Archive for April, 2012

Fund of funds from Santander in Jersey offers investors added choice

Santander Private Banking in Jersey has joined forces with the award winning Multi Manager team at Santander Asset Management UK to offer its clients an offshore sterling denominated fund of funds range. The Luxembourg domiciled SICAV is targeted at local Jersey and UK resident non domiciled clients.

The new Santander offerings, which have only recently become available, have a multi asset, multi-jurisdictional structure which uses best of breed funds that are selected and monitored for performance by the award winning UK Santander Asset Management (SAM UK) team of Tom Caddick and Toby Vaughan. The product offers clients a choice of three sub funds, depending upon an individual’s investment risk profile and portfolio objectives, and comprises the Santander Conservative Fund, the Santander Balanced Fund and the Santander Growth Fund.

According to The Telegraph, British investors now hold some £63.5 billion in fund of funds products, having invested £3.8bn into the sector in the first half of 2011 alone. Particularly in volatile and unpredictable markets, fund of fund products are felt to offer investors a certain amount of comfort as asset allocation decisions are taken by a professional fund manager, who also monitors on-going performance. Whereas rising bull markets can sometimes tempt investors to run their own portfolios, in more difficult markets such as at present, many investors will prefer to de-risk and subcontract these decisions.

Adopting an open architecture approach, the managers at SAM UK are able to choose from thousands of independently managed bond, equity and cash funds which are then selected on the basis of a rigorous analysis covering performance, stability and consistency before they can be considered for addition to the portfolio. At any one time, the Santander fund of funds product could be invested in a range of typically 15 to 25 individual funds to achieve its investment objectives.

This is the first time Santander Private Banking in Jersey has worked together with Santander Asset Management, but it illustrates the potential that is available within the worldwide group of Santander companies for the benefit of its clients in Jersey. It is a collaborative approach which the bank expects to replicate, as other new funds are brought to the market.

Santander Private Banking in Jersey can now offer clients a comprehensive multi asset, multi region fund of funds range, which is designed to provide a simple solution for investors, whatever their appetite for risk. The new offerings are available through the bank’s Investment Advisory Service, whose client base has shown a demand for such investment products to complement the existing model Portfolio of Funds and cash and fixed contract deposits currently available. The new fund of funds range is available both as part of a wider portfolio or as a stand-alone investment. Targeting clients with a minimum investment of £100,000 and above, the Fund of Funds gives clients access to structured investment management processes, where all fund level investment decisions are taken by Santander Asset Management UK within the context of the three portfolio risk models.

Commenting on the tie up with Santander Asset Management UK (SAM UK) and the broad appeal of its fund, Head of Investment Products Paul Clifford said, “Our private banking clients in Jersey are now able to draw directly upon the skills and resources which exist within our worldwide Group. Our goal at Santander Private Banking in Jersey is to offer high quality personalised services for clients, so as demand rises, we expect to be launching more products

in conjunction with the Santander Group. Our clients appreciate our approach to private banking which is based on a mixture of service excellence, strength and security. Our fund of funds products are managed by award winning experts and in the current market, offer clients an option where asset allocation and investment choices within the fund of funds product are made by qualified experts in their field. This can help to insulate clients from the often stressful decisions which cannot be avoided with wealth preservation and wealth growth.”

Globally, Santander Private Banking has over €90 billion of client funds under management and more than 2000 professional staff operating out of over 120 offices worldwide.

For further information on private banking with Santander Private Banking in Jersey, visit santanderpb.je.

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Monday, April 30th, 2012 EN No Comments

Baird Hires a Top UMB Alum

Company Press Release

MILWAUKEE, April 26, 2012 –Baird, an employee-owned, international asset management, capital markets, private equity, and wealth management firm, today announced the addition of Peter J. Hammond to its Asset Management team.  Hammond was named Senior Vice President and will be responsible for client service, operations and distribution of the Baird Funds Family. 
 

“We continue to develop our asset management team.  Peter brings extensive industry experience on the operations side of servicing and selling mutual funds.  He is a strong addition to our team and will bring additional experience to our growing mutual fund business,” said Mary Ellen Stanek, Director of Asset Management at Baird and President of Baird Funds. 

Prior to Baird, Hammond was Executive Vice President and Chief Administrative Officer of UMB Fund Services in Milwaukee.  Before UMB, he was a Senior Consultant with PriceWaterhouseCoopers in New York.  He began his career at Firstar Corporation as an Assistant Vice President in corporate banking.  He received his MBA from Michigan Business School and a BA from Wesleyan University.
 

 
About Baird’s Asset Management Team


Baird Advisors, Baird Investment Management and Baird Public Investment Advisors manage $18 billion dollars for institutions, public entities, high net worth individuals and the Baird Funds.  The Baird Funds Family includes Baird Aggregate Bond Fund, Baird Core Plus Fund, Baird Intermediate Bond Fund, Baird Intermediate Municipal Bond Fund, Baird Short-term Bond Fund, Baird MidCap Fund and Baird LargeCap Fund.
 

About Baird

Baird is an employee-owned, international wealth management, capital markets, private equity and asset management firm with offices in the United States, Europe and Asia. Established in 1919, Baird has more than 2,700 associates serving the needs of individual, corporate, institutional and municipal clients. Baird has more than $87 billion in client assets. Committed to being a great place to work, Baird ranked No. 21 on FORTUNE’s 100 Best Companies to Work For in 2012 – its ninth consecutive year on the list. Baird’s principal operating subsidiaries are Robert W. Baird Co. in the United States and Robert W. Baird Group Ltd. in Europe. Baird also has an operating subsidiary in Asia supporting Baird’s private equity operations. For more information, please visit Baird’s Web site at www.rwbaird.com.

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Monday, April 30th, 2012 EN No Comments

Judge: MF Global Officers Entitled to Use Insurance

A bankruptcy judge shot down an attempt by an MF Global Holdings Ltd. commodities customer to block the firm’s executives, including former Chief Executive Jon S. Corzine, from accessing millions of dollars in insurance proceeds.

Judge Martin Glenn of the U.S. Bankruptcy Court in Manhattan on Monday denied Sapere Wealth Management LLC’s request for an injunction that would block MF Global’s executives from drawing $30 million in available insurance funds while Sapere appeals their right to payment. The insurance covers the costs the executives may face defending themselves against “wrongful act” lawsuits. …

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Monday, April 30th, 2012 EN No Comments

Ecobank China desk rakes in $100 million investment

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Sunday, April 29th, 2012 EN No Comments

Super tax changes threaten retirement savings: PIMCO

Changes could distort asset allocation

By
Samantha Hodge
Mon 30 Apr 2012

Tax raises for superannuation earnings could pose a risk to retirement savings, says PIMCO.


A move to increase tax on superannuation contributions in the upcoming Federal Budget would have a negative impact on Australia’s retirement savings by distorting asset allocations of members who are overweight in growth assets, according to PIMCO.

The fund manager said raising the tax on fund earnings may encourage super fund members to increase their exposure to high yielding shares in attempt to reduce the impact of higher tax, which could in turn make retirement savings more volatile.

“We have an aging population with a compulsory superannuation system that already has an overwhelming bias to Australian equities thanks largely to the dividend imputation system that offers domestic equities an extremely high advantage over other asset classes,” PIMCO head of global wealth management Peter Dorrian said.

“We should be encouraging a more balanced approach to retirement savings by providing a level playing field across all asset classes, allowing investors to select a mix of growth and income producing investments based on their individual investment objectives, not on tax benefits.”

The changes would go against the government’s recent comments of looking to develop a larger local debt market, he said.

“This is potentially a short-sighted policy approach which could be detrimental to the long term goal of compulsory superannuation to effectively manage the retirement savings of all Australians,” Dorrian said.

Last week, four industry bodies also released a joint statement voicing strong opposition to the potential tax increase.

The Financial Services Council, the Self-Managed Super Funds Professionals’ Association of Australia, the Australian Institute of Superannuation Trustees, and the Association of Superannuation Funds of Australia called on the government to rule out the tax changes.

They said the government’s relentless changes to super were eroding confidence in the system and were short-sighted.

The government has announced a raft of super reforms in recent times, including increasing the superannuation guarantee rate from 9 per cent to 12 per cent over the next eight years.

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Sunday, April 29th, 2012 EN No Comments

Will Reliance AMC win back investors?

These are tough times for Reliance Capital Asset Management Co. Ltd. Since it lost the top slot to HDFC Asset Management Co. Ltd in the quarter-ended September 2011—after ruling the roost for 46 consecutive months between March 2007 and June 2011 as India’s largest fund house—the Anil Ambani-promoted fund house has been slowly losing assets.

By Jayachandran/Mint

Between January and March 2012, Reliance Capital lost a corpus of Rs 4,068.4 crore, the most among the 45 asset management companies (AMCs) in the Indian mutual fund (MF) industry. Poor performance of its flagship schemes and its erstwhile chief investment officer Madhusudan Kela moving out of the fund house and being elevated to its sponsor company does not paint a positive picture. Has the fund house lost the plot or is this a temporary blip?

Uncertain times

Ever since the equity markets the world over, including India, fell on the back of the global credit crisis in 2008, equity funds have failed to deliver consistent returns. Between 2008 till date, equity funds have lost 4% on an average. But many of Reliance Capital’s equity funds fell harder.

Schemes such as Reliance Vision Fund (RVF) and Reliance Growth Fund (RGF)—its two equity schemes that were, for years, a compulsory addition to everyone’s portfolio—failed to live up to expectations.

Also See | Top 10 NFOs Since 2003 (PDF)

**Aggressive in launching NFOs (PDF)

***How Reliance schemes fared (PDF)

Between 2003 and 2007, RGF and RVF were in the top 10 having returned 80.78% and 65.16% returns. Their downfall began once markets crashed in 2008. In 2011, RVF’s returns were among the bottom 10 in its category; it lost 29% as compared with the category average that lost 23%. Of its eight actively managed equity schemes in 2007, four were among the top 10 and only one among the bottom 10. It got worse in 2011. Of its 11, actively managed, equity schemes, only one was among the top 10; five figured among the bottom 10 of the respective categories.

For a fund house—and more so for its investors—that was known for its performance, this came as a rude shock. “They seem to have lost their consistency that investors have grown accustomed to. When you market schemes based on past performance and don’t live up to investors’ expectations, there’s a problem,” says an adviser of a wealth management outfit of a large private sector bank, on conditions of anonymity.

But the problem, says Kela, is more with the way the markets have behaved, rather changed the way since he first joined Reliance Capital.

The good old days

When Kela, who headed the equity fund management team back then and is now the chief investment strategist at Reliance Capital Ltd, joined Reliance Capital AMC in 2001—he had no mutual fund experience till then—the equity corpus of the fund house was just Rs 11.32 crore; the AMC was ranked 29th in terms of assets under management (AUM).

At that time, Reliance Capital AMC had just two equity schemes—RVF and RGF, two of India’s most volatile equity schemes living an insignificant existence. But Kela—who was personally recruited by Amitabh Jhunjhunwala, then CEO of Reliance Capital and now said to be Anil Amabani’s right-hand man—and Anand Jain, then vice-chairman of Reliance Capital, and his team of fund managers he got to recruit after coming on board, turned around the fortunes of the fund house in a manner no one ever dreamt of.

The team specialized in picking up small companies ahead of the market. They picked up Jindal Steel and Power in 2003 when its market capitalization was just Rs 300 crore (at present it is Rs 44,758.22 crore), Divis Laboratories Ltd when its market capitalization was Rs 200-250 crore (at present it is Rs 10,957.19 crore), Siemens when its market capitalization was Rs 500 crore (at present it is Rs 26,499.16 crore) and Eicher Motors Ltd when its market capitalization was Rs 300-400 crore (at present it is Rs 5,905.68 crore), among many other small companies.

“I could never reconcile at that time given the state of equity markets and economy that we should be happy just outperforming the benchmark index. I saw screaming opportunities in the market that could give us much, much higher returns,” says Kela. Between 2003 and 2007, RGF was the best performing actively managed equity scheme. Kela and his team made their names as being one of the best mid-cap fund managers in the industry.

Tweaking its strategy

The year 2008 changed things, however. Equity markets fell, mid-cap stocks fell faster and harder. Kela and his team’s thinking got turned on to its head as investors found safety in holding equity shares of only large and established companies, giving impetus to fund houses such as HDFC Asset Management Co. Ltd that specialized in investing in such companies.

“The particular set of holdings that Reliance MF had specialized in investing, worked well between 2003 and 2007. The same kind of stocks, sectors and investment style has not been working since markets crashed in 2008,” says Sandip Sabharwal, head of portfolio management services, Prabhudas Lilladher Pvt. Ltd. Sabharwal knows because his fund management style too specialized in identifying smaller companies at nascent stages; his strategy suffered a similar fate after markets crashed in 2008, when he headed equity funds at JM Financial Asset Management Co. Ltd in 2007 and 2008.

One of the steps that Reliance Capital AMC took was to give more impetus to macroeconomic indicators while picking stocks. The fund house hired a team of six people just to track macroeconomic indicators, prepare research reports that get circulated not just within the fund house and fund managers but also among the sponsor company. Numbers such as Index of Industrial Production (IIP) and inflation are calculated and tracked in-house by this team; the MF aims to track its own calculations rather than those being put out by government agencies.

The MF swears by the team’s contribution. “It helps us to evaluate companies based on a particular factor. So if you know that the rupee will depreciate, you know very well that you need to be overweight on export-oriented sectors,” says Sunil Singhania, head (equities), Reliance Capital. Kela adds that since they were bottom-up investors, they gave “perhaps only 10% weightage to macroeconomic factors. He says that present times call for more emphasis, definitely more than 5-10% weightage, to such factors. “We now give up to 40-50% weightage to such factors,” says Kela.

What went wrong

Too many new fund offers (NFOs): Its fund management style was just part of the problem. The other part of its problem also comes from the way it— along with most of the Indian MF industry—evolved over the years. Rising equity markets and a favourable fee structure that allowed mutual funds to compensate distributors handsomely—as well as make money for their own operations— tempted many fund houses to launch new schemes frequently.

Between 2004 and 2007, the MF industry launched 351 equity-oriented and hybrid schemes that collected a huge Rs 1.23 trillion, according to data provided by Value Research. Reliance Capital was no different; it aggressively launched new schemes. And since its track record was good, investors came in droves.

Between 2004 and 2010, it was among the top five mobilisers of funds every year. The two highest grossing NFOs (equity and hybrid schemes) since 2003 belong to Reliance MF; five of the top grossing NFOs since 2003 also belong to Reliance MF. Reliance Equity Fund (REF) created history in March 2006 by collecting the maximum inflows in its NFO period (Rs 5,790 crore) that any scheme had ever collected in the Indian mutual funds industry till that time, according to Value Research.

Wrong timing: It was a smooth ride that hit a bumper, eventually. The AMC got its timing wrong while launching some of its equity funds. Launched in February 2008, just before the equity markets collapsed, Reliance Natural Resources Fund (RNR) collected Rs 5,660 crore. Today its corpus is Rs 1,772.4 crore and its net asset value Rs 9.77. REF’s corpus, too, is down to Rs 1,122.5 crore. “Because Reliance MF hit the markets at their peak with NFOs, there were a lot of investors. Their underperformance has led to a lot of pain both to them as well as investors,” says the marketing head of a government bank-owned sector fund house, who did not want to be named.

But the fund house has a defence. “The MF industry grew on NFOs at that time and we were also a part of it,” says Sundeep Sikka, CEO, Reliance Capital Asset Management Ltd, who reminds us that NFOs were the flavour at the time. One of the lessons that Sikka and his team learnt was to try and get the launch timing right. “Our learning has been to not to launch too many themes or products that the investor does—or may—not understand. Many people invested up to 25-30% of their corpus in RNR despite it being a thematic fund,” he says.

Performance aside, multiple schemes confuse the investor when choosing what may suit her best. But Singhania says that there is method in madness. “All our offer documents have clearly mentioned the mandate. And this is also where the role of the financial adviser comes in; to help the investor select the fund that suits her best. Two large-cap funds from within the same fund house may differ by only a couple of percentage points in the long run in terms of their returns, but if their philosophy is different, there is merit in having both the schemes,” says Singhania.

Still, when the equity markets recover, Reliance Capital will have a lot of catching up to do; the days where it had to worry about just two equity schemes (RVF and RGF) are long gone.

Continuing strengths

Aggressive marketing: Its aggressive marketing style had positives and few can question them. It launched Reliance Any Time Money (ATM) card first in January 2006 and again later in November 2011 with a slight twist.

A first in the industry, it allowed its investors to withdraw (instantly, from a bank’s Visa-enabled ATM machine) from its equity and debt schemes. Investors can also use it like a debit card at shops. It was the first fund house to launch a micro-systematic investment plan or SIP (just that it wasn’t called the micro-sip back then) in April 2007. These micro SIPs allow retail investors to invest as low as Rs 50,000 a year, without submitting a permanent account number (PAN) card.

Despite micro SIPs turning profitable for the MF only after three years (assuming an investor puts in Rs 100 and the cost of this SIP—verification, dispatch and sundry costs—is Rs 15), the MF has gone ahead with gusto marketing it.

Initiatives such as these helped Reliance Capital tap customers like no other fund house could. “Our innovation is always aimed at expanding categories. We are trying to get new investors in the industry who would start by investing Rs 100 and then later graduate to investing Rs 1,000 or Rs 2,000,” says Sikka. This is also why Reliance Capital launched its ATM card as Sikka felt that mutual fund investing got synonymous with equity investing. By tweaking and relaunching its ATM card in November 2011—yet at the same time making it mandatory for its ATM card investors to invest in its liquid schemes— Sikka took the fight to the banks’ doorsteps that were busy raising interest rates on their savings accounts late last year.

Aggression can also be seen in its fund management style. For instance, despite the 2008 credit crisis, the MF’s fixed income team does not shy from picking scrips other than the highly AAA-rated companies. A credit team—fixed income head Amitabh Mohanty claims it’s one of the largest of its kind in the Indian MF industry—that just monitors credit quality of companies enables its bond fund managers to pick up slightly lower-rated companies too. “But we ensure we don’t have bad credit in our portfolios. The idea is to not to become so conservative and avoid opportunities. Fixed income is not just about managing your average maturities; it’s also about managing credit risk,” says Mohanty.

Focused staff: Reliance Capital’s aggression comes from its culture: to get the job done at any cost. That’s not to say they flout rules. On the contrary, it speaks volumes of how savvy the fund house is in a sense that it believes in reaching its goals, no matter what the odds are.

A high collection to almost any new scheme that it launches to garnering huge responses to new facilities launched, like micro SIPs or ATM card, the on-ground sales and marketing force—the MF’s foot soldiers—have found rank and recognition elsewhere too. “When I look to enhance my sales force, I have recruited a lot of people who have worked at Reliance Capital. They are very good, sharp, well-rounded and focused,” says the head of sales and marketing of a leading foreign fund house. This official goes on to say that since it has been easy to recruit its former sales staff, perhaps Reliance Capital may not be doing enough to nurture its sales team beyond a point, purely on account of its gigantic size.

That’s not the same though for its fund managers. Continuity of fund managers has been a hallmark at Reliance Capital. Singhania and Sikka have been with the fund house since 2003. Senior fund managers Ashwani Kumar and Amit Tripathi have been around since 2003. Its head of fixed income, Amitabh Mohanty, has been around since 2005. Kela himself is no exception.

Many of the MF’s peers we spoke to hold Reliance Capital in high esteem purely on account of its nimble footedness, despite being a large firm. “They are street smart and very opportunistic in terms of launching new products quickly and at the peak of their performance. They know how to take advantage of market opportunities. Their orientation is: Let’s just do it; we should not be hesitant in trying out new things,” says the chief executive officer of a foreign fund house.

Way ahead

Compared with prior to 2008’s market crash, Reliance Capital has been quieter and has not launched many schemes, apart from fixed maturity plans.

But if it wants to retain its investor’s loyalty, it will need to monitor its performance. Its performance over the last three to six months indicates that the MF’s work is bearing fruit. Several schemes, including RVF, Reliance Top 200 and Reliance Regular Savings Fund – Equity, are back among the top 10 of their respective categories.

Singhania is confident that the MF’s equity funds’ performance will swing back once again. Time will tell whether the recent surge in performance is temporary or is here to stay.

Graphics by Sandeep Bhatnagar/Mint

kayezad.a@livemint.com

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Sunday, April 29th, 2012 EN No Comments

Spain At Economic Depression, Soaring Unemployment Rate to 23.6%


Economics / Great Depression II
Apr 28, 2012 – 04:44 AM

By: Mike_Shedlock


Via email from Barclays Capital, Spain: Q1 unemployment rate rises; trend likely to continue into H1 2013.

This morning Spain released labour market statistics for Q1. Seasonally adjusted, the unemployment rate rose to 23.6% from 23.1% in Q4 last year (Figure 1). We think that the labour market’s deterioration is likely to continue over the next 3-4 quarters. We look for unemployment to peak at nearly 26% in H1 2013, before slowly starting to decline.

Beyond cyclical lags, the Spanish labour market trend, to a large extent, is a reflection of the hangover from a boom-bust in the construction sector, which for many years has been an important source of employment growth (Figure 2). It seems that the adjustment in the construction sector’s employment is close to an end: it now contributes c.10% to total employment, in line with the long-term average pre the housing sector boom.

However, we think that the unemployment rate is likely to stay elevated for a while and that it will decline only slowly as the economy likely starts to grow in H2 2013. There are at least two reasons for our view: 1) fiscal consolidation will negatively affect consumers’ spending, economic activity and consequently employment; 2) As we pointed out in Spain: Assessing the fiscal and labour market reforms, we think that Spain needs better “active labour market policies” that can address long-term unemployment (Figure 3) and the retraining of young (in some cases) low-skilled unemployed workers (Figure 4).

Depression in Spain

It is difficult to know precisely when Spanish unemployment stops going up. I see no reason it cannot hit 28% or even 30%.

Spanish politicians (for now) remain insanely committed to the Euro. How long the citizens remain committed to the Eurozone is another matter.

When is the Breaking Point?

Will the general population of Spain put up with an unemployment rate of 28%? 30%? I think not, but I do not know the precise breaking point. Whatever it is, Spain has little chance for growth prospects for a decade as long as it remains in the eurozone.

Eventually will come a time when a politician will hold up a copy of the EMU treaty, declare it null and void, and the debt null and void right along with it. That politician will be elected.

Spain will be better off as soon as that happens.

By Mike “Mish” Shedlock
http://globaleconomicanalysis.blogspot.com Click Here To Scroll Thru My Recent Post List

Mike Shedlock / Mish is a registered investment advisor representative for SitkaPacific Capital Management . Sitka Pacific is an asset management firm whose goal is strong performance and low volatility, regardless of market direction.

Visit Sitka Pacific’s Account Management Page to learn more about wealth management and capital preservation strategies of Sitka Pacific.

I do weekly podcasts every Thursday on HoweStreet and a brief 7 minute segment on Saturday on CKNW AM 980 in Vancouver.

When not writing about stocks or the economy I spends a great deal of time on photography and in the garden. I have over 80 magazine and book cover credits. Some of my Wisconsin and gardening images can be seen at MichaelShedlock.com .

© 2012 Mike Shedlock, All Rights Reserved.

© 2005-2012 http://www.MarketOracle.co.uk – The Market Oracle is a FREE Daily Financial Markets Analysis Forecasting online publication.

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Saturday, April 28th, 2012 EN No Comments

Ron Carson: I got the Muppet treatment from Goldman










Ron Carson: I got the Muppet treatment from Goldman

Wealth manager not thrilled with recent dealing with investment bank; ‘couldn’t believe he just said that’

By
Bruce Kelly

April 27, 2012 12:31 pm ET

Wall Street

(Photo: Bloomberg News)

Leading wealth manager Ron Carson says The Goldman Sachs Group Inc. recently made him understand how it felt to be treated like a Muppet. No, not the Oscar-the-Grouch kind of Muppet, but the British-slang kind of Muppet, or “idiot.”

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Mr. Carson’s description of his recent encounter with Goldman Sachs jibed closely with company defector Greg Smith’s description of how Goldman treats clients. As you recall, Mr. Smith, an executive director at the white-shoe firm, quit Goldman in March and immediately published a blistering opinion piece about the global investment bank in The New York Times.

Among the derogatory details about Goldman’s culture, according to Mr. Smith, was that its managing directors routinely called clients “Muppets,” a term of derision commonly used in the U.K.

Mr. Carson, chief executive of Carson Wealth Management, had discussions in early April with a team at Goldman to evaluate a potential private investment. “We were doing due diligence on an investment, and Goldman Sachs put out a report on it,” Mr. Carson said in an interview in Orlando, Fla., Thursday, while taking a break from the spring Peak Advisors Excell meeting he hosted.

According to Mr. Carson, during a conference call about the pre-IPO investment, the details of which Mr. Carson declined to specify, one of the Carson team members questioned a Goldman analyst’s math as to the deal’s appropriate valuation.

“They had made some mistakes, and my guy had uncovered them and said that their valuations were wrong, and they were off and here’s why,” Mr. Carson said. “My director of research just pissed [a Goldman analyst] off.”

Mr. Carson said: “The [analyst] at Goldman, a 17-year veteran, said, ‘When we do a road show, nobody really looks at this stuff very deeply. They really don’t dig that deep into these numbers.’”

The Carson team was stunned by the supposed comment. “There were several of us on the call, and we just looked at each other, like we couldn’t believe he just said that. I couldn’t help myself, and said: ‘What if the [Carson analysts] are not Muppet-like?’”

The proposed transaction was the first such deal Carson Wealth Management and Goldman had discussed. “It reinforced to me how screwed up, and how conflicted” Wall Street can be, he said.

RELATED ITEM Seven key stats about elite advisers

When asked about Carson’s comments, Goldman Sachs spokesman Michael DuVally said: “Without knowing the name of the alleged Goldman Sachs employee, it’s difficult for me to comment.”

Ultimately, Carson Wealth Management did not proceed with the transaction for its clients. “Goldman was trying to justify a valuation on the pre-IPO transaction that was three-and-a-half times higher than what we had,” Mr Carson said. “I think it just reinforces how the Wall Street machine, if it can take advantage of anybody, they’re going to.”

In fact, the wealth manager said his firm is considering taking sides with this new kind of Muppet. “We’ve been thinking about writing a book for consumers.”

The title? “The Muppets Strike Back.”

Follow Bruce Kelly

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Saturday, April 28th, 2012 EN No Comments

Bull’s Eye: Buy Titan, Bajaj Finserv, Tata Coffee

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Bull's Eye: Buy Titan, Bajaj Finserv, Tata Coffee

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  • See what other Experts Brokerages are saying about Titan Ind
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Bull’s Eye, CNBC-TV18’s popular game show, where market experts come together to dish out trading strategies for you to make your week more exciting and compete with each other to see whose portfolio is the strongest.

Remember these are midcap ideas not just for the day, but stocks that look attractive in the medium-term as well.

This week, Rajesh Agarwal of Eastern Financiers, Ashish Kapur of Investshoppe and Lancelot D Cunha of ITI Wealth Management battle it out for top honours.

Rajesh Agarwal, Eastern Financiers

Buy Titan Industries with a stoploss of Rs 227 and a target of Rs 244. The company is doing well both in watches and jewellery division. Even the eye-wear division has started showing good results. They have recently started a new jewellery unit in excise free zone of Pantnagar and the board is meeting on 30th of April, this month for declaring the results. Going forward we believe its strong brand of the company, the retail presence and the growing difference for branded jewellery – this company is going to do better in coming years also.

Buy Natco Pharma with a stop loss of Rs 397 and a target of Rs 445. This company is a leading player in cancer drugs and manufactures whole range of branded and generic drugs not only for domestic market but for international markets also. Recently they have entered into an agreement with the Swiss company that would help them into growing in cancer drugs. This company has recently won a compulsory order license from Bayer to manufacture cancer drugs in India.

Buy Siemens India with a stop loss of Rs 768 and a target of Rs 810. The company reported a strong set of numbers yesterday exceeding market expectations. 23% topline growth and 10% growth in bottom line was reported. The company has secured order worth 18,000 million in this quarter and order back log stands at 1.26 lakh million as on March 31st. We think going forward the company is likely to do well with the kind of management, the kind of parent this has.

The fourth and the last stock that we have in our list today is Jindal Steel and Power. This again has reported a very good set of numbers yesterday with around 42% jump in top line and around 16% jump in bottom line. Growth is witnessed in production of steel and power with around steel and pallets showing a growth of around 24% power grew by 42%. The kind of expansion plan this company has in power sector, the kind of asset this company has in Bolivia – we believe that this company is highly undervalued at the current levels. Trading at around nine times FY13 earnings we believe this company leaves enough scope for appreciation.

Lancelot D’Cunha, ITI Wealth Management

Buy Bajaj Finserv with a target of Rs 779. Bajaj Finserv has been extremely bullish over the last 2-3 months and it has outperformed the market. I have seen the stock move up on volumes and coupled with the increased volumes we have seen an increase in price. This is a very positive trend.

Buy Mcleod Russel . It is the world’s largest tea producer and this stock also has been moving up on volumes over the last few months. It’s come of a bit from its highs and is now moving upwards and we have seen a breakout here at this level so I expect it to move further up and hit its target price of Rs 284.

Buy Pantaloon with a target price of Rs 174. Pantaloon has been trading in a very narrow range and it has recently broken out of that range. Now based on the upward momentum that we are seeing I expect it to move upwards thereafter and we should see it hitting its target price of Rs 174.

Sell Ambuja Cements . It came out with disappointing numbers where the operating profits were lower because of higher employee cost despite increase in revenues and the stock had gone up tremendously on valuations and given the overhang of the CCI investigation on cartelization for cement industry the stock has been continuously falling and has broken its 200 day moving average on the downside. So I expect a momentum to take it further down and may be hit its target of Rs 141.

Ashish Kapur, Investshoppe

My first call for the day is a long position on Tata Coffee with a target of Rs 900 and a stop loss at Rs 838. The company has been reporting good numbers and the growth is likely to sustain going forward as coffee prices stabilize world over. More over their brand Eight O’ Clock has been gradually generating better numbers, getting better acceptability in various markets. We are quite comfortable. It’s a stock which is defensive in nature, is not getting adversely affected by any of the economic vows.

My second pick for the day is a long position on Asian Paints with a target of Rs 3,700 and a stop loss at Rs 3,440. Our reason for being positive on Asian Paints is that this is one company which has delivered strong numbers continuously over the last many quarters. Going forward, we have reason to believe that this momentum will continue. Asian Paints is getting more and more accepted in the decorative paint segment. Moreover the international business is also delivering good growth. The recent acquisition of Berger Paints in Singapore gives then a good footprint in Asia, Middle East and in the Caribbean markets.

Third call for the day is a long position on Cummins India with a target of Rs 507 and a stop loss at Rs 472. My reason for being bullish on this counter is that though it is operating in very highly competitive power as well as in the industrial segment. It has managed to keep its head above water in very diligent –check– times. Moreover, the guidance of the management going forward is very encouraging. They had a very muted performance in the previous quarter but the management has guided around 15% growth both in their domestic as well as in international business going forward. EBITDA is also likely to increase by about 12-15%.

My final call for the day is a short position on JSW Steel with a target of Rs 650 and a stop loss at Rs 704. My reason for being bearish on this counter is that they have a very high proportionate of raw material cost compared to other peers like Tata Steel and SAIL. Moreover, unlike Tata Steel and SAIL, this company is not fully integrated in terms of their raw material supply. It is dependent on import of metallurgical grade coke as well as iron ore. Both these raw materials are in great demand and the prices have soared up.

  

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Saturday, April 28th, 2012 EN No Comments

Wescott Financial Advisory Group LLC Appoints David W. Gaskin as COO

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    Veteran Vanguard Officer To Guide Firm’s Growth Strategy

    PHILADELPHIA, PA – In a move that expands on the firm’s growth strategy, Wescott Financial Advisory Group LLC, an SEC-registered Wealth Management firm serving high net worth individuals and institutions, is pleased to name David Gaskin as its new Chief Operating Officer.

    Gaskin brings a proven combination of financial acumen, entrepreneurial savvy and business development to his new role at the firm, which has $1.6 billion in assets under management. A graduate of Yale University with his MBA from The Wharton School at the University of Pennsylvania, before joining Wescott Gaskin had been a Principal at Vanguard for 12 years, overseeing financial, organizational, planning and institutional operations.

    Wescott founder / CEO Grant Rawdin said, “With his experience at an organization known for high value and efficiency, David brings an unparalleled pedigree as a proven and trusted leader and organizer. His sophistication and skills will help to serve Wescott’s current path and growth.”

    “Wescott to me offers an ideal balance of stature in the financial services community and the entrepreneurial spirit of a boutique firm,” Gaskin said. “This perfectly suits the next stage of my professional career, as much as I can serve the firm’s well-planned growth model.”

    Gaskin’s arrival builds on Wescott’s ongoing strategic plan, serving Wescott’s path of framing its internal operations ahead of its ongoing robust growth, Rawdin said. The hire also follows a 2008 organizational analysis and plan put in place by Rawdin and then-COO, Harold Weinstein, Ph.D., a renowned organizational psychologist. The resulting plan “created an organizational structure that has improved the flow of communication and ideas among the firm’s various committees,” one magazine reported.

    As a result, the five departments – operations, administration, marketing and sales, advisory and investment research – are overseen by a management committee comprised of executives from each department. The group meets monthly to assess plan execution and staff and client satisfaction metrics, and to seek areas for improvement. Additionally, a cross-functional committee drawn from those five departments improves collaboration and drives communications firm-wide.

    In a related personnel move, Weinstein has transitioned to become Wescott’s Director of Organizational and Talent Development where he will continue to work on expansion strategies and new Advisor integration.

    Such deliberate, detailed growth has been the plan since Rawdin founded Wescott in 1987. Tapping his tax and business practice at the prominent law firm Duane Morris LLP, he slowly built the firm on client referrals and through strategic partnerships with other firms. Today, Wescott is one of the nation’s largest registered independent advisors with more than 325 clients and $1.6 billion in assets under management – and managed from offices in Philadelphia, PA; San Francisco, CA; Boca Raton and Miami, Florida.

    “In today’s market, short-term success can be impressive in the near-term, but our clients and partners depend on us for long-term results,” Rawdin said. “With our blueprint for balanced growth and David at the helm of operations, we’re confident our strategy will continue to be executed as planned.”

    Founded in 1987, Wescott Financial Advisory Group LLC is an SEC-registered, fee-only investment advisory and wealth management firm. Wescott’s clients are high net worth individuals, families, trusts, foundations, pension plans and institutions. The firm’s investment philosophy is a uniquely disciplined, tax sensitive and opportunistic “open architecture, multi-manager (passive and active management)” approach that has been maintained for over 25 years. This approach allows Wescott to control risk while creating portfolios with a combination of complementary styles, diversifications and enhanced returns. Wescott is rated one of the top investment management firms in the United States. The firm is ranked in the top 50 nationally by Barron’s and was named a top firm in South Florida by the South Florida Business Journal. With offices in Philadelphia, Boca Raton, Coral Gables, Miami and San Francisco, Wescott’s mission is “Achieving Client Goals.” For additional information, please visit www.wescott.com.

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    Friday, April 27th, 2012 EN No Comments