Funds Hub
Money managers under the microscope
Morning Line-Up: Gartmore, Odey, zombie funds, Pru
Clients returning to Gartmore after Rambourg - Reuters
City stalwart Odey backs launch of Ocado - Independent
Return of the zombie fund snatchers - Telegraph
Pru investors line up new man for Pru - Daily Mail
from Global Investing:
Revisiting March lows
No, not in the way you think. Tuesday marked the one-year anniversary of world stocks hitting what appears to be their post-financial crisis low. The index was the MSCI all-country world index. The low was hit on March 9, 2009.
At the time, many investors reckoned their world was collapsing. Stocks had fallen close to 60 percent in a little more than 16 months. But the low proved to be the start of a remarkable rally that brought the index back up 80 percent until January this year.
All is not well on equity markets at the moment, given worries about European debt, the end of special central bank liquidity programmes and questions about the sustainability of the U.S. economic recovery. The MSCI index seems to be having a hard time staying in positive territory this year.
And there are also investors such as Crispin Odey of hedge fund Odey Asset Management who have started worrying about whether the market will regress to its lows. He recently told his clients in a note:
"Having hoped that March of last year might have proved to be the long term bottom for the developed markets, I am now much less sure."
For now, though the lows remain a year past and the MSCI index is around 73 percent higher than it was then. Happy Anniversary.
Who dares wins
Everyone is interested in reading about someone making billions of dollars in profit, and the Wall Street Journal’s story about the Appaloosa fund making $7 bln of profit so far this year is certainly eye-catching.
Rather like London’s Crispin Odey, who earned a handy 30 mln stg this year, the fund, run by David Tepper, made its money buying bargain basement bank shares.
Whilst in Odey’s case it was Barclays, for Tepper it was Bank of America below $3 (now $15.35) and Citigroup preferred shares below $1.
For the skilful/lucky few, 2009 presented a once-in-a-lifetime opportunity to buy assets at ridiculously low prices. For many others, it was a frustrating year of sitting on the sidelines in cash and waiting for the macroeconomic situation to get a little clearer.
Of course, now it’s a bit clearer, the opportunity appears to have disappeared.
Myners’ let-off for hedge fund pay
There’s been plenty of confusion over who exactly will be hit by the ‘supertax’ on banker bonuses.
The wording of the Treasury’s clampdown last week suggested some hedge funds and traditional asset managers could be caught — PwC’s John Terry told me that of the 20 hedge funds he had spoken to, around half may have been caught in the net.
However, hedge funds are to fall outside the supertax, confirming a rumour doing the rounds among hedge fund executives.
Speaking at Reuters’ London offices this morning, City minister Paul Myners clarified that the tax would be focused on “the activities of banking”.
This is of course a relief to managers. Many hedge funds are still below their high-water marks, but 2009 has nevertheless been a far, far better year than 2008 for hedge fund managers and is likely to be reflected in pay packets. (Crispin Odey has already pocketed a reported 30.4 mln stg after some shrewd calls on the market and the banking sector).
And today we speculate on whether this will cause an exodus from banks to hedge funds.
* We wonder if Paul Myners himself may fancy posting a comment on Hedge Hub? This morning he told the audience at Reuters’ offices: “My office complains I spend too much time looking at blogs. But very interesting things are happening on online commentaries.” We wait with bated breath…
Enjoy the bubble, says Odey
This year’s stock market rebound has turned into a bubble, or at least that’s the view of closely-followed hedge fund manager Crispin Odey.
Odey, who called a bull market back in April, reckons quantitative easing has fuelled investors’ desire to get out of cash and government bonds and into real assets, leading to a stampede.
However, there is little sign this bubble is going to burst in the immediate future and Odey reckons these conditions could continue until the end of the year.
For now at least, “everyone should enjoy it”, says Odey, whose European fund rose 6.5 percent in August, taking year-to-date gains to just under 47 percent.
Octopus’s Crawford eyes FTSE at 5,000
Some good news for the bulls.
Octopus fund manager David Crawford believes this year’s equity rally could lift the FTSE 100 to the 5,000 mark, from just over 4,600 currently, helped by energy stocks.
The call backs up that from hedge fund manager Crispin Odey, who earlier this year pointed to the start of a new bull market and then recently said there is “every reason to be hopeful that a major correction will not happen before September”.
“The rally in March was from a position of strong risk aversion, thus the stocks that led the rally were ones that were too hot to handle for most – retail banks, miners and other cyclicals,” says Crawford.
“Some FTSE 100 energy companies may help the FTSE 100 rise to 5,000 over the next three months. Do we think it’ll reach 5,000? I guess so.”
(See also Staying Long, Make hay while the sun shines and Jabre upbeat (but not quite bullish) on stocks)
Jabre upbeat (but not quite bullish) on stocks
High-profile hedge fund manager Philippe Jabre has lent his voice to the view that equity investors have more to play for.
The former GLG trader, probably better known for a record FSA fine of 750,000 pounds for market abuse than for his strong track record, thinks there is “money to be made”in bombed-out stocks in sectors such as financials, energy and industrials.
While not quite subscribing to the idea of a “bull market” — put forwarded notably by Crispin Odey — he does think there are plenty of cheap stocks around and that investors are getting paid “very well” to hold equities.
He notes equity markets have rebounded to where they were six months ago, but could rise as investors currently sitting in cash buy into the market to avoid missing out on further rises.
However, he does share one thing in common with Odey in that he has done well out of Barclays’s astronomical rebound — for equity investors probably one of the trades of the year.
(See also Make hay while the sun shines and Odey’s Barclays boost)
Indebted companies – short or long?
Hedge funds and other investors are shorting stocks laden with the biggest debts, according to stock lending research group DataExplorers, betting they may struggle to refinance themselves.
According to the research, Yell Group and Debenhams are among the top ten non-financial firms with the biggest net debt to equity ratios out of the 300 largest listed companies in the UK.
They also rank 1st and 4th respectively in Dataexplorers’ ‘Negative Sentiment’ (DNS) indicator, which is highlights where stock out on loan — usually used for shorting — has been highest and is rising.
In Europe, meanwhile, Itinere Infraestructuras and Grupo Ferrovial are among the top ten firms with the biggest net debt to equity ratios, and rank 8th and 15th in Dataexplorers’ DNS score.
In the U.S., Caterpillar and Autozone are in the top ten for debt ratios and rank 40th and 44th on the DNS, while in Japan debt-heavy Kintetsu, Japan Airlines and Odakyu Electric Railway rank 9th, 12th and 13th on the DNS score.
“This reflects recent concerns about banks failing to lend, or to roll over existing loans, as well as the capacity of some companies to service debt from current revenues,” the paper says.
This bet by many funds is in stark contrast to the view expressed by Crispin Odey, who earlier this year pointed to the start of a new bull market and who recently told clients he sees the best opportunities in “prodigal” companies.
Very good article.
In my opinion, it is all a matter of market timing. It does not matter if it is gold, oil, or Microsoft, if you have access to good market timing signals, they will help you get in and out at a profit.
No guarantees in this business, but if they are right most of the time, you can still make $s.
There are may web sites providing them out there (search Google). Just find one that works and use it! Check out http://invetrics.com as an example.
Its Dow Jones timing signals are up 43% as of 6/23/09 while the Dow is up just 29% off its March lows.
Following a market timing system works!
Make hay while the sun shines
More good news for equity bulls from Crispin Odey.
Odey, who called the possible start of the bull market earlier this year, says technically there is “every reason to be hopeful that a major correction will not happen before September”.
And, having profited handsomely from his position in Barclays, which is now a 16.3 percent holding in his European fund, he sees the best opportunities in companies that were once unable to refinance but now can get credit, rather than safe-haven stocks.
“I still find myself coming out of meetings with companies whose share price is up fivefold since January and wanting to fill my boots. But it is quite a narrow field.
“This is the year of the prodigal son, with no prizes for being the sensible and good older brother.”
(See also Odey’s Barclays Boost)
(Follow major developments in the hedge fund industry this week with Hedge Hub’s coverage of the GAIM)
No defence
Sheltering from the credit crisis in so-called defensive stocks could prove a disappointment to investors and a great opportunity for short-sellers, according to Liontrust hedge fund manager James Inglis-Jones.
Inglis-Jones, who runs a hedge fund for Liontrust and who recently took on the First Income fund after the departure of star manager Jeremy Lang, has short positions in sectors such as tobacco and pharmaceuticals and has recently added more.
“It’s an interesting opportunity when something is seen as safe,” he told me. “When the company delivers a disappointment the payoff can be pretty good.”
In February Hedge Hub reported Crispin Odey saying defensives were becoming “interesting shorts” and that he “certainly wouldn’t own them”.
However, with markets having bounced so much recently – the FTSE 100 is up by a quarter since March — and many defensives having missed out on most of the rally, are defensives still expensive or do they offer better relative value now?
Much of that depends on whether the rally has legs or is a dead cat bounce. Barclays Wealth came out today saying it is ”shifting to the tactical offensive”, adding, “The big question now is whether the pick-up is temporary or the real thing. We suspect the latter.” Several big names have already pointed to a new bull market, but after a 25 percent rally where do we go from here?
