BlueBay, the publicly-quoted hedge fund with $21bn AuM at the end of September, is closing its Emerging Markets Total Return Fund run by Simon Treacher, after it reported a 53% loss, most of the losses occurring after the end of September. In NY, Satellite Asset Management stopped client withdrawals from its three largest funds, in a report from City AM. Asset manager BlackRock is looking to make around 200 job cuts, the "first major round of redundancies in the company's history". Fidelity also announced it would cut headcount by 3000 by early 2009.
A fund manager commenting on the hedge fund industry remarked: "It's going to be difficult for them to reinstate fees once the industry has turned around". Investor George Soros ("the man who broke the Bank of England", making $1bn betting against the pound, following the UK's unwillingness to raise rates to ERM currency levels, forcing Britain to withdraw from the ERM and devalue the pound) declared that the "bubble has burst" for hedge funds.
In other news, HSBC (the world's local bank) is looking to buy back its Canary Wharf HQ which is sold to Metrovacesa for £1.09billion.
Friday, 28 November 2008
Tuesday, 25 November 2008
Further $800bn Stimulus from the Fed!!!
Henry Paulson declares move is to make more lending available to consumers. $600bn will be used to buy up MBS and $200bn to unfreeze the consumer credit market. Does it make sense?
Have Bailouts worked in the past? Find out here.
http://news.bbc.co.uk/1/hi/business/7648330.stm
Have Bailouts worked in the past? Find out here.
http://news.bbc.co.uk/1/hi/business/7648330.stm
Sunday, 23 November 2008
Crisis at Citigroup, Stock Crushed, Senior Departure and Nomura to Raise Capital
Pop quiz: How much did Citi CEO Vikram Pandit make from the sale of Old Lane to Citigroup? (hint: 20% of the total deal value)
Citi's shares lost 20% on Friday, giving it a value $20.5 bn (less than a quarter of JPM Chase). The board is considering a sale of the business and the position of Vikram Pandit.
Vikram Pandit, from Nagpur in Central India, moved to the US in the 1970s to study at Columbia University where he obtained four degrees. His PhD thesis was entitled "Asset Prices in a Heterogeneous Consumer Economy".
1983 and Vikram joined Morgan Stanley following a period consulting for the bank. He gained a reputation as a "driven banker" and "prudent risk manager".
After a battle at Morgan Stanley, Mr Pandit founded Old Lane, a hedge fund that was sold to Citi in 2007 for $800m. Mr Pandit earned $165m from the deal. In early 2008, Old Lane was closed down for poor results. He took charge of Citi's hedge fund business and was promoted to head of the securities division. Following the ousting of Chuck Prince, he became CEO, backed by Citi power brokers like Robert Rubin, former US Treasury Secretary, and Sandy Weill, the former CEO.
In Asia, Citi's India CEO Sanjay Nayar, has moved to KKR after 23 years with the giant.
In addition to considering a sale of the business, Citi was also locked in talks with the Treasury (can the bank survive without a capital injection?) Chairman Sir Win Bischoff met with Federal Reserve officials and the US Treasury department. (Sir Win was previously at Schroders and moved to Citi following the acquisition of Shroders corporate advisory business).
Tokyo newspapers announced Nomura is likely to issue subordinated loans and other products to financial firms to bolster its capital base.
Emerging markets bank Standard Chartered (formed in 1969 from the merger of Standard Bank and Chartered Bank) announced a $3-4bn rights issue to boost its capital reserves. Sovereign wealth fund Temasek will underwrite part of the rights issue. Temasek is Standard Chartered's biggest shareholder.
Citi's shares lost 20% on Friday, giving it a value $20.5 bn (less than a quarter of JPM Chase). The board is considering a sale of the business and the position of Vikram Pandit.
Vikram Pandit, from Nagpur in Central India, moved to the US in the 1970s to study at Columbia University where he obtained four degrees. His PhD thesis was entitled "Asset Prices in a Heterogeneous Consumer Economy".
1983 and Vikram joined Morgan Stanley following a period consulting for the bank. He gained a reputation as a "driven banker" and "prudent risk manager".
After a battle at Morgan Stanley, Mr Pandit founded Old Lane, a hedge fund that was sold to Citi in 2007 for $800m. Mr Pandit earned $165m from the deal. In early 2008, Old Lane was closed down for poor results. He took charge of Citi's hedge fund business and was promoted to head of the securities division. Following the ousting of Chuck Prince, he became CEO, backed by Citi power brokers like Robert Rubin, former US Treasury Secretary, and Sandy Weill, the former CEO.
In Asia, Citi's India CEO Sanjay Nayar, has moved to KKR after 23 years with the giant.
In addition to considering a sale of the business, Citi was also locked in talks with the Treasury (can the bank survive without a capital injection?) Chairman Sir Win Bischoff met with Federal Reserve officials and the US Treasury department. (Sir Win was previously at Schroders and moved to Citi following the acquisition of Shroders corporate advisory business).
Tokyo newspapers announced Nomura is likely to issue subordinated loans and other products to financial firms to bolster its capital base.
Emerging markets bank Standard Chartered (formed in 1969 from the merger of Standard Bank and Chartered Bank) announced a $3-4bn rights issue to boost its capital reserves. Sovereign wealth fund Temasek will underwrite part of the rights issue. Temasek is Standard Chartered's biggest shareholder.
Thursday, 20 November 2008
RBS Chairman Reports of "Unprecedented" Difficulties
RBS announced its expectation for its first full-year loss in nearly 300 years of existence. Chairman Sir Tom McKillop stated it was the worst experience in his 40 year working life.
Tuesday, 18 November 2008
Japan joins Europe in Recessionary Doldrums
Kaoru Yosano, fiscal policy minister for Japan, announced Japan is joining Europe in recession, following two straight quarters of negative GDP growth.
Monday, 10 November 2008
GM Stock Lowest in 55 years - Target Price: Zero, AIG eats more government cash
GM's Securities
Fitch Ratings has warned of GM's "rapidly diminishing liquidity position" and DB has set a target price of zero for the stock. (aside: check out DB's art website here, DB owns the world's biggest corporate collection of art).
STOCK
GM has dropped from $33 to $3 this year, following DB's downgrade. The short interest on GM stock is currently 93.5 million - short interest is the number of shares of a stock that have been sold short but not yet covered (by depositing funds) or closed out.
OPTIONS
GM's most active contracts were November $3 puts. Their value more than doubled to 70 cents.
DEBT
GM's debt is trading at "stressed" prices. "Stressed" is basically one level above "distressed".
Will federal bank-bailout funds be opened up to automakers?
The Treasury announced it will pay $40 billion for another 2% stake in AIG (preferred shares), which has posted a $24.47 billion loss for Q3. The term of the loan has been extended from 2 years to 5 years. AIG was involved in insurance of CDOs.
The ignominious position of GM will force management to reflect on its history. Founded on September 16, 1908 in Flint, Michigan (now hq'ed in Detroit) as a holding company for Buick, controlled by William C. Durant of Boston. He lost control of GM in 1910 to a banker's trust due to excess debt taken on in its acquistions followed by the collapese of new vehicle sales. A few years later he started Chevrolet, and reassumed control of GM by building up secret stakes.
Fitch Ratings has warned of GM's "rapidly diminishing liquidity position" and DB has set a target price of zero for the stock. (aside: check out DB's art website here, DB owns the world's biggest corporate collection of art).
STOCK
GM has dropped from $33 to $3 this year, following DB's downgrade. The short interest on GM stock is currently 93.5 million - short interest is the number of shares of a stock that have been sold short but not yet covered (by depositing funds) or closed out.
OPTIONS
GM's most active contracts were November $3 puts. Their value more than doubled to 70 cents.
DEBT
GM's debt is trading at "stressed" prices. "Stressed" is basically one level above "distressed".
Will federal bank-bailout funds be opened up to automakers?
The Treasury announced it will pay $40 billion for another 2% stake in AIG (preferred shares), which has posted a $24.47 billion loss for Q3. The term of the loan has been extended from 2 years to 5 years. AIG was involved in insurance of CDOs.
The ignominious position of GM will force management to reflect on its history. Founded on September 16, 1908 in Flint, Michigan (now hq'ed in Detroit) as a holding company for Buick, controlled by William C. Durant of Boston. He lost control of GM in 1910 to a banker's trust due to excess debt taken on in its acquistions followed by the collapese of new vehicle sales. A few years later he started Chevrolet, and reassumed control of GM by building up secret stakes.
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