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After-hours investing

21 March 2014 By Rob Cox

Look out JPMorgan. Against a sampling of its big company peers, the Wall Street bank was judged most vulnerable to an activist investor in a straw poll of some 250 star fund managers. They gauged the institution led by Jamie Dimon as more likely than General Electric, IBM, Exxon Mobil and Berkshire Hathaway to draw the attention of an uppity shareholder.

Luckily for Dimon, this isn’t science. Rather, it is what happens after plying leading investors with liquor and Lucite. For the third year in a row, that’s effectively what Breakingviews did at the Lipper Fund Awards, convened to honor the best performing U.S. portfolio managers. If last year’s prognostications are any indication, Dimon is safe, as investors picked Morgan Stanley boss James Gorman as most likely to go. The stock has risen by half and Gorman is still very much in command.

Generally, the assembled investors were bullish. Three-quarters of them said they expect the S&P 500 Index to close the year above 1,900. Yet they also believe interest rates are heading higher: 81 percent forecast the 10-year Treasury yield would crest 3 percent by December. They don’t like bitcoin, however. About half expect the crypto-currency to fetch less than $200 by year-end.

The overall bullishness may just be a reflection of their political biases. More attendees believed the Republican Party had a chance of winning a majority in the U.S. Senate from the reigning Democrats. But the difference – 51 percent versus 49 percent – suggests a gridlocked Congress will do no evil to the U.S. growth story.

Corporate governance die-hards won’t be thrilled by responses to the question asking whether shareholder votes on executive compensation should be binding. While a vast majority last year said that companies should split the roles of chairman and chief executive, in this year’s poll only 43 percent favored forcing companies to act on votes about manager pay.

This poll isn’t binding, either. But it does reflect the opinions of the cream of the investing industry crop. If they put these views to work this year, they will also determine whether they will be back next March for another piece of Lucite.


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