Public Service? No Thank You…
CNBC is reporting that Chelsea Clinton has left McKinsey Consulting to take a position with Avenue Capital Group, a NYC-based hedge fund partially owned by Morgan Stanley.
Although Chelsea was unavailable for comment, she is no doubt thrilled to increase her compensation while working fewer hours, and we would anticipate her becoming active in events sponsored by the Robin Hood Foundation, given her family’s experience in stealing from the rich to give to the poor.
Although Chelsea has no prior experience in the financial services industry, investors in Avenue Capital are probably hoping that her mother’s cattle-trading acumen rubbed off on her.
Knuckleheads vs Marblehead
Stalingrad
USC/Notre Dame
Ali vs Frazier
Battlegrounds each and all. The past year we have enjoyed a front row seat to another battle that will live in infamy.
Knuckleheads vs Marblehead
First Marblehead is engaged in the nuts and bolts of lending money to college students. It is a specialized niche of lending, and can be extremely profitable if done correctly.
The specialty finance sector has traditionally offered up a bounty of riches to short sellers...Mercury Finance and a host of others come to mind. Apparently the shorts thought this was another zero...until Tom Brown ambled into the firefight.
You remember Tom Brown right? The man who nearly ten years ago had the temerity to call Ed Crutchfield, CEO of First Union (now Wachovia) the “serial diluter” for his questionable acquisition strategy. Tom pioneered Wall Street humor long before Dan Loeb of Third Point LLC arrived on the scene.
Mr. Brown eventually lost his job after criticizing investment banking clients. But he moved on to bigger and better things, founding a hedge fund and the publishing the quirky website bankstocks.com. The site has provided a forum to refute knuckleheads and intelligently discuss the current state of the financial services industry. But back to our story…
The past year and a half witnessed a steep plunge in First Marblehead’s shares followed by a sustained rally. Along the way the longs and shorts have traded catcalls, personal insults and a slew of published research supporting their view. Talking their book fersure.
The latest potshot came from Zach Maxfield, one of Tom’s sharp as a tack analysts and his point man in the battle.
Brown’s lead-in to a letter Maxfield sent to the UBS analyst covering the stocks reads as follows…
Buffett is Buying!!!!!!
Shares of Target gapped open this morning and traded up to a 52-week high as breathless traders piggy-backed a filing made by Berkshire Hathaway reporting a large stake in the company.
But investment legend Warren Buffett probably is not behind the purchases. The 2004 Berkshire annual report explains that GEICO’s Lou Simpson, an astute investor in his own right, manages approximately $3 billion with Buffet’s blessing. And it appears he has the authority or wherewithal to establish positions up to the $300 million mark…
the Oracle of Omaha opines…
Even then, it is not typically I who makes buying decisions. Lou Simpson manages about $2.5 billion in equities that are held by GEICO, and it is his transactions that Berkshire is usually reporting. Customarily his purchases are in the $200-$300 million range and are in companies that are smaller than the ones I focus on.
You may be surprised to learn that Lou does not necessarily inform me about what he is doing. When Charlie and I assign responsibility , we truly hand over the baton-and give it to Lou just like we do to our operating managers. Therefore I typically learn of Lou’s transactions about 10 days after the end of each month. Sometimes, it should be added, I silently disagree with his decisions. But he is usually right.
Given that the position is smack dab in the middle of Simpson’s sweet spot, it is likely investors are chasing Lou’s pick not Warren’s.
Wonder if Warren likes this one.
The Little Book That Could
The diminutive category of “little books” by value investors is getting a bit crowded with the recent release of Christopher Browne’s Little Book of Value Investing. Browne, a charter member of the lucky sperm club, works at the eponymously named firm Tweedy, Browne Company LLC, which is one of the more stable and successful buyside shops on the street. Solid citizens all around in our eyes.
Morningstar offers up an explanation of the investment genre, if you will, practiced by Browne and his slow money group...which reminds us of the Ohio State football teams under Woody Hayes...three yards and a cloud of dust. Not very sexy, but it gets the job done and builds dynasties.
Morningstar concludes with an excerpt from the book, where the silver spoon himself offers up a nugget of advice that, if followed, should keep the benjamin’s flowing to his firm.
Browne states the following…
I prefer funds where the individuals running the fund are also the owners of the investment management firm.
Dutch Trick or Treat
Placido Polanco of the Detroit Tigers turned in a memorable effort in an unmemorable World Series. Not for what he accomplished though. For stinking up the joint.
0 for 17
ING Investment Management’s fundamental equity team might be the Placido Polanco of the buyside. They stink too.
ING’s Dutch parent has done an admirable job establishing a beachhead in the U.S. through its ubiquitous ING Direct online bank and branding via a massive advertising budget that includes this week’s NYC marathon. Deep pockets indeed.
But ING Funds domestic offerings are a bit uneven. The ING Partners Fund family has assembled an all-star roster of sub-advisory relationships. The term “best of breed” usually provokes the involuntary gag reflex in us, but in this case it might be deserved. These outside managers are for the most part legit.
While ING’s quantitative equity products also seem to pass muster despite recent personnel turnover and client defections, ING’s NYC-based fundamental equity team seem to be giving their fund’s investors more of a trick than a treat.
After a spate of acquisitions and the subsequent integration efforts that combined the investment professionals of the Pilgrim Funds, Furman Selz and Aetna among others, you are left with what unhappy investors could only describe as a work in progress. Although ING’s newly-arrived small cap team are getting the job done, the larger-cap offerings that constitute the bulk of the assets run by this motley-NYC based-crue are posting bottom quartile year-to-date numbers with no turnaround in sight.
