Fisher Capital Management Investment Solutions: For investment banks in Q1, underwriting was it

http://fishercapitalmanagementinvestment.com/2011/04/fisher-capital-management-investment-solutions-for-investment-banks-in-q1-underwriting-was-it/

http://www.reuters.com/article/2011/04/12/us-investmentbank-idUSTRE73B3EB20110412

By Lauren Tara LaCapra
NEW YORK | Tue Apr 12, 2011 9:59am EDT

(Reuters) – U.S. stock underwriting was the sole strong business in an otherwise bleak first quarter for U.S. investment banks.
Both Goldman Sachs Group Inc (GS.N) and Morgan Stanley (MS.N) are expected to report lower first-quarter earnings next week compared with the same quarter a year ago.
Revenue from trading, merger advisory and bond underwriting is expected to be weak as markets were choppy, relatively few mergers closed, and debt issuance declined relative to exceptionally strong levels a year ago.
Unfortunately for investment banks, stock underwriting is too small a business to make up for weakness in all these other areas.
Longer term, banks face other pressures, too. Trading profit could be crimped in the future as more markets move to exchanges and clearinghouses. And new rules will limit banks’ ability to make bets with their own funds.
“The greatest strategic challenge facing Goldman Sachs and Morgan Stanley,” says Bernstein analyst Brad Hintz, “is the uncertainty of new regulations.”
But in the first quarter, banks did well with stock underwriting, thanks in part to massive initial public offerings from private equity firms looking to cash out of companies they bought before the financial crisis.
In the first three months of the year, companies issued $196.3 billion of stock globally, the best first quarter for equity issuance on record, according to Thomson Reuters data. Issuance volume rose 15 percent from a year earlier, and fees for underwriting increased 12 percent to $6.1 billion.
That helps banks, but only so much — the stock underwriting business delivered just 7 percent of overall revenue for Goldman Sachs last year, and Goldman was the biggest underwriter. The business was even less substantial for Morgan Stanley, whose equity underwriting revenue comprised just 4.6 percent of its total revenue for 2010.
OTHER BUSINESSES SUFFERING
Stock underwriting could end up being a material part of earnings in the first quarter just because so many other businesses were relatively weak. Goldman raked in an estimated $491 million of fees from stock underwriting, Thomson Reuters data show, up 41 percent from a year earlier.
Analysts on average expect Goldman to report first-quarter net income of $459.5 million, or 81 cents per share, according to Thomson Reuters I/B/E/S. Even without a charge of $2.80 per share to buy back Goldman preferred stock from Warren Buffett’s Berkshire Hathaway, that’s well below earnings of $5.59 per share in the year-ago period. Goldman is slated to report results on Tuesday, April 19.
Morgan Stanley, scheduled to post results on Thursday, April 21, will see a boost from its role as lead underwriter for the conversion of $59 billion worth of American International Group Inc (AIG.N) preferred stock into common shares.
Results for both investment banks could be even worse than analysts expect. Sell-side researchers with the best track records are forecasting results for Morgan Stanley that are 22 percent below analysts’ average estimate, and 0.2 percent below for Goldman Sachs, according to Thomson Reuters Starmine Smart Estimates.
A key factor for Morgan Stanley will be how well its Morgan Stanley Smith Barney joint venture with Citigroup Inc (C.N) performed during the quarter. Morgan Stanley Chief Executive James Gorman has staked the future of the bank on that wealth management business in a way that none of his rivals have.
Morgan Stanley’s global wealth management division delivered $1.2 billion in pre-tax income last year, more than double the amount in 2009, and some investors are hopeful the business will continue to be a stable source of revenue.
JPMorgan Chase & Co (JPM.N) garnered the most fees of any investment bank in the first quarter thanks to its advisory role in several key deals and its dominance in the high-yield debt market.
JPMorgan collected $1.4 billion in investment banking fees, or 6.2 percent of the industry total. It reported impressive results as other banks struggled to dodge unexpected interest rate moves.
JPMorgan is scheduled to report quarterly results on Wednesday, April 13.
(Reporting by Lauren Tara LaCapra; editing by John Wallace)

Fisher Capital Management Investment Solutions: Alliance Trust defends investment strategy

http://fishercapitalmanagementinvestment.com/2011/04/fisher-capital-management-investment-solutions-alliance-trust-defends-investment-strategy/http://www.bbc.co.uk/news/uk-scotland-scotland-business-13057133  12 April 2011 Last updated at 16:33 ET  Money  The group’s profits before tax, including capital, were down from £473m to £456m  A Dundee-based investment trust has issued a defence of its strategy with its annual results.  Alliance Trust reported its return to shareholders stood at 19% for the year to January 31,compared with more than 20% in the previous year.  It also highlighted the share price reached a three-year high in January, with net asset value increasing by 11.9% in the second half of last year.  The company is striving to see off a challenge from an activist investor.  Chairwoman Lesley Knox said the asset management business saw a sharp increase in third party funds under its management, up from £12m to £83m by the end of the year, and up to £100m since then.  The group’s profits before tax, including capital, were down from £473m to £456m.  These are some of the figures being used in the battle with hedge fund Laxey Partners, which owns an eighth of Alliance Trust equity, and which wants to force a buy-back of shares as a means of raising the share price. Continue reading the main story “Start Quote      We are focused on managing the trust in the best interests of these long-term shareholders – not those who are motivated purely to make a short-term gain”  Lesley KnoxChairwoman, Alliance Trust  It is pressing other shareholders to back its campaign to overturn the management strategy at the company’s annual general meeting on 20 May.  It argues the share price has been trading at nearly 20% below net asset value of Alliance Trust funds, and it wants that brought below a 10% discount.  Alliance Trust’s chairwoman said the company’s performance was in the median range for its corporate peer group.  “Through regular engagement with our shareholders, we believe that we have a good understanding of their long-term investment priorities,” she said.  “We are focused on managing the trust in the best interests of these long-term shareholders – not those who are motivated purely to make a short-term gain.”  Chief executive Katherine Garrett-Cox said there was already a share buyback under way, with nearly £9.6m put into supporting the Tayside company’s share price.  Near-term prospects for stock markets remain “clouded” by uncertainties, including rising commodity prices and consumers’ debt burden, she added.

Fisher Capital Management Investment Solutions: Novices, take Trio Capital Funds as a warning

http://fishercapitalmanagementinvestment.com/2011/04/fisher-capital-management-investment-solutions-novices-take-trio-capital-funds-as-a-warning/

http://www.theaustralian.com.au/business/novices-take-trio-capital-funds-as-a-warning/story-e6frg8zx-1226039900616

Glenda Korporaal

From:The Australian

April 16, 2011 12:00AM

THIS week’s $55 million bailout of the Trio Capital funds — which did not apply to investors in self-managed superannuation funds — is not an argument against having a self-managed superannuation fund.

But it is an argument that those who do not have the interest or the skills to take an active interest in the management of their money would be better off opting for their employer’s default fund, an industry superannuation fund or a major reputable fund.
Those considering taking their money out of an established super fund and putting it in a self-managed superannuation fund — who are being convinced to do so by a “friendly” financial adviser offering to take on the hassle of handling paperwork and annual tax returns — should think again.
Having a self-managed superannuation fund can offer a considerable degree of flexibility and control for those who know what they are doing.

Related Coverage

• Super is not as safe as you think Herald Sun, 1 day ago
• Claims loom on Trio fundThe Australian, 1 day ago
• DIY funds to put case for compo The Australian, 2 days ago
• DIY super funds entitled to Trio compo The Australian, 2 days ago
• Warning for self-managed super funds The Australian, 2 days ago

But those who don’t know what they are doing, and take the self-managed super option, are highly vulnerable to the skills and integrity and the judgment of their financial adviser in a way which would not occur if they opted for a no-fuss conventional option.
This week’s bailout was a timely reminder that the levy system that benefits investors in APRA-regulated funds does not apply to self-managed super funds. “Trustees of self-managed superannuation funds have to be aware that there isn’t any form of compensation for which things go wrong, except for remedial action through the courts,” Sharyn Long, the chairwoman of the Self Managed Super Fund Professionals Association (SPAA), said yesterday.
“If a financial adviser is involved they can take action, but there is limited remedy for them in cases where fraud occurs.”
The bailout is based on the fact that APRA-regulated funds will be levied to cover the cost of the fraud involved. The system does not apply to self-managed super funds. The logic is that why should the trustees of some 400,000 small funds, often operated for only two or three beneficiaries, have to pay up for the investment mistakes of a handful of other small funds (in this case 285 SMSFs) who would have quite happily reaped the upside if the funds had delivered the superior performance?
There may be some change to that situation but this is what is prevailing at the moment.
The collapse of Trio does reinforce the need for all investors to do their homework on the type of funds they invest their money in, particularly funds offering higher than normal returns or which may have unknown international links. “The basic principle is that the higher the return, the higher the risk,” says Long. “One of the main tools to mitigate that risk is diversification.”
No investor should put all, or the bulk, of their investments into one fund or one associated group of funds. And the more exposed one is to a fund, the more need for detailed homework.
It is also a general warning that anyone who uses a financial adviser should not regard this as a reason to suspend all judgment — no matter how competent they appear or how much they offer to take over the burden of financial life.
There is no excuse for not asking questions about where and how the money is being invested.
In the case of Trio, the situation was made worse by the fact that there was a wrap situation where fund managers handed over their clients’ funds, with those funds invested in Trio-related funds such as Astarra.
In the case of wraps, it is vital that the investor has complete confidence in the operator of the wraps — and only after doing some basic homework.
If the fund itself or the wrap provider is not well known, the investor should ask what is it and who are its principals.
The Trio funds were based out of Albury, which is not exactly the funds management capital of the world. Warren Buffett, of course, is based in Omaha, which is not the fund management capital of the world either. But he and his Berkshire Hathaway organisation are well known and have a track record of integrity.
With the ready availability of search engines such as Google, investors can easily do simple online searches from the comfort of home.
The searches should be done on the funds and the principals of those involved to see if there is any “form”, or any questionable activities.
The fact that the fund is offering investment in exotic products using offshore tax havens should also be a red flag for investors to do some extra homework.
In the end there will always be fraud — which is the reason that the default option for anyone with little financial knowledge should be to go with the plain, vanilla-type of investments with plain, vanilla-type managers.
John Hempton of Bronte Capital, who raised the alarm on the Trio funds, also raises other issues of concern about the lack of regulation of broker-dealers and how they are still allowed unrestricted pledging of client assets.
This is another area which needs some government attention. But in the meantime the Trio collapse should be a wake-up call for investors that there is no excuse not to be aware of exactly how their funds are invested and who is handling their money. When it comes to handing over your money to anyone, all questions are good questions.
There are no dumb questions.

Fisher Capital Management Investment Solutions: Trusteer: User education can’t protect against social engineering

http://fishercapitalmanagementinvestment.com/2011/04/fisher-capital-management-investment-solutions-trusteer-user-education-can%E2%80%99t-protect-against-social-engineering/http://www.thetechherald.com/article.php/201115/7066/Trusteer-User-education-can-t-protect-against-social-engineering
by Steve Ragan – Apr 15 2011, 03:40
An experiment by security firm Trusteer has shown that even the most educated user can be fooled by a Phishing attack. By using 100 well-informed participants on social/business portal LinkedIn, Trusteer sent out messages similar to the ones site users would see on a regular basis. Interestingly, almost 70 percent of the test group fell for the con.
Phishing attacks and other scams are constantly explained and cautioned against, and most security professionals can explain what to look for and how to avoid falling victim to these cons. Yet, there is always a victim. No matter how good the education, you can’t reach everyone… and, more worringly, some will simply ignore the advice.
Trusteer, in wanting to test the notion that education isn’t the total solution for avoiding Phishing and other scams (as well as looking to show how easy it is to fall victim) asked 100 people to take part in its experiment. All of them agreed. However, while they knew they would be part of a security test, none of them knew when the test would take place.
Trusteer created a new identity on the LinkedIn site and then used some basic data-mining techniques on the supposedly educated participants, its goal being to collect information on their connections along with any other personal information presented via the site.
Mickey Boodaei, Trusteer’s CEO explains: “We picked a population of 100 users – these are people we know – friends and family and estimated to be fairly educated about security…”
“Since LinkedIn sends an alert when one of your connections has a new job, we decided to use this update method to create a fraudulent email. For each one of our targets we crafted a fictitious new job alert,” he added. “We chose one of their LinkedIn connections, and announced that this person was now working for a company that directly competes with our victim’s company.”
The message came with a large linked button with which to view the friend’s new title, just as LinkedIn does on its regular communications. Included in the email was a photo of the friend alongside their name, again much as it appears on the proper site. By choosing to click the button, users were taken, not to LinkedIn, but to a dummy attack site.
“The website we used was innocuous, but it was a place holder for a potentially malicious website that places malware on the victim’s computer. We released this email to all 100 subjects on the same day – a Tuesday morning – and monitored who clicked the link and reached our landing page,” Boodaei said.
Within the first 24 hours, 41 participants had fallen for the scam. Within seven days, 68 people had clicked the button. If this had been a real attack, those numbers would have marked a high return on a criminal’s investment. In all, Trusteer spent about 17 hours on the study.
As for the other 32 people, Boodaei explained that, when approached: “Sixteen said they haven’t seen this email (it probably went into their spam folder). Seven said they usually don’t read LinkedIn updates. Nine said that the update was not interesting enough for them to click the link.”
The one thing we disagree with is the company’s statement issued at the end of the test, which says that the “solution to this problem must be based on technology and probably using more than one method.”
Technology, while helpful, will not prevent the problem of people falling prey to Phishing scams. Perhaps a better recommendation would have been to blend technology with basic education and awareness. Phishing scams work because they are able to bypass technology and take advantage of human nature.
As mentioned in the Trusteer write-up, the tools that organizations use to train their customers on Phishing scams are “not effective enough” to reach all of them, or convey the message in a way the majority will understand. Mixing education and technology might help, but technology alone will do no better than that which exists today.
The test performed by Trusteer is an interesting one. It would be nice to see a similar test where the participants are told it is a Phishing attack beforehand. Likewise, it would be interesting to see the test done to scale, where several hundred if not thousands of participants are targeted.
It’s frustrating to see people fall for basic Phishing scams, and it’s painful when major companies like RSA are victimized by them. However, there is no single answer when it comes to protecting against or preventing tricks against the human mind. The person who finally solves that riddle will be able to demand any ransom they want for the answer.

Fisher Capital Management Investment Solutions: Number of victims hacked by News of the World may be ‘substantially higher’

http://fishercapitalmanagementinvestment.com/2011/04/fisher-capital-management-investment-solutions-number-of-victims-hacked-by-news-of-the-world-may-be-substantially-higher/

http://www.telegraph.co.uk/news/uknews/8454311/Number-of-victims-hacked-by-News-of-the-World-may-be-substantially-higher.html
By Mark Hughes, Crime Correspondent 9:15PM BST 15 Apr 2011

The number of victims who had their phones hacked by the News of the World may be “substantially higher” the Metropolitan Police has admitted after it began trawling through nearly 10,000 records of private investigator Glenn Mulcaire.

Image 1 of 2

Sienna Miller, who has been named as a hacking victim. Photo: PA

By Mark Hughes, Crime Correspondent 9:15PM BST 15 Apr 2011Follow Mark Hughes on Twitter

Previously Scotland Yard had said that information found in records kept by Mulcaire who was employed by the newspaper, showed that he had 91 voicemail PINs – suggesting 91 potential victims.

But the High Court has heard that the new police investigation expects to find many more victims. And that could open the door for more celebrities to take legal action against the News of the World.

The disclosure came as it emerged that the actress Sienna Miller may have had her emails hacked into. Ms Miller has been offered £100,000 to halt her case against the News of the World. She is yet to accept or reject the offer.

But while the News of the World waits to hear whether Ms Miller will settle, they could now have to defend themselves against scores of other claims.

The High Court heard that 40 detectives working on the new investigation – codenamed Operation Weeting – are currently trawling through 9,200 pages of records seized from Mr Mulcaire.

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Specifically they are looking for direct dial numbers (DDN) – the number dialed by a mobile phone user to access voicemails.
Jason Beer QC, acting for the Metropolitan Police, told the High court: “There are, within the Mulcaire archive, records of DDNs where, on the face of it, there is no good reason for these to appear. That is strongly indicative of interception.”
Asked about whether the number of numbers is larger than the 91 PINs, Mr Beer added: “The number of DDNs is substantially higher than that.”
The New of the World issued a public apology over phone hacking last Friday, offering to pay damages to anyone who could prove that their phone was hacked by one of its journalists.
Mr Beer said that since then a host of people have been in touch with the Metropolitan Police attempting to discover whether they were a victim of phone hacking.
“Since the admissions last Friday, the Metropolitan Police has been flooded with enquiries. The number of people beating a path to the Met’s door has increased very substantially.”
The court hearing also heard that the News of the World had offered to settle the case with Sienna Miller, one of the celebrities who is suing the newspaper over fears that her voicemails were intercepted.
The court heard that the actress has been offered £100,000 plus her legal costs to settle the case. She has neither accepted nor rejected the offer.
There was also a suggestion that Ms Miller may also have had her emails hacked into as recent as 2008.
The documents seized from Mr Mulcaire had Ms Miller’s email password and her legal team claim that a journalist could have known this in 2008, despite the fact that by then the Mulcaire documents were in the hands of the police.
Hugh Tomlinson QC, her barrister, explained: “The hacking in 2008 is separate from the phone records. We have linked that to the Mulcaire archive because she used the same password on her mobile phone and on her email and that was recorded on Mr Mulcaire’s notes. We infer that that password was used to hack her email.”
The civil cases against the News of the World are being brought by 20 people, including Jude Law, Paul Gascoigne, George Galloway, Tessa Jowell and the jockey Kieren[CORR] Fallon.
But yesterday the judge Mr Justice Vos ruled that there should be four test cases which will determine how much damages should be paid to future claimants. The tests cases, the court heard, are likely to be those of the football pundit Andy Gray, football agent Sky Andrew, Sienna Miller and Kelly Hoppen, the interior designer.
Glenn Mulcaire and the News of the World’s royal correspondent Clive Goodman were jailed in 2007 after they admitted hacking into voicemails. But the Metropolitan Police was criticised for ending their investigation when, it was alleged, the practice of hacking at the paper went further.
In January this year a new investigation was launched. So far three News of the World employees have been arrested. Chief reporter Neville Thurlbeck, former news editor Ian Edmondson and assistant James Weatherup have all been bailed to return in September.

Fisher Capital Management Investment Solutions: GLOBAL MARKETS: European Stocks Slide On Euro Debt Worries

http://fishercapitalmanagementinvestment.com/2011/04/fisher-capital-management-investment-solutions-global-markets-european-stocks-slide-on-euro-debt-worries/http://online.wsj.com/article/BT-CO-20110418-702096.html
APRIL 18, 2011, 4:25 A.M. ET
- European stocks fall on ‘peripheral’ debt worries
- China’s weekend rate increase also being digested
- Eyes on the 1Q US earnings season, with Citigroup earnings due
- Corporate news from Europe relatively upbeat
LONDON (Dow Jones)–European stocks slipped Monday, as euro-zone ‘peripheral’ debt problems together with worries about upcoming earnings from the U.S. following a disappointing start to the season combine to put pressure on the market.
By 0805 GMT, the Stoxx Europe 600 index was down 0.3% at 276.90. London’s FTSE 100 was down 0.3% at 5977.52, Frankfurt’s DAX dropped 0.5% to 7144.22 and Paris’s CAC-40 was …

Fisher Capital Management Investment Solutions: S. Korea set to spend 6.5 tln won on growth engines

http://fishercapitalmanagementinvestment.com/2011/04/fisher-capital-management-investment-solutions-s-korea-set-to-spend-6-5-tln-won-on-growth-engines/2011/04/14 10:20 KST
SEOUL, April 14 (Yonhap) — South Korea will provide about 6.5 trillion won (US$5.98 billion) worth of loans, guarantees and other financial support this year for domestic companies seeking to nurture the nation’s new growth engines, the finance ministry said Thursday.
The plan is part of measures that the ministry and other related government agencies reported to President Lee Myung-bak earlier in the day to better establish effective ties between funding and business activities in new growth engines.
The government has been pushing to nurture a total of 17 new growth engine businesses in green, high-tech convergence and value-added industries. New renewable energy, LED technologies, robotics, nanotechnology, biotechnology, health and software are among those businesses expected to lead the nation’s future economic growth.
According to the ministry, the Small and Medium Business Administration will provide about 1.7 trillion won this year in the forms of loans and financial support for smaller companies that have developed new technologies in those cited areas.
About 1.3 trillion won worth of loans will also be provided by the state-run Korea Finance Corp through private banks. Under the so-called “on-lending” system, the corporation will grant a mid-term loan to private banks, which will in turn lend money to promising companies by using the government support, the ministry said.
The state-run Korea Technology Guarantee Corp., known as the KIBO, seeks to offer 3 trillion won worth of loan guarantees for businesses. The loan guarantee will be given based on its assessment of technologies and future growth potential of individual companies.
The corporation will also plan to issue about 300 billion won worth of primary collateralized bond obligations this year in order to expand its financial support for green and tech start-ups, the ministry added.
“We expect the latest measures will help strengthen the ties between the financing process and real ongoing business activities in new growth engine categories,” the ministry said. “In particular, they will likely boost financial support tailored to new growth engines which tend to be high-risk and need longer-term help in the nature of their work.”