THE FINTAG NEWSLETTER @ 19 October 2009

FINTAG COMMENT

Marriage.

Trading is like being married. It is a contract between an ego and a lifestyle that starts out on the right tracks but can often lead to a hatred of that Bloomberg or Reuters screen and turns into a nasty love hate scenario what-if denial depression. My divorce started at the beginning of this month and my first and only love has been sold on. I sold out and now my soul is selling out too.

My brain is struggling to cope. It is used to constant stimulation. News, market data, lunches and email avalanches. Today it is going to sleep and it is not pleasant. I have never slept more than 6 hours and I am losing an extra 2 hours a day to the sandman. This is not right. I am turning into a welfare addict, a human being who has no responsibility.

Roll on next year when I can get back into the game. Leisure is not what it is cracked up to be.

HEDGE FUNDS GAIN CLOUT ON CAPITOL HILL

deal book

Hedge fund managers appear to have a new degree of clout on Capitol Hill in shaping legislation that will determine how they will be regulated, according to The Boston Globe.

To gain that clout, industry leaders are using a congressman-turned-lobbyist, a major increase in campaign donations and a strategy that relies heavily on advancing their own reform ideas, making them active players in the legislative process and perhaps staving off more rigorous regulation measures.

Fintag says
Just like Investment Bankers, we have learned to lobby and lobby hard. If it involves lunches, then I am in.

DUE DILIGENCE KEY TO HEDGE FUND INVESTING

investment news

The losses of 2007 and 2008 in the [hedge]-fund-of-funds industry showed us that some funds of funds turned out not to be as diversified or non-correlated as they claimed and that some funds of funds were not performing the level of due diligence required to avoid the problems experienced by others. The events of 2007 and 2008 demonstrated that strategies that were supposed to be non-correlated were in fact correlated, and managers were exposed when the financial markets ceased to function. Trades were taking place, but not at rational levels. We believe that many funds of funds were not doing enough research into portfolio management, and as a result, their performance did not deliver the steady results they once provided. Remember, however, that one bad apple does not spoil a bunch, nor does it mean that the whole industry is spoiled. Quite the contrary; the funds-of-funds industry is alive and well, and thriving in the post-meltdown world. That’s the beauty of what the hedge funds industry is all about.

Fintag says
Hasn’t it always been? Well I guess Optimal, UBP, et al thought they knew what they were doing but as usual checking an AIMA DDQ is not really DD is it? DD is having a decent lunch and touching and feeling your hedgie.

A LOOK AT THE HEDGE FUND CHIEF ACCUSED OF FRAUD

dealbook

In 2004, Raj Rajaratnam started a charity for victims of the devastating tsunami that hit his native Sri Lanka. On Friday, Mr. Rajaratnam, a 52-year-old hedge fund manager, was caught in a storm of his own as one of six people charged by federal investigators in a $20 million insider trading scheme.

While he was born in Sri Lanka, Mr. Rajaratnam, founder of the hedge fund Galleon Group, studied engineering at the University of Sussex in England and earned a business degree from the Wharton School, University of Pennsylvania in 1983. He started his career as a lending officer in the technology group at Chase Manhattan Bank before becoming an electronic analyst at Needham & Company, the boutique investment bank.

Fintag says
I wonder how many others didn’t carry out a proper DD on Galleon? Unfortunately Inside Trading is a tricky one to catch. My theory is to be wary of those with the letter “J” in their names. You know, Jabre, The Junk Bond King, Rajaratnam ….

CALIF. BANK BECOMES 99TH IN US TO BE SHUT IN 2009

yahoo

The Federal Deposit Insurance Corp. was appointed receiver of San Joaquin Bank, based in Bakersfield, Calif. It had $775 million in assets and $631 million in deposits as of Sept. 29.

The FDIC said Friday the bank’s deposits will be assumed by Citizens Business Bank, based in Ontario, Calif. Its five branches will reopen Monday as branches of Citizens Business Bank.

Fintag says
Some banks are just too small to survive. Big is best. We all want monopolies and banks with large middle fingers.

EU HEDGIE BILL TO COST £2.9BN

city am

EUROPEAN UNION plans to crack down on hedge funds and private equity houses could cost the industries as much as €3.2bn (£2.9bn), according to the first official report into the directive.

The study, conducted by Charles River Associates for City watchdog the FSA, also said the affected firms would be hit with annual costs of around €311m.

The EU is planning to force fund managers to sign up to a costly registration and disclosure regime, and to adhere to caps on leverage.

Fintag says
We are not worried. Its your Private Equity and Real Estate girls and boys who are worried. What is the point? Yes, to create jobs in Ireland and Malta at the expense of London and hit Investors with more costs. Not that the FSA are bothered – its more regulation work for them.

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