Unstructured Finance

from Global Markets Forum Dashboard:

GMF @HedgeWorld West, World Bank/IMF and Financial & Risk Summit Toronto 2014

(Updates with guest photos and new links).

Join our special coverage Oct. 6-10 in the Global Markets Forum as we hit the road, from the West Coast to Washington to the Great White North.

GMF will be live next week from the HedgeWorld West conference in Half Moon Bay, California, where we’ll be blogging insight from speakers including Peter Thiel, former San Francisco 49ers great Steve Young and other panelists' viewpoints on the most important investment themes, allocation strategies, reputation risk management ideas and more.

 

 

Eric Burl, COO, Man Investments USA

Eric Burl, COO, Man Investments USA

Our LiveChat guests at HedgeWorld West include Jay Gould, founder of the California Hedge Fund Association, on Monday; Rachel Minard, CEO of Minard Capital on Tuesday; and Eric Burl, COO of Man Investments, on Wednesday discussing the evolving global investor. If you have questions for them, be sure to join us in the GMF to post your questions and comment.

Follow GMF’s conference coverage and post questions live via our twitter feed @ReutersGMF as well, where we’ll post comments from other HedgeWorld panelists. They include: 

    Peter Algert, Founder and CIO, Algert Global Adrian Fairbourn, Managing Partner, Exception Capital Nancy Davis, Founder & CIO, Quadratic Capital R. Kipp deVeer, CEO, Ares Capital Judy Posnikoff, Managing Partner, PAAMCO Caroline Lovelace, Founding Partner, Pine Street Alternative Asset Management Cleo Chang, Chief Investment Officer, Wilshire Funds Management Brian Igoe, CIO, Rainin Group Mark Guinney, Managing Partner, The Presidio Group

In a preview of the HedgeWorld West conference, Rachel Minard said what matters most to investors today is "not so much what something is

Rachel Minard, CEO of Minard Capital

Rachel Minard, CEO of Minard Capital

called but what is its behavior," she told the forum. "What investment instruments are being used -- what is the ROI relative to cost, liquidity, volatility, market exposure, price/rates and is this the most "efficient" method by which to achieve return. What's great from our perspective is the meritocracy of the business today -- the proof necessary to validate the effective and sustainable ROI of any fund or investment strategy."

How Babel became Symphony

The communications platform announced this week went through several different names before Symphony.

The idea for a communications platform went through several names before Symphony.

In late-2012, Goldman Sachs traders started to notice something unusual. News was sometimes breaking on social media faster than it was breaking on sophisticated information terminals that cost the bank millions of dollars each year.

The realization set in motion a series of events that would lead Goldman to team up with 13 other financial firms and invest in a new communications platform called Symphony. But before it was called Symphony, it had a lot of other names. What follows is the story of how Symphony got its name, as told to Unstructured Finance by people involved with the project.

Lessons from Buffett-palooza: Six months in

Buffett.jpgSure, there were the prosaic T-shirts with Warren Buffett’s face at the annual Berkshire Hathaway meeting this May. But there were also boxers. Ketchup bottles. Rubber ducks. Why not? The country’s most famous investor is also its most consummate pitchman – only one of the distinctions that differentiate Berkshire Hathaway from other companies.

 

Of course, Warren Buffett is so iconic an investor that the word “iconic” seems inadequate. He’s the fourth richest person in the world, an avuncular-seeming investor who nonetheless made money off Goldman Sachs, who themselves are hardly pushovers. He’s got a humble, down-to-earth demeanor and a personal fortune somewhere around the entire GDP of Croatia  (WB: $65 billion; Croatia, around $60 billion).

 

It’s now been six months since I started covering Berkshire, and it’s been a learning experience, to say the least. Covering this company is not like any other (can you imagine AIG selling out of Bob Benmosche-emblazoned shirts? How about just giving them away?). Below I’ve compiled a roundup of things the Berkshire beat has taught me at the half-year mark, along with things to watch for in the rest of 2014 and beyond.

‘Bond King’ Gross speaks to 700 at Pimco client event in Big Apple

By Jennifer Ablan

Bill Gross did something last week he rarely does — venture from his Newport Beach, Calif. home to meet with investors twice. 

First in Chicago at the Morningstar Investment Conference where he made waves for donning sunglasses and joking he’d become “a 70-year-old version of Justin Bieber,” and then, the next day at a less-publicized event for 700 clients in New York City. 

The meetings are a sign that Gross, dubbed the market’s “Bond King,” is trying to make amends with investors and the media after a brutal first half of the year. 

GUEST BLOG: Edge over the markets and do you have it?

This is a guest post from author and former hedge fund manager Lars Kroijer. The piece reflects his own opinion and is not endorsed by Reuters. The views expressed  do not constitute research, investment advice or trade recommendations.

Most literature or media on finance today tells us how to make money.  We are bombarded with stock tips about the next Apple or Google, read articles on how India or biotech investing are the next hot thing, or told how some star investment manager’s outstanding performance is set to continue.  The implicit message is that only the uninformed few fail to heed this advice and those that do end up poorer as a result.  We wouldn’t want that to be us!

What if we started with a very different premise?  The premise that markets are actually quite efficient.  Even if some people are able to outperform the markets, most people are not among them.  In financial jargon, most people do not have edge over the financial markets, which is to say that they can’t perform better than the financial market through active selection of investments different from that made by the market.  Embracing and understanding this absence of edge as an investor is something I believe is critical for all investors to understand.

Jim Chanos, bad news bear, urges market prudence

Prominent short-seller Jim Chanos is probably one of the last true “bad news bears” you will find on Wall Street these days, save for Jim Grant and Nouriel Roubini. Almost everywhere you turn, money managers still are bullish on U.S. equities going into 2014 even after the Standard & Poor’s 500’s 27 percent returns year-to-date and the Nasdaq is back to levels not seen since the height of the dot-com bubble in 1999.

“We’re back to a glass half-full environment as opposed to a glass half-empty environment,” Chanos told Reuters during a wide ranging hour-long discussion two weeks ago. “If you’re the typical investor, it’s probably time to be a little bit more cautious.”

Chanos, president and founder of Kynikos Associates, admittedly knows it has been a humbling year for his cohort, with some short only funds even closing up shop.

What the? Money managers and the fog of bitcoin

“I still don’t even know what it is” – Jim Chanos, famed short-seller and founder of $6 billion Kynikos Associates.

“You know,  I don’t understand bitcoin” – Bonnie Baha, head of Global Developed Credit at $53 billion DoubleLine Capital.

“I don’t really know enough to have a view” – Chris Delong, chief investment officer of $8.1 billion multi-strategy hedge fund Taconic Capital Advisors

Berkowitz, Ackman bets on Fannie and Freddie puzzle investors and policy buffs

On Thursday, the United States threw cold water on Bruce Berkowitz’s daring proposal to recapitalize mortgage finance behemoths Fannie Mae and Freddie Mac, saying the only way to revamp the home loan market is through proper housing finance reform.

Berkowitz’s Fairholme Capital Management said it wants to buy the mortgage-backed securities insurance businesses of Fannie and Freddie by bringing in $52 billion in new capital, in a bid to resolve the uncertain future of the mortgage financiers by freeing them from U.S. government control. For its part, the government said the way forward would be to create a new housing finance system in which private capital would play a pivotal role.

Up until a few days ago, the idea that the government would hand Fannie and Freddie back to private investors seemed unlikely. Now, the idea appears all but dead. This appears to be bad news for a number of well-known money managers – the most prominent of which are Fairholme and Bill Ackman’s Pershing Square – which recently scooped up shares in both companies.

The nine lives of the eminent domain for mortgages debate

By Matthew Goldstein and Jennifer Ablan

Law professor Bob Hockett, widely credited with popularizing the idea of using eminent domain to restructure underwater mortgages, says he continues to be approached by yield-hungry angel investors looking for a way to help out struggling homeowners and make money at the same time.

He said an increasing number of wealthy investors on “both coasts” regularly reach out to him to get more information about how eminent domain would work and get a better read on “the prospects of municipalities adopting one or another variance of the plan.”

Hockett also is continuing to advise local officials in a variety of cities including some in New Jersey and New York (Irvington, N.J. and Yonkers, N.Y. for instance) on how they might use eminent domain to condemn, seize and restructure deeply underwater mortgages for homeowners determined to keep-up with their high monthly mortgage payments.

Carl Icahn in his own words

Icahn’s Big Year in investing and activism

By Jennifer Ablan and Matthew Goldstein

We held an hour-long discussion with Carl Icahn on Monday as part of our Reuters Global Investment Outlook Summit, going over everything from his spectacular year of performance to his thoughts on the excessive media coverage of activists like himself who push and prod corporate managers to return cash to investors. We also talked about the legacy he wants to leave.

There was much Icahn wouldn’t talk about on the advice of his lawyer, however. While he said he took a look at Microsoft, he won’t say why he decided not to join ValueAct’s Jeffrey Ubben’s activist campaign. He also stayed mum on any plans for his Las Vegas white elephant, the unfinished Fontainebleau Las Vegas resort, which he bought out of bankruptcy proceedings in 2010.

Never one to mince words, Icahn said he takes issue with Bill Ackman’s brand of activism which he believes borders on micromanaging by telling chief executive officers how to do their jobs. “I think Ackman is the opposite of what I believe in activism. You don’t go in and you don’t go tell the CEO how to run his company.”

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