Had this on the watch list too long and could kick my own ass if it was possible. I think this is just the type of play needed on these markets along with Value shares such as Churchill China that I recommended yesterday.

Heres just a brief background on the company.................

Hedge fund leads rush to float
by Louise Armitstead
RAB Capital is the first to plan a listing in London. Others are bound to follow

IN the spring of 1999 Philip Richards and Michael Alen-Buckley arrived almost empty-handed at their new office — a small room in 1 Adam Street, just off the Strand in central London.
The day — April Fools’ Day — seemed apt at the time. Richards and Alen-Buckley, both highly regarded bankers at Merrill Lynch, were giving up stellar careers to start their own hedge fund, RAB Capital. The only money they had was their own, and their staff consisted of one manager, a compliance officer and a secretary.

Five years on, the little room in 1 Adam Street, still RAB Capital’s main trading floor, albeit straining under a vastly expanded workforce, is again the engine room of an ambitious and pioneering venture.

Last week RAB Capital became the first stand-alone hedge-fund company to announce its intention to float in London.

Richards, 46, and Alen-Buckley, 43, will be at the helm of a company with a market value that could be as high as 100m. Their stakes could be worth 30m each. Advised by KBC Peel Hunt, the firm will release a prospectus tomorrow revealing how much money it intends to raise.

In the past five years, Richards, a former army officer, and Alen-Buckley, who is the son-in-law of the hotelier Lord Forte, have increased their funds under management from 4m to an estimated 1.1 billion. They have 40 staff (16 of them managers), 7 hedge funds and a track record that is the envy of the City.

RAB’s first fund, the European equities fund, which was launched in November 1999, has made returns of 84% despite the tumbling markets.

Floating will for the first time allow small investors to take part in the success of a hedge-fund boutique rather than investing in one fund.

But there is growing concern that they will also be exposed to risks that at the moment are restricted to professional investors.

Watching in the wings are hundreds of other hedge-fund managers, salivating at the thought of following RAB to market and realising the value of their businesses. Investment bankers and advisers are also rubbing their hands at the prospect of a spate of similar deals.

Two funds earmarked for flotation are Thames River Capital and GLG Partners, one of the biggest hedge funds in London, with about $8 billion under management. Experts say plenty of others are looking to float as a way of cashing in.

Richards and Alen-Buckley dismiss the suggestion that this is their motive for floating RAB. “Right from the start we wanted to create a long-term business and we’re here to stay,” said Richards. “Floating is an indication of our permanence. Neither one of us will be taking cash out. We are also doing this for our staff. We have given them options over the years and this will be their chance to realise some cash. Staff loyalty is important to us and to our clients, who like the stability this offers.”

The cash raised from the float will also be used to launch additional hedge funds and bankroll the company’s rapid expansion.

Managers have already been hired for several new funds that will specialise in energy and in Japan. Small investors are likely to be attracted through a joint venture with Saga, which provides services for the over-fifties and has 7m customers.

Richards and Alen-Buckley built impressive reputations in the City working together in the late 1980s at Smith New Court, where they helped to build the stockbroker from a market value of 10m to one of 500m by the time it was sold to Merrill Lynch in 1995.

Both men had been watching the growing hedge-fund industry with interest. Alen-Buckley had numerous contacts, including leading figures such as George Soros. They spent four years at Merrill before quitting to set up RAB.

Alen-Buckley, who is taking the title of executive chairman, is described as the “public face” of the business. Richards, who goes from chief investment officer to chief executive, is more involved in strategy.

Richards runs the Special Situations fund, which is just over a year old but has already generated a return of 1,274%.

Since hedge funds are known for being opaque and secretive, observers are concerned that RAB will struggle to live with the scrutiny that comes with being a public company.

Richards said the company planned to float on the Alternative Investment Market (AIM) rather than the main market so that lengthy meetings with institutions could be avoided. “We want to spend our time managing the money, not talking about it,” he said.

“We have a simple philosophy. Our goal is to produce consistent returns in all market conditions. We think that if you work on managing the risks and reducing the downside, the upside tends to look after itself. The float is exciting but it will still be business as usual.”ENDS



Please DYOR, you are responsible for your own buying and selling timing actions.

cheers GF

ramu

Be careful when you recommend a tipster on any BB regardless of how highly you may rate them.

If you check out the CMS Webview thread around November last year you will find it massivly ramped with even our Sue Helen getting over excited and proclaiming "it will be 50p by Christmas". It briefly got to around 20p and is currently 7.5p.

I should point out that this is NOT an attack on Sue Helen, but simply an attempt to make sure that everyone understands:-

A) the need for a balanced arguement with all the pro's & con's highlighted and debated openly &

B) the need to do your own research, make your own decisions and blame nobody else if they are proved wrong. After all, if SH can get it so drastically wrong, we sure as hell all can.

Have a great day tomorrow everyone.

Agree markp. Nice to see this one up again on good volume a near 25% recovery in recent days on decent volume. But still plenty upside to the broker's fair value of 57p. Which as i have said I consider very modest, based on fundamentals.

GF, et all (except Third Eye)

We are moving forward. We have broke the 20MA and just edging up the 60MA. MACD and RSI look positive and more upside looks likely. There is a positive comments on Shares Mag on RAB too. At these levels the company is still undervalued.

GF could you add some TA graphs at the beginning of these thread so we can see the developments. Ta

Hedge funds no threat to financial stability
Thu 10 June, 2004 13:45

By Pratima Desai

LAUSANNE, Switzerland (Reuters) - Hedge funds no longer pose a threat to the world's financial system, industry experts say, and may even increase stability by taking on risk and providing liquidity at times of market turbulence.

In 1998 it was a different story. Then, huge losses at hedge fund Long Term Capital Management threatened to destabilise the world's equity and bond markets. The U.S. Federal Reserve was obliged to step in and organise a multi-billion dollar bail-out.

"LTCM happened when hedge funds were relatively new and there tended to be a very few large macro funds," said Mike Cuthbert, funds analyst at Bridgewell Securities.

"They have been superseded by smaller more specialist vehicles...There is probably a bigger threat from derivatives trading between institutions (than from hedge funds)," said Cuthbert, who was attending an alternative investment conference here.

Global macro funds mainly bet on currency and interest rate movements, but their dominance has waned as the hedge fund industry has expanded into equities, government and corporate debt and commodities.

"Strategies like equity long/short have grown. They are seen as producing good returns with more acceptable risk levels," said Teather & Greenwood funds analyst Martin Cross.

"Basic economics tells us that speculators work to the benefit of efficient markets...because they provide liquidity when others are shying away."

WORRYING DEVELOPMENTS

In recent years hedge funds have made money from merger and acquistion activity, from convertible bonds -- bonds that can be converted into equity -- and distressed bonds, the debt of firms in financial trouble.

But some of these strategies are not as profitable as they used to be and many hedge funds are turning to equities where the ability to short -- to sell a stock that isn't owned in the hope of buying it back cheaper at a later date -- has reaped rewards.

But that doesn't mean global macro funds have shut up shop. Many hedge funds, with the help of statistical analysis and options, manage risk well to produce very healthy returns for investors.

"The more a market is populated with people with different behaviours the better it is," said Luc Estenne, director at Geneva-base Partners Advisers, hedge fund advisers.

Previously this role was filled by banks' proprietary trading desks.

But the stock market doesn't like banks to take too much risk nowadays, preferring instead client-related fees, a hedge fund manager told Reuters.

"Banks have reduced their proprietary risk taking activities, but what many have done is invest in hedge funds," he said.

Experts agree hedge funds have taken over the role of risk takers and liquidity providers.

"But this needs to be mitigated," said Estenne. "For hedge funds to play this role they need to be sure of a stable capital base. The stability of their capital base is related to the liquidity they provide to their investors."

If investors can pull out when things look shaky then that compromises hedge funds, especially those who allow redemption on a monthly basis with only a few days notice.

Is that house broker value hawick?

Most house brokers seem to have targets way in excess of current prices, have you noticed?


Xmortal I have heard of Warren buffet who is negative about hedge funds & I'm aware of the FSA...(See my article earlier)

However I haven't heard of Pratima Desai who appears to be your author.

Me either, we RAB are confident. Just posting what I found, doing my reseach. Are u happy RAB has made a come back?

Am I happy it's made a comeback?

I would have thought comeback would mean the 50p+ it was tipped at, it's still way below that, so not really made a comeback at all to my mind..& down 2.5p today....not unhappy or happy.

it has really come back from the recent lows, also it never reached the lows u suggested either. You see if u go for an investment that someone just tips here then, really may just as well throw your money away. I for one, and assume GF the starter of this thread made basic research based on price, growth forecasts, low P/E, management and market sector made the correct decisions to gamble money here. Shares go up and down, you know it. this one is going up. Watch this space

xmortal said: and assume GF the starter of this thread made basic research based on price, growth forecasts, low P/E, management and market sector made the correct decisions to gamble money here.

I haven't seen it, just selected fund performances & copy & paste stuff.


I will watch the space. should be 1 quick time according to some, not seen any fundamentals or reasoning to back that statement up though.

Good luck :-)

Nothing wrong with cut and paste as long as you beleive in what the original author states (unlike you of course, thirdeye lol). Plenty of fundies on this thread, why not read it all.

I stand by my quid quick time.

cheers GF.

Thirdeye - well followed on the RAB fundamentals, you've definitely predicted the downward trend the shares have been on since hitting 60p. The recent bounce up from 35-36 level to 42-43p looks like a little hope-hump in the chart before the downward trend continues.

GF - yet another case of you pushing a stock 'cause it has a story behind it?
Almost ramping .. nothing personal dude. As you say, "DYOR", to support your assertions. Incidentally - suggesting buying because you expect it to be tipped more is also highly dangerous as will it be tipped by an ever increasing number of people or will it be tipped less (and that's not even with negative sell suggestions in the tips - as mainly they have been positive - and that still barely supports the company float price let alone price performance since.)

Myself - i do believe in the long-term story - however the market valuation for the company float is buoyed by the shortage of boutique hedge fund management companies to invest in.
The company is also performing well. I do expect this to continue and i do believe it will attract further funds to grow, which will grow profits - and maybe performance fees.

On a wider note - MAN Group can not achieve stellar returns for ever - it will eventually fall to an Evil Knieval short - if it isn't already.

One final point - RAB is seen a big investor in primary extraction plays - natural mineral resources and oil explorers. I am wondering if some of these have already had their best days as commodity prices appear to have spiked - at least in the short run. Will RAB's performance fees follow?

Expect RAB to continue to float down towards 32p. (No post-float pun intended)

ps reminds me of an old saying in equity broking - "expect a quid quick time" - it's like saying it'll be a quid at Christmas - and not saying which Christmas ...

Just another copy and paste

AGM 21st of May


Hedge funds' market spoiler
Anthony Hilton, Evening Standard
11 May 2004

EASYJET'S shares plunged 30% last week when the company warned that, in common with other low-cost airlines, it was having a tough time. Nokia shares fell 30% the week before for similar reasons.

Something very serious is happening here. What these movements underline is how hedge funds have come to dominate the activity of the London Stock Exchange and trading in the big international blue-chips. The City pressures companies to promise growth as a precondition for taking an interest in the shares. When a company fails to live up to the promises it has been pressured into giving, it is savagely punished.


The hedge funds know there is money to be made by selling the stock short at the slightest whiff of disappointment They have the money and the power through their close relationships with investment banks like Goldman Sachs and Morgan Stanley to deal in huge volume.

So 110m shares changed hands in the hours after easyJet's gloomy announcement, according to chief executive Ray Webster. That is more than 50% of the free float of the company because 42% of the 360m shares in issue are still held by founder Stelios Haji Ioannou and his family. Activity on that scale is out of all proportion to the nature of the profit warning and the change in easyJet's prospects. It shows how distortion, manipulation and the use of overwhelming force have become endemic in the market.


Some commentators have said Webster is wrong to complain about this treatment, but he is surely not alone in thinking that this is not how stock markets were meant to work. The stock market is where people with an interest in backing companies meet people who need capital to develop their businesses. That is its reason for existence. Hedge funds and the prime brokerage activities of investment banks are turning the place into a casino where genuine long-term investors and companies are overwhelmed by their superior financial resources.


If this continues, the stock market is stripped of its usefulness and becomes of as much value to society as a high-stakes poker game. Already the market is no place for an individual investor. Increasingly, however, it is no place for professional institutional fund managers either. It is not just a question of the chaos caused by excessive volatility.


Institutional investors do not get access to the fine terms and choice deals brokers reserve for the hedge funds. They lack the technology and access to deal on the finest terms. They no longer get first sight of the choicest deals. On the contrary, they suspect every deal they do is likely to have a hedge fund or two riding on its back. Some institutions have even started offering higher commissions to brokers in the hope of encouraging more favourable treatment. It underlines how worried they are at being treated like secondclass investment citizens.


The City spends a lot of time considering plans to reward executives with shares. The premise is that the growth in the share price will be a reflection of the medium-term success of management in growing the business. Hedge funds and prime brokers are destroying the nature of that premise, and if they continue unchecked they will destroy popular support for the stock market itself. Meanwhile they simply devastate the morale of managements who see share price movements that bear no connection to the work they are actually putting in to a business

shares will eat themselves

Exactly, which is why hedge funds are being investigated, something will have to give & it's likely to be limitations imposed on hedge funds, how might that affect forecasts? No one knows until they are revealed. Perhaps the FSA do have reason to investigate & perhaps Warren Buffet does know what he is talking about, more than a lot of posters on here, that's for sure.

A quid for xmas 2004.

Even I'm not that bearish...It's not going to be that bad Xmortal I'm sure your holding will be worth more than that by Xmas ;-)

a quid by xmas or b4.

Well we have had one say "A Quid quick time" & now a second say "A quid by Xmas or before"

So, I asked the first if he would care to give us some analysis/fundamental reason why it would reach a quid, ie low p/e ratio? NAV? Forecast profits? etc etc, but no response, It would be churlish not to invite you to give your reasons as you may have a constructive reasoned argument as to why 1 will be acheived on or before that date....over to you?