Harry Newton's In Search of The Perfect Investment
Newton's In Search Of The Perfect Investment. Technology Investor.
8:30 AM EST, Friday, March 23, 2007: Soon
there will be a Federal election in Australia. To get re-elected, the governing
party often produces a pre-election, BIG tax break. This election's BIG tax
break is that from May 10, 2006 to June 30, 2007 (the end of the Australian
financial year), you're allowed to put up to $1 million tax-free in your super
fund/s (your retirement superannuation fund/s). That money can be contributed
by you, and/or your employer.
think where the money will go. Most of it (and I mean most of it) will go into
the Australian stockmarket. And guess what the Australian stocks have done since
the compulsory super law was passed in 1992? This chart compares BHP to the
ASX200, over the past ten years. The ASX200 is Dow Jones index of Australia,
except it covers not 30 stocks, but the 200 biggest Australian companies.
There has always been a big incentive to put money in your super fund. Ordinary
income tax can be as high as 46.5%. Allowable contributions to your super fund
are deductible. But "allowable" has been low. This is the first time
the government has opened it to a huge amount. A $1 million is a lot of money
in Australia. And Australians are scrambling to scrounge the money before the
June 30 deadline. You should hear what's going on in my sister's family, who
live in Sydney, my home town. To raise cash, my sister is trying to sell her
grandchildren. (Well, not really. But you get the idea.)
Like the U.S.,
Australia has zillions of us baby boomers about to retire. The Australian Government,
like the U.S. government, doesn't have the money to pay their old age pensions.
The compulsory super fund system --
introduced in 1992 -- was to address that lack of money problem. And it's worked
have more money invested in managed funds per capita than any other country,
including the U.S. Compulsory superannuation in combination with buoyant economic
growth has turned Australia into a 'shareholder society', where most workers
are now investors in the stock market. Apart
from sport, it's all everyone in Australia talks about. Wikipedia has a good
piece on Australian superannuation. Click
recommendation remains: Vanguard Australian index funds. For more, click
Chutzpah Today, Part 1: from today's Wall
the energy trader whose risky bets triggered the largest hedge-fund failure
in history, has formed a new fund only six months after Amaranth Advisors'
collapse. Solengo Capital, of Calgary, Alberta, and Greenwich, Conn., is hiring
traders and seeking money for "a series of funds across the commodities
space," according to a preliminary marketing document circulating among
Mr. Hunter is
seeking hundreds of millions of dollars from overseas investors, potentially
in Europe and the Mideast, people familiar with the matter say.
recent loss of more than $6 billion makes it unlikely that he can raise
capital from U.S. institutions such as pension funds, he could benefit from
the willingness of cash-flush investors elsewhere to take risks in the commodities
markets. Investors also can invest in Solengo funds that are separate from
the portfolio that the 32-year-old Mr. Hunter will manage....
Two energy traders
who worked for Mr. Hunter from his Calgary trading outpost at Amaranth, Shane
Lee and Matthew Calhoun, are among the portfolio managers. A former Amaranth
quantitative analyst for risk management, Karl Koster, is also listed as part
of the team.
A person familiar
with Mr. Hunter's new fund says a launch could come by midsummer. Solengo
is the name of an Italian wine, but the organizers declined to elaborate on
how they selected the name.
Mr. Sabad, a
Calgary energy trader, says the fund has imposed restrictions on the size
of individual portfolios and how much money each can have at risk. A trader's
violation of maximum-capital restrictions "eliminates ALL capital locks
for investors," enabling them to withdraw funds without penalty, the
marketing document states. Says Mr. Sabad: "We've given a lot of thought
to risk management and how we can prevent what happened at Amaranth."
Mr. Hunter was
allowed to invest billions of dollars at Amaranth, mostly in the natural-gas
markets. His initially successful, but risky, bets took a wrong turn in September,
when prices for natural gas for future delivery plummeted amid the absence
of major hurricanes and a glut of gas inventory.
to stay in business but had to pay large concessions to its investment bank
and another investor who agreed to take on its undesirable trades. Clients
rushed to withdraw money, and the fund said it would close; it is still the
subject of various regulatory investigations.
offer stand-alone portfolios tailored to specific market sectors, such as
crude oil or base metals, the document states. Mr. Hunter will manage a "commodities
volatility" fund that takes positions in options and other instruments
based on how prices move.
a generous portion of profit to its traders. It will charge investors 2% of
assets and 20% of profit; each manager gets to keep all of his own portfolio's
20% profit fee and as much as half of the 2% annual asset fee. Usually, hedge
funds pay traders a smaller percentage. It calls its compensation "perhaps
the most attractive work environment in the hedge-fund world."
involved in big blowups have started new investment funds, most notably John
Meriwether, the head of Long-Term Capital Management when it collapsed in
Today, Part 2: from today's Wall Street Journal:
P. Nacchio, the former chief executive of Qwest Communications who is on trial
for insider trading, knowingly repeated unreliable growth forecasts in 2000
and 2001, a former company official testified yesterday.
projected revenue growth of 15 percent to 17 percent a year, without disclosing
that the increase relied on one-time sales of network capacity, a former investor
relations chief, Lee Wolfe, told jurors yesterday in Federal District Court
analysts became skeptical of Mr. Nacchios claims that revenue from Internet
and data services drove growth, he said.
Joe Nacchio, a propitious stock timer.
becoming increasingly accusatory in terms of, What are you guys doing
that enabled you to beat the numbers? said Mr. Wolfe, the trials
accuse Mr. Nacchio, 57, of selling $101 million in Qwest shares from
January to May 2001, before the price plunged, based on internal warnings
that the company would not be able to meet its targets. Mr. Nacchio denies
engaging in insider trading and said he believed Qwests public projections
Mr. Nacchios lawyer, John Richilano, suggested that Mr. Wolfe had tailored
his testimony to avoid prosecution on insider-trading charges. Mr. Wolfe said
prosecutors had agreed not to charge him as long as he told the truth.
Both Mr. Nacchio
and Mr. Wolfe worked at Qwest from 1997 to 2002 after working at AT&T.
Mr. Wolfe said
he learned in company meetings in late 2000 and early 2001 that Qwest was
not reaching Mr. Nacchios targets for Internet and data service growth.
Mr. Nacchio controlled virtually all the information released to investors,
Mr. Wolfe said.
found ways, and Mr. Nacchio found ways, to trivialize and minimize the one-time
transactions, and way understated the true impact they were having,
Mr. Wolfe said.
Mr. Wolfe said
he implored Mr. Nacchio not to reaffirm the revenue growth rate of 15 percent
to 17 percent before a conference call announcing Qwests first-quarter
earnings in April 2001.
there were problems with growth, Mr. Wolfe said. Im not
sure that he responded to my concerns.
Shares of Qwest
reached a closing high of $64.50 in March 2000 on expectations that
use of its fiber-optic network would surge. Mr. Nacchio sold the last of his
shares in May 2001 at $38.25. Shares fell to $1.11 in
August 2002, meaning Qwest lost more than $100 billion in market value.
yesterday, Mr. Wolfe said that in early 2001, he exercised options to buy
20,000 shares and sold them for $646,000. He allowed options to buy 25,000
shares to expire, he said.
deep down that I had material information in the form of the fact that we
were using one-timers to make our numbers, Mr. Wolfe said. I knew
it was wrong. It was a crisis of conscience to say I should not do that anymore.
I knew I shouldnt have done it before.
from Mr. Richilano, Mr. Wolfe said he had never consulted company lawyers
before making his stock sales based on inside information.
He said he had
testified for six days to the Securities and Exchange Commission and spent
many days cooperating with the Federal Bureau of Investigation.
The Jewish Mistress
A Jewish husband and wife were having dinner at a very
fine restaurant when this absolutely stunning young woman comes over to their
table, gives the husband a big open mouthed kiss, then says she'll see him later
and walks away.
The wife glares
at her husband and says, "Who was that?"
replies the husband, "she's my mistress."
the last straw," says the wife. "I've had enough, I want a divorce!"
"I can understand
that," replies her husband, "but remember, if we get a divorce it
will mean no more shopping trips to Paris, no more wintering in Barbados, no
more summers in Tuscany, no more Jaguar in the garage and no more yacht club.
But the decision is yours."
Just then, a mutual
friend enters the restaurant with a gorgeous babe on his arm. "Who's that
woman with Moishe?" asks the wife.
mistress," says her husband.
prettier," she replies.
is here. Part 1. Park benches beckon.
An elderly man is sitting on a park bench reading a newspaper. A bird flew overhead
and a copious dropping lands on the man's best navy blue suit.
looks up, shakes his fist in fury at the bird and cries out, "For others,
Spring is here. Part 2. Park benches beckon.
Moishe and Yankele are sitting on a park bench. A bird drops a copious present
on Moishe's beautiful suit.
Moishe says to
Yankele, "Can you please get me a Kleenex."
Yankele answers: "Why? By the time I get the Kleenex, the bird will have
long flown away."
This column is about my personal search
for the perfect investment. I don't give investment advice. For that you have
to be registered with regulatory authorities, which I am not. I am a reporter
and an investor. I make my daily column -- Monday through Friday -- freely available
for three reasons: Writing is good for sorting things out in my brain. Second,
the column is research for a book I'm writing called "In Search of the
Perfect Investment." Third, I encourage my readers to send me their
ideas, concerns and experiences. That way we can all learn together. My email
address is .
You can't click on my email address. You have to re-type it . This protects
me from software scanning the Internet for email addresses to spam. I have no
role in choosing the Google ads. Thus I cannot endorse any, though some look
mighty interesting. If you click on a link, Google may send me money. Please
note I'm not suggesting you do. That money, if there is any, may help pay Claire's
law school tuition. Read more about Google AdSense, click
here and here.