Thursday, December 11, 2008
Barclay Roundtable: Bailouts and Privatizations of US Financial Firms Shift Landscape
From the Fourth Quarter, 2008 issue of Barclay Managed Funds Report. The full report also includes 24 hedge fund and managed futures performance ranking tables and in-depth manager profiles. Subscribe. View Roundtables from back issues.
Unprecedented – a word not lost on the investment world recently to describe the global capital turmoil as we have entered a new era of change, fear, illiquidity, selling, and volatility that has not been seen in decades. It may not be easy to exactly pinpoint where it all started, but it’s safe to say that the heart of the problem was, and remains, within the financial sector. Inflated real estate values, a flood of new mortgages, overextended borrowers, highly levered securitizations, and tenuous bank balance sheets. All of the above seemed harmless, and routine, as long as the investment community continued to feed the liquidity machine. But once the music stopped, it didn’t take long for things to unravel and spark a severe chain of events: mortgage delinquencies, defaults, margin calls, bank insolvencies, frozen lending, widespread global market sell offs, and government interventions. Where does it all end? As of the writing of this article, the events have only begun to unfold, and the light at the end of the tunnel remains hazy.
From chaos and irrationality, however, comes great opportunity. Many a hedge fund manager has been uttering this sentiment for the last several weeks. No greater potential, for that matter, may be more prevalent than within the financial sector from whence the trouble started. Battered banks, high yielding REITs, severely discounted mortgage pools, stressed asset management organizations, and more. There is undoubtedly a great deal of profit to be made, but not without sidestepping some landmines.
In order to better understand the current environment and opportunity set within the financial sector, we have assembled a panel of experts with experience trading equities in this troubled area. Our panelists are:
Len Riddell, Martin Currie Investment Management, Ltd.
Nick Watkins, Texas Capital Limited.
Bo Thiara, Peninsula, LP.
The complete article will be available on the BarclayHedge.com website in January. Subscribe to receive each issue of the Barclay Managed Funds Report at it comes out.
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