30JUN08:
Oil to be USD200 by 30OCT08
USA Inflation to be 7.5% by 30OCT08 23APR08:
Next Rights Issue:
HBOS...yes
All & Lec ... 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
As with Fulham Football Club, a UK based soccer club funded by an Egyptian whose son dated Princess Di, they left it to the last few minutes to avoid being relegated to a lower and less profitable division. Many a hedge fund manager is in a similiar position, enjoying the benefits of others who fall while they hang onto their beta chasing game hoping for another few months of performance before they are found out.
Starting up a Hedge Fund is easy. There are books on it. Accruing fat performance fees is more difficult but if you do exceed your hurdles you can become very wealthy. For those who are exceptionally clever and lucky and have the right networks, a large chunk of the management company can be sold to an unsuspecting Investment Bank. But this is very rare and only happens, as has happened, when the markets are awash with liquidity and investors wanting a piece of you.
So with this optimistic outlook for the week [Editor: You gave us some facts and no conclusion? Looks like you are turning into a Financial Journalist] what happened over the weekend?
Oil is getting close to my USD127 prediction by end of June, and we are starting to snap up cheap bank debt because nobody else wants it and we know that it is really supported by governments so has a triple A rating but don't tell anyone please.
We also look at all in wrestling at Bear Stearns and a Karaoke night for Hedgies.
Advertisement: If you are in the market for mugs or t-shirts, we are now offering a new range of Fintag branded items. All proceeds go to me and I will spend it on good food, wine and women.
THE taxman plans to bring to book the drug barons and City fraudsters who have squirreled away millions of pounds in secret Swiss bank accounts.
HM Revenue & Customs (HMRC) is linking up with the German tax authorities to get information about those who have deposited their ill-gotten gains amidst the snow-dusted mountain chalets.
The new access could even help recoup some of the money Britain is losing to Switzerland as it undercuts our tax rates to lure UK companies and the so-called “nondoms” - rich foreigners.
The taxman's first targets are likely to include Curtis “Cocky” Warren, 44, once Britain's most notorious cocaine trafficker, and the white-collar criminals behind so-called Vat “carousel frauds” that have cost the British government up to £4 billion a year.
Warren, a notorious drug smuggler, was released from a Dutch prison last year after serving 10 years for a £125m drugs plot and kicking a fellow prisoner to death. Only £3.6m of the money has so far been recovered.
Tax experts say Switzerland, which is home to an estimated one-third of offshore funds worldwide, has become more willing to cooperate rather than be tarred as a haven for terrorists and drug smugglers.
“Switzerland is not as safe as it was. Dubai and Singapore are about the only places left who have made it abundantly clear that they are not going to divulge information.”
Fintag says Swiss cheese has holes in it. The country also has holes in it. Signing up to the EU savings directive was a bad idea. No wonder Singapore and Dubai are the place to be, I would have said Burma too, but that has a few issues to resolve first.
IN the darkest days of the Depression, Treasury Secretary Andrew W. Mellon, one of the richest men in the United States, opposed any government action to stem the tide of plunging business activity and soaring unemployment. Instead, he urged a policy of supreme indifference.
“Liquidate labor, liquidate stocks, liquidate the farmers, liquidate real estate,” he said.
“It will purge the rottenness out of the system,” he added, and values “will be adjusted, and enterprising people will pick up the wrecks from less competent people.” ...
Fintag says Will Ben Bernanke come out a hero or a villain?
I have always said he will be a villain but would love to be proved wrong. The crash will take time, they always do, and I still don't see how consumer debt can be sorted out by dropping interest rates. However, rampant inflation will erode the value of that debt so maybe the old snake really does know what he is doing.
For the first time in History, we have two competing economic approaches (USA versus Europe) and time will tell as to who wins.
Up to 1,800 estate agents may go bust by the end of the year unless lenders ease up their squeeze on new mortgages, as fears grow that the UK is heading for a full-scale housing crash, with price falls of up to a fifth.
The warning comes from Nick Salmon, a board member of the National Federation of Property Professionals, who said last week that banks had "over-reacted" to the credit crunch and were in effect strangling the life out of the property market.
Mr Salmon said: "Lenders do not seem to be in the business of lending any more. They are the ones who lent irresponsibly and now the public and our industry are paying the price."
But senior bankers are not likely to rush back into the home loans market, with many forecasting that it will be several years before mortgages are readily available again. Even Mervyn King, Governor of the Bank of England, is understood to believe that it will be up to a decade before the mortgage lending and housing market fully recovers.
Sterling's weakness and fears of rising inflation were the main reasons the Bank held rates at 5 per cent last week. This week it publishes its quarterly growth and inflation forecast, which is likely to show that inflation may go above 3 per cent.
Fintag says Foxtons. IPO'd at the top of the market and made a killing. We all hate estate agents. They make their money in the good times and lose out in the bad times just like all brokers. It is the way of the world and despite the internet, we still want to sell our houses via people and pay them silly money for doing it.
However, as this picture shows, even the most contentious of Estate Agents are hard to kill off (this one in Fulham, London, was featured on a BBC program about corrupt agents valuing low and selling onto their mates before selling on again) as the wrong shop is closed down:
Breaking News - 50% Cut The closed shop is one half of the Estate Agent and not another unfortunate retailer. I suppose a 50% less Estate Agent is better than a whole one.
GLG Partners, the London hedge fund, has imposed a set of exit charges of as much as 5 per cent on any investor who wants to pull their assets out of Greg Coffey's benchmark $4.5 billion emerging markets fund before its star manager formally quits at the end of October.
Once he leaves, redemption would be free.
Sources close to GLG, which is bracing itself for as much as $4.3 billion to head for the exit in the wake of Mr Coffey's resignation, said the fund was insisting that fleeing investors pay the redemption penalties, the terms of which are detailed in the original prospectus.
They said that GLG had made concessions to requests from investors in other areas.
Penalties depend on the amount invested and for how long. GLG is understood to have written to investors over the past few days to tell them of the charges
"The charge could be 5 per cent; it could be nothing. It depends on how much you have invested and what the holding period is," said one source close to the hedge fund.
"All investors have the right to redeem their capital at any time; they have a free option to redeem it after Greg has left the fund at the end of October. GLG has made a number of concessions, but not on the redemption fee."
Fintag says As we reported a couple of weeks ago (rounding), and GLG then denied it, they have put nasty redemption fees on the Coffey funds. This is even more shocking because his funds are down 25%+.
Nice people to do business with.
If I were to write a book of fiction based around Hedge Funds of recent times, I would base it on GLG. There would be a smattering of Peloton, PlusFunds and Amaranth too, but the core would be GLG. There is so much I would love to tell you about this place but cannot - and dare not.
And, if by coincidence, I have been approached to write one too ... if only I had the time [Editor: Better blow up your hedge funds because with your performance you ain't never going to IPO and escape your own little hell]
Hedge funds and other investors have started buying leveraged loans and asset-backed securities that have been languishing on banks' balance sheets since the credit crisis began last summer. This is the latest indication that the credit market may have turned.
A sustained recovery in buyers' enthusiasm for this debt could free banks' balance sheets and allow bankers to recommence arranging financing for leveraged buyouts and corporate acquisitions.
Among the investors that have started buying are Centaurus Capital, a UK-based company with $12bn (€7.8bn) of assets under management, and Cerberus Capital Management, a US private equity firm that last year had $26bn of assets.
Centaurus said it started buying loans from banks a few weeks ago. A spokesman said: “The banks need to unload their inventory or they cannot do deals. The market has started to move and we have bought quite a few of the loans. But we have cherry-picked, the environment is still very risky.” Cerberus declined to comment.
Fintag says All banks are supported by Governments (Northern Crock, Citi, Bear Stearns) so bank debt is as safe as T-Bills.
The annual May-Fair event happens this year at the Cafe de Paris in London. But you will have to be quick since it takes place next Thursday, May 15, getting underway at 6.30.
The line-up: The Subscribers, The Hypothecators, Hicksville 6, Pinstripe Hype, Then There Were Three, The Dealers and The Hedgetones.
The sponsors: Bennelong Asset Management, Weavering Capital, GLG Partners, RBC Capital Markets, Octagon Asset Management, BoNY ConvergEx Group and Tapestry Asset Management.
The beneficiary: A Leg To Stand On, a non-profit organisation that provides prosthetic devices for children in India, Bangladesh, Haiti, Belize and Colombia.
Research In Motion Ltd. unveiled a BlackBerry phone with quicker Web browsing and more room for songs and videos, getting a jump on a faster iPhone that analysts expect next month.
The device, called the BlackBerry Bold, has a brighter screen and better Web browser than previous models, co-Chief Executive Officer James Balsillie said in an interview. The phone, which also has satellite navigation and a video camera, will start selling at AT&T Inc. for $300 to $400 this summer in the U.S., he said.
The product sets up a showdown between Apple Inc. CEO Steve Jobs and Balsillie in the market for so-called third-generation phones, which offer speedier Web access and video downloads. Such phones are the fastest-growing part of the handset market, with users quadrupling to 400 million in the next three years, RBC Capital Markets estimates.
Fintag says Yes please.
'IT WILL SURPRISE PEOPLE.' FSA GETS TO HEART OF HBOS SHARE SCANDAL
Financial Services Authority chiefs are believed to have found the "smoking gun" in the recent share-shorting incident that caused the value of HBOS to slump by a fifth in one day.
The regulator is set to go public on its findings by the end of the month, with a source close to the body saying: "It's now known what happened. It will surprise people what's been found."
The FSA is believed to have pulled more than a day's worth of emails sent by City dealers on the Bloomberg trading platform, when rumours sent the shares into a tailspin on 19 March.
Meanwhile, the regulator's clampdown on insider trading will be demonstrated when a second criminal prosecution is launched before the summer, after one earlier in the year over insider dealing linked to shares in Motorola.
The FSA recently revealed that it had doubled its roster of criminal prosecutors for pursuing insider dealing cases, following last year's introduction of a computer system called Sabre, which attempts to identify abnormal share-trading patterns.
The FSA is also set to publish new guidelines for mergers and acquisitions, with a so-called "principles of good execution" likely to be issued in early June.
Fintag says This is like a soap opera. How gripping.
More bad news for hedge fund manager Ed Lampert. His ESL Investments was down 27% last year, Bloomberg reports, citing investors, and declined an additional 1.3% in the first quarter of this year. Lampert's fund has been hit hard by his big bet on Sears Holdings (SHLD), the struggling retailer whose shares are off 48% over the past year. Lampert also hurt his own cause last year by making an ill-timed bet on Citi (C) just before the collapse of the mortgage market last summer.
But Bloomberg notes that Lampert is far from alone in feeling the pain of hefty bets gone wrong: Other managers of concentrated hedge funds - ones that plow lots of money into a limited number of stocks - are getting hit harder, with former UBS (UBS) trader Jon Wood's SRM Global fund down 70% through March 31. SRM's big misses include troubled mortgage lenders Northern Rock of the United Kingdom and Countrywide (CFC).
Fintag says Even the big boys can have off days.
Mind you, these big boys never seem to have a good day:
Sir, There seems to be much support for the views expressed by the governor of the Bank of England, in which he laid a large portion of the blame for the current spate of write-offs by banks at the feet of compensation structures within these banks. Proprietary traders have been generously compensated for risking the bank's capital, in many cases for short-term performance based on year-end valuations that have yet to be realised. It is like giving a gambler a pile of chips and telling him that he can keep a slice of any winnings, but not to worry if he runs out, as you will replenish his chips.
Banks will aver that they had to compensate valuable traders in this way, otherwise they would leave for a competitor or, worse still, a hedge fund. Many banks recognised the problem and tried to defer part of the bonus compensation, but mostly in restricted stock and options of the parent. This merely had the effect of transferring any risk to the bank's shareholders and employees as a whole and had no restraining effect on the traders.
The only solution is for proprietary traders to be charged over time for losses as if they had their own capital at risk. The problem is that, while this may work at the present when traders are being laid off, without regulation or agreement among the banks, over time, the lessons will be forgotten when the next group of traders threatens to leave, as they were after the collapse of Long Term Capital Management.
Philip Keevil,
Compass Advisers,
London SW1X 7HJ
Copyright The Financial Times Limited 2008
Fintag says Nice idea. But I don't get it.
8 comments
anonymous said ...
finbar/fintag...coffey is now down 25%!!..so another 6% off so far in May. ugly
12 May 08 - 07:29 gmt
anonymous said ...
are investors fleeing glg or coffey or both??
12 May 08 - 08:16 gmt
anonymous said ...
how dare they leave! GLG have big screens, a coffee shop and lots of people in jeans and pointy shoes; all the ingredients for a successful hedge fund shop.......
12 May 08 - 09:28 gmt
anonymous said ...
Foxtons did not IPO, Hunt announced he was going down the IPO route, but sold out instead.
12 May 08 - 10:08 gmt
Finbar said ...
anon - you are correct re Foxtons - detail isn't my strongest skill ...
12 May 08 - 10:55 gmt
t2k (france) said ...
In France the estate agents ask for 6% commission from the buyer and refuse to pool list properties for sale on internet. Now they really are bandits.
12 May 08 - 12:13 gmt
ozgerbobble said ...
The Takeover Panel has been going for 40 years looking after M&A. Why are the FSA sticking their oar in?
12 May 08 - 13:38 gmt
anonymous said ...
Babylon Capital Management (2009) by Imogen E-J with "Anonymous". I'd buy that for a dollar.
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THE taxman plans to bring to book the drug barons and City fraudsters who have squirreled away millions of pounds in secret Swiss bank accounts.
HM Revenue & Customs (HMRC) is linking up with the German tax authorities to get information about those who have deposited their ill-gotten gains amidst the snow-dusted mountain chalets.
The new access could even help recoup some of the money Britain is losing to Switzerland as it undercuts our tax rates to lure UK companies and the so-called “nondoms” - rich foreigners.
The taxman's first targets are likely to include Curtis “Cocky” Warren, 44, once Britain's most notorious cocaine trafficker, and the white-collar criminals behind so-called Vat “carousel frauds” that have cost the British government up to £4 billion a year.
Warren, a notorious drug smuggler, was released from a Dutch prison last year after serving 10 years for a £125m drugs plot and kicking a fellow prisoner to death. Only £3.6m of the money has so far been recovered.
Tax experts say Switzerland, which is home to an estimated one-third of offshore funds worldwide, has become more willing to cooperate rather than be tarred as a haven for terrorists and drug smugglers.
“Switzerland is not as safe as it was. Dubai and Singapore are about the only places left who have made it abundantly clear that they are not going to divulge information.”