGov, best-known for its political polling in the U.K., has teamed up with Four Capital on the YouGov Alpha Fund, expected to launch next month. The firms are seeking up to US$50 million for the equity long/short vehicle.
YouGov will provide polling-based market research, which it believes can make for profitable insight in sectors such as banking, retail, leisure and travel. The fund will hold at least 10 different pair trades, targeting an annual return of at least 15%, net of fees.
YouGov conducts its polls on the Internet, drawing its supposedly demographically-representative sample from a pool of 150,000 British Web users.
Fintag says An interesting idea. Maybe I will turn my web 2.0 adventure, sageGauge.com into a hedge fund too?
Big Brown, the horse owned by hedge-fund-to-be International Equine Acquisitions Holdings, is just a mile and a half away from horseracing immortality.
The big bay colt will try to become the first Triple Crown winner since 1978 at the Belmont Stakes on June 7 after posting a convincing win at Saturday's Preakness Stakes in Baltimore. Two weeks ago, Big Brown won America's most prestigious race, the Kentucky Derby, by a similar margin.
But IEAH, which plans to transform itself into a hedge fund, is not waiting to see if its horse can become the 12th Triple Crown champion since 1919 before it cashes in. Just before the Preakness the group announced it had sold an undisclosed interest in the horse to Three Chimney's Farm in Kentucky, to which he will retire for a life of procreation after the Belmont.
The price was not disclosed, but NBC Sports reports it was in excess of $50 million. IEAH paid $2.5 million for a 75% interest in Big Brown after his first race.
Fintag says Horse racing? Hedge Funds? Seems about right.
They are fighting back with new models and new ideas, but are running into investor skepticism.
Three quarters of fund managers—quant and non-quant alike—agree the outlook for computer models is troubled.
It will be difficult for them to generate returns because they are all following similar market factors, according to a study last week from the CFA Institute, a trade body for fund managers.
Managers are responding in three ways, often in combination, the study found.
They are developing extra models, looking for fresh sources of information to feed into the models, and some are introducing a level of more traditional, human insight into their process.
The authors, Frank Fabozzi of the Yale School of Management, and Sergio Focardi and Caroline Jonas of the consultancy Intertek, concluded: “The relatively poor performance of many quantitative funds since 2006 has led some managers to take a fresh look at fundamental processes. The objective is to gain an informational edge by adding a fundamental insight on companies.”
Fintag says Let me tell you a secret. All quant models have a manual over ride. It is just that in the past 12 months, the manual over ride has been used considerably more than usual. The quants hate this because they have to come to work earlier than normal. I mean getting up at 6 am is not normal.
Are Mayfair's finest having a crack at Bradford & Bingley?
The bank last week announced a £300m, 16 for 25 rights issue, priced and underwritten at 82p. On Monday, the stock, which has lost more than half its value this year, shed a further 10 per cent. The stock hit a new all-time low of 120p.
The falls mean that the stock is now trading below theoretical ex-rights price of about 129p at the time the issue was announced. At Monday's lows, the TERP is down to about 105p. Still someway off the 82p pricing - but the discount to the TERP has narrowed from 36 per cent last Wednesday to 21 per cent. Will underwriters Citi and UBS be getting nervous?
Two, related, schools of thought on Monday. One held that the sell-off was prompted by continued worries that the ailing UK housing market could prompt a slew of bad debts for the niche buy-to-let and self-cert lender. B&B said last week that it would use its improved financial strength to enhance its competitive position, writing “selective good quality business at attractive margins.” B&B's exposure to troublesome areas is nothing new - but the lack of a signal from the company of a pause or pullback may have put the frighteners on a skittish market. The other camp was pointing fingers towards W1 citing suspicions that the hedge fund mob, already short the housing market and B&B, might be setting its sights on a revaluation of the rights.
Fintag says I just couldn't possible comment. B&B and all that midlands buy to let? Rumors are that if house prices fall 15%, B&B will go under. Rumors of course based on serious analytical research of their balance sheet.
16 September 2007 I noted:
Not that it is being shorted of course: ftalphaville says " “Short sellers are an endangered species, like the dodo bird” "
telegraph says " Mortgage debt fears hit banks' shares "
10 comments
anonymous said ...
Looks like you had a double expresso this morning. Keep it up!
20 May 08 - 07:28 gmt
anonymous said ...
Perhaps if Erin accepts your proposal, you will need to buy her a gold ring rather than a platinum one?
20 May 08 - 08:08 gmt
anonymous said ...
What the hell is an 'expresso'? Fast coffee?
20 May 08 - 08:25 gmt
Finbar said ...
its a bit like speed
20 May 08 - 08:48 gmt
ozgerbobble said ...
I heard of a great scam yesterday by the incompetent banks. Apparently they are approaching investors in CDOs arranged by other banks which are now struggling and offering to restructure the said CDOs for which they will obviuosly charge a fee. How about explaining why they sold the clients the toxic rubbish in the first place?
20 May 08 - 08:56 gmt
Tradebot said ...
Hey, Ozgerbobble... the show must go on! The salad days of when custy was happy receiving Libor + peanuts for tranches made of some alphabet soup are OVER... you got to do what you got to do, even if it means robbing some graves for food.
20 May 08 - 11:12 gmt
Tradebot said ...
Caveat :....unless equity buyers are right, looking at the indices and vols the HAPPY days are here again.
I think my trading strategy is to sit on my house and wait for it double every year like before since housing market was invented by our Dear Leader in 1997.
20 May 08 - 11:15 gmt
anonymous said ...
tradebot - you are so going to get nailed
20 May 08 - 13:32 gmt
Septic said ...
The 130/30 mandate may not be worth the hassle that it will take to manage. I'd guess that the base fee is 25bps, and the performance fee has either a hurdle, a cap, or both. Not bad if this doesnt constrain your capacity but if it does then it's just marketing spin
20 May 08 - 14:38 gmt
Dan said ...
SF is warm these days, you are cynical and cold. These do not mix.
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GLG Partners has been awarded a mandate from the asset management division of Banca Fideuram to manage three UCITS III 130/30 accounts, which are expected to be funded late in the third quarter with initial assets of approximately $3 billion.
Noam Gottesman, GLG's co-chief executive officer, said: "We have had a close relationship with Banca Fideuram, which currently has $250 million invested with GLG.”
Tommaso Corcos, chief executive officer of the asset management division of Banca Fideuram, added that the new mandate will give its investors access to “hedge fund like flexibility.”
The management fees charged for the 130/30 products will be set at institutional levels, according to the firms.