Chairman of Berkshire Hathaway, legendary value-investing disciple of Benjamin Graham.

]]> http://foroffshorejobs.wordpress.com/2009/10/08/swiss-banks-storm-east/ Thu, 08 Oct 2009 12:32:23 +0000 foroffshorejobs http://foroffshorejobs.wordpress.com/2009/10/08/swiss-banks-storm-east/

Swiss wealth managers are hoping that Asia can breathe life into an industry that has been battered by recent asset erosion and tax-evasion scandals. The flow of offshore assets, especially from the United States, is dwindling away, but offshore banks are well positioned to take advantage of the fastest growing wealth market in the world.

The Swiss private banking industry had already begun to shift its focus to onshore activities in prosperous regions before it had felt the full force of the US and European assault on tax havens.

UBS pulled out of offshore banking from the US after losing a lawsuit brought by the Internal Revenue Service (IRS) while other Swiss banks have either followed suit or reduced their activities.
But UBS chief executive Oswald Grübel recently told the Wall Street Journal that lost revenues “can be made up over time through emerging markets, in Asia and the Middle East.”

Despite having lost its mantle as the world’s leading wealth manager, according to researchers, UBS is dominantly placed in Asia, head and shoulders over its rivals. Singapore-based fund manager Calamander Group estimates that UBS holds $100 billion (SFr104 billion) of the $640 billion in wealth managed by private banks in the Asia Pacific region. Credit Suisse comes fourth in the list with $50 billion in assets.

And there appears to be plenty more wealth on the horizon despite assets taking a huge hit in the recent financial crisis. The Boston Consulting Group believes the region will generate 9.5 per cent per annum growth for the next five years compared to a global wealth creation average of four per cent.

An annual report by Merrill Lynch bank together with consultancy group Capgemini predicts that Asian millionaires will hold more wealth than their European counterparts by 2012. Asia has advantages over wealth rivals such as Russia, the Middle East and Brazil, according to Calamander Group chairman Roman Scott.

“Asia-Pacific has a much larger demographic base and a more diversified wealth base than commodities,” he said. “This has been the place to be for the last six years. You must be looking at 50 to 60 per cent of future growth of the market situated in the region.”

Observers also predict that much of the wealth currently managed in Europe or the US will return to Asia as assets pass to the next generation and locally based banks gain in stature. The financial hubs of Singapore and Hong Kong are the likely beneficiaries of this trend. Bankers in the region are keen to refute fears that the region will also attract illicit funds from tax dodgers who have been flushed out of other havens.

Singapore has been busy negotiating new tax treaties with other countries and expects to be removed from the Organisation for Economic Cooperation and Development (OECD) grey list by the end of the year. Hong Kong has so far proved more reticent to bow to the international tax crusade. But local bankers hope the Chinese territory will soon reform.

I’ve spent the last few days observing at the Disney Institute in Orlando.  Much of the focus is about how Disney does business and, with my lens always focused on the luxury market, I wondered why Disney doesn’t play in this segment.  Yes, I understand that high income individuals are not their primary target, but why shouldn’t they be?  One of the key tenets of Disney’s strategies is inclusiveness – happiness for everyone.  I think the fear is that including HNWI (high net worth individuals) would exclude others but I don’t think this has to be the case.  For example, why not offer a luxury resort on property? If you can’t afford it, there are many other resorts to choose from – you’re still at Disney and you still get the same park experience.  Apparently, there is one luxury property (“like the W” I was told), but it is for Vacation Club members only.  Why?  The Institute facilitators tell the class that Disney has no 5 star properties because “they don’t want gated properties” and “they’re not family friendly”.  Do you understand what a 5 star property means?  And I guess you failed to notice the security gates to enter Disney.  So the facilitators may not know what they’re talking about…but I’ve been wracking my brain all week and can’t come up with a good reason why Disney shouldn’t have a luxury property.  Half the battle in luxury is customer service, which Disney has in spades…

I was also looking at the Disney merchandise – again, primarily targeted to non-HNWI.  Admittedly, there is a tendency to get caught up in the emotion of the park, causing one to run madly through an “Emporium” grabbing t-shirts, Mickey ear hats, bracelets and hats.  And then you picture yourself walking in Georgetown, wearing an oversized shirt that says, “Are you Grumpy today?” and you slowly back away from the register before the damage is done.  Ok, so Mickey and Disney emblazoned clothing is not haute couture – but I noticed Marc Jacobs wearing a vintage Mickey tee on the Marc Jacobs Louis Vuitton documentary.  I’m just saying – although the current product is not appealing to the high end of the market, it would be possible to do so.  Hell, Isaac Mizrahi seemingly whores himself out to anyone, I’m sure you could get him to design a few shift dresses and ballet flats.

Seth Klarman, Baupost Group

The Benjamin Graham Centre for Value Investing

Seth A. Klarman, MBA, The Baupost Group

March 17, 2009 – Videoconference

Seth Klarman at the Benjamin Graham Center for Value Investing

Mr. Klarman is President of The Baupost Group, L.L.C. Founded in 1982, Baupost discretionarily manages $15 billion for a number of institutional and wealthy individual investors. Baupost uses a value discipline with an event-driven bias to find global opportunities in such diverse areas as publicly-traded and private equities, bankrupt and financially-distressed debt, and real estate.

E. M. Murray. Managed Equities. Fixed Downside Risk.

Michael Jackson, U2 and The Wealth Report – WSJ Blogs
zyakaira notes: WSJ blogs also have U2’s Larry Mullen speaking against the
Irish Bile and resentment against the rich..the US is cautioned not to treat
them poorly. In a related story, the death of Michael Jackson has caused
speculation about the sale of his rich music collection that’s jointly owned
with Sony and includes the vintage Beatles collection purchased by him for
$47.5 million. This collection along with his own is valued at $1 billion
and may go higher given the quality of the artiste’s recordings despite the
debts that pwned him and raised questions on his lifestyle. Sony has hard
work cut out for them to sort out these squabbles The world population of millionaires fell 15% last year, with the super-rich
taking an even bigger hit, according to a new survey.
The Capgemini and Merrill Lynch World Wealth Report, released this morning,
finds that the number of global millionaires fell to 8.6 million from 10.1
million in 2008. The declines were the largest since Capgemini/Merrill
started the survey 13 years ago. (The survey defines millionaires as those
with investible assets of $1 million or more).
There were 2.5 million millionaires in the U.S. at the end of 2008, down
from 3 million in 2007.
The wealth held by the world’s millionaires plunged nearly 20%, to $32.8
trillion from $40.7
trillion. The ultrawealthy, or those with $30 million in investible assets,
saw their ranks drop 25%, with their wealth dropping 24%.
According to the survey, the more rapid fall in wealth by the superrich had
an outsize impact on the overall numbers, since so much of global wealth is
concentrated at the top of the millionaire pyramid. At the end of 2008, the
ultrawealthy accounted for less than 1% of the millionaire population but
held 34.7% of the wealth.
The main reason for all the declines: the financial crisis, contracting
gross domestic product and the accompanying declines in stocks, real-estate
values, private equity, hedge funds and other things the wealthy invested
in.
Surprisingly, the U.S. wealthy fared better than many
via The Wealth Report – WSJ .

Posted via email from The investment blog on Post

“One million gets you nothing nowadays” « Dr Hsu’s Forum

Posted via email from The investment blog on Post

(PTI – NDTV.Com)
The wealth of world’s rich people dropped nearly 20 per cent to $32.8 trillion, while India saw the second largest decline in the number of High Net Worth Individuals at the end of 2008, says a report.
 
The population of HNWIs shrank by about 15 per cent to 8.6 million and in India, the numbers came down by 31.6 per cent to 84,000, says the World Wealth Report from Merrill Lynch and Capgemini.
 
HNWIs are referred to those who have at least $one million in investable assets, excluding primary residence, collectibles, consumables, and consumer durables.
 
“At the end of 2008, the worlds population of HNWIs was down 14.9 per cent from the year before to 8.6 million, and their wealth had dropped 19.5 per cent to $32.8 trillion.
 
The declines were unprecedented, and wiped out two robust years of growth in 2006 and 2007,” the report said.
 
Interestingly, the wealth of such individuals grew about 7.2 per cent from 2005 to 2007 while their wealth rose 10.4 per cent during the same period.
 
“India’s HNWI population shrank 31.6 per cent to 84,000, the second largest decline in the world, after posting the fastest rate of growth (up 22.7 per cent) in 2007.
 
“India, still an emerging economy, suffered declining global demand for its goods and services and a hefty drop in market capitalisation (64.1 per cent) in 2008,” the report said.

Posted via email from The investment blog on Post

We’ve developed the following brief guide to the successful launch of a fund as an unregulated collective investment scheme.  StypersonPOPE offers a variety of services throughout this process and these are noted below:

1. Idea – As with all investments, a fund must have a good idea behind it. It doesn’t have to be clever (the simpler the better!) but it does have to be well thought through and capable of delivering returns which will attract investors.

2. Initial Regulatory Options – depending on what you want to achieve, you will either have to understand the regulations you will be working within or plan how you can operate without undertaking regulated activity. In either case, it’s vital to understand the potential investment structures, how they are regulated, and how each is viewed by investors.

If what  you have in mind could be described as a ‘fund’ then it is likely that you have come up with a Collective Investment Scheme. In that case, you need to have early discussions with an operator but, more importantly, you need to understand the rules which apply to make sure that your advisors keep focused on what you want to achieve and don’t just throw up regulatory roadblocks.

Often, it is helpful to have one person coordinating all of the advisors and this is familiar territory for StypersonPOPE. We work with a number of experienced operators and solicitors to whom we can introduce you if you don’t already have strong relationships.

3. Market Research – after your initial discussions with advisors, and before you start spending too much money, you must make sure that your idea will work. As ever, it’s vitally important that you know you customer (the investor); who are they, what are they looking for, what else is on offer to them.  Your fund must be able to deliver suitable financial returns to investors, it must be something for which investors have an appetite, and you must carefully consider the competition and existing best practice in your market.  Most of what is produced in the research will feed directly into the Information Memorandum so it’s also important to make sure that the conclusions are well supported.

StypersonPOPE can carry out much of this research and will produce three important documents:

1. A clear indication of whether the investment opportunity is likely to be attractive to investors.

2. A ‘business and marketing plan’ which addresses the remaining steps to launch and run the fund.

3. A ‘due diligence pack’ which records the sources of facts, opinions and assumptions.

(This final document will be important for ensuring that the Information Memorandum can be approved without unnecessarily duplicating effort.)

4. Information Memorandum – this is by far the most important document and must be produced within rules laid down by the FSA. Ultimately, your Operator will approve this (or otherwise!) so you must write it in a way with which they are happy. You must also remember that its principal purpose is marketing – if it doesn’t sell the investment, you may as well not bother! Solicitors and Operators don’t always have marketing at the forefront of their minds, so you need to find somebody to coordinate the efforts, who understands the rules and regulations you must observe and the most effective way to market to investors.

StypersonPOPE includes within the team, experienced marketers, designers and writers who know what investors will want to see and who thoroughly understand the limits imposed by regulations.

5. Legal & Regulatory Approval – having prepared the IM, it must be approved by your Operator and they may require a legal review. The IM should have been written with the regulations in mind and the facts, opinions and conclusions must be properly supported by documented evidence and assumptions.

By involving StypersonPOPE from an early stage this, sometimes difficult, process can be made very straightforward.  We have often become involved here at the request of one or other party but it’s much better (and cheaper) to get it right first time rather than try to put right what has already gone awry.

6. Design for print, e-mail and web – once approval has been obtained, the final documents can be prepared. Often these will include a printed IM and Executive Summary and their e-mailable equivalents and possibly a web site from which investors can download copies. Each of these must comply with the regulations and because the circulation will be heavily restricted, web sites in particular must be carefully planned to ensure that relevant information reaches only those for whom it is intended.

By combining print and new media design skills with a deep understanding of the rules surrounding the distribution of Collective Investment Schemes, StypersonPOPE can create a suite of compliant and effective marketing documents as well as clear procedures for ensuring that they are distributed appropriately.

7. Marketing – there are several routes to market for this kind of collective investment scheme and these will have been planned at an early stage. One of the most common routes to market is through financial advisors.

StypersonPOPE can assist with marketing whether it be compiling a target database for an e-mail campaign or hosting nationwide roadshows for financial intermediaries.  Where allowed, StypersonPOPEcan also manage campaigns to individual High Net Worth Investors whether through respected (non-IFA) intermediaries or through direct mail.

8. Receiving Applications – dealing with applications for investment can itself be a regulated activity (“receiving and transmitting orders”).  Often the Operator will handle this directly but in some cases, particularly if the Operator is based outside the UK, it may make sense for somebody else to receive, check, complete, and forward on the applications as this can involve a process of ‘to-and-fro’ with the investor’s advisors. 

StypersonPOPE can help find an authorised person to perform this service or, where appropriate, manage a variation of permissions to allow you to do this yourself.

As you have seen, StypersonPOPE’s broad range of services can assist throughout the process of establishing a fund whether it is still just an idea or whether it is seeking further rounds of investment.  To discuss how we can help in your particular circumstances, please call or e-mail Simon Webber and we can begin our discussions. 

If you are a potential investor, we’d be very grateful if you could take 30 seconds to complete the anonymous poll at the bottom of the page to let us know which certificates (if any) you currently hold.

The Financial Services Authority (FSA) categorises individual investors in a number of ways and allows certain firms to promote their services, products, investment schemes and funds to different groups.  These categories include:

• Certified High Net Worth Investors
• Certified Sophisticated Investors
• Self-Certified Sophisticated Investors
• Qualified Investors
• Individuals for whom a collective investment scheme has been assesed as ’suitable’
• Individuals assesed as having ‘adequate knowledge & experience’ of the risks of investing in a collective investment scheme 
• Individuals who have invested in ’substantially similar’ schemes

An investor may fall into any or all of these categories and may, at the same time, be either a ”retail” or “elective professional” client.  An  investor may also fall into one category for a certain instrument (eg shares in unlisted companies) but not for others (eg derivatives).  Also, depending on the structure of the investment (eg an EIS or a Collective Investment Scheme) certain categories may or may not be used.

It’s a complicated overlap of different restrictions, trying to acheive different objectives – if you’re promoting an investment or a regulated service and you need to understand it, please do call or e-mail Simon Webber to talk it through. 

IFAs are not the only route. 
“Unregulated Collective Investment Scheme” (UCIS) is something of a misnomer.  Far from being unregulated, the FSA restrict these schemes very tightly indeed – for funds structured as a UCIS, there is a simple edict:

“Such schemes cannot be marketed to the general public and are otherwise restricted in their promotion.“

As a result, the promotion of unregulated collective investment schemes, must be carried out very carefully and only to selected groups of investors.  Often the only route considered is through IFAs but in fact any authorised firm, and even unauthorised firms, can promote a UCIS as long as the approach is planned carefully and carried out correctly.

Summary Documents
For the sake of making the fund more attractive to investors, the detail of the information memorandum (IM) needs to be distilled, summarised and presented in a more user-friendly, marketing-led form.  Although secondary to the IM, this document must still meet the stringent demands of the FSA.  We produce summary documents, ensuring compliance, and with marketing expertise on hand, as well as design and print facilities, we can offer a full service if required.

Alternative Routes to Market
For some funds, IFAs may not be the best (or at least the only) route to market and with our assistance, General Partners, Managers, Advisers, and Promoters of such schemes can negotiate a marketing plan with their Operators, draft documents and produce a set of procedures which allows them to engage with individual investors under specific exemptions to the rules.

If, under the FSA’s rules you qualify as a High Net Worth Individual or a Sophisticated Investor, feel free to download and use one of the certificates (the criteria for eligibility are contained in each certificate):

• Certified High Net Worth Individual – Collective Investment Schemes
• Certified High Net Worth Individual – Financial Promotion
• Self-Certified Sophisticated Investor – Collective Investment Scheme
• Self-Certified Sophisticated Investor – Financial Promotions

Each certificate is valid for 12 months from the date of signature.  We don’t need to see these certificates because we’re not promoting any investments but if the criteria apply and you sign one of these certificates then other firms will be able to promote relevant investments to you.  They will probably ask to see a copy.

The Financial Services Authority (FSA) categorises individual investors in a number of ways and allows certain firms to promote their services, products, investment schemes and funds to different groups.  These categories include:

• Certified High Net Worth Investors
• Certified Sophisticated Investors
• Self-Certified Sophisticated Investors
• Qualified Investors
• Individuals for whom the investment is assesed as ’suitable’
• Individuals assesed as having ‘adequate knowledge & experience’
• Individuals who have invested in ’substantially similar’ funds

An investor may fall into any or all of these categories and may be a ”retail” or “elective professional” investor at the same time – to better understand the various categories of investor and the exemptions that they may be able to fit into, please e-mail or call me so that we can discuss it in more detail. 

(If you are a High Net Worth Individual or a Sophisticated Investor, you can find downloadable copies of the investor certificates here.)