Shareholders’ Activism and Firm Performance

Escrito el 20 febrero 2007 por Juan Toro en Financial Markets

Last week the IE hosted a Research Workshop on Corporate Governance attended by top scholars on the field of finance. Among the topics discussed, presentations dealt with the classical agency problems that exist in the boardrooms/shareholders relationship and the relationship between activism and performance.

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La noticia de la semana

Escrito el 19 febrero 2007 por Javier Vega Fernández en Corporate

Os adjunto una noticia de Agencia, de la que he borrado los signos identificativos porque no se trata de se


Nothing to worry about

Escrito el 14 febrero 2007 por Juan Toro en Financial Markets

This is the main idea transmitted in the Fed Chairman Bernanke’s Senate Banking Testimony. Ben Bernanke presented a rosy picture of the US economy. Growth slightly below trend, housing sector correction not to worry about and inflation in control though still needs some


Sobre las grandes corporaciones

Escrito el 12 febrero 2007 por Javier Vega Fernández en Corporate

La pasada semana, el presidente de Siemens, Klaus Kleinfeld, ha hecho unas declaraciones al Financial Times sobre la miop


Can Hedge Funds go public?

Escrito el 11 febrero 2007 por Juan Toro en Financial Markets

This seems odd but it is as it sounds. On Friday, we had the first hedge fund going public in the NYSE: Fortress. The main differences relative to others is how its assets under management are distributed. They have approximately 30 bn dollars distributed as: a) 60 % is in private equity; b) 30 % on hedge funds; c) 10 % is in real state.

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You can emit for free:

Escrito el 8 febrero 2007 por Juan Toro en Financial Markets

It seems that this is what we can interpret from the price of European Union Allowances for CO2 in Phase I (EUAs) within the European Trading Scheme (ETS). Yesterday, prices for EUAS prices were slightly above 1.5 euros per tonne. This means that any installation that emits above the allowances they were allocated, could comply just paying 1,5 euros per tonne of CO2 that they produce in excess. The ETS, considers two phases, Phase I going from 2005 to 2007 and Phase II going from 2008 to 2012. The amount of CO2 allocated to industrial installations in each phase is established in National Assignment Plans that have to be approved by the EU. Any amount of CO2 produced by installations in excess of their allocations has to be bought in the markets for EUAs.

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At the end of 2006, Goldman Sachs announced that they will be offering an index able to clone hedge funds returns synthetically. The index responds to the appealing name of ART (Absolute Return Tracker) and would replicate hedge funds performance at a much lower cost, just a 1 per cent flat fee. Anyone that buys it can expect to get the returns of the universe of hedge funds that it clones. The flat fee would undoubtedly attract many investors if we consider fees charged in the hedge fund industry. Some fees in the US can go up to 2 % of annual management fees and the corresponding performance fees can reach 20 % of returns. Goldman


Hawks and Doves

Escrito el 2 febrero 2007 por Juan Toro en Financial Markets

These are very common words in the financial press since Central Banks gained independence. But what do they mean? A “Hawk” is a central banker who is a little more concerned with implementing monetary policy to fight inflation rather than to stimulate the economy. A “Hawk” has a bias towards higher rates whenever there are signs of overheating in the economy. A “Dove” believes in the stimulating properties of monetary policy and thinks that it is a relevant tool in keeping the economy growing. A


The sudden drop in oil prices is worrying policy maker to the extent that some economist show the equivalence between the sharp drop in oil prices and the effect of a rate cut (whether it is Eonia or Fed Fund). Merril Lynch & co belives this recent drop in oil prices is equivalent to three rate cuts (of 25 basis points each) by the Federal Reserve. This seems a bit of an exaggeration. Some other economists were doing similar studies at the end of last year comparing the dollar depreciation with a given cut in rates. No doubts that this large price movements (either oil, exchange rates, or housing prices) have consequences when Central Banks set rates and it changes the scenario within which policy makers revise any upward/downward decision on rates. May be the hardest thing is always to distinguish between shot term and long term asset price movements that might need correction. This has puzzled Central Banks in the last ten years quite a bit. It did with the dot com bubble and it has done recently with the surge in real state prices.

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Have petrodollars affected some asset prices?

Escrito el 26 enero 2007 por Juan Toro en Financial Markets

In a previous article I discussed the huge current account surpluses that some oil producing countries have accumulated in the last four years and how this has implications both from an asset allocation and an asset pricing perspective. I focussed there on where the inflows have been channelled from oil producing countries. I would like now to pay a bit more of attention on the asset pricing side of this story. Has the inflow from oil income affected asset prices worldwide? Which assets have been affected most?

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