Fri, Nov 27, 2015
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. Other Voices: Hedge fund marketing and the selling cycle[more]

    By Bruce Frumerman. How long is the selling cycle now? That’s a question my financial communications and sales marketing consulting firm has been asked on a regular basis by hedge fund firm owners and sales people, ever since we opened the doors to our firm in 1987 pre-crash. Wa

  2. People - Solus Alternative Asset Management adds chief strategist from BTIG[more]

    From Daniel Greenhaus joined hedge fund manager Solus Alternative Asset Management as managing director and chief strategist. He will work closely with Chris Bondy, Solus’ chief economist, managing director and executive vice president, said Chris Pucillo, CEO and chief investmen

  3. Opalesque Roundtable: Seeding deal terms can be onerous for hedge funds[more]

    Benedicte Gravrand, Opalesque Geneva for New Managers: Executives from fund of funds firms, family offices, a placement agent, a private equity firm, and an accounting firm gathered in Connecticut last month for the

  4. Opalesque Roundtable: Family offices flock to co-investment[more]

    Bailey McCann, Opalesque New York: Co-investments have been a hot topic for pension funds in recent years, as they try to move away from high fees and improve transparency. But now, family offices are more readily getting into the mix and establishing in-house deal teams, according to the delega

  5. More institutional investors invest in CTAs compared to last year despite dissatisfaction with performance[more]

    Benedicte Gravrand, Opalesque Geneva: "Despite a strong start to 2015 for CTAs in Q1, commodity market conditions have made return generation difficult for fund managers over much of the rest of the year to date," says Preqin’s November