Should Carlyle bail out its listed debt fund? 7 Mar 2008 The buyout firm backed an Amsterdamlisted fund that could go bellyup. Injecting capital might keep the fund afloat and minimise reputational damage. And there s a chance Carlyle would make money. But there would be risks. Carlyle could look even worse if a bailout failed.
Banks have no excuses for their losses 7 Mar 2008 That s the conclusion to be drawn from a new report by regulators on risk management practices at 11 major banks. They might like to blame unanticipated factors that botched up their models. But it was sophomoric blunders that separated the winners from the losers.
Hedge fund consolidation steps up a gear 7 Mar 2008 Londonbased Castlegrove is being acquired by Millennium Group, while GLG is opportunistically eyeing 20 hedge funds, including Tisbury. Further consolidation is inevitable fuelled not so much by distress as smaller firms throwing in the towel.
Asset classes multiply, returns don’t 7 Mar 2008 Everything from stocks in failing countries to carbon offsets to rare violins is being peddled as a new asset class . Theoretically, adding uncorrelated assets to a portfolio can increase returns while lowering volatility. It s easier to sell investment nirvana than reach it.
Carlyle debt fund too slow to cut borrowing 6 Mar 2008 The Amsterdamlisted mortgage fund with ominous ticker symbol CCC leveraged itself 32to1 to buy AAArated US mortgage bonds. Now it is struggling to meet margin calls. Prime brokers are increasingly riskaverse; Carlyle s fund didn t deleverage quickly enough.
Grabbing masters of the universe coattails doesn’t work 6 Mar 2008 Investors who bought into Blackstone, Carlyle, OchZiff or KKR shares hoping for some altasset pixie dust have been sorely disappointed. They shouldn t be shocked. The fund managers are masters of market timing. Why wouldn t they have sold out at the top?
Buffett shows that finance can still pay 6 Mar 2008 Microsoft s Bill Gates has been displaced as the world s richest man by the sage of Omaha. He s done brilliantly in a disastrous year for the finance industry. But Buffett is the exception. The best way to make great big money these days is to build a fortune in a poor country.
Ambac’s bailout springs a leak 5 Mar 2008 It isn t being rescued by its bank clients, as shareholders hoped. News of its plan to raise $1.5bn in equity and converts sent its stock plummeting. Ambac admits the new capital won t eliminate the risk of a rating downgrade. Banks were wise not to increase their exposure.
ECB should look for US help with the dollar 5 Mar 2008 The strong euro now has Europe worried. The ECB s Trichet is likely to try to talk the single currency down on Thursday. What he would like is US help. A Fed purchase of dollars would take pressure off the euro. It would also counter some inflationary problems in the US.
MBIA’s hothead CEOs don’t do it any favours 4 Mar 2008 Gary Dunton railed against allegedly unscrupulous short sellers and unfair ratings agencies. His successor, Jay Brown, has now taken up the cudgel. MBIA s shareholders might be better off if the bond insurer's bosses stopped slinging blame for its problems, and solved them.
Spacs shouldn’t be considered a bear market hedge 4 Mar 2008 Issuers say investors are snapping up shares of blank cheque IPOs even as they shun regular IPOs because there is little downside. But that s only true if the manager doesn t buy anything. If he does and he has every incentive to do so investors can easily lose out.
Exclusive: Brevan Howard to list new $500m fund 4 Mar 2008 The UK hedge fund is hoping to capitalise on the performance of BH Macro, its existing permanent capital vehicle, and growing investor appetite for listed funds. The timing looks smart providing investors aren t spooked by recent hedge fund blowups.
Bulldog baits SEC on hedge fund advertising 3 Mar 2008 Fund manager Phil Goldstein thinks regulators are unfairly preventing US hedge funds from marketing their businesses, putting the funds in the same category as purveyors of pornography. Goldstein has embarrassed the SEC before, and has a case this time, too.
Carlyle up to old tricks with Sarko hire 3 Mar 2008 The US private equity firm insists it is hiring the French president s halfbrother purely for his investment banking expertise. But Carlyle has always understood the value of political connections it would be surprising if it didn t hope to use them.
Buyout shops rebalance reality and myth in valuations 29 Feb 2008 Alternative managers are set to revalue private holdings more often as public markets move. KKR s publicly listed fund just marked several assets down. Investors should welcome more information, but could also see more volatility. That might change how they view private equity.
Close’s failed auction looks bad news all round 29 Feb 2008 All four of the UK bank s bidders have walked away. That s grim for shareholders, who have lost out on a bid premium, and embarrassing for managers, who rejected an offer last year. Funding looks to have been the stumbling block which doesn't bode well for other bank deals.
Will Wilbur whip Warren in monoline war? 29 Feb 2008 Messrs Ross and Buffett are both pushing into the bond insurance business. Buffett s offer to reinsure monolines muni business at exorbitant rates only roiled Berkshire Assurance s rivals. Ross s investment in Assured Guaranty could be a more effective play for market share.
Peloton blow-up signals dark days ahead for hedge funds 29 Feb 2008 The UK hedge fund was scuppered by a bad trade, tougher bank financing terms and the leak of its rescue plan. Peloton is unlikely to be the only fund caught out this way. But if it s any consolation to investors, Peloton s partners have lost everything too.
Hedge funds race to defuse leverage time bomb 29 Feb 2008 Peloton was laid low partly by leverage that was too aggressive for its creditors. The LTCM debacle in 1998 had similar features. Hedge funds have so far avoided blowups on the scale of Wall Street s losses. But that could change if they fail to scale back borrowing.
Swiss and Luxembourg tax havens next in firing line 28 Feb 2008 After the scandal over little Liechtenstein, the two larger European countries will come under pressure to divulge more information about accounts. Both turn over information in cases of tax fraud, but not tax evasion. The distinction looks flimsy.