Thu, Dec 18, 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. Investing - Big hedge funds win again on PetSmart, Riverbed, RBS sells real estate loans to hedge fund Cerberus, Talisman energy speculation: Which hedge funds could benefit?[more]

    Big hedge funds win again on PetSmart, Riverbed From CNBC.com: Another week, another set of wins for activist investors. On Sunday, pet supply retailer PetSmart agreed to the largest leveraged buyout of the year at $8.7 billion. Hedge fund firm JANA Partners had been pushing for a sale a

  2. Outlook - Hedge fund manager who remembers 1998 rout says prepare for pain, Bond guru Bill Gross predicts U.S. economic growth to dip to 2%[more]

    Hedge fund manager who remembers 1998 rout says prepare for pain From Bloomberg.com: Stephen Jen landed in Hong Kong in early January 1997 as Morgan Stanley’s newly minted exchange-rate strategist for Asia. He was soon working around the clock when investors began targeting the region’s

  3. Opalesque Exclusive: U.S. legal receivables fund launched in August[more]

    Benedicte Gravrand, Opalesque Geneva for New Managers: Investing in asset-backed receivables is a strategy that has been an integral part of the alternative investment space within the overall fixed income asset c

  4. Comment - High fees and low performance hit hedge funds[more]

    From FT.com: Disenchantment over high fees and lackluster performance may finally be turning the tide against hedge funds, fresh data suggest. Despite generally weak returns since the global financial crisis, hedge funds have enjoyed positive net inflows every year since 2010. This helped assets und

  5. Performance - Lansdowne, Man Group, other hedge funds profit from shorts in oil, Turmoil boosts hedge funds that bet against Russia, oil, CTAs post strongest returns since December 2010[more]

    Lansdowne, Man Group, other hedge funds profit from shorts in oil From Valuewalk.com: The rising short interest in oil companies implies that the worst for oil is yet to come. Data from Markit shows that short exposure in energy sector of S&P 500 is still looming close to the highest mar