Funds Hub
Money managers under the microscope
from Reuters Investigates:
Dubai comeback already?
We went behind the scenes of Dubai's debt debacle last November and found a much more sober city-state starting to rebuild itself from the $59 billion hole that was dug by the whizz kids who had powered its transformation. Loans don't come as easy -- particularly the nod and the wink of association with the royal family isn't cutting it like it used to.
Some people see a connection between the crisis and the fact that Dubai has also started to tighten up on its trade with Iran, in line with broader international sanctions, but we're not so sure about that.
What did come across loud and clear in our reporting is that the new-new Dubai is currently being led more by older, senior types who had been thrown off the ladder by the MBAs and the like on their way up. Some of the financial types we spoke to worried about this: we don't need civil engineers, one said, we need financial engineers. It'll be interesting to see how it plays out.
Cheyne hedge fund spots RBS opportunity
M&A is on the up again and hedge funds are getting ready – last week we revealed Cheyne Capital had raised over $100 mln for an event-driven fund.
The fund will concentrate on ‘hard’ news (as opposed to rumours of deals), but, as suggested in their name, such funds can look at a wider range of events than just M&A, including restructurings, debt refinancings, asset sales, share buybacks and so on.
In Cheyne’s case, it has spotted what it thinks is a great opportunity in Royal Bank of Scotland debt.
Co-manager Michel Massoud explains:
“In RBS’s tier 1 instruments we’ve found two that had embedded in them the option, at the discretion of the holder, to be redeemed at par if the bond is not called at its call date.
“We bought the bond at an average of 97 and we’ll get the coupon until it is redeemed. It’s a 16-17 percent unlevered annualized return for an investment that we think is very safe.”
Saving Hendry? Thanks but no thanks, says Hugh
It was always unlikely that a letter of advice was going to change the mind of maverick hedge fund manager Hugh Hendry.
And in his latest letter to investors, Hendry has smartly rebuffed any attempt to ‘save’ him from his bond investments.
The letter in question – Gregor.us’s monthly note, entitled “Saving Hugh Hendry” – praises the Eclectica co-founder and CIO as a “brilliant and colourful” hedge fund manager who saw the coming storm and took cover well in advance.
But it goes on to argue that the 27-year bull market in government debt, in which Hendry is a big investor, is probably coming to an end:
There are certainly few signs of inflation at the moment. Hendry makes an interesting point that maybe we’ve already had all that inflation that investors are expecting somewhere down the line. But do you think we could be in for the deflationary slump he talks about?
