Tuesday, 23 September 2014
Last updated 6 hours ago
Apr 2 2009 | 10:17am ET
In a dark omen for the U.S. government’s toxic assets plan, the world’s largest hedge fund manager says it will not participate in the program to buy mortgage-backed securities from banks.
Bridgewater Associates founder Raymond Dalio, in a note to investors, blasts Treasury Secretary Timothy Geithner’s Public-Private Investment Program as creating a “conflict of interest” for the five firms to be hired to run the assets, the New York Post reports. Just a week ago, Dalio had written investors to say it might join the program. At the time, Dalio raved about the “easy access to leverage” on offer, calling it “a heck of a deal” for buyers.
But he has changed his tune on that count.
“As things now stand, very little leverage is actually being offered via the ‘Legacy Securities Program,’” Dalio wrote in the new note, entitled, “Why We Decided Against Buying in the PIPP and Why We Doubt It Will Be Broadly Subscribed.” He said PIPP was offering just 1-to-1 leverage on the mortgage-backed securities, and that “we aren’t interested in the illiquid loans” for which the government is offering as much as 12-to-1 securities.
Dalio also said that the government plan to hire just five managers to run the toxic assets on behalf of both taxpayers and investors was seriously flawed.
“The managers are clearly in a conflict-of-interest position because they have both the government and the investors to please and because they will get their fees regardless of how these investments turn out,” Dalio wrote, adding that the plan “raises possibilities (or at least perceived possibilities) of them colluding because they all know each other.”
Dalio said the plan also leaves the five managers at risk of attack.
“There will be reasons for politicians to complain and to focus on the five winners to see how they ‘abused the system,’” he wrote.
Sep 22 2014 | 4:15pm ET
"I tell people that everybody likes good news and so if you have good performance that’s wonderful,” explains Mike McKitich, CIO of Petty Endowment, “but it’s the people that want to talk about the bad news or where they drifted and how they came back and how they stayed to their discipline…” that he wants to hear from. Read more…
Aug 25 2014 | 11:21am ET
As many of you know, FINalternatives was recently acquired by the owners of Futures magazine, a firm called The Alpha Pages LLC. Today marks the soft-launch of a new sister site for both publications. As its name suggests, The Alpha Pages will cover all types of alternative investments, going far beyond the more well-known ones such as hedge funds and private equity. Read more…
Credit default swaps brought down the London Whale and cost JPMorgan $6.2 billion. Here is how it happened.