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
I like to wrap up the recent hedge fund related news stories into a theme. Today there is no theme. We are themeless. Having scoured all the weekend news, it is clear that there is a lack of direction in editorial. As we approach the last week or so of May (go away and come back another day or something like that), it is clear that with low volumes the markets are in a clear state of distress denial.
There is so much an individual can take that is gloomy and doomy and since we all know that it is only going to get worse (if you are long of course) before it gets better, it is a time to send out positive press releases and hope nobody challenges what you say.
Assuming you haven't fallen asleep or moved onto a more interesting website, I can truly say that despite 3 days of news to pick on, there is frankly very little to get me or you excited. I put this down to the markets being closed and commentators literally running out of themes. Of course the key reason for this lack of news is because I don't write this newsletter.
No newsletter means no plagiarism. [Editor: That was very dull]
We look at ageism; Merrills scraping the barrel (literally); Amaranth news (yawn) and SWF's taking over the world as usual. And size does matter.
Hedge funds post their best performance in their first two years, producing lower returns as they get older and larger, according to a study published today.
The research, conducted by Petrac Financial Solutions, software provider, includes data up to the end of last year - when many hedge funds suffered poor performance because of market volatility brought on by the credit crunch in the US.
The study finds that hedge funds less than two years old produced average returns of 11.7 per cent per year, while funds over four years old returned an average 10.2 per cent.
Returns at larger older funds tend to be more steady, however. This suggests that what managers may lose in performance, as time goes on, are made up for in risk management and their ability to navigate choppy, difficult markets without suffering huge swings in their returns.
An increasing number of investors are focusing on new managers in an attempt to secure higher returns. Hedge funds on average have seen their returns fall in recent years as the industry expands.
Many larger more established funds tend to be closed to new investment and can often have higher minimum investment criteria, making their barriers to entry greater than those for emerging managers.
Fintag says Age and size are key. Would you want to date an 18 year old who drives a 10 year old Golf? Or a 48 year old man who drives a new Maserati? [Editor: Uh?]
Older managers may suffer from blue pill performance but have a track record and so are seen as a safer bet. If you have had kids you can have them again. In this life it can take 5 years to build a business and a couple of weeks for it to blow up (Peloton, Vega, Amaranth, the list is endless).
Big old managers are seen as a safe bet. We all want 100% returns but not if the risks of getting the capital back are too high.
Dull. Safe. Big. Boring. That is what asset allocators like. That is because most of these people are dull, safe, big and boring.
ALISTAIR DARLING RETREATS FROM TAX ON OFFSHORE INTELLECTUAL PROPERTY
Alistair Darling will signal another tax U-turn this week to prevent a threatened exodus from Britain of multinational companies.
In a speech to the CBI tomorrow, the Chancellor will sound the retreat over moves to tax intellectual property held offshore. The proposal was contained in a Treasury discussion paper on reforms to the way in which earnings from foreign subsidiaries are taxed. It led to a storm of protests from companies fearing that patents and brands held offshore were about to be brought within the reach of the British taxman.
Mr Darling is expected to offer an explicit assurance that the new regime will be revenue-neutral and will pose no specific threat to companies rich in intellectual property. A Treasury spokesman said that the final reform package would be unveiled late next month or in early July.
The backdown comes as Richard Lambert, the Director-General of the CBI, said that the issue of leaving the UK for more favourable tax regimes was on the agenda across business.
Fintag says I didn't think there were any UK resident companies left?
But so many hedge funds and private equity investors wanted to sink money into the project that Mr. Sanghoee, himself holding down a day job at a New York hedge fund, pushed the needle higher. Soon the budget had tripled to $15 million. In October, he decided against a fund-raising trip to Dubai. “We don't even need it now,” he said in an interview at the time.
But that was before Wall Street's mortgage mess, tight credit markets and the sour economy — and before a parade of poor box-office results for investor-backed films. The torrent of private money flowing into Hollywood slowed to a trickle. Mr. Sanghoee now finds himself panning for gold in a very different stream.
Investors for “Merger” have either slammed on the brakes or disappeared altogether. A fund in Atlanta weighing a $7.5 million investment has cut back by $3 million. A $5 billion hedge fund group that was supposed to handle debt financing now has other priorities, namely liquidating 80 percent of its holdings.
“Things have gotten a bit hairy, and unexpectedly so,” Mr. Sanghoee said.
Mr. Sanghoee has been caught in the lurch of an uncertain economy and nervous lenders, like many other aspiring filmmakers, as private money has become harder to obtain.
Fintag says When is Wall Street 2 coming out?
LIONHART SEEKS TO RAISE $500M FOR PRIVATE EQUITY FUND
Wimbledon is better known for lawn tennis than leveraged buy-outs, but Lionhart, a hedge fund based in the south London suburb, hopes to change this image as it seeks to raise at least $500m for its debut private equity fund.
The diversification of Lionhart, which has offices in Wimbledon as well as the Cayman Islands, Toronto, New York and Singapore, underlines the increasingly blurred lines between hedge funds and private equity.
Lionhart was founded in 1993 by Terrence Duffy, the former head trader of global equity derivatives at First Interstate Capital Markets.
With a staff of 40, it runs three hedge funds, two of which invest globally with $180m and $200m of assets respectively, and one with $105m to invest in Asia.
Lionhart Talon, the new private equity fund launched this month, will initially seek to raise $500m but will have a hard cap limit of $2bn, which it hopes will be reached after a few years.
The fund will focus on several areas: property development; minerals, mining and natural resources; energy; alternative energy and environment; technology; mezzanine, bridge and distressed financing; ethical; and Sharia compliant.
Fintag says A positive press release. "Seeking to raise ..." We are all seeking to raise. I can tell you right now I am seeking to raise USD4 trillion. Will it come in? No.
Actually, Private Equity funds are quite easy to raise for at present. Put in the word "distressed" and investors think they are going to pick up some bargains for later resale. Their other monies maybe tied up in useless 12 year funds closed at the height of the boom, but there is the perverse behavior where an investor feels warm inside if their assets are tied up for 12 years. They somehow feel it will work out. Fingers crossed and all that. Of course it is in an easy trade. You can then spend the rest of the 12 years living in Florida. [Editor: You need to spend some time in Florida].
The moral? Forget open ended funds. Closed every time.
LSE chief executive Clara Furse is back in the firing line after a turbulent year, writes Louise Armitstead
For Clara Furse, chief executive of the London Stock Exchange, last New Year's Eve was time for celebration. For a start, she was not spending the evening pouring over defence documents as she had done for the previous four years. It was also one of the first holidays that was free from interruption - among the countless cancelled breaks that blighted the start of previous years was one to the Caribbean that couldn't be cancelled at the last minute and was in the end auctioned off to staff to raise money for charity.
But it all seemed worth it. January saw Furse's seventh anniversary at the helm of the LSE and the shareprice had closed at £19.79 on December 31, representing a 400 per cent rise during her tenure. The LSE was catapulted into the FTSE100 list of biggest companies and Furse into the league of one of Britain's most admired business leaders.
Better still, a few months earlier, in an extraordinary battle, two Middle Eastern investors - the Qatari Investment Authority and Borse Dubai - had secured 30 per cent of the shareholder register between them. One analyst said: "In an extraordinary move, Clara had got what she wanted: the LSE was bid-proof, and she had a supportive investor base for the first time in years."
Fintag says I hate the LSE. Hedge Fund trading activity comprises about 60% (probably more) of its trading volumes. And it charges me for the privilege. It has a monopoly. It does nothing.
Concerns are mounting among Yahoo! investors that Carl Icahn's rebel campaign will lead to Microsoft picking the troubled internet company up on the cheap. Eric Jackson, the hedge fund manager who represents three million people who hold shares in Yahoo!, said he has spoken to several institutional shareholders who are wary of Icahn's approach.
Icahn, an aggressive activist investor, swooped on $1.5bn of Yahoo! shares last week and launched a campaign to oust Jerry Yang, the chief executive, and his board of directors. Icahn wants Yahoo! and Microsoft to negotiate a merger so that they can tackle Google's dominance of the internet advertising market.
Icahn has gathered the backing of some key Yahoo! investors, but does not enjoy universal support. Bill Miller, investment manager at Legg Mason Capital Management, at first welcomed Icahn's intervention, but it is understood that he is now worried about the campaigner's approach.
It emerged late last week that Miller sold some 20 million Yahoo! shares early in the first quarter of the year, but with 72 million Yahoo! shares under management at Legg Mason, worth nearly $2bn at Friday's closing price of $27.63, his opinion still carries a lot of weight.
Fintag says Yahoo. Makes you want to cry. Such great intentions but run by a bunch of no hope hippy autocrats. Time to go long because it is a company a lot of people would like to own. Not that I follow my own advice of course ...
EX-AMARANTH TRADER HUNTER HELPS DELIVER 17% GAIN FOR PEAK RIDGE
A commodities hedge fund advised by Brian Hunter returned 17 percent last month using a strategy similar to one the energy trader relied on at Amaranth Advisors LLC and that led to its collapse in 2006.
The Peak Ridge Commodity Volatility Fund, which seeks to profit from price differences in the natural-gas market, has gained 138 percent since starting on Nov. 13, according to an investor letter obtained by Bloomberg. The HFRX Global Hedge Fund Index fell 2.4 percent during the same period, according to Hedge Fund Research Inc. in Chicago.
Peak Ridge Capital Group Inc., a private-equity firm in Boston, hired Hunter last year as a consultant after his bets on natural-gas price spreads triggered $6.6 billion of losses at Amaranth, the most by a hedge fund. In 2005, his trades generated $1 billion in gains for the Greenwich, Connecticut- based firm.
Fintag says That makes me so happy.
reuters says " Ex-Fidelity manager Clapp sets up new hedge firm "
GULF SOVEREIGN FUNDS: BIGGER THAN EVER, AND GROWING FAST
Sovereign wealth funds, many argue, aren't new. Kuwait set up its fund in the 1950s, Abu Dhabi's fund was established in the 1970s.
True enough. But this argument still misses a key point.
In the past, these funds were small. Now they aren't. The existence of sovereign funds isn't new. But their current pace of growth is. They now have a far bigger impact on the global economy - and particularly cross-border capital flows - than in the past.
And with oil now trading above $125 - and, at least according to Goldman - set to rise further, the Gulf funds in particular are poised to get even bigger. Fast.
We still don't know exactly how big the Gulf funds now are. Abu Dhabi continues to insist that it cannot match Kuwait's level of transparency. We also don't know quite how big they will become. But it isn't all that hard to come up with a guess.
If oil averages $115 over the course of 2008 (a price consistent with $125 a barrel oil for the rest of the year), the Gulf's current account surplus should approach (if not top) $350 billion. The big existing Gulf funds (Qatar's fund, Kuwait's fund and Abu Dhabi's fund) should get about $150 billion of surplus oil revenue to invest abroad. The Saudi Monetary Agency (and the new Saudi investment fund) should get another $200 billion.
Fintag says Imperialism.
WILL TABLOID QUEEN GET TAPPED AS NEXT EDITOR OF THE WALL STREET JOURNAL?
Is Rupert Murdoch preparing to name Rebecca Wade, the editor of UK tabloid The Sun, to be the new managing editor of the Wall Street Journal? That's the rumor we're hearing today. (And perhaps the one that Nick Denton called "too crazy for even me to pass on.") Wade is reportedly close to Murdoch. We're told that Robert Thomson, the Journal's publisher, may favor naming Wade to replace Marcus Brauchli, who resigned as editor in April.
Update: Apparently Rebecca Wade spells her name Rebekah Wade. Whatevs.
Fintag says Remember my prediction last summer? As ever, more brownies to me ...
Merrill Lynch has handed its most senior equity capital markets role to a London-based banker, highlighting the importance of the City to the Wall Street banks and proving that foreign appointments no longer have "stigma" for US institutions.
The investment bank has appointed Rupert Hume-Kendall as chairman of global equity capital markets, replacing Jim Birle. Mr Hume-Kendall, who started last week, will continue in his role of vice-chairman of investment banking for the group in Europe, Middle East and Africa.
He is the second major equities appointment in the City by a US investment bank in two months after Goldman Sachs appointed Matthew Westerman head of global equity capital markets in March.
An internal memo that circulated Merrill last week said: "Rupert will lead Merrill Lynch's senior-most equity capital markets efforts with key clients around the world. In addition, he will help us capitalise on the many emerging markets and global opportunities before us."
Mr Hume-Kendall, one of Merrill's most active dealmakers, has been at the group for a decade and worked in the equities, corporate broking and capital markets and financing teams.
Fintag says ...my false teeth nearly fell into my coffee ...Hume-Kendall ...that old UBS corporate financier ...nothing ever shocks me, but this has made my day. What are Merrills thinking? He is one of the most hated people in the City. I of course love the man.
Did you know his brother once featured as a character in a Jeffrey Archer novel? [Editor: Now that is lame]
One of the City's most high-profile economists, Rachel Lomax, is quitting her role as deputy Governor of the Bank of England at the end of June.
The Government has yet to find a successor for Ms Lomax, 62, who is leaving at the end of her five-year term, despite Gordon Brown's attempts to keep her on. A Treasury spokesman said the search for candidates had begun but a shortlist had not been put together yet.
An appointment needs to be made quickly because Ms Lomax has responsibility for monetary policy and sits on the influential Monetary Policy Committee. But the spokesman said that the Treasury must first appoint a new chairman for the Financial Services Authority, the City regulator, by the end of the month. The former CBI chief Lord Turner is only one of the candidates being considered by the Chancellor, Alistair Darling.
The deputy Governor role is a crown appointment, made on the advice of the Prime Minister. It will be a sensitive one to fill following the deterioration of relations between the Treasury, the Bank of England and the FSA caused by the Northern Rock debacle.
Fintag says Oh dear. And I thought being a central banker was an easy job? You don't do much except vote to put rates up and down.
Lehman Brothers is thought to be the next investment bank that will unveil job cuts as the fallout from the credit crisis continues to hit workers in the Square Mile.
Cuts are likely to be made across the board, with investment bankers at the group said to be "bracing themselves for the worst" very soon.
The job losses will come on the back of an earlier cull in March when it was revealed that Lehman was planning to dismiss 5 per cent of its global workforce. The bulk of the 1,425 job cuts are thought to have been borne by the group's domestic operations in North America.
A spokesman said he was unable to comment on the likelihood of new job losses.
The news of further cuts at Lehman Brothers comes days after rival American bank Morgan Stanley began a series of cuts in London that will see as many as 350 staff lose their jobs. No official announcement accompanied the axing of the 350 Canary Wharf positions, with the speed of the cuts believed to have come as a total shock to staff. Morgan Stanley had culled as many as 3,000 jobs since October, before the latest round.
Fintag says Tomorrow that is. Banks never fire on a Monday.
SARBANES URGES TOUGHER BANK, HEDGE FUND REGULATION
Former Sen. Paul Sarbanes, behind one of the most sweeping set of finance reforms since the Great Depression, said on Friday investment banks and hedge funds needed tighter regulation amid the global subprime crisis.
Sarbanes said a recent move by the U.S. Federal Reserve to rescue Wall Street investment bank Bear Stearns (BSC.N: Quote, Profile, Research) had to be accompanied by stricter controls of a sector that has racked up billions in losses from the credit crunch.
"I don't think you can set access to the Fed in this unprecedented manner without more oversight from the Fed and other agencies," said Sarbanes, speaking after an Institutional Investor Educational Foundation conference in Paris.
"It's not a free pass. I think they'll review the investment banks more closely than they have in the past."
Fintag says What a good idea. More regulation. Look at how successful Sarbanes-Oxley was when Refco collapsed? It had been signed off as compliant, was IPO'd and then crashed and burned. And as for all those companies that de-listed.
Look at the UK. It has created a tax uncertainty environment and we are all leaving. The USA is a "regulation" uncertain country and nobody wants to do business there.
When will these people ever learn? It is all in wikipedia. They should read it some time.
Aprofessor at a well-known business school was recently grading papers for a required ethics course. In two of the papers he saw obvious signs of plagiarism. Students were not required to put their names on their papers, just a number identifiable by the administration. Before escalating the problem, the professor e-mailed his entire class saying that the guilty parties could avoid sanction by coming forward now. He received eight e-mails, in addition to the two he had already spotted, admitting to cheating.
Such stories bolster the academic research that suggests business students, both at graduate and undergraduate level, are more inclined to cheat than students in other disciplines. Critics of business and business education leap on such findings to say that this explains Enron, dodgy hedge funds and crooked sub-prime mortgage lenders. They say the whole system is built on fraud. This impression was reinforced further in March when the dean of Durham University's business school in the UK, Tony Antoniou, was fired for having plagiarised academic work 20 years earlier.
However, in their enthusiasm to eviscerate, the critics may be overlooking some vital differences between a business education and one in, for example, philosophy or electrical engineering.
Fintag says I don't want to be rude but MBA's are a complete waste of time. They are the qualification for the last century. Shame, because I too spent 2 years gaining one and regret every moment.
'Stephen (not his real name), we did not take this further because he (your candidate) was after too high a salary for his experience....
You were (also) incredibly rude to me on the phone on Friday (when trying to 'pitch' the candidate). I have asked that (we) not deal with you in future.....You need to start reviewing the way you deal with clients and learn some basic manners'.
From 'Stephen':
'Thank you for the correspondence regarding this matter.
How dare you not give me or any consultant the time to speak with you. It's not my fault you were still organising an open evening event at the 11th hour on a Friday afternoon......If you had not 'approved' of the candidate, then why were you (initially) trying to arrange an interview with him ?
We all have things we need to learn in business and life...I take on board any suggestion you have given to me. Thank you. What do you think you need to learn ? I suggest basic efficiency and due care and attention to the finer details of your job.
I am very concerned that you seem to have the authority to destroy the working relationship (between your company and my firm)'.
etc etc etc
Fintag says The Foxtons' approach is shocking. I get emails like "Fancy lunch?". I immediately open them up to find a recruiter wants to take me out and sell me thousands of resumes. I couldn't think of anything worse. My PA spends most of her day fending off the sellers of people. And it is getting worse. Unfortunately.
14 comments
anonymous said ...
Nothing wrong with a middle aged man in a new sports car......
19 May 08 - 08:17 gmt
anonymous said ...
i Take it that Fin is 48 and drives a Masa'
19 May 08 - 08:20 gmt
Finbar said ...
Thankfully I have yet to do either ... I prefer to be driven than drive for starters ...
19 May 08 - 09:01 gmt
anonymous said ...
I have had headhunters call me and after a while I realize they are checking out if there are any vacancies. Scum. Worse than estate agents.
19 May 08 - 10:45 gmt
anonymous said ...
Did you think that they were calling to say that they loved you.....?
19 May 08 - 15:00 gmt
anonymous said ...
All the contingent recruitment agencies or CV Monkeys love to call themselves headhunters whereas in reality they actually just punt CV's around all day long and know very little about either their industry clients or candidates.
19 May 08 - 15:29 gmt
anonymous said ...
comments function is bust................I consider it to be an infringement of my right to free speech!
19 May 08 - 15:49 gmt
Finbars IT Geek said ...
comments are time delayed on the archive pages (i will get this changed) and some comments are auto deleted if they praise investment banks, that sort of thing
19 May 08 - 16:03 gmt
ozgerbobble said ...
Have I been gagged?
19 May 08 - 16:08 gmt
anonymous said ...
fundraising in bk heights lately?
19 May 08 - 16:55 gmt
Finbar said ...
I often go to Brooklyn Heights to launder my laundry. The photo reminded me of an Icelandic bank ...
19 May 08 - 17:44 gmt
anonymous said ...
48 + mas is fine with me... can always take a toyboy on the side
20 May 08 - 03:31 gmt
Dan said ...
One can't teach business skills, why bother? Other than to be a lifer advancing in adult day care. Get some technical skills, apply them in a unique manner. Oh wait, you work at a finance shop. Nevermind...
20 May 08 - 05:18 gmt
ozgerbobble said ...
Surely the Icelandic bank would put signs up in cyrillic for the benefit of it's majority "off-shore investors"
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Hedge funds post their best performance in their first two years, producing lower returns as they get older and larger, according to a study published today.
The research, conducted by Petrac Financial Solutions, software provider, includes data up to the end of last year - when many hedge funds suffered poor performance because of market volatility brought on by the credit crunch in the US.
The study finds that hedge funds less than two years old produced average returns of 11.7 per cent per year, while funds over four years old returned an average 10.2 per cent.
Returns at larger older funds tend to be more steady, however. This suggests that what managers may lose in performance, as time goes on, are made up for in risk management and their ability to navigate choppy, difficult markets without suffering huge swings in their returns.
An increasing number of investors are focusing on new managers in an attempt to secure higher returns. Hedge funds on average have seen their returns fall in recent years as the industry expands.
Many larger more established funds tend to be closed to new investment and can often have higher minimum investment criteria, making their barriers to entry greater than those for emerging managers.