Sat, Aug 23, 2014
A A A
Welcome Guest
Free Trial RSS
Get FREE trial access to our award winning publications
Alternative Market Briefing

Old Mutual bond manager introduces 'Facebunds’ and calls a turn in government bond markets

Thursday, June 14, 2012

Beverly Chandler, Opalesque London: Stewart Cowley, manager of the Old Mutual Global Strategic Bond Fund has written a strongly worded note comparing the Facebook IPO with the German government bond market, or 'Facebunds’ as he calls them.

"If regulators think the Facebook initial public offering was a scandal, they should look at the German government bond market" he writes, citing Bill Gross of PIMCO’s comment about the Facebook IPO, "I know a bubble when I see one."

Cowley writes that we can now see that Bill had a point. "At an initial valuation of nearly $105bn, each of Facebook’s 900m active users was valued at nearly $120 of annual advertising revenue. Put it another way, with revenues of $3.5bn it would take 30 years to pay off the original valuation of the company. Pretty steep you’d agree".

Cowley then advances to draw comparison with the 'absurdly valued’ Facebook and German government bonds, or bunds, saying: "What bubble hasn’t the world seen that it would merrily continue buying something that is one day a guaranteed to make a loss?"

Cowley analyses the maths behind the German bund. "Duration is a measure of a bond’s price sensitivity to yield movements. The higher the duration, the greater the price movement of a bond for any given yield. German bunds with a maturity of 30 years currently have a duration of 20 which means that for any one point movement in the yield up or down you will lose or gain 20 points of capital. This is be......................

To view our full article Click here

Today's Exclusives Today's Other Voices More Exclusives
Previous Opalesque Exclusives                                  
More Other Voices
Previous Other Voices                                               
Access Alternative Market Briefing
  • Top Forwarded
  • Top Tracked
  • Top Searched
  1. Institutions – Texas Employees sets 2015 tactical plan for alternatives, CalPERS' real estate consultant cautions the pension fund's investment committee, Why Sunsuper likes hedge funds[more]

    Texas Employees sets 2015 tactical plan for alternatives From PIOnline.com: Texas Employees Retirement System will invest in up to four new hedge funds in the next fiscal year, which begins Sept. 1. Trustees approved 2015 tactical investment plans for the hedge fund, private equity and in

  2. Private equity follows hedge funds into reinsurance for long-term capital[more]

    From Artemis.bm: It’s not just hedge funds that are entering the insurance and reinsurance market in search of so-called long-term capital to put to work in their strategies, private equity firms targeting the space are also seeking opportunities to add assets under management. The entry of large pr

  3. North America – New York City’s next hot neighborhoods targeted with property funds[more]

    From Bloomberg.com: New York’s real estate world is filled with tales of ordinary people who bought property decades ago and saw values skyrocket to the millions. Seth Weissman is seeking investors to get in early on the next hot neighborhoods. The veteran of Goldman Sachs Group Inc. and hedge

  4. Investing – George Soros bets $2bn on stock market collapse, Warren Buffett's Berkshire reveals Charter stake, cuts DirecTV, Hedge funds lusting to cash out of MGM, Top hedge fund managers are buying Ally Financial, Hedge funds dumped 5m Herbalife shares in Q2, Paulson & Co hedge fund ups Puerto Rico real estate bet, Netflix Inc., Citigroup Inc, Google Inc are top new picks in Tiger Management’s 13F[more]

    George Soros bets $2bn on stock market collapse From Newsmax.com: Billionaire investor George Soros has increased his financial bet that U.S. stocks will collapse to more than $2 billion. The legendary hedge fund manager has been raising his negative bet on the Standard & Poor's 500 Inde

  5. Investors now net short S&P500 and increased Russell shorts, technicals suggest further selling[more]

    Komfie Manalo, Opalesque Asia: Market Neutral funds increased their market exposure to -1% net short from -6% net short last week, according to Bank of America Merrill Lynch’s Hedge Fund Monitor. The report also added