"Huge bank" knocks on Bear Stearns' door
From New York Post and From Barron's
A "huge bank" approached Bear Stearns' CEO James Cayne a few days ago wanting to explore a deal, the paper reports. Cayne failed to provide a name or say what what sort of transaction was discussed in his talks to the paper. He added that Bear Stearns wasn't in talks with anyone and that "They are exploratory with us; I'm not exploratory with them." Cayne has recently told analysts he would sell the company if the price were right. The right price is reported to be no less than $120 per share. Names mentioned in the article as possible suitors include: Chase Manhattan, Lehman Brothers, Bank of New York, or possibly a foreign bank. Meanwhile, Barron's writes that Cayne wants too much for a dull business. "Don't bet on it," says the article.
Putnam, Fidelity mull hedge funds
From Boston Globe
Several Boston-based fund companies, including Putnam's T.H. Lee, Putnam Capital arm and Fidelity Investments are considering hedge funds to follow in the footsteps of MFS Investment Management. Boston-based MFS launched a hedge fund on July 1 which it is offering to pension funds and endowments. The paper adds that a private meeting of hedge fund managers and institutions was held in Boston July 7 to discuss the disclosure issue. Pension clients typically want full-disclosure of portfolio holdings while hedge fund managers want to keep holdings quiet.
Liberty shuffles managers
From Boston Globe
Liberty Financial Cos. Inc., has replaced four managers who used a quantitative value approach. The four are: Peter Wiley, manager of the $1.54 billion Liberty Fund, Mark Stoeckle, manager of the $1.16 billion Liberty Growth & Income Fund, Jim Haynie and Mike Rega, comanagers of the $709.7 million Liberty Select Value Fund and the $409.4 million Liberty Small Cap Value Fund. A Liberty spokesperson is quoted as saying that ''These steps we have taken are designed to sharpen the focus of our value-style equity management group, and to best deploy the resources of that group. Rather than continue to follow multiple approaches toward value investment management, we have decided to concentrate our resources on delivery of high-quality core value investment management.''
Why is MeVC on sale?
MeVC, and its large discount to its NAV, is the subject of a profile in the paper. The closed-end fund offered by Draper Fisher Jurvetson Fund I invests in non-public securities and promises to let "ordinary" investors into the venture capital game. Currently meVC trades at a 17.8% discount to its NAV. The article says one reason for the discount may be that "the fund invests in companies that can't be valued at regular intervals, and that only time will tell if those investments will do well." Another possibility is that John Grillos -- not Draper and his partners -- manages the fund and DFJ partners have none of their own assets in it. Or, it could be a result of the fund's structure. The fund charges a 250 basis point management fee and 20% of the fund's gains.
Did Janus' spinoff blow $7 billion?
Kansas City Southern shareholders lost $7 billion by mishandling the spinoff of Stilwell Financial, claims the author of this article. The calculation was based on a comparison of the price Bank of America's paid for Marsico Capital Management and the valuation of the Stilwell spinoff. The article claims that "by not spinning off the Janus funds separately and by using the innocuous Stilwell name rather than capitalizing on the high-profile Janus brand, the KSU and Stilwell shareholders lost about $7 billion of the inherent $16 billion value in the Janus organization." A large amount of this lost value resulted from investors "not-investing-in-Janus-but-investing-elsewhere," according to the article.
Both longs and shorts lose at ProFunds
O.K. It makes sense that ProFunds UltraOTC is down 26% this year since, but how come ProFunds UltraShort OTC is down 38.1%? This is the question the fund company is now having to explain. Oh yes, the Nasdaq itself is down just 2.4% for the year to date. The explanation is that the funds' returns are compounded daily, not over a longer period of time.
Who is Steve Wallman?
Steven Wallman is on his way to joining Charles Merrill, Charles Schwab, and Edward Leffler in the pantheon of mass-market financial ground-breaking, says Barron's. Wallman is the CEO of FOLIO.fn. If you want to know more about Wallman, his company, and the risk it presents to the fund business this article is a good place to start.
The idea for the service was based on Wallman's observation that there were only two primary ways for people to invest over the past century, through brokerage houses or pooled investments like mutual funds and unit investment trusts. His idea was to use the Net to create third way. So far he has raised more than $100 million from investors. Still, he retains his humilty. Asked if he will eat the lunch of the fund industry he replied: "They have awfully large lunches. I believe it will be quite some time before we get through the appetizer."
First Chinese open-end fund announced
From Wall Street Journal
Three of China's ten asset-management firms are launching an open-end mutual fund. The launch will be possible when Chinese regulators complete guidelines for open-ended funds. The paper reports that the new funds are expected to begin operating in the fourth quarter or early next year. All current Chinese funds are closed-end funds.
Stay ahead of the news ... Sign up for our email alerts now