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Do the crises in Argentina and Turkey spell danger for emerging markets as the strong dollar stings? Spend your way onto the property ladder! The hedge fund that has lost a fortune betting on the rescue of Northern Rock put out a profit warning today, admitting the turmoil in financial markets last month is likely to see its profits stagnate this year. 72m it has bet on a recovery in Northern Rock’s shares, an embarrassing reverse for two of the most highly regarded hedge fund managers in the business. That contributed today to the first-ever profit warning from a firm that boasts Britain’s richest man, steel magnate Lakshmi Mittal, among its significant shareholders.
RAB was founded in 1999 by two of the most successful and wellconnected hedge fund managers of their generation. A fantastically gifted stockpicker who cut his teeth at Merrill Lynch and who has ridden the boom in oil stocks, Richards is also among the City’s most highprofile Christians, making a point of giving away a proportion of his enormous bonuses every year to evangelical causes. Michael Alen-Buckley, who like Richards is in his forties, plays chairman to Richards’ chief executive. Old Amplefordian Alen-Buckley is an urbane moneymaker who counts multi-millionaire hotelier Sir Rocco Forte among his in-laws. While RAB, like most hedge funds, has always argued that it can make money in good times as well as bad, the firm today shocked investors with the profit alert. While the company currently believes that pre-tax earnings for the full year to 31 December will be around the level of those earned in 2006 and at the lower end of expectations, the eventual outcome for the year will be dependent on trading conditions for December 2007 and the actual level of performance fees earned as at December 2007. Alen-Buckley said RAB is historically used to having up to three months a year of poor trading, but that performance is smoothed out over the year.
So a downturn in the performance of a fund at the end of the year will disproportionately hurt the results. He also revealed that RAB’s two main money-spinning funds are hurting most. Its Special Situations fund, which accounts for up to a third of assets under management, is the one that has been investing in Northern Rock. But Alen-Buckley downplayed the effect of the Rock investment. The Energy fund, which has bankrolled RAB’s success in recent years and has most famously been a backer of the controversial ventures of ex-England cricketer Phil Edmonds, is also hurting.
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What is an investment trust and why would you want to put your savings into one? Do the crises in Argentina and Turkey spell danger for emerging markets as the strong dollar stings? Spend your way onto the property ladder! Wall Street’ because of his legendary swagger and instinct for survival, writes Hugo Duncan. 18million bet on his US banking giant by snapping up 500,000 shares following the dramatic fall in share prices so far this year. It’s a bold bet on the financial health of global banks, and comes despite JP Morgan’s own stock falling around 20 per cent this year.