Avoiding Guilt by (Name) Association
I can certainly understand why a bank or investment fund would want to have “First” in its name (“First National Bank of [ ______ ]).”
The name that’s always puzzled me is “Fifth Third Bancorp,” headquartered in Cincinnati.
Given the financial news the last few days, I thought a scorecard would help keep things straight:
Third Avenue Management: Proprietor of a junk bond that failed last week, rocking financial markets. It subsequently announced that it is liquidating the fund, and in the meantime blocking redemptions.*
Third Point: Activist investor in the middle of the Dupont – Dow Chemical combination (it opposes it).
Stone Lion Capital Partners: High-yield credit fund also rumored to be in trouble, and that just suspended redemptions.*
Lionstone Investments: Houston-based real estate investor (run by my first cousin!). Doing fine (they just struck a major development deal in downtown Atlanta).
WTI: “West Texas Intermediate.” Benchmark for wholesale oil prices that just fell below $35 a barrel, presaging even lower prices at the pump.
WTF: As in, “What the F*ck is going on with energy prices right now?!?”
“Sell First, Ask Questions Later”
At least to me, it’s perplexing that a tiny, long-announced Fed uptick in short-term interest rates — official announcement due this Wednesday — should roil the bond market.
Surprise #2 about the recent action specifically in junk bond funds: by Wall Street standards, they’re all relative minnows (under $1 billion).
Which suggests that either the markets are overreacting, or, there’s more going on beneath the surface than is readily apparent.
Anyone else having déjà vu right now??
*It’s almost never a good sign for an investment fund when: a) investors simultaneously all clamor for their money back; and b) the firm refuses.
One of the sole exceptions I can recall is when money manager Michael Burry (of “The Big Short” fame) refused — and ultimately made a killing for the same investors.
