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  • Fake or philistine: the jury’s out

    September 28, 2011 @ 12:28 pm | by John Collins

    Alessio Rastani, the London day trader, has become a viral hit around the world following his rather in your face interview with BBC News on Monday. Rastani isn’t just a business story – even my Pricewatch colleague Conor Pope has got hot under the collar about this guy.

    If you haven’t seen the interview with the “independent trader” (echoes of Del Boy and Rodney?) who claims to dream of another recession and that Goldman Sachs rules the world, here’s the clip:

    YouTube Preview Image

    Almost immediately after the appearance speculation began to mount that Mr Rastani was a fake and bore a striking resemblance to a Yes Man that had pretended to be a spokesman for Dow Chemical. As a result the BBC press officer was forced to issue a statement stating that Rastani was not a fake. Never missing an opportunity to have a pop at the Beeb the Telegraph published an article claiming he was a fake, although if you read the article he’s actually an attention seeking lowly day trader rather than a fake.

    My take: Rastani went on the show to get a reaction. Most of what he said isn’t new (remember Rolling Stone journalist Matt Taibbi’s description of Goldman as “a great vampire squid wrapped around the face of humanity, relentlessly jamming its blood funnel into anything that smells like money”) it’s just that he managed to get so much into his three and a half minute slot and was so unapologetic about it.

    The best comment on the whole thing comes from Fiona Walsh, our London Briefing columnist:

    “By Tuesday evening, his 3½-minute interview had clocked up almost half a million hits on YouTube and, such was the candour of his comments, there was widespread speculation that it was a hoax. Seasoned City hands thought otherwise, however, and marvelled that someone had at last revealed what we all know to be true – that traders are in business to make money.

    Only an independent trader would have been be foolish (or publicity-hungry) enough to speak as unguardedly as Rastani; anyone employed by one of the major investment banks would have been sacked before he left the studio.

    In fact, the only part of the interview that did not ring true was the bit where Rastani said he wanted to help people. That part surely was a hoax.”

  • Does Google’s ambition know no bounds?

    May 28, 2010 @ 1:20 pm | by John Collins

    On the internet it’s invariably the kiss of death for your business if Google decides to enter your space. With the exception of social networking it’s become a major player in almost every new category it enters – just look at the popularity of Gmail where Hotmail once reigned supreme.

    This interesting Businessweek article highlights the internet giants latest addition – a trading floor staffed by former Wall St types. They have been hired to manage Google’s $26.5 billion in cash and short-term investments. As you’d expect Google’s engineers have written them some very funky tools to help them with the job.

    Can’t imagine there was too many problems luring staff from Wall St to California with the lure of Google stock, a laid back environment etc.  But I think the big investment banks can rest easy for the time being that Google is going to start luring away their clients.

  • Black Swan-connected fund may have caused Black Swan sell off

    May 11, 2010 @ 2:10 pm | by John Collins

    Several investigations are still ongoing in the US to try and get to the bottom of last Thursday afternoon’s biggest ever drop in the Down Jones Industrial Average. As we reported last Friday, it was initially thought the culprit was a so-called “fat finger” trade, where a trader accidentally sells, for example, 100 billion shares rather than 100 million. That theory was quickly discounted.

    The Wall Street Journal publishes an interesting theory today. They suggest that a $7.5 million bet by hedge fund Universa Investments, that shares would continue downwards, was the trigger for events. While this may have been the trigger for the Dow dropping 6 per cent in 10 minutes, it was not the cause and actually took place at the middle of a perfect storm. The markets were already sp0oked, largely due to the Greek debt crisis, so all it took was one big bearish bet to start a massive sell-off.

    The irony is that Nassim Taleb is an advisor to Universa and also an investor in the fund. His best selling book The Black Swan: The Impact of the Highly Improbable suggests that “once in a lifetime” events, such as last Thursday’s market collapse, are much more common than the average investor thinks. If it turns out to be true it would highly ironic.

    For those who haven’t read The Black Swan: The Impact of the Highly Improbable it’s a great read. Particularly after the market chaos of the last two years.

  • Apple’s iPad – winners and losers

    January 29, 2010 @ 7:07 pm | by John Collins

    Now that the dust has settled a little on Steve Jobs’ launch of Apple’s “magical and revolutionary” new device, the iPad, it’s interesting to see how the market has treated the stocks of various companies who will be impacted by its introduction. I’ve looked at their prices on Wednesday morning versus what they are at the time of writing (lunch time Friday in New York trading).

    • Apple: $204.78 down to $195.62. Seems all the hype about Apple’s slate was priced in by the market and we know there was no way it could ever meet expectations.
    • Google: $538.77 down to $534.71. The one time allies are now quickly becoming all-out foes. By the time the iPad shifts it may well feature Microsoft’s Bing search rather than Google’s.
    • Microsoft: $29.36 down to $28.53. Apple’s perennial rival who once wiped the floor with its Californian rival has tried and failed to make tablets popular. Apple’s success isn’t assured but if it happens its bad news for MSFT.
    • Gemalto: $28.35 up to $28.86. A surprise beneficiary. The French maker of smart cards and sims for mobiles has possibly got a lift as it is the main maker of the micro sims that will fit 3G iPads.
    • Amazon.com:  $120.85 up to $129.00. Amazon couldn’t really lose. Even if the iPad wipes the floor with the Kindle, Amazon’s e-book reader was always a loss leader to seed the e-book market. Amazon will benefit from the shot in the arm that the iPad will give the e-book market.
    • Barnes & Noble: $19.19 down to $17.48. It might have the Nook and sell books online but its network 0f retail outlets could become a liability if books turn digital like music.
    • Sony: $2,948 up to $3,010. Steve Jobs had a pop at Sony in his keynote but it didn’t dent the shares. Possibly because the Japanese giant is not dependent on any single category of products.
    • Nokia: $12.70 up to $13.89. Jobs may have pointed out Apple is a larger mobile device company (by revenue) than the Finnish handset giant, but a return to a profitable quarter in the meantime has driven up the price of its ADRs in New York.

    This is of course is a totally unscientific exercise and is not intended as investment advice. It is interesting though.

  • Who is Bank of Ireland lending to?

    November 4, 2009 @ 3:19 pm | by John Collins

    Bank of Ireland reported its interim results this morning, announcing a hefty €979 million pre-tax loss. For the sake of rounding lets call it a billion euro. The markets have reacted well pushing Bank of Ireland shares up about 18 per cent at the time of writing. Effectively a pre-tax loss in this range had been expected.

    More interesting Bank is refusing to do any media interviews on “legal advice” so the media are left to wade through the 81 page “Interim Statement for the 6 months ended 30 September 2009” for details on the bank’s performance.

    Most Irish business owners will be interested on the statement’s about the bank’s business lending:

    “Gross new lending to SMEs in the first 6 months of our financial year was over €1.5 billion, with overall SME overdraft / working capital facilities / limits available to customers up 18% on 2008 levels. We continue to process over 6,000 credit applications each month with consistently high levels of approvals maintained over the period. We have opened 12,000 business current accounts since April 2009. Bank of Ireland is very much open for business and committed to supporting our customers.”

    I have no doubt that if the bank says it has lent  €1.5 billion to businesses it has. But I wonder just what proportion of its lending is in private equity deals overseas. As we reported in August Bank of Ireland was part of a syndicate of banks that supported the €133 million acquisition of German company Kalle by Silverfleet Capital, a buyout firm. A bank spokesperson said each of the banks contributed about €25 million, so that’s a fair chunk of the €125 million.

    Given the €3.5 billion in Government support Bank of Ireland has received (not to mention the bank guarantee) taxpayers might expect some more explicit detail and evidence that it is supporting the real Irish economy.

  • Bookies beat the bankers

    May 18, 2009 @ 4:10 pm | by Barry O'Halloran

    “When I was young, people called me a gambler. As the scale of my operations increased, I became known as a speculator. Now I am called a banker. But I have been doing the same thing all my life.”

    - Ernest Cassel, City of London merchant banker and financial adviser to King Edward VIII of England.

    Cassel uttered those words over a century ago,  but the Irish Stock Exchange threw up one interesting figure today that would probably have given him cause to smile. At around 3pm, Paddy Power plc was worth more than Irish Life & Permanent (IL&P), Ireland’s “third biggest” bank.

    The listed bookie’s shares were trading at 17 euro, giving it a market capitalisation of 800 million euro. IL&P was at around 2.80, a total price tag of 770 million euro. And it’s likely that Paddy Power’s shares will continue to head north, thanks to its purchase of a majority stake in Australian bookmaker, Sportsbet.

    Davy Stockbrokers published a note earlier setting a target price of 22 euro for Power. If it were to hit this, at their current prices, it would beat both Bank of Ireland and AIB by a short head in the valuation stakes.

    Given the uncertainty about the banks, the short odds that the State will take a 90 per cent stake in them and the fact that nobody knows if the National Asset Management Agency will jump the many hurdles that it faces, you’d have to say the bookie is a better bet. (more…)

  • ISEQ provides a glimmer of good news

    May 5, 2009 @ 12:53 pm | by John Collins

    There’s been little good news for investors in the Irish stock market in the last 18 months. The Dublin exchange saw a net loss of €61 billion last year. While most people in this country don’t invest directly in the ISE they participate through their pension funds which are down by an average of 30 per cent in the last 12 months (new figures on pension performance are expected later in the day).

    We should all be buoyed by the news that the ISE had its second best month ever in April with the ISEQ index gaining 19.5 per cent (albeit off a dreadful base). At the time of writing it’s up another 5 per cent today.

    A research note from Davy says that “a jump of 9.3% in the final two days of April capped a great month for the ISEQ. The index is now well into positive territory year-to-date (up 11.9%)”. The analysts note that Irish stocks outperformed the FTSE Eurofirst 300 index by 5.8 per cent and are ahead 12.4 per cent so far this year. 

    The finance and banking stocks led the charge in April gaining 53.4 per cent, following a 69 per cent gain in March.  Davy notes that ”encouragingly, gains were evident right across the market, with 48 of the ISEQ’s 59 constituents advancing on the month”. They believe the market bounce globally was driven by a better-than-expected earnings season in the US, combined with some encouraging economic indicators.

  • Nostalgia for St Patrick’s Day Massacre: the Iseq’s glory days

    March 17, 2009 @ 5:45 pm | by Laura Slattery

    It is now one year since the event dubbed by market traders as the St Patrick’s Day Massacre, in which banking shares started bouncing all over the place with even more wild abandon than normal and ”false and misleading” rumours about the financial strength of Anglo Irish Bank sent the then-listed stock hurtling down 15 per cent.

    Such percentage falls seem commonplace to market-watchers now, but even then, seven months into the credit crunch, it seemed calamitous – and suspicious. The high intraday volatility was connected with unusual trading patterns at HBOS in London: both banks were thought to be the victims of short-sellers using illegal “trash-and-cash” techniques to spread malicious gossip about banking stocks and then pocket the profit when the share price collapsed.

    One year on, and many shareholders and bailout-providing taxpayers alike will find it hard not to wish for the simplicities of a world in which unscrupulous short-sellers were the only problem facing the likes of Anglo Irish Bank, now nationalised with its associated scandals responsible for a downgrading in the Irish banking system’s ranking, and HBOS, now submerged into the largely state-owned Lloyds Banking Group. It was ruefully noted today that even after the banking bloodbath of St Patrick’s Day 2008, the Iseq closed above the 5,700 mark. These days, it hovers at around 2,100 and is down one member. (Or two, if you count Waterford Wedgwood.)

    In the meantime, the phrase “green jersey agenda” has acquired connotations rather less innocent than anything you might find at a St Patrick’s Day parade.

  • Elan’s trouble with dates

    January 13, 2009 @ 8:12 pm | by Dominic Coyle

    Elan president Carlos Paya entered the JP Morgan Healthcare Conference hoping to put behind him the controversy over statements attributed to him over a possible extension to the duration of Phase III trials for the company’s Alzheimer’s drug bapineuzimab  currently slated to last 18 months.  Unfortunately, as he moved to clarify -referring to recent confusion – he again alluded to 24 months before hastily correcting himself.

  • Crossed lines at Elan

    @ 7:59 pm | by Dominic Coyle

    Irish drugmaker Elan is suffering a significant attack of mixed messages. Just days after chief executive Kelly Martin stated categorically that the maker of multiple sclerosis breakthrough drug Tysabri “isn’t negotiating to sell the company to Pfizer or any other drugmaker”, the company announced a strategic review to assess a range of alternatives (sic) that include . . . a merger or sale.

    That announcement came just after the company put out a statement “clarifying” about an “erroneous report” in news service Bloomberg that said the duration of a Phase III clinical trial for the company’s Alzheimer’s disease drug bapineuzimab could be extended. “The planned [18 month] duration of the trials has not changed since the program was announced in December 2007. There are currently no plans to extend the duration of the Phase III trials,” it said curtly.

    Fair enough, except that the Bloomberg story quotes both Elan president in charge of strategy Carlos Paya and head of corporate relations Mary Stutts (both appointed in recent months, but industry veterans).

    “There are a number of discussions going on, including what is the right duration of the trial,” Paya said in a telephone interview with the news service. “The length is now 18 months. There are also some discussions of making a number of changes in the protocol: should they be 24 months, or 18 months with an extension?” Stutts was reported as saying the discussion about the length of the trials is occurring within the company, and hasn’t been broached with either the Food and Drug Administration [the regulator] or partner Wyeth.

    So just who needs clarification then?


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