Showing posts with label hedge funds. Show all posts
Showing posts with label hedge funds. Show all posts
Tuesday, January 24, 2012
Tuesday, January 19, 2010
Cadbury Kowtow To Kraft
The board of Cadbury have accepted Kraft's 840p offer.
Cadbury chairman, Roger Carr, is quoted on Citywire:
"We believe the offer represents good value for Cadbury shareholders and are pleased with the commitment that Kraft Foods has made to our heritage, values and people throughout the world."
Doubtless the board would not have given in if they did not believe that they had the support of key shareholders. It should be noted that, when details of an initial offer were made public in September, hedge funds were more than keen to snap up shares in Cadbury.
However, whether all the shareholders are as happy with the deal remains to be seen.
The board were also advised by the banks that they would not achieve a better deal. It should also be noted that, on the assumption that the deal goes ahead, the banking advisers to Cadbury and Kraft will reap a windfall of £150M.
However, the support of the workforce is not guaranteed, given what Kraft's plans may actually be for the future of Cadbury.
Gordon Brown, fearful of his re-election prospects, made a grab for the headlines by saying:
"We are determined that the levels of investment that take place in Cadbury in the United Kingdom are maintained and we are determined that, at a time when people are worried about their jobs, that jobs in Cadbury can be secure."
All very nice and voter friendly, but there is nothing that he can do to stop Kraft doing whatever they wish with the company once they take ownership of it.
Cadbury chairman, Roger Carr, is quoted on Citywire:
"We believe the offer represents good value for Cadbury shareholders and are pleased with the commitment that Kraft Foods has made to our heritage, values and people throughout the world."
Doubtless the board would not have given in if they did not believe that they had the support of key shareholders. It should be noted that, when details of an initial offer were made public in September, hedge funds were more than keen to snap up shares in Cadbury.
However, whether all the shareholders are as happy with the deal remains to be seen.
The board were also advised by the banks that they would not achieve a better deal. It should also be noted that, on the assumption that the deal goes ahead, the banking advisers to Cadbury and Kraft will reap a windfall of £150M.
However, the support of the workforce is not guaranteed, given what Kraft's plans may actually be for the future of Cadbury.
Gordon Brown, fearful of his re-election prospects, made a grab for the headlines by saying:
"We are determined that the levels of investment that take place in Cadbury in the United Kingdom are maintained and we are determined that, at a time when people are worried about their jobs, that jobs in Cadbury can be secure."
All very nice and voter friendly, but there is nothing that he can do to stop Kraft doing whatever they wish with the company once they take ownership of it.
Thursday, March 13, 2008
Darling's Ostrich Budget
Yesterday's budget, presented by Alistair Darling, aside from being tedious and predictable betrayed the fact that Darling and the government are burying their heads in the sand over the meltdown in the world's financial markets.
Stock markets across Europe and Asia are falling this morning as the dollar slumped to new lows, and fears grow that the US Federal Reserve's $280BN liquidity bailout will fail to stop a market meltdown and a US recession.
The Carlyle Capital Corporation (CCC) admitted today that it is likely to be liquidated, after failing to reach an agreement with its lenders. The company defaulted on $16BN of debt, and bankers are seizing its assets.
Several hedge funds with assets of more than $4BN are on the brink of collapse, or had halted withdrawals.
Meanwhile Darling tinkers with the tax on booze and fags, and worries about plastic bags.
Thursday, August 16, 2007
The Silver Lining
Whilst investors and bankers gnash their teeth as they suffer the fallout from the sub prime mortgage fiasco in the US, there is one group of people that will be rubbing their hands - lawyers.
It seems that the liquidity crunch, brought about by the sub prime fiasco, has exposed another problem. That of the ratings applied by so called "professional" investment firms and hedge funds.
I understand that some companies given AAA+ ratings are in fact not quite as "blue chip" as their ratings would suggest, and that money put into these companies has in fact been lost.
The question therefore arises, why were they given AAA+ ratings?
Seemingly the research done by some "professional" companies that provide ratings was not as thorough as it should have been.
The lawyers will have a field day when people wake up to the fact that the ratings are in fact wrong.
As said, there is always a silver lining!
It seems that the liquidity crunch, brought about by the sub prime fiasco, has exposed another problem. That of the ratings applied by so called "professional" investment firms and hedge funds.
I understand that some companies given AAA+ ratings are in fact not quite as "blue chip" as their ratings would suggest, and that money put into these companies has in fact been lost.
The question therefore arises, why were they given AAA+ ratings?
Seemingly the research done by some "professional" companies that provide ratings was not as thorough as it should have been.
The lawyers will have a field day when people wake up to the fact that the ratings are in fact wrong.
As said, there is always a silver lining!
Thursday, May 3, 2007
Prudential Asked For Views on Break Up
The Telegraph reports today that the Prudential's chairman, Sir David Clementi, has received a letter from a fund manager with a "substantial holding" asking him to explain the board's thinking on a break-up.
The shareholder notes that there could be advantages to splitting the business up.
The letter is a sign of the frustration that is felt amongst investors over Prudential's UK performance compared with the performance of Asian/US business.
Market speculation has increased, as it is reported that hedge funds have been buying Prudential over the past few weeks.
The market is trying to push the Pru into demerging, we shall see.
The shareholder notes that there could be advantages to splitting the business up.
The letter is a sign of the frustration that is felt amongst investors over Prudential's UK performance compared with the performance of Asian/US business.
Market speculation has increased, as it is reported that hedge funds have been buying Prudential over the past few weeks.
The market is trying to push the Pru into demerging, we shall see.
Thursday, March 8, 2007
Hedge Funds and Sub-Prime Lenders
From the WSJ:
Live by the subprime, die by the subprime.
Seriously, this highlights an interesting and perhaps difficult problem in the market. Hedge funds don't make any disclosure reports to the SEC. Therefore, we don't know what they are investing in. We also don't know how many hedge funds are investing in the subprime mortgage area or in what concentration.
This means there could be a few more hedge funds out there reeling from the subprime shakeout. This could lead to a wave of redemptions and a ton of problems in the market.
Hedge-fund investors betting on the riskiest home-mortgage loans are learning a difficult lesson: The higher they fly, the further they fall.
Consider the volatility at Second Curve Capital -- a hedge-fund firm run by Thomas Brown, a former Wall Street research analyst -- which recently has been hammered betting on the stocks of "subprime" lenders, which cater to high-risk borrowers.
The two main funds at Second Curve were down 8% and 10% in January -- and at least as much last month. Hedge-fund databases show the funds' losses for February at 12.5% and 14%, though Mr. Brown contends that the performance was comparable to January.
In any case, it is a significant turnabout from 2006, when the Second Curve funds rose nearly 55%. In 2005, Mr. Brown's funds were down 2%, after soaring 60% in 2004. With $600 million under management, Mr. Brown tends to invest in highly concentrated areas of the financial world, accentuating the bumps.
Live by the subprime, die by the subprime.
Seriously, this highlights an interesting and perhaps difficult problem in the market. Hedge funds don't make any disclosure reports to the SEC. Therefore, we don't know what they are investing in. We also don't know how many hedge funds are investing in the subprime mortgage area or in what concentration.
This means there could be a few more hedge funds out there reeling from the subprime shakeout. This could lead to a wave of redemptions and a ton of problems in the market.
Sunday, February 4, 2007
News of Hedge Fund Loss Hits Copper and Zinc Market
From the Economic Times
From Reuters
From the Chicago Tribune:
The commodities markets have become the high-tech stock market of the early 2000s -- a market ripe with speculation. The number of commodities advisers etc... has ballooned over the last 6 years. This is one of the reasons why the commodities markets have moved a great deal higher. There are also strong fundamental reasons for the increase, largely related to the growth of China and India.
One of the main problems with hedge funds is they fly below the investment radar and they are large enough to impact markets. Because there are no reporting requirements, stories of their problems quickly take-on rumor related reporting issues which is not good for anyone.
According to agency reports, the hedge fund Red Kite lost roughly 20% of its $1 bn fund since the beginning of the year up to January 24, ‘07.
Investors began to withdraw their money in panic causing the market to crash, as they feared a repeat of the Amaranth debacle. US-based hedge fund Amaranth Advisors had lost close to $6.6 bn in September ‘06 after poor bets on natural gas on Nymex.
From Reuters
Hedge fund Red Kite, which posted strong gains in 2006, has suffered a roughly 20 percent loss in the first days of January and is now trying to stall investors who want to pull money out, The Wall Street Journal reported.
Citing one unnamed investor who saw an unofficial estimate of the 2-year-old London-based hedge fund's performance in the first few weeks of January, the newspaper wrote that the fund lost about 20 percent for the year.
Red Kite specializes in metals trading.
The newspaper also said the fund had asked investors to approve an amendment that would require investors to give 45 days notice before pulling their money out. Previously they were able to get their money out at the end of each quarter after giving only 15 days notice.
From the Chicago Tribune:
"The fear is that it's an Amaranth," said Michael Guido, director of hedge-fund marketing at Societe Genearle SA in New York referring to Amaranth Advisers LLP, the hedge fund that lost $6.6 billion last year on natural-gas trades.
The commodities markets have become the high-tech stock market of the early 2000s -- a market ripe with speculation. The number of commodities advisers etc... has ballooned over the last 6 years. This is one of the reasons why the commodities markets have moved a great deal higher. There are also strong fundamental reasons for the increase, largely related to the growth of China and India.
One of the main problems with hedge funds is they fly below the investment radar and they are large enough to impact markets. Because there are no reporting requirements, stories of their problems quickly take-on rumor related reporting issues which is not good for anyone.
