THE FINTAG NEWSLETTER @ 09 October 2009

FINTAG COMMENT

Economy.

I tried but I couldn’t cope, so bought an upgrade to First Class. This game of down sizing is not as easy as I thought. Like going cold turkey, one needs to be locked away for a few weeks or you take the easier path and wean yourself off luxury which is what I am doing. My excuse for upgrading was the threat of catching DVT and my nose being sensitive to strange smells. I would prefer not to fly than be treated like a student so I flew First. Next time I will fly Business and then try the back of the plane again.

But enough if this. I decided to start my new company as Fat Tail Capital. However, as pointed out by a concerned reader, this already exists and I apologize for passing myself off as an existing manager. So it is back to the drawing board.

Today’s name will be First Class Capital (sounds better than Economy Capital). Let me know if that has gone too.

I didn’t realise how many unemployed bankers there were out there. My inbox has been hammered with requests from the once great and the good and this is flattering. Investors want fixed income on volatile and hard to price underlyings. Apparently. Once you are an ABS / MBS / CDO junky you will always be one. So it looks like my new funds will be just this. Junk with a bond on top. And I don’t have to pay these people until the fund is up and running (which they will fund too). Now that it is what I call a proper business model.

U.S. DEFICIT FOR 2009 TOTALS $1.4 TRILLION, BUDGET OFFICE SAYS

bloomberg

The U.S. government ended its 2009 fiscal year with a deficit of $1.4 trillion, the biggest since 1945, the Congressional Budget Office reported.

The deficit amounted to 9.9 percent of the nation’s economy, triple the size of the shortfall for 2008.

The nonpartisan CBO said yesterday the government was squeezed on both sides of the budget ledger in the fiscal year that ended Sept. 30. Tax revenue fell by $420 billion, or 17 percent, to the lowest level in more than 50 years.

Fintag says
And the markets keep on going up …

Taxes at a generational low and debt at a generational high. Staggering, truly staggering. Ben Bernanke, Hanky Paulson and Alan Greenspan are the goblins of future children.

I mean what is Bernanke talking about …

reuters says ” Bernanke sees tighter policies as economy heals “

financial news says ” New threat emerges to London’s financial crown “

city am says ” Rates held by central banks “

TROUBLES AT THE MAIL

tax payers alliance

Troubles within the Royal Mail roll on, with a national postal strike likely in the near future. This adds to the disruption still being felt after recent industrial action, which has lead to serious delivery problems across the country; millions of items of mail have yet to be delivered.

Unions are unhappy about the Royal Mail’s modernisation plans. Redundancies have already taken place, and plans for greater mechanisation of sorting – for instance – will likely lead to more, but more than anything they feel Royal Mail management has handled the process badly. Royal Mail’s bosses retort that these are the only way the post office can remain a sustainable business, in light of the falling volumes of post.

Fintag says
Of course I expect you think I shall be ranting about state owned monopolies but I wont.

I am more interested in the author of this post. Emily de Looze. Surely that is not here real name? The men who work on TPA are surrounded by highly intelligent women of a knowing nature. Who would have thought tax was so much fun? I hope I get an invite to their Christmas party. [Editor: Steady on the jet lag]

financial times says ” Cameron attacks ‘big government’ “

HEDGE FIRM SAYS CHIEF WILL RETIRE

new york times

James H. Simons, one of the most respected money managers in the hedge fund industry, told investors Thursday he planned to step down from day-to-day management of Renaissance Technologies, the firm he founded over 30 years ago.

Fintag says
Now this man is not a goblin but a hero to us all.

HEDGE FUNDS STRUGGLE TO KEEP PACE WITH EQUITY MARKETS

finalternatives

Hedge fund struggled to keep pace with equity markets in September, with the Hennessee Hedge Fund Index gaining 3.18% during the month (20.89% YTD).

At the same time, the S&P 500 increased 3.57% (17.03% YTD), the Dow Jones Industrial Average increased 2.27% (10.66% YTD), the NASDAQ Composite Index advanced 5.64% (34.59% YTD), and the Barclays Aggregate Bond Index advanced 1.05% (5.72% YTD).

“Hedge fund managers we talk to are concerned that the markets are rallying while the real economy is shrinking,” said Charles Gradante, co-founder of hedge fund advisory the Hennessee Group. “Liquidity is driving this market, and that is likely to continue with more than $3 trillion on the sidelines. However, liquidity driven markets eventually dry up. Hopefully, credit expansion and GDP growth arrive to support the market in 2010.”

Fintag says
That is because we are (sorry, in my case was) Hedge Funds. We hedge our bets.

ft alphaville says ” The pitfalls of being market neutral “

EX-BEAR STEARNS FUND MANAGER TANNIN WORRIED ABOUT ‘BLOW UP’

bloomberg

Former Bear Stearns Cos. hedge fund manager Matthew Tannin, accused of misleading investors, said “We could blow up” in a 2006 e-mail, according to documents released by prosecutors.

Tannin, 47, is set to go on trial Oct. 13 for securities fraud with fellow ex-manager Ralph Cioffi, 53. In a message with the subject title ‘Thoughts” that Tannin sent to himse

Fintag says
And I was telling you all the same thing at the time…

33 HEDGE FUND STAFF SHARE £30M PAYOUT

telegraph

The hedge fund, which was set up by Stephen Zimmerman, the former Mercury star manager, paid the employees a total of £29.4m, according to accounts filed at Companies House.

The accounts show that NewSmith wrote down the value of its listed and private equity investments by £7m, including a £3.3m write-down on its holding in FibreChem Technologies. The group’s profits were also lower after NewSmith sold its debt advisory unit to Unicredit Group. NewSmith manages $3bn (£1.86bn) of assets having lost $2bn in the past 18 months because of redemptions and the market downturn.

Fintag says
Big deal. After tax that will be enough for each of these people to buy a Mini Cooper.

THE NOBEL PRIZE FOR ECONOMICS MAY NEED ITS OWN BAILOUT

guardian

The economics award is usually the last of the Nobel prizes to be announced. Correctly so, for it was also the last to be created – and strictly speaking is not even a real Nobel prize. The five original awards, first given out in 1901 for literature, peace, medicine/physiology, physics and chemistry, were intended by Alfred Nobel to recognise contributions that enhanced the quality of human life, through scientific advance, literary creativity or efforts at bringing about peace.

The economics prize is not a prize of the Nobel Foundation; rather, it was created in 1968 by the Central Bank of Sweden as a “prize in economic sciences in memory of Alfred Nobel”. However, it now has the same procedure of selection by the Swedish Academy, and the same cash award presented at a similar ceremony as the Nobel prizes.

Fintag says
And the winner is …Finbar Taggit … [Editor: In your dreams]

HEDGE FUND MANAGER PLEADS GUILTY TO FRAUD CHARGE

dealbook

A Chicago hedge fund manager pleaded guilty Wednesday for his role in an alleged $3.5 billion Ponzi scheme.

Gregory Bell, founder of Lancelot Investment Management, was accused of feeding client assets to a fraud scheme run by a Minnesota businessman, Thomas Petters.

Fintag says
I know we did this yesterday, but I forget to mention the company name – Lancelot. Sounds like a porn star …

LEHMAN ADMINISTRATORS ASK TO PAY BROKERAGE CLIENTS $3.3 BILLION

bloomberg

Lehman Brothers Holdings Inc.’s U.K. administrators are seeking a London judge’s permission to pay as much as $3.3 billion to prime brokerage clients, funds the investment bank took in after its collapse.

PricewaterhouseCoopers LLP asked the High Court in London at hearings scheduled to conclude today to determine how it should distribute securities, redemption proceeds, dividends and interest payments that have accumulated since Lehman’s September 2008 bankruptcy. The administrators have legal duties to the prime brokerage clients, most of which are hedge funds, PwC’s lawyer, William Trower, said in a court filing.

Fintag says
PWC are truly parasites of the worst nature. They are my new bete noir, my new hate figures. Private Equity jockeys were the scum of 2007, the CRA’s in 2008, and PWC are the new anti-christ (or is that anti-Mohammed) of 2009.

‘MENACE OF MAYFAIR’ JEWELLER DUPED VICTIMS OUT OF FAMILY HEIRLOOMS

telegraph

A fraudster, Andrew Batchelor, branded the ”Menace of Mayfair” posed as a reputable jeweller to dupe a string of victims out of watches, necklaces and earrings including family heirlooms.

Fintag says
Personally, I like to be known as the “Russell Brand of Mayfair”

REGULATORS CRITICISE ‘UNWORKABLE’ EU PLANS FOR HEDGE FUND REFORM

telegraph

Eddy Wymeersch, chairman of the Committee of European Securities Regulators (CESR), said the proposed legislation on alternative investment funds was unworkable and needed a rethink.

“I hope they will come forward with something more balanced,” he said. “It really doesn’t work. They have pooled everything together, the scope is absolutely too wide, everything is caught.”

Recent research from trade body AIMA showed that the hedge fund and private equity industries contribute £7.9bn in tax to the coffers of EU governments each year – including £5.3bn to the UK Government alone.

Fintag says
Please see my twitters at the last FSA conference for my comments which are broadly exactly the same.

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