Archive
Reuters blog archive
from Global Investing:
Tokyo Sonata calls the tune for investors
The jury may be out on whether Messrs. Abe and Kuroda will succeed in cajoling the Japanese economy from its decades-long funk but the cash is betting they will. Domestic and foreign investors have stampeded for Tokyo equities, and Morgan Stanley has been crunching the numbers.
Since 2005, Japanese investors built up a 14 trillion yen (over $140 billion) portfolio of foreign equities. But between January-March 2013, they offloaded a third of this -- about $39 billion. Going back to July 2012 when they first started bringing cash home, the Japanese have sold $53 billion in foreign equities, or 36 percent of equity holdings.
If one were to include all foreign portfolio investments, they sold a net $74 billion worth of assets in the first three months of 2013. Morgan Stanley says this is the the most since 2005. You can see their graphic below (click on it for a bigger version).
Not surprising then that the Nikkei has been on a roll with returns of 34 percent this year. Aside from the Japanese money, foreign cash has also flooded in -- foreigners have bought $23 billion worth of Japanese equities in the first two months of 2013, according to Japanese government data. Broadly, that is a 7 percent rise in cumulative holdings. Asian investors' holdings alone have jumped 26 percent.
from Global Investing:
Will gold’s glitter dim in India?
Indians have reacted to the latest gold prices falls by --- buying more gold. And why not? Aside from Indians' well known passion for the yellow metal (yours truly not excluded) gold has by and large served well as an investment: annual returns over the past five years have been around 17 percent, Morgan Stanley notes.
Now, gold's near 20 percent plunge this year has wiped some $300 billion off Indians' gold holdings, Morgan Stanley estimates in a note (households are believed to own about 15,000 metric tonnes of gold). So is the gold rush in India over?
from Global Investing:
Emerging earnings: a lot of misses
It's not shaping up to be a good year for emerging equities. They are almost 3 percent in the red while their developed world counterparts have gained more than 7 percent and Wall Street is at record highs. When we explored this topic last month, what stood out was the deepening profit squeeze and steep falls in return-on-equity (ROE). The latest earnings season provides fresh proof of this trend and is handily summarized in a Morgan Stanley note which crunches the earnings numbers for the last 2012 quarter.
The analysts found that:
--With 84 percent of emerging market companies having already reported last quarter earnings, consensus estimates have been missed by around 6 percent. A third of companies that have already reported results have beaten estimates while almost half have missed.
from Breakingviews:
How to go public and private all in one go
By Robert Cyran
The author is a Reuters Breakingviews columnist. The opinions expressed are his own.
A Brazilian company seems to have found a way to go public and private all in one go. Biosev, an ethanol producer, is preparing to sell new shares next month. As part of the deal, parent company Louis Dreyfus is offering to buy them back in 15 months. It’s essentially an initial public offering, convertible bond and potential buyout packaged together. And it’s an overly clever solution to a unique problem.
from Breakingviews:
Private equity at 4-and-20? Think twice
By Richard Beales
The author is a Reuters Breakingviews columnist. The opinions expressed are his own.
Private equity with a 4-and-20 fee structure doesn’t sound too inviting. It’s what a new vehicle will charge people with only $50,000 to invest to gain entry to Carlyle Group’s private equity funds, and it’s far more than what institutions pay. While the firm’s long-term internal rates of return on private equity, after fees, are nearly 20 percent, today’s reality holds less appeal. The arrangement could be risky for Carlyle, too.
from Ben Walsh:
Disrupting the market for helping people lose money
Investors tend to lose money in boring, but effective, ways. Motif Investing (“turn any idea into a motif”) promises to disrupt this predictable pattern by helping people lose their money in new and exciting ways. Motif’s CEO proudly describes the company as like the iPhone, but for investing, with the ease of shopping on Amazon. The fact that that description makes no sense at all does not make it any less terrifying. It wasn’t hard to predict that Twitter mockery would (rightfully) ensue.
Here’s PandoDaily’s Michael Carney trying to describe what Motif actually does:
from Felix Salmon:
Why analysts should not be investors, Andy Zaky edition
Back in October, Andy Zaky put out his sixth "buy" recommendation on Apple stock. The first five -- in July 2006, November 2008, August 2010, June 2011, and May 2012 -- all did spectacularly well, and all hit his price target within the time span he specified. Zaky was a first-rate Apple analyst, quoted by me and many, many others; as Philip Elmer-DeWitt says, he had "a series of spot-on predictions", of everything from Apple's earnings, to its iPhone sales, to -- of course, its stock-price movements.
Smart and accurate Apple analysts are in high demand, and Zaky, quite sensibly, decided to monetize his gift. In June 2011 he put his blog behind a paywall, charging first $49 per month and then, in June 2012, $200 per month. With 700 subscribers, that meant a six-figure income per month, just by selling access to his detailed Apple analysis and trading recommendations.
from Bethany McLean:
Should Apple be a $200 stock?
According to the numbers, Apple’s battered stock is one of the best bargains of all time. Since hitting a high of almost $700 last fall, shares have plummeted 37 percent, to $442, including a 12 percent drop in late January after Apple posted flat year-over-year profits, which bitterly disappointed the Street. Apple now trades at just over 10 times last year’s profits and roughly eight times Wall Street’s estimate of next year’s earnings — well below the average of the Standard & Poor’s 500-stock index. Plus, Apple is set to begin paying a dividend of $10.60 a share, well above the yield on Treasuries.
Fortune estimates that 29 of 36 analysts covering Apple rate it some form of buy, with a median price target of $605 per share. One analyst, who dubbed the company the “trillion dollar baby” based on his belief that Apple will one day have a market value that exceeds $1 trillion, still maintains his price target of $880 per share.
from Unstructured Finance:
Hedge fund scorecard 2012: Mortgage masters win, Paulson on bottom again
Mortgage funds roared home with returns of almost 19 percent last year, trouncing all other hedge fund strategies and beating the S&P 500 stock index, which rose 13 percent.
BTG Pactual's $245.5 million Distressed Mortgage Fund, which invests primarily in distressed non-agency Residential Mortgage-Backed Securities (RMBS), returned about 46 percent for the year, putting it at the top of HSBC Private Bank's list of the Top 20 performing hedge funds and making it one of 2012's best performing funds. Bear in mind the the average hedge fund gained only 6 percent last year.
from Felix Salmon:
The seductive Warren Buffett
Andrew Ross Sorkin and Jim Surowiecki both had lunch with Warren Buffett recently: with this book, unlike the last one, Buffett is taking an active role in the book tour. And he's staying on-message. Here's Surowiecki:
The investing world is dominated by a manic-depressive style, in which the average mutual fund turns over nearly its entire portfolio every year. Yet Buffett has prospered by ignoring all this. As an investor, he’s known for his patience—he says that he likes holding stocks “forever”—and he prefers a few big bets to an endless number of small ones. “If you go from flower to flower, you have to find a lot of flowers to make a lot of money,” he told me. “There aren’t that many great ideas out there.”
