Shocks & Stares » Hedge Funds H&K\'s Financial & Professional Services Team Blog Tue, 19 Mar 2013 08:00:56 +0000 en hourly 1 FPS’ Friday Fiver Fri, 13 Jan 2012 14:49:54 +0000 David Chambers Hello all and welcome to the second Financial & Professional Services Friday Fiver of the year. Apparently, Monday 16th January is set to be ‘Red Monday’ – the most depressing day of the year. With that in mind, this week’s Fiver at least attempts to lift the gloom a little with the return to blogging of our resident sharp-tongued Apprentice critic, Marie Cairney, who brings us her views on Scottish independence (as a Scot herself). We’ve also got thoughts on Tesco, Mitt Romney, cockney slang and an intriguing new report from Barclays Capital. Thanks to Ed, Jonathan and Ross for their contributions as well this week.

CAMERON THE BRAVE…..In a display of blunt brinkmanship combined with a lesson in ‘being careful of what you wish for’, the PM this week tried to push Alex Salmond into a corner on the future of the UK, most likely to the bewilderment of those around him. Perhaps buoyed by his new-found devil may care – we can go it alone – attitude recently honed in Europe, Cameron decided to raise an issue that didn’t really need to be raised right now. So much so that we were looking for some really bad news that needed to be hidden in the ensuing manufactured maelstrom.

There wasn’t any but then I guess the economic crisis can’t get much worse. Philip Clarke at Tesco might have been slightly relieved for five minutes although not even a divided kingdom could distract from those awful results yesterday (more on that below). While Marie can’t speak with any certainty or authority for a nation on how much they want to stay in the UK (being a deserter for 20 years now), she can say that if there is one thing that Scots don’t like; it is being told what to do by governments they don’t vote for, especially if they are predominantly English. Have the Conservatives learned nothing?  Instead of calling Salmond’s bluff Cameron played right into his tartan-mitted hands and raised the not inconsiderable heckles of 6 million people. Well done. Or as they say up there ‘Gaun yerself Big Man’!

Not that Mr Salmond came out of this glowing. His explanation of why we should wait until 2014 for something he has spent his ENTIRE career asking for seems equally lame. Yes, Scotland may have voted for the time-frame he proposes but the fact that they also voted for a load of other electoral goodies like free prescriptions at the same time kind of makes you think that they weren’t paying that much attention to that bit of the SNP’s manifesto. They are now though and for the first time, Marie has a slight sinking feeling in her stomach that it might actually be considered a serious option for more Scots than ever before. Hopefully common sense will prevail over patriotic, stick- it-in-the-eye-to the English fervour.  This week’s self-created constitutional crisis only confirmed something that has rumbled for some time now; that the people most likely to benefit from independence in Scotland are in fact the English. Increasingly they probably believe it too.

BUBBLES IN THE SKY…..As someone who flirted with the prospect of becoming an architect, but couldn’t stomach the seven years it would have taken to get the qualification, Ed in particular loved this stuff and it’s a great bit of PR – so hats off to BarCap. The Barclays division published a report this week which claimed to have figured out that ‘there is an “unhealthy correlation” between the building of skyscrapers and subsequent financial crashes.’ A look around London certainly could lead you to believe this is absolute fact. Still, Ed loves skyscrapers all the same. Especially this one.

THE BIG PRICE FLOP…..As it’s already been labelled by many City analysts, Tesco’s discounting programme seems to be the main lightning rod for at least the short-term woes of Britain’s biggest supermarket. A £5bn puff of smoke for their shares in one day is certainly not to be sniffed at, but what was far more extraordinary was the candid disclosure by the chain’s CEO, Philip Clarke, about the longer-term problems the retailer has battled since at least 2008 – in a nutshell, diminishing numbers of customer-facing staff in stores, which has led to a poorer ’shopping experience’. Extraordinary that is because Mr Clarke only took over nine months ago, and before that Tesco was run by the previously bullet-proof retail granddaddy, Sir Terry Leahy. In a stroke, his legacy has now become questionable.

As an interesting aside to this tale, it’s worth noting what looks like it might be a PR effort by Tesco to focus the media’s attention ahead of their results on the company’s expansion into India (witness the features on their Indian shops in both The Times and Mail today) – certainly very timely given the recent opening-up of the Indian market to foreign companies, and also a clever way to maintain focus on the Tesco success story. Alas, when your CEO issues a huge profit warning for the year ahead, not even a jolly to India can disguise it.

THE MITTS ARE OFF…..Mitt Romney’s campaign to become the Republican candidate to take on Obama appears to be gathering momentum. However, the former Governor of Massachusetts’ past has come into focus in recent weeks for his role as CEO of Bain Capital, the private equity firm. On this side of the Atlantic, we are regularly being reminded about the problem of career politicians and their lack of business or broader life experience.  We imagine similar criticisms are levelled at those in power in the US.

Romney has the opposite problem. As a man who regularly restructured companies and hired and fired, critics are on the hunt for examples of Romney wielding the axe over the average American. Of course, political debate often operates in a world where normal logic is turned on its head (as this video where his dog is brought in the equation demonstrates) and whatever the truth of the matter Romney is now the man in the spotlight.

GOOD WEEK/BAD WEEK…..Hedge Funds. Loved by few and loathed by many, especially the many who don’t work in them. This week has been something of a mixed bag for them but there appear to be signs of support emerging for the sector which is why they qualify for our Good Week award (hey, it’s been a lean week all round otherwise). On the negative side, The Economist ripped into them for posting fairly average, if not poor returns for investors over the long term. Then again, low returns aren’t exactly a phenomenon confined to hedgies over the past few years. On the plus side however, today’s FT features a compelling argument in favour of retaining and encouraging hedgies in light of RBS’ investment banking demise. The argument is simple – finance is never going to be a stable system, and hence it’s far better to contain the inherent instability in small institutions that aren’t too big to fail i.e. hedge funds. Have a read, and see if you’re convinced.

City Gent David Buik joined Twitter this week

On the Bad Week side, spare a thought for one dieing aspect of the City. According to Reuters, the accelerating change in the social background of the City’s foreign exchange traders and the march of technology is threatening to kill off traditional cockney rhyming slang in the Square Mile. It almost makes you pine for the old days, which is why we’re also celebrating the arrival of veteran City Gent, David Buik, on Twitter this week. We’ll leave you then, with some examples of cockney trader slang at its finest:

‘A prickly’ – the number 2 (as in ‘a prickly pear’)

‘A Lady Godiva’ – the number 5 (rhymes with fiver)

‘An Ayrton’ – the number 10 (Senna rhymes with tenner)

‘A Bully’ – the number 50 (from the bullseye on a dartboard)

‘Bill and Ben’ – Japan’s currency, the Yen

‘The Stokkie’ – Sweden’s currency, the Swedish Crown

‘The Nokkie’ – Norway’s currency, the Norwegian Crown

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FPS’ Friday Fiver Fri, 06 Jan 2012 18:20:08 +0000 Edward Jones This is the last time in 2012 I say this – Happy New Year! I hope you all had a good Christmas but now it’s done let’s look forward to what will no doubt be a memorable year, in many ways, most of which Dr Doom will relish, but many of which are truly historic. Here is our first fiver of the year.

Probably the best recovery of any opposition party in history

So the Labour Party hasn’t had the best of weeks. In fact on Thursday it really didn’t have the best of days. Firstly, Lord Glasman, adviser to Ed Miliband, gifted the tories and the so-called ’Miliband hunters’ in the Labour Party with a stinging critique of the Labour leader’s, err, leadership. Shortly after this excitement, Diane Abbott kicked up a storm over comments she made on twitter, later interrupting an interview on Sky News to take a call from Ed Miliband himself, who proceeded to give Abbott a ‘severe dressing down.’ The icing on the cake was a leaked strategy document script for broadcast (according to Labour HQ), which is worth a read, if you haven’t already (P1 & P2), and yes, it does include those fateful words in the above subtitle.     

Count the cars

No doubt you’re bored of hearing about Europe and the mess our inter-dependent economies now find themselves in. The simple fact of the matter is, the problems are not over, and 2012 is set for more of the same.

Singing a different tune at the end of 2011 however, Sam Jones, the FT’s Hedge Fund Correspondent penned an intriguing piece about the lengths hedge fund managers go to find out what they are investing in. The crux of the article was that all may not be quite as rosy as it seems in the East and that problems may lurk within the Chinese economy. Hedge fund managers have dispatched intelligence gatherers to factory gates to “count the cars” and ensure official figures match realities on the ground.


The article also linked to a video of hedge fund manager Hugh Hendry dating back to 2009 on a jaunt amongst seemingly empty Chinese skyscrapers pondering who is actually going to rent these steel giants. Both the article and the video are worthy of five minutes of your attention.

Top 50 Most Valuable Brands in China

Moving seemlessly from empty skyscrapers to those who might fill them.

Click on the image – Simples!

Old hacks new tricks

After tweeting this in error, Sky’s crime correspondent Martin Brunt gave a quick lesson in how to shut down an embarrassing moment with this swift response.

Tweet that

A precise report which helpfully landed in our inbox earlier today revealed the following:

Who ‘owns’ your company’s Twitter followers?

A US firm is suing a former employee who took 17,000 Twitter followers with him when he left the company. PhoneDog Media is seeking damages of up to USD370,000 from Noah Kravitz after claiming the costs and resources invested in its followers and fans were substantial. Kravitz speaks to TheDroidGuy about the dispute and says the company never asked for the Twitter account back and suggested he could tweet on its behalf. In contrast, PhoneDog president Tom Klein says the Twitter account was created to promote PhoneDog content and to give fans a chance to follow Noah ‘as a representative of the company’. The New Statesman says the case could have far-reaching legal implications regarding the value of social media and its users and how intellectual property law has adapted to the emergence of social media. The outcome could also influence how companies choose to use and invest in such technology in future.

It is an interesting development, and follows (to some extent) the debacle around Twitter account ownership of Laura Kuenssberg, who you may remember, moved from the BBC to ITV taking some 60,000 followers with her. The central question (or one of them) being are you following the tweeter due to the specific interest you may have in them as a person, or because of the inherent brand association they enjoy thanks to their role i.e., were you following Laura Kuenssberg, or the BBC ‘s Chief Political Correspondent?

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