Falling on deaf ears
The European private equity industry today published its response to the proposed Alternative Investment Fund Managers directive that seeks to place controls on the industry.
In what it must hope will be seen as a carefully considered and constructed response to the European Commission’s hastily drafted and ill-thought-out proposed directive, the European Private Equity and Venture Capital Association — the voice for private equity in Europe — calls for the threshold for reporting on its companies’ activities to be lifted to 1 billion euros assets under management from 500 million.
It argues that private equity firms smaller than that specialise in managing small and medium-sized companies and should be subject to national legislation.
EVCA also wants a grandfathering clause introduced so firms existing funds that use no leverage and have no redemption rights (the vast majority of all unlisted private equity funds) would be exempt from the directive. It argues that failing to do this could result in termination of these funds “with disastrous consequences for the industry and its portfolio companies”.
The big question is who in Europe is listening?
Having already gained a surprise concession in the published draft, which lifted the reporting threshold to 500 million euros from an expected level of 250 million euros, private equity may be seen as pushing its luck by asking for further leeway.
While the Socialists lost ground to the Conservative right in the recent European Parliament elections, it would be a mistake to think that the left wing coalition leader Poul Nyrup Rasmussen will be any less strident in his call for stringent legislation on private equity and hedge funds alike. The right wing Governments in France and Germany have been just as loud in their demands for legislating of the industries.
from Funds Hub:
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?
from Funds Hub:
Light at the end of the tunnel?
There's no shortage of bad news in the financial world at the moment.
But one top hedge fund manager believes that equities could soon be heading for a very sharp rally.
Cazenove's Neil Pegrum -- whose fund made 9.4 percent last year while markets were plummeting -- believes UK equities could soon be enjoying a "March 2003" rally.
While it seems a long time ago now after the market's recent woes, March 2003 marked the start of a 4-year bull market which took the FTSE 100 from less than 3,300 to more than 6,700 and saw clever stockpickers reap huge rewards.
Pegrum argues that stocks are already discounting a lot of bad news. He adds that equities look forwards rather than backwards and therefore, as in March 2003, can rally even as analysts are still downgrading corporate earnings forecasts.
His equity long/short fund's net long position is 14 percent, but he's planning to increase that this year.
It's a brave call, especially after so many investors tried to buy stocks on the cheap last year, only to find them getting even cheaper.
Thanks. The March 2003 rally seems also to have been driven, at least in part, by the removal of a lot of uncertainty about the U.S. and Iraq. Back to the present time, government spending appears to be materialising in the U.S., but there is still plenty of uncertainty around.
