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People Moves: Deutsche builds investment team; Portfolio manager leaves Schroders
Asset Management
<p>Deutsche builds asset management team. Hilary Aldridge and Alex Sloane have joined Deutsche Asset &amp; Wealth Management as equity investment specialists in its UK active asset management business. Aldridge most recently worked as a fund of fund manager at Barclays Global Investments Solutionss. Sloane was an equity analyst at Societe Generale in London. Michael Keough and David Hanlon also joined the firm's institutional global client group in the Americas. Hanlon comes to the firm from F-Squared Investments, and Keough joins from BNY Mellon's investment management unit. Reuters</p> <p>Portfolio manager leaves Schroders. Rosemary Banyard will be departing Schroders in March after joining the firm in 1997. For the last 17 years, Banyard has worked closely with Andy Brough to head the firm's mid cap funds. Banyard says she is not joining another firm, but is leaving to spend more time with family. CityWire</p> <p>Sierra Investment Management poaches from Mercer. Sierra hired Spath as CIO, reporting to co-founders Dave Wright and Ken Sleeper. Spath most recently worked for Mercer Advisors, but has also worked for Franklin Templeton Investments, RSF Capital Management, and Fidelity Investments.</p> <p>JP Morgan insurance lead moves to Neuberger. Neruberger Berman has hired Matthew Malloy as global head of insurance solutions. Malloy most recently worked as global head of insurance solutions and advisory at JP Morgan Asset Management. Malloy has previously worked for Goldman Sachs and UBS Investment Bank. Reuters</p> <p>Pioneer Investments promotes portfolio manager. Chin Liu has been named portfolio manager of Pioneer's diversified high income trust. The trust was found in 2007, and run by Andrew Feltus, Jonathan Sharkey, and Charles Melchreit. Liu joined Pioneer in 2007 as a portfolio manager for fixed income.<br /> Photo: ©iStock.com/ooyoo</p>
Short-selling: Karl Loomes picks the six hottest US-listed stocks
Hedge Funds
<p>&nbsp;</p> <p> SunGard's Astec Analytics looks into short-selling activity.</p> <p> This week’s top pick, from a securities lending perspective, is Amazon.com, Inc. (NASDAQ:AMZN).<br /> Other stocks that are seeing substantial short-selling activity include ZIOPHARM Oncology Inc. (NASDAQ: ZIOP), Chesapeake Energy Corporation (NYSE: CHK), Juno Therapeutics Inc (NASDAQ: JUNO), Fitbit Inc (NYSE: FIT) and GoPro Inc (NASDAQ: GPRO).</p> <p>&nbsp;</p> <p>SunGard's Astec Analytics provides intraday short-selling market data via securities lending analytics. In a recent report sent to clients, the firm shared a “roundup of some of the hottest stocks from a securities lending perspective.”</p> <p>Below is a look at Karl Loomes’ list of top stocks in the Americas from a security lending perspective.<br /> Amazon<br /> After two consecutive weeks occupying the front-runner spot, Apple Inc. (NASDAQ: AAPL) was displaced by Amazon. The online retailer recently banned the sale of Apple and Google streaming on its website, suggesting they don’t “interact well” with the Amazon Prime service, and announced its intentions to extend its one-day delivery service in the U.K. to include frozen and chilled food items – which led to some speculation around increasing competition with and from online supermarkets.</p> <p>The report explained, “The news helped bolster its stock in the cash market, while from a sec lending perspective Astec’s data hints at some growing optimism on the part of short sellers, with having fallen 26 percent during September.”<br /> ZIOPHARM Oncology<br /> Escalating one position in the list this week is ...</p> <p>Full story available on Benzinga.com<br /> Photo: Rob Hurson</p>
Commodities ETFs want to get back into your portfolio
Asset Management
<p>&nbsp;</p> <p>During the halcyon days of quantitative easing, dollar weakness and inflation expectations, commodities exchange traded products were hits. Just five years ago, there was $125 billion in assets under management across commodities exchange-traded funds and exchange traded notes (ETNs) and there was a time, albeit brief, when the SPDR Gold Trust (ETF) (NYSE: GLD) was the largest ETF in the world.</p> <p>Over the past year, commodities ETFs have been beset by dismal performances and massive outflows, prompting some investors to question the value of commodities as core portfolio holdings, even in modest allocations.<br /> What Commodities Are Doing<br /> While the PowerShares DB US Dollar Index Bullish (NYSE: UUP), the U.S. dollar index tracking ETF, has climbed 9.3 percent over the past year, commodities ETFs have been decimated. For example, GLD and the iShares Silver Trust (ETF) (NYSE: SLV) have posted an average loss of 6.5 percent, while the United States Oil ...</p> <p>Full story available on Benzinga.com<br /> Photo: Sajid Pervaiz Fazal</p>
VCs tech investments trump exits for the first time in years
Venture Capital
<p>&nbsp;</p> <p>Investors are now pumping more money into US startups than they are getting back in the form of exits.</p> <p>According to a report by CBInsights, total funding for this year has reached $42 billion, about $16 billion more than the $26 billion generated through exits.</p> <p>What's more, the VC investment total for the year to date has already surpassed that of 2014, and is more than double that of the 2010.  Exits meanwhile are less than a fifth of what they were in 2012.</p> <p>Fluctuations in exits and investments are to be expected over a long period. VC investments typically have a 5-year lifespan, while the fund life-cycle is anywhere between 8-10 years.</p> <p>Many of the VC funds making exits and returning capital to investors during 2012 have since returned to the market with follow-on funds. This means a lot of those VCs exiting investments in 2012 have raised and are spending the next three to four years deploying capital.</p> <p>That said, there are other trends to consider. Companies are staying private longer and funding rounds are getting larger, pushing up private market valuations. The upshot is that the funding aggregate is exceeding exit valuations faster -- even if we witness a number of large liquidity events in the fourth quarter.<br /> Photo: Indigo Skies</p>
Value investing with legends – Lei Zhang’s lecture at Columbia Business School
Asset Management
<p>Value Investing With Legends – Lei Zhang's (Hillhouse Capital) Lecture At Columbia Business School by Zong Z. Peng: Art, Travel, Entrepreneurship, and Investing:</p> <p>In the high flying world of investing, Lei Zhang maintains a relatively low profile. Yet since he was seeded by David Swensen of Yale Endowment with $20 million in 2005, he has achieved a ~40% compounded annual return (28x not adjusting for inflation), making him one of the best performing investment managers. To put it into perspective, Warren Buffett has achieved a compounded annual return of ~22%, albeit for the past 50 years!! Today, Lei Zhang’s Hillhouse Capital, named after a street nearby Yale where Lei received his MBA and master’s in public policy, manages ~$18 billion. Thought not just focused on tech, Lei is best known for backing several most successful Chinese internet entrepreneurs and start-ups (e.g. Tencent, JD.com). On April 29th, Lei paid a visit to the “Temple of Value Investing” Columbia Business School to share his investing and life lessons.</p> <p>For those who crave for brevity, here is the essence of the lessons that Lei Zhang shared:</p> <p> Being a long-term investor gives you a big advantage from the starting line.<br /> Do deep fundamental research, make few bets instead of keeping on chasing ideas. This way you simply your life and your business.<br /> Hillhouse invests in changes and strives to help create value through entrepreneur-like thinking and problem solving. “We are entrepreneurs so happen to be investors”<br /> Spend quality time with quality people, doing quality things. Hopefully part of the outcome is making money.<br /> Stay connected to reality and everyday life, do not become a victim of your own success.<br /> Four most important traits in people that Lei looks for: intellectual curiosity, intellectual independence, intellectual honesty, and empathy.</p> <p>&nbsp;</p> <p>For those who want more details and articulations, read on:</p> <p> Investment Strategy</p> <p> Flexibility – Lei only had one investor in his fund when starting out Hillhouse – David Swensen from Yale Endowment seeded Hillhouse with $20 million. He could have raised more money with Swensen’s endorsement but did not. He wanted to start with a solid foundation, a strategy that allows him 100% flexibility to invest in whatever he believes in and is passionate about, be it public equity, venture capital, or private equity. In Lei’s words “it’s not about the format but about the essence.” To him the essence is to invest in companies that he thinks make sense, truly believes in, run by people who he respects and are open-minded, and could compound capital over a long stretch of time no matter what stage the company is in. In terms of his investment team, Lei believes in a generalist model and prides himself on being one of the analysts.</p> <p> Long Term Orientation – Hillhouse is a long-term investor. Lei thinks that when you have a long-term orientation, from day one you have a huge advantage over most people – it’s what he calls free option value of time arbitrage. His view on the Chinese stock market at the time of thi</p>
Startup heavy-hitters in Indonesia launch $150 million fund for early stage companies
Venture Capital
<p>Three top startup investors are putting together a new band with support from the Indonesian family conglomerate Lippo Group.</p> <p>The new firm, Venturra Capital, will target Series A and B deals in Southeast Asia raising between $2 million and $5 million -- but will also consider seed candidates.  This will be an interesting group to follow -- the founders have impressive credentials: Stefan Jung is co-founder of German incubator Rocket Internet; Johny Riady, was a director at Lippo Group, and Rudy Ramawy was in charge of Indonesia for Google.</p> <p>Tech in Asia reports the fund has already raised $15o million, mostly from  Lippo. The fund is successor to Lippo Digital Venture (LDV) - Lippo's corporate VC arm where Ramawy was managing partner.</p> <p>Venturra has absorbed LDV's portfolio of investments previously made off of Lippo's balance sheet. However, Lippo's role will be restricted to limited partner.</p> <p>Between them the founders have an investment track record the covers start-ups such as GrabTaxi, Traveloka, HappyFresh, Bridestory, Munchery, and MatahariMall. The fund will focus on e-commerce, fintech, and healthcare.  Jung - who last set up Monk's Hill Ventures' Jakarta office - says the firm is open to earlier stage investments:<br /> "We are considering ourselves agnostic in terms of stage preference. We are still keeping ourselves open to early stage and seed rounds. If we’ve known the entrepreneur for a while and want to support them from day one, then we will surely consider investing.”<br /> Photo: The Diary of a Hotel Addict<br /> &nbsp;</p>
Will the Fed lift rates this month?
Hedge Funds
<p>Here’s an intriguing thought. Yra Harris, the low-key futures vet who was featured in Steven Drobny’s “Inside the House of Money,” recently opined that he thinks the Fed is going to lift rates this October.</p> <p>Why? Well, apparently San Francisco Fed President John Williams telegraphed the move in his latest speech:<br /> “Why do I think the rate increase is coming? Williams gave three hints in a speech he delivered today, ‘The Economic Outlook:Live Long and Prosper.’</p> <p>1. ‘In addition, an earlier start to raising rates would allow us to ENGINEER a smoother, more gradual process of policy normalization. That would give us space to fine-tune our responses to react to economic conditions. In contrast, raising rates too late would force us into the position of a steeper and more abrupt path of rate hikes, which doesn’t leave much room for maneuver. Not to mention, it could roil financial markets and slow the economy in unintended ways.’</p> <p>2. ‘I am starting to see signs of imbalances emerge  in the form of high asset prices, especially in real estate, and that trips the alert system;’ and</p> <p>3. ‘When unemployment was at its 10 percent peak during the height of the Great Recession, and as it struggled to come down during the recovery, we needed rapid declines to get the economy back on track. NOW THAT WE’RE GETTING CLOSER, THE PACE MUST START SLOWING TO MORE NORMAL LEVELS. LOOKING TO THE FUTURE, WE’RE GOING TO NEED AT MOST 100,000 NEW JOBS EACH MONTH.’ [emphasis all mine]”<br /> The man has a point. Williams’ speech, while littered with Fed speak meant to offset Yellen’s post-decision presser, is absolutely hawkish at its core. And the fact that he’s one of the FOMC’s members should make it something more of note. Timing however was not quite apparent, though Harris does have a compelling reason for October:<br /> “I say October because I believe December is too late as year-end funding issues will cause unwanted volatility in the REPO MARKET.”<br /> It’s still a little too early to call though. Federal fund futures are still giving a 2015 hike the thumbs down, but the FOMC minutes are coming up tonight and that could change the entire ball game. Stay tuned.<br /> Photo: Anne-Lise Heinrichs</p>
PLDT builds SoftBank-style web of influence
Venture Capital
<p>&nbsp;</p> <p>The recent decision by PLDT (Philippines Long Distance Telephone Company) to launch its own venture capital unit is the latest in a series of moves by telecoms giant that are reminiscent of its larger Japanese counterpart SoftBank.</p> <p>Just as SoftBank has grown its internet and media empire by drawing on an expanding global web of early stage investments, PLDT is also turning to venture capital to help build its own kingdom.</p> <p>The new investment unit - PLDT Capital - will not be based in the Philippines but instead it will be based in Los Angeles. But its remit will be to try and tap innovative Silicon Valley and Southeast Asia-based startups that can contribute to its own ecosystem. Winston Damarillo, Managing Director of PLDT Capital, had this to say:<br /> “The PLDT Group serves more than 70 million mobile and internet customers in the ASEAN region,”In addition to investments, PLDT Capital aims to become the gateway for the most promising startups to expand their opportunities to the fast growing digital consumers in the ASEAN region.”  <br /> This is by no means its first foray in venture capital. The firm made headlines earlier this year when it bought a 10% stake in Rocket Internet, the German incubator and venture capital investor that is currently driving an e-commerce revolution in Southeast Asia and other emerging markets globally.</p> <p>The firm also recently swallowed up Singapore's Paywhere, the start-up  behind TackThis, an ecommerce platform that operates on a software-as-a-service (SaaS) model, through its digital innovations unit: Voyager Innovations.</p> <p>Corporations using venture capital investments to tap innovation is neither new nor unique. That said, the way PLDT (a telecoms company like SoftBank) is using VC to broaden its global influence and access new verticals - notably e-commerce - shares a few parallels with the Japanese giant.</p> <p>Of course PLDT has nowhere near the size, or the war chest, of a firm like SoftBank. Perhaps PLDT looking for that one big hit in same the way SoftBank had its home run with Chinese e-commerce Alibaba. Setting up shop in Silicon Valley certainly increases their chances of finding it.<br /> Photo: Rod </p>
Bill Gates, Li Ka-shing take a second helping of fake burger maker
Venture Capital
<p>Impossibe Foods, the startup famous for creating a vegan cheeseburger that actually "bleeds", has whet the appetites of two of the world's wealthiest men - Microsoft co-founder Bill Gates and Hong Kong tycoon Li Ka-shing - and raised a fresh $108 million Series D round of funding.</p> <p>The round was led by UBS and also included Viking Global Ventures, the firm said. Exisiting investors Gates and Li - who got involved via  his VC firm Horizon Ventures - also re-upped for the round alongside Khosla Ventures.</p> <p>Impossible makes plant-based foods that look and taste like their meat or dairy equivalents but take fewer resources to produce. It is a part of cluster of food start-ups that have emmerged in recent years looking to disrupt unethical meat and diary alternatives.</p> <p>This isn't Li's first foray into hi-tech food. His Horizon Ventures also backed Modern Meadow, a start-up that experiments with bioengineering animal cells to make cruelty-free leather and meat products.</p> <p>The firm also backed Just Mayo maker Hampton Creek, as did Khosla Ventures.  Hampton is looking provide a range of dairy-free alternnatives to egg-based products. Samir Kaul, partner at Khosla,said:<br /> "To achieve a sustainable future, we need to further invest in companies like Impossible Foods that minimize the environmental impact of our food system through innovation without compromising taste,"<br /> Photo: stu_spivack<br /> &nbsp;</p> <p>&nbsp;</p>
The case for gold to protect clients’ wealth shorting the Federal Reserve
Asset Management
<p>“I’ve never let my guard down by saying, I do not need to be hedged” - Paul Singer</p> <p>Preservation of clients’ wealth is the most important fiduciary duty guiding investment managers. This obligation is under-appreciated in the midst of financial asset bubbles when recency bias blunts the need to sacrifice potential gains in exchange for protection against losses. Inevitably, this is made painfully clear when a bubble pops and those once-popular assets lose value and the manager’s clientele suffer. As valuations are stretched on the back of reckless Federal Reserve monetary policy and poor economic fundamentals, caution is paramount.</p> <p>This article presents the case for an asset that will help managers protect their clients and uphold their fiduciary duty owed to them. I’ll explain why gold is a powerful hedge that will protect your clients’ wealth, but first I’ll look at the history of trade and currencies and how gold evolved to become a global store of wealth.</p> <p>Gold - ?g?ld AU #79 - A heavy yellow elemental metal of great value</p> <p>Gold is neither a claim on the promise of future earnings like a stock, nor a liability owed by a public institution or a private party like a bond. It also lacks the full faith and credit of most governments that a currency has. Gold serves little industrial purpose, unlike all other commodities, and is most commonly revered as a shiny metal used in ornamental display or jewelry.</p> <p>But it is precisely these failings that make gold a unique and valuable asset and one that can play an important role in portfolio construction.</p> <p>Gold is one of the few stores of value that is limited in supply, transportable, globally appreciated and not contingent upon the faith and credit of any entity. It cannot be manufactured or debased. Gold is the only time-honored currency, or in the words of John Pierpont Morgan (J.P. Morgan), “Gold is money; everything else is credit.”</p> <p>History </p> <p>Thousands of years ago trade began through a system of barter. This method of payment was effective but very limiting. Trade could not occur unless both parties had the goods or services demanded by the other. If a metalsmith, for example, did not need wheat, a farmer seeking a new sickle would have to find alternative goods or services to offer the metalsmith.<br /> These stark limitations and the growing desire to conduct trade with parties over greater distances required a more robust system. Accordingly, trade graduated from the barter system to that of a common currency. Aristotle stated the rationale for a common currency eloquently: “When the inhabitants of one country became more dependent on those of another, and they imported what they needed, and exported what they had too much of, money necessarily came into use.”</p> <p>At first, in almost all cases, the currency was a commodity. While eliminating some of the problems associated with barter, this system presented new ones. Carrying gold or other commodities such as silver, grain, shells or livestock can be cumbersome and difficult to properly measure for weight and purity. Dividing most commodities into fractions for ease of exchange produced additional difficulties. Paying for an acre of land with a quarter of a cow m</p>