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And That’s The Week That Was, the Brounes & Associates market/economic commentary for the week ended May 2, 2008.

Wow. Talk about a busy week.  With Exxon-Mobil experiencing the second best corporate quarter EVER (and still disappointing investors), earnings season moved closer to completion and the results have not been half-bad (at least, not as bad as many anticipated).  Profits from overseas have been the savings grace for many multi-national companies.  Likewise, news about the economy seemed to invigorate investors as reports on labor and manufacturing depicted continued sluggishness, BUT the data beat most analysts’ more dire forecasts.  The Fed cut rates for the seventh time since 2004, but indicated that the move would be its last for a while (barring any unexpected developments).  The dollar rose from its recent doldrums; oil fell from its all-time highs; and investors went bargain shopping for yet another week.

Next week finds little in the way of significant earnings/economic data. Hopefully, no news is good news.   

Coming up in the week ahead:  ISM - Services (Monday), Consumer Credit (Wednesday), Trade Balance (Friday)

corporate profits, dollar, earnings, exxon mobil, oil

Chicago, IL (PRWEB) April 22, 2008 — Hedge Fund Launch.com sees a difficult environment for start up and emerging hedge funds over the next several months. Fall out from the U.S. credit crisis, losses from “blue chip” hedge funds and a slowing economy have caused many allocations to hedge funds to cease. Hedge Fund Launch.com offers some insights to hedge fund managers trying to raise capital in this environment.

Hedge Fund Launch.com Core News

Industry performance: Returns  have not been great so far in 2008 and many believe this may continue until the U.S. credit crisis and economic landscape improve. This is causing a lot of previously earmarked hedge fund allocations to remain on the sidelines.

Read More

hedge funds, start up hedge funds

This is good stuff and the kind of thing the mainstream press should note about the hedge fund industry: there is a lot of philanthropy and generosity!

 Last night, corporate sponsors, New York Knicks alumni and NYC high school basketball players came together for a night of basketball at the 2008 11th Annual Net Gain Tournament hosted by Youth, I.N.C. The tournament, which was held at the Park Avenue Armory in New York City, raised money for the organization Youth, I.N.C. Youth, I.N.C.’s Net Gain Program provides court time for high school basketball teams whose schools do not have gymnasiums and gives athletes the opportunity to participate in projects that help improve their communities. Over the past 11 years, the event has raised over $3 million and has provided basketball court time to more than 2,000 NYC high school students. More than $700,000 was raised for last night’s event.

The event kicked off with the second annual Hedge Fund vs. Private Equity All-Star game, featuring some of the most prominent names in the Hedge Fund and Private Equity community and coached by New York Knicks legends Allan Huston and Walt Clyde Frazier.  For the second year in a row, the Private Equity team beat the Hedge Fund team - final score was 32-24.

Additional tournament details and stats can be found directly below. Photos from the event can also be downloaded directly from: http://www.imagelinkphoto.com/youthinc.

2008 11th Annual Net Gain Tournament Stats:

Private Equity vs. Hedge Fund All-Star Game - For the second year in a row, Private Equity beats Hedge Fund 32-24!!

*    Private Equity team led by Ted Virtue, MidOcean Partners and coached by Allan Houston, New York Knicks alumni
-    Ted Virtue, MidOcean Partners (Captain)
-    Rob Berner, CVC Capital Partners
-    Ron Blaylock, GenNx360
-    Rick Schnall, Clayton, Dubilier & Rice
-    Jacob Capps, Lion Capital
-    Luke Long, Thomas H. Lee Capital
-    Rick Schifter, Texas Pacific Group
-    Michael Beal, Morgan Stanley

*  The Hedge Fund Team included:
-  Marc Lasry, Avenue Capital Group (Captain)
-  Ryan Renteria, Karsch Capital
-  Andrew Fishman, Schonfeld Group
-  Funsho Allu, AIG Investments
-  Steve Cronin, Schonfeld Group
-  Kyle Neptune    
-  Kevin Draughon

Half court shoot-out winner - Darius Garland from Jacqueline Kennedy Onassis High School

Round-robin tournament (24 teams playing on 6 courts throughout the night) final championship game:

*   Wachovia vs. Bloomberg & Crestview
*   WINNERS: Bloomberg & Crestview
*   Final score 26 - 22

hedge funds, new york knicks, philanthropy, private equity

Attached/linked please find And That’s The Week That Was, the Brounes & Associates market/economic commentary for the week ended April 18, 2008. Enough with the negativity. No more “gloom and doom”.It’s time for a newattitude. Bring back the bulls.  Apparently folks simply have had enough (at least, for one week that is).  While this week’s earnings reports were lackluster at best (for the most part), investors rejoiced that no new surprises surfaced.  Financials reported lower profits (and some losses), though the news came in as expected and the newfound sentiment seemed to be that the “worst of times” has now passed.  In fact, reports from a few “new economy” techs (IBM, Google) and “old economy” companies (Caterpillar) surpassed expectations and added to the euphoria.  Even some relatively weak economic releases couldn’t put a damper on the optimism.  Here to hoping the new “trend is your friend” (and we can all use a new friend these days). 

Coming up in the week ahead:  Existing Home Sales (Wednesday), Durable Goods Orders (Thursday), New Home Sales (Thursday)

earnings, google, IBM, investors, new economy

If you have your own family office or you work for one, I think you should take notice of this new association.  Not only is it very timely, I think their web site is very informative and well laid out.  In corresponding with the founder and CEO, Angelo Robles, he let me know that  The Family Office Association desires to engage exceptionally successful individuals and families towards their perfect vision, one that captures their heart and empowers them to take action on their family, business and philanthropic passions – secure in knowing that an elite advisory group constantly oversees and coordinates their affairs. The Family Office Association, compromised of select and exceptionally successful individuals, families, foundations, family offices, family firms and elite advisors – organizes exclusive world-class: events, speakers and resources.

They have a very nice page about alternative investments with accompanying resources.  It is worth checking out.

family office, hedge funds, wealth

Attached/linked please find And That’s The Week That Was, the Brounes & Associates market/economic commentary for the week ended April 11, 2008. Welcome to 1st quarter 2008 earnings season and consider yourself warned by Thomson Financial (and virtually everyone else) not to expect much.  (And with those low expectations, Alcoa, UPS, and GE did not disappoint.)  While airlines struggle to afford the surging gasoline prices, management also decided they probably should start abiding by certain FAA regs.  Alan Greenspan became the latest culprit in the ongoing financial crisis “blame game” as many of those same folks who proclaimed him a genius a few years ago are now taking their shots about how he ran the Fed.  (Take note, Dr. B. they can turn on you quickly.)  Yahoo, Microsoft, Google, News Corp and Time Warner all talked about ways to revolutionize the Internet ad and search games (and who should buy whom in the process).   And, through it all, investors seemed to take it all in stride (until Friday that is).   

Coming up in the week ahead:  Retail Sales (Monday). PPI (Tuesday), CPI (Wednesday), Housing Starts (Wednesday), Industrial Productions (Wednesday), Leading Indicators (Thursday)

earnings, FAA, google, greenspan, microsoft, yahoo

Attached/linked please find And That’s The Week That Was, the Brounes & Associates market/economic commentary for the week ended April 4, 2008.  So the books on the dismal 1st quarter 2008 are officially closed (and not soon enough) and investors seem intent on moving past the recent negativity. Though financial (more write-downs) and economic (weak housing, manufacturing, services, labor) news highlighted the week, the markets moved higher as investors looked at the carnage of the past three months and found some value in equities.  Bernanke stood up nicely to the heat as he was grilled by a finger-pointing Congress over his role in the JP Morgan/Bear Stearns transaction.  Paulson set out to reform the entire financial regulatory system, though he knows he will be long since retired (or back on Wall Street) before any of his proposals are approved/rejected.  The new quarter is off to the races and many investors believe the worst of the news is behind us.  Let’s hope the newfound optimism lasts (despite the  continued talks of recession.  Sorry, just a friendly reminder). 

Coming up in the week ahead:  Construction Spending (Tuesday), ISM - Manufacturing (Tuesday), ISM - Services (Thursday), Unemployment Rate (Friday), Nonfarm Payroll Additions (Friday)

bear stearns, bernanke, congress, JP Morgan, paulson, wall street

Congratulations John and Suzy Taxpayer, you are now the proud owners of Bear Stearns.  Yes, this could be you should Bear end up filing for Chapter 11 over the next couple of days.  This looks likely as the heroics by JP Morgan and the Federal government has not been able to completely stop the bleeding.  For the tax payer, the likely result is losses as the government will not want to carry these assets on the books and will look for the quick fire sale.  What does this mean for the hedge funds?  A couple of good things: 1) hedge funds will be the likely buyers of these assets at significant discounts and 2) one, if not more of the big boys will be invited to manage and facilitate the sale of the assets. 

My money is on The Blackstone Group given the media’s recent attention to their enviable liquidity position and ability to raise $10 billion fairly effortlessly for their latest real estate fund.  So as a taxpayer (or burgeoning hedge fund manager) how do you ease the pain and potentially participate in all of this?  Pick up a few shares of The Blackstone Group (ticker: BX)* and ride the wave of their liquidity and strategic positioning.  Alternatively, play the part of the activist investor: shoot some e-mails to your congressmen, Fed governors, Bear Stearns execs, and other related players and let them know that we are watching and that we want a fair and open market bid (or ongoing asset management process) that yields the best possible return on our investment.

bail out, bear stearns, start up hedge funds

Attached (linked) please find And That’s The ‘Quarter’ That Was, the Brounes & Associates market/economic commentary for the period just ended March 31, 2008.  As go the first five trading days, so goes the entire year. (Hopefully that is not true this year.)  As goes January, so goes the entire year.  (Hopefully that is not true this year either.)  When an original NFL team wins the Super Bowl, the markets move higher.  (Didn’t anyone on Wall Street watch the Giants beat the Patriots?)  With all kinds of theories abound, the markets continued to take their negative cues this quarter from the subprime mess and ongoing credit crisis.  With more record write-downs (and lots of finger-pointing), the major equity indexes all tumbled and fixed income became the beneficiary of a flight-to-quality.  Bernanke put on his thinking cap and got pretty darn creative to prevent a further escalation of the “challenges.”  During the quarter, we said goodbye (and good riddance) to one-time financial giant Bear Stearns (whose investors may have gotten the raw end of the “bailout” deal.  While most analysts now anticipate a recession, a few eternal optimists believe that the second half of the year will bring a nice rebound (both in the economy and the markets). On that note, has ESPN-Classics started replaying this year’s Super Bowl yet?

bailout, economics, investments, subprime

The Financial Times recently ran a story titled “‘Unbelievable’ chance for hedge funds” and opened with:

“Hedge funds and institutional investors are starting to launch distressed mortgage funds to take advantage of an “unbelievable” buying opportunity, but they say they are running into resistance from risk-averse prime brokers”.

From where I’m sitting, the prime brokers are only a fraction of the problem.  The real road block is underlying investors.  The investing world has once again thrown on the blinders and after selling all of their positions into an illiquid market will sit on cash until it is too late, or worse, they are chasing liquidity down another rabbit hole - commodities. The supposed “long-term” investor has once again shown their true colors at the first sign of trouble and continues to lend support to the “hot money” moniker so feared by all serious hedge fund managers. 

My advice to the managers: keep the lock ups coming; it’s the only way to effectively manage your business and keep the little leaguers from fowling up the works.

hedge funds, investing, prime brokers