Money managers under the microscope
By Jason Benham
Glitzy Dubai’s property market is in trouble, there’s no doubt about that. Just take a look at the hundreds of motionless cranes, unfinished projects and the expats who are leaving in droves as they lose their jobs.
And prices and rents which soared during a six-year boom have crashed since late last year. According to one resident who recently moved in the City, it now costs 150,000 dirhams to rent a three-bedroom flat on the Palm, a man-made island off the coast of the emirate, around the same it would have cost to rent a one-bedroom appartment there a year ago.
It’s not just the global downturn thats the concern for Dubai’s once-booming property market, but also the lack of transparency and need for greater regulation. And that’s what’s going to keep the western investor from splashing the cash.
Investors looking at Dubai’s real estate sector are a different breed. They are no longer looking to snap up properties in the hope of making a quick buck. They are more conservative with a longer term outlook.
Activist investors have traditionally been kept at arm’s length by the mainstream fund houses. Fund managers at the major players haven’t felt able to align themselves with those agitating for change for fear their cosy chats with company chairmen might be compromised.
There are clear signs though that the mood has shifted.
Not only are institutions getting rapped over the knuckles for failing to apply active ownership principles, but the credit crisis has purged short-termist activists from the market, helping to soften the sector’s association with financial engineering and slash-n-burn tactics.
This year’s GAIM conference was far smaller than the three previous summer events, with fewer organized events, no sponsored gala dinner and restricted cocktail sessions where two or three bar staff struggled to satisfy hundreds of thirsty conference-goers
The fact was duly noted, initially with some concern, by many of the investors and asset managers, several of them grumbling about the limited amount of liquid refreshment available to slake a healthy thirst worked up in the searing Monaco sun.
Maverick hedge fund manager Hugh Hendry is rarely far from controversy and his appearance at the GAIM conference in Monaco this week was no exception.
Having been scheduled to give a short talk on the future of capitalism before getting into a longer discussion with Lombard Street Research chief international economist Charles Dumas, Hendry proceeded to overrun his slot, giving his views on pretty much anything to do with the world of investment.
Journalists have not needed to persecute and cajole hedge fund executives into handing over their business cards at GAIM this year, a sharp contrast to conferences in less troubled times.
At past GAIMs, or the Global Alternative Investment Management conferences, certain hedgies went to great lengths to duck journalists, and many even expressed concern or irritation that journalists were allowed in at all.
It is not really such a surprise, and not only because the attendee list was visibly shorter this year than in 2008. Of the around 800 registered visitors, perhaps 500 have turned up.
David Einhorn again sent markets scurrying last week when he told investors he was shorting Moody’s Corp, but the Greenlight Capital manager’s latest thumbs down packed a weaker punch than his past, celebrated broadsides.
To be fair, Einhorn had a tough act to follow. A year ago, he boldly said Lehman Brothers was in much worse shape than its management would admit. Four months later — the bank went bankrupt and the shares were wiped out. It took more than six years, but his warnings about business lender Allied Capital also proved accurate and ultimately very profitable.
from Global Investing:
For permabears who live on doom and gloom to make money this is just a blip which is going to end in tears.
It may be the awakening we all experience in the spring, but this month two different class actions against previous financial giants were started by a bunch of pension schemes. In both cases a small group of such previously semi-obscure institutions have de facto come under the spot light for suing companies– and their executives– which they say have been less than straight about their financial shape and lost them millions.
Earlier this week five schemes, including Europe’s second largest one, clubbed to become lead plaintiff in a class action over about $274 million losses incurred since Bank of America took over Merrill Lynch.
By Lorraine Turner
Speakers at the Reuters Hedge Fund and Private Equity summit this week were asked “what keeps you awake at night” and the answers were wide-ranging, from “my 7-week old daughter” to “the next meteorite”.
Some executives are left counting sheep over the heavyweight questions that are plaguing our economies such as how low investment markets will fall or how the credit crisis can be eased as businesses remain stymied by a lack of credit.