Archive for the ‘Wednesday's Random Shots’ Category
Wednesday, March 10th, 2010
I’ve been covering hedge funds for about 10 years, and in that time I’ve seen them shift from investments most people had never heard of to topics of conversation among friends of mine with no connection to finance. I used to say I wrote about hedge funds and get a blank stare. The other night I was at a college alumni function with a bunch of younger people I’d never met and every person I talked nodded knowingly when I said “I cover hedge funds.” Reactions ranged from “Oh, Madoff” to “Oh, Greece.”
Granted, not everyone understood the hedge fund connection to the home of the Gyro, but the perception was that hedge funds are somehow, possibly illegally, making money off the misery of another country. (more…)
Wednesday, February 24th, 2010
News item: “Arthur Nadel, a former Florida fund manager dubbed a ‘mini-Madoff’ for running a decade-long investment fraud, pleaded guilty on Wednesday to criminal charges of bilking investors out of as much as $360 million.
“Mr. Nadel, 77, disappeared for two weeks before his arrest in January 2009. He had left a letter for his wife imploring her to use a trust fund for her benefit and “sell the Subaru if you need money,” a reference to their motor vehicle.”
Remember when $360 million was a lot of money? Heck, time was when a man accused of stealing that much money would have had to have conned the government of a developed country. Nowadays, thanks to Bernard Madoff and the Wall Street bailout, a $360 million fraud is nothing. Front-pocket money. Whoops, did I just compare the bailout to a con job?
“I understand the anger and rage of all of the people I let down so badly,” Mr. Nadel told the court. “I want them all to know I will carry this burden for the rest of my life.”
And the people he bilked won’t be nearly so burdened, since they’re hardly carrying anything now that all their money is gone. Although in hindsight, maybe they should have known something was amiss when he showed up for the investor meetings in a Subaru.
“Under the sentencing guidelines for his crimes, he can expect to spend the rest of his life in prison.”
At 77, let’s be honest, that ain’t gonna be that long.
Wednesday, February 17th, 2010
I don’t know Zachery Kouwe. I’ve never worked for The New York Times and the record will reflect I’ve never sought to. So I have no firsthand knowledge of how Kouwe came to be unemployed, an accused and convicted (all in the span of a couple of weeks) plagiarist. But since Kouwe doesn’t seem to know, either, and presumably he was there, I feel my take on it carries as much weight as anyone else’s.
If you read the story in the Observer, a couple of things stand out. First, Kouwe references the pace of things there. â€śIn the essence of speed, Iâ€™ll look at various wire services and throw it into our back-end publishing system, which is WordPress, and then Iâ€™ll go and report it out and make sure all the facts are correct,” he told the Observer. “Itâ€™s not like an investigative piece. Itâ€™s usually something that comes off a press release, an earnings report, itâ€™s court documents.â€ť
I have been complaining for years about the 24-hour news cycle and the era of “instant information.” There’s a breakneck pace to TV and online news these days, but more often it resembles someone flailing about on a treadmill. There’s lots of activity, but little real progress. The speed at which information must be processed and moved in order for a news organization to be the first to report something increases seemingly every day. It used to be a few hours constituted a lightning turnaround time. Now anything longer than 10 minutes can be considered slow. And once a story is reportedâ€”and this is especially true on TVâ€”the same information gets repeated over and over and over for hours. Even online, incremental advances in a story are considered “Breaking News,” and are breathlessly related by the news readers, after the appropriately dire lead-in music and graphics presentation, or under screaming red electronic banners. (more…)
Wednesday, January 27th, 2010
I’ve been sort of watching the AIG bailout hearings on Capitol Hill. The gist I’ve gotten so far is that the House Committee on Oversight and Government Reform appears to have called the wrong witnesses. Both current Treasury Secretary Timothy Geithner and immediate past Treasury Secretary Henry Paulson said they weren’t responsible for negotiating the AIG credit default swap bailout. Geithner said he had no role while he was at the New York Fed because by that time he had been tapped by Obama to head the Treasury and recused himself from most N.Y. Fed matters and Paulson said it was the Fed’s decision.
It was smart of Geithner to hold on to his N.Y. Fed job, and just not do anything in it, in case the whole Treasury Secretary confirmation thing didn’t work out. (more…)
Wednesday, January 6th, 2010
I swear I was going to use some variant of this in my post today, but FINalternatives beat me to it.
Headline: “Sen. Dodd (D-Hedge Funds) Wonâ€™t Seek Reelection”
No word on Dodd’s future plans, but judging by the way things typically seem to work inside the Beltway, the word “lobbyist” comes to mind as a logical career choice. (more…)
Wednesday, December 2nd, 2009
In a story that moved on Bloomberg today, Saudi Prince Alwaleed bin Talal blames banks for any pain they may suffer as a result of Dubai World’s attempt to reschedule $26 billion in debt payments to creditors.
“These banks are very mature banks, and they have to differentiate between a corporate loan and a sovereign loan,” Alwaleed, 54, said yesterday in an interview on Bloomberg Television. “When things go sour, you can’t have some banks in the West going to Dubai and saying ‘oops’ and crying wolf and saying, ‘You should have guaranteed those loans.’”
Of course, as Una Galani points out in her Breakingviews.com piece today, Dubai didn’t really bother to make the same distinction Alwaleed he claims investors should have made. (more…)
Wednesday, November 25th, 2009
Alternatives for the People?
IPE.com reports that the U.K.’s Personal Accounts Delivery Authority has found that 80% of “stakeholders” polled said they supported the use of alternative investments in personal retirement accounts.
The PADA, as it’s known, is a quasi-governmental body charged with setting up a kind of national pension program for those without workplace retirement funds. As part of that process, the PADA has been in consultation with stakeholders it describes as the pension and investment industry participants, employer organizations, unions, consumer groups, academics and pension fund trustees. In May of this year, the PADA began reaching out to these stakeholders to gather feedback on what this sort of national pension scheme might look like, including asset allocation options.
Perhaps surprisingly, given alternatives’ negative portrayal over the past couple of years, 37 of 46 respondents said they saw a place for alternatives in personal retirement accounts. “Alternative asset classes were felt by most respondents to be suitable for a scheme that is likely to be significant in size and could offer important ways of increasing returns or managing risk,” according to the report that came out of the PADA’s consultations. They specifically cited property and commodity investments.
Which sounds fine, until the kicker:
“â€¦ [I]nvesting in alternatives was identified by stakeholders as creating challenges around liquidity, daily pricing and costs, [however] they thought these challenges could be overcome.”
So, alternative are great â€¦ except for, you know, the liquidity, pricing and cost issues.
Where have we heard that before? It seems those questions are never adequately answered. We simply move on, justifying the status quo by pointing to improved returns. Until the next crisis, when we once again realize that sometimes everything is correlated.
Wednesday, October 22nd, 2008
The sense of relief among the ranks at Morgan Stanley was palpable at the bankâ€™s autumn cocktail party held amid the elegance of Londonâ€™s Wallace Collection on Tuesday evening. John Mack lieutenant co-chairman Walid Chammah welcomed guests with an understandable message of relief: â€śWhat a difference a week makes!â€ť Later Mr. Chammah told me that the prime brokerage business had â€śchanged overnightâ€ť but that the bankâ€™s continuing conscientious service to hedge funds had helped it retain the vast majority of its clients. As weâ€™ve discussed in several recent stories, Mr. Chammah confirmed that there is an unprecedented battle for market share in the prime services space. From his perspective, Morgan Stanley and Goldman remain in the top slots with J.P. Morgan Chase (after acquiring Bear Stearns) in third, but with Credit Suisse, Citigroup and Deutsche Bank all gaining share with new client wins. Marty Byman, Morgan Stanleyâ€™s co-head of prime services, told me that a few days of things â€śreturning to relatively normalâ€ť had steadied the nerves of many hedge fund manager clients. We paused to drink to that before he cautioned that a lot of deleveraging is still happening and that the impact of this on investor returns would continue to reverberate across the hedge fund industry.
At a time when hedge funds are in the public spotlight more than ever before, Nat Rothschild, heir to the illustrious banking family fortune and early partner in the $13 billion New York-based hedge fund Atticus Capital has gotten involved in a high profile spat with leading Conservative MP and Britainâ€™s opposition finance spokesman George Osborne. In a letter published in The Times of London, Mr. Rothschild accuses Mr. Osborne of meeting Russian oligarch Oleg Deripaska to â€śsolicitâ€ť a large campaign donation even though contributions from foreigners are illegal under British law. Amid a â€śwelter of claim and counterclaimâ€ť, the business of activist investing goes on with Atticus succeeding earlier this week in its long term campaign to oust Deutsche Boerse chairman Kurt Viermetz.
Just as bankers from Morgan Stanley and other firms have confirmed the rising competition in prime services, so arrives a new entrant to the market in the shape of Conifer, a fund administrator and services provider to hedge funds with a 20-year track record. The firm is targeting smallish $50 million to $250 million funds looking to add a prime broker. With financial backing from J.P. Morgan, Coniferâ€™s move will be of interest to a lot of entrepreneurial hedge funds that may be looking for a more customized service than many of the big prime brokers find it cost effective to provide.
Meanwhile, more data shows how tough the environment is for hedge funds.
The EurekaHedge Hedge Fund Index racked up its worst month ever in September, dropping 4.7%. On a regional basis, North America and Japan outperformed while Europe and Emerging Markets underperformed with losses of nearly 7%. It makes me curious to see what the indexes will show for October.
Wednesday, May 21st, 2008
Various day-job duties have forced the postponement of today’s Random Shots. I hope to have something up this evening. In the meantime, check out some of today’s news on the site:
Wednesday, May 14th, 2008
Sit Still, You Wonâ€™t Feel A Thing
I sure am glad the U.S. Department of Labor is around. Otherwise Iâ€™d really be feeling the pinch of higher food and energy prices. See if you can follow this logic: the Labor Department reported today consumer prices (read: inflation) rose 0.2% in April, which economists would call â€śessentially flat.â€ť This despite the fact that food prices jumped 18% in April, the biggest rise in nearly two decades. And clearly energy prices have risen, as well, although get this: Labor says gasoline prices actually fell in April, offsetting a 4.8% increase in natural gas prices. How, you may ask, could Labor think gasoline prices fell last month? Well, as the Associated Press explains,