Showing posts from August, 2012

Will The Fed Give Into QE Brats?

Pinchas Landau of the Jerusalem Post reports, We want quantitative easing now : There is something profoundly pathetic about the fact that the dominant concern of the entire financial world for the last two weeks has been what the chairman of the Federal Reserve Board, Ben Bernanke, will say at the annual late-summer gathering of central bankers and senior economic figures, held at Jackson Hole, Wyoming. The words that will issue from Bernanke’s mouth will, supposedly, be critical for the financial markets and for the American and global economies. This is what it has come to, five years into the global economic crisis and four years after the “Lehman moment” that sent the crisis spinning out of control and placed the entire world on the very edge of a major depression. It is axiomatic in mainstream financial circles that: a) the actions of Bernanke and his fellow central bankers at that time prevented the descent into depression; b) his subsequent policies, meaning various

Changing Of The Old Private Equity Guard?

Greg Roth of Reuters reports, Wisconsin jettisons stakes in Blackstone, Carlyle, KKR : The $83 billion State of Wisconsin Investment Board last month sold $1 billion worth of funds, at least three of them managed by publicly listed private equity firms, in part because those firms could no longer demonstrate that the pension fund's interests came first. The pension fund joins a wave of limited partners that are selling interests in funds, including the New York City pension system and the California Public Employees' Retirement System. Many cite a desire to shrink their private equity portfolios to make them more manageable. Wisconsin may be the first to publicly cite a misalignment of interests with public firms as a reason to sell. Wisconsin's private equity adviser, StepStone Group, advised the pension that "select mega buyout firms have embarked on initiatives that reduce the alignment of interests between GPs and LPs, including: asset aggregation and

Annus Horribilis Seals Hedge Funds' Fate?

Kate Kelly of CNBC reports, Paulson & Co. Facing Some Frustrated Investors : Many of Paulson & Co.'s investors hung with it last year despite an annus horribilis in which the company's flagship hedge fund lost 35 percent. But with returns continuing to sag amid a rising equities market, some of those investors are now jumping ship. Citigroup ( C ) announced last week that it was pulling Paulson off its hedge-fund investment platform and planned to take back $410 million in assets. Morgan Stanley's ( MS ) brokerage firm has reportedly had the fund company on watch for possible removal from its hedge-fund platform for months now. And other investors big and small are considering redeeming their capital soon as well, say bank officials and fund of funds managers. During a phone call with clients and employees of Bank of America late Tuesday, Paulson & Co. founder John Paulson said he was “disappointed” about the loss of Citigroup as an investor, accordi

Defusing Japan's Pension Time Bomb?

Kanoko Matsuyama of Bloomberg reports, Wrinkled Workers Help Defuse Japan’s Pension Time Bomb : The thought of retiring after more than four decades made Hirofumi Mishima anxious. Instead of looking forward to ending his three-hour daily commute, Mishima wanted to work, even if it meant another hour on the train. “Keeping a regular job is the most stimulating thing for me,” said Mishima, 69, who spent six months trawling the vacancy boards at a Tokyo employment center after retiring from his $77,000-a-year job as an industrial-gas analyst in 2009. “If I was at home all day, I’d get out of shape and my wife would fret about all the extra chores she’d have to do.” Mishima is one of 5.7 million Japanese older than 65 still in the workforce for money, health or to seek friends -- the highest proportion of employed seniors in the developed world. While European governments struggle to convince their voters to sign up for longer work lives, Japan faces the opposite issue: how to meet the wi

Split in Private Equity Funding?

Gregory Zuckerman of the WSJ reports, Split in Private Equity Funding : The private-equity industry is dividing between haves and have-nots. As investors become pickier and more closely scrutinize recent performance, some big names are finding it hard to raise as much money as they would like. But other buyout specialists are seeing a surprising surge of interest, helping them raise big, new buyout funds. "There's polarization" in the private-equity business, said André Bourbonnais, who oversees the Canada Pension Plan Investment Board's private-equity investments. "It's a tough environment for fundraising for many funds," but those with stellar recent returns are tapping a gusher of cash, he said. Among those dealing with some investor indifference: Wilbur Ross Jr., the billionaire specialist in distressed assets. Mr. Ross's WL Ross & Co. recently closed a $2.2 billion fund, well below its original $4 billion target, despite two year

Are Hedge Funds Playing a Loser's Game?

A follow-up on Friday's comment in defense on the hedge fund industry . Jonathan Ford of the FT reports, The hedge funds are playing a loser’s game : T he financial crisis trashed many reputations in the City of London and on Wall Street. But not those of the financial aristocracy – the hedge fund bosses. While the bankers took it in the neck for the carnage, some of the savvier hedgies – such as John Paulson, who made billions shorting the US housing market – actually saw their stock soar ever higher. Other investment vehicles may have become pariahs but hedge funds have remained stubbornly fashionable. Since 2009, investors have pumped nearly $150bn of net new money into them, allowing the industry not only to rebound from the crisis but to resume its expansion. At last count, hedge funds managed $2.1tn in assets, more than they did on the eve of the financial crisis five years ago. Among the most enthusiastic buyers of hedge fund services have been pension funds. Dr