Unstructured Finance

Out for the count

A bit delayed this, but drawing your attention to Parvathy Ullatil’s entertaining look at hedge fund managers going at each other with fists and gumshields, rather than outlandish claims of stratospheric bonuses. Photos from Reuters pictures.

Steve 'Dynamite' Davidson from JP Morgan is introduced before a boxing match during the Hedge Fund Fight Nite in Hong Kong October 29, 2009. Twelve financiers participated in six charity fights on Thursday, watched by 800 of their peers from the corporate and finance world of Hong Kong. REUTERS/Bobby Yip (CHINA)It was the kind of opportunity loss-stricken investors probably wished for in the worst months of the financial crisis: getting a bunch of hedge fund managers in a boxing ring and pummeling them. 

But the mood at the hedge fund “fight night”, held in Hong Kong late on Thursday, was exuberant, as managers and executives slugged it out, raising for charity nearly HK$700,000 ($90,300) from auctions. 

Asian hedge funds have returned close to 22 percent year to September, outperforming their U.S. and European counterparts, a year after the Lehman Brothers’ collapse rocked the industry. 

Chris 'Fingers' Aukland from Michael Page bleeds during a boxing match against George 'The Assassin' Sobek from UBS at the Hedge Fund Fight Nite in Hong Kong October 29, 2009. Twelve financiers participated in six charity fights on Thursday, watched by 800 of their peers from the corporate and finance world of Hong Kong. REUTERS/Bobby Yip (CHINA BUSINESS SOCIETY SPORT BOXING)Most of the tables were booked by banks and other financial institutions seeking to win favour with the industry. Six matches were held in total, with six winners crowned at the end of the night. 

Who likes to stop at the duty free shop?

dutyfreeApparently, travelers looking for some new cosmetics.
 
Sales at duty free stores — those airport emporiums for everything from perfume to cigarettes and extra-large Toblerone bars – boosted results at both Elizabeth Arden and Estee Lauder.
 
Elizabeth Arden posted stronger sales than anticipated and an unexpected quarterly profit on Thursday.  A day later, Estee Lauder said that travel retail accounted for about 9 percent of sales in its latest quarter, up from the usual range of about 7 percent.  Its higher profit came in well ahead of expectations.

There may be fewer passengers traveling these days, but those that are seem to be willing to buy.  Still, the market is a volatile one, Estee Lauder CEO Fabrizio Freda told Reuters.

Sales at duty free shops boost the bottom line since they are more profitable than typical sales.  That’s partly because companies spend little, if anything, to advertise.  Shoppers already know the brands from traditional outlets and marketing.

Mutual fund investors rewarded for patience

A man speaks on a phone as he looks at a large screen displaying India's benchmark share index on the facade of the Bombay Stock Exchange (BSE) building in Mumbai May 18, 2009. REUTERS/Punit ParanjpeEquity fund investors had a lot to cheer about in the last seven months.

Stock market enthusiasts had almost given up hope after losing an average 52 percent in 2008, when the benchmark Sensex recorded its first annual fall after six years of gains. But a rally since the start of March has bought the smiles back.

By September 30, as many as 10 equity funds more than doubled their net asset values as fund managers bought into the global panic, data from global fund tracker Lipper, a Thomson Reuters company, showed. During the same period 145 Indian equity funds outperformed the 30-share Sensex, which returned 73 percent.

Domestic tax saving funds, which manage nearly 200 billion rupees ($4.3 billion dollars), also rose with the tide. The nation’s largest such fund, SBI Magnum Tax Gain, surged 83 percent.

Oil market gets a government

The physical oil market, where traders exchange barrels of oil or financial instruments derived from them, is transacted not on a trading floor or electronic exchange, but by phone, instant messaging and – although employers have clamped down on it — the long liquid lunch.
Exactly, in other words, where regulators tend not to be looking. Instead, guidelines and indexes drawn up by the two main oil pricing agencies, Platts and Argus Media, serve as the de-facto rulebook for oil trading.
Argus announced a coup against Platts this week. The state oil company of top world exporter Saudi Arabia, Aramco, is switching to a crude benchmark index published by Argus to price its crude oil sales to the United States, from another benchmark published by Platts.
With a due sense of the gravity of its task, Argus issued a description of its index in a document labelled a white paper — a term typically reserved for drafts laws issued by the British government.

Check Out Line: Define “significantly”

fabrizio-fredaCheck out Estee Lauder’s profit coming in well ahead of raised expectations.

Sure, we should have expected that.  After all, the cosmetics maker said two weeks ago that its fiscal first-quarter profit would be “significantly higher than previous guidance” due to a variety of factors.

Apparently Estee Lauder management, including CEO Fabrizio Freda, has a different understanding of “significantly” than Wall Street.

Keeping score: PGE, Stellar Megaunion and IPOs

Highlights from the Thomson Reuters Investment Banking Scorecard:

BIGGEST EUROPEAN IPO SINCE MAY 2008

As part of a government privatisation program, Polska Grupa Energetyczna SA (PGE), an electric utility, raised $2.1 billion in an IPO on the Warsaw stock exchange this week.  The offering marks the largest IPO from a Polish company on record and the biggest IPO in Europe since the $2.5 billion listing of Dutch coal miner, New World Resources NV, in May 2008.

Goldman Sachs and Unicredit led the offering, which brings year-to-date European IPO activity to $3.3 billion, a decline of 76% compared to last year at this time.

* REAL ESTATE ACCOUNTS FOR 19% OF CHINESE M&A

China’s Stellar Megaunion’s planned $2.7 billion acquisition of real estate assets from Guilherme Holdings brings the volume of Chinese M&A to $73.6 billion for year-to-date 2009, a 14% decline from last year’s levels but far outpacing the 40% downturn for worldwide mergers.

DealZone Daily

That big, candy-coated M&A bellwether, Kraft-Cadbury, remains at the forefront of many dealmakers’ thinking. Brad Dorfman examines how the clock will really start ticking on a deal to create the world’s biggest confectioner once Kraft (KFT.N) reports earnings next week. Meanwhile, a clutch of other companies are making more upbeat noises about M&A, to wit:

* Juniper Networks Inc’s (JNPR.N) chief executive says the network equipment maker is open to acquisitions, although in-house research and partnerships remain its priorities.

* Macquarie Group Ltd (MQG.AX), Australia’s largest investment bank, has grown its surplus capital by almost half to a hefty A$4.5 billion ($4.1 billion), giving it muscle to hunt for assets overseas.

And the award for best hedge fund goes to….

Take a bow George Soros, Trafalgar Capital, King Street, Credit Agricole and a host of others.

Oscar statuesThose lovely people at Lipper (wholly-owned by Thomson Reuters, I should note) have handed out the gongs for the top hedge funds in 2009. The awards pick out the managers delivering the best consistent returns over three years among participants the Lipper TASS database, divvying up the goodwill between strategies and regions to give a global snapshot of the leading performers.

Soros Fund Management is picked for best offshore multi-strategy fund while King Street gets the prize for best North American event-driven fund. Credit Agricole’s CAAM Invest VaR 20 I EUR fund wins for Global Macro in Europe.

M&M stock rises in weak market

AUTO INDIA MAHINDRAShares in Mahindra & Mahindra rose nearly 4 percent to 928 rupees and ended as the top Sensex gainer, even as the benchmark index dropped over 200 points.

The company reported its quarterly numbers on Wednesday and said net profit nearly trebled, helped by cost cuts and strong sales.

Its shares, which ended as the top gainer in the BSE Auto index, touched an intra-day high of 942 rupees before closing at 928 rupees.

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