Category: Market

Mozes Victor Konig on Understanding Secondary Markets

MVK Ventures SARL – headed by Mozes Victor Konig – has recently found its niche in the secondary market.  Established in 2011 as a way of helping startup companies get funding, since its inception the firm has provided access to fiscal backing to many firms.

The secondary market – also known as the stock market – is a market through which investors buy and sell their own securities such as NYSE, NASDAQ, Euronext, Hong Kong Stock Exchange, etc. The main focus of secondaries markets are investors exchanging with each other, as opposed to buying and selling from the issuing entity. One of the main differences between primary markets and secondary markets is that the former’s prices are usually set ahead of time whereas the latter’s prices are the result of supply and demand.

Konig has encountered various benefits directing MVK Ventures SARL to use secondary markets.  One of the most obvious of these being that investors are able to profit well in a much shorter time frame.  In addition, for working with companies needing investments, the stock prices in secondary markets gives him an edge in how to most accurately appraise the firms.

There is for sure an untapped niche in this area.  MVK Ventures has managed to benefit from this while helping its clients.

Investors Fled Stock Market in March

The end of March saw an exit of about $40 billion from US equity market funds in a move that the Institute of International Finance called “remarkable.”

According to a survey conducted by the organization that works with banks and financial institutions around the world, several factors caused the exodus of money, including: trade uncertainty, higher deficit spending by the US government, higher interest rates instituted by the US Federal Reserve, and perhaps others that made the market look less attractive than it did before.

“Regardless of the trigger — trade tensions, the prospect of a higher U.S. fiscal deficit, Fed tightening — heightened market volatility and swings in risk appetite have had a big impact on fund flows in recent weeks,” the IIF stated.

There was a parallel lowering of fund outflows from emerging markets as well, hinting that investor panic is limited to the US assets.

Compared to $11 billion in investments flowing into EM equities in February and $28 billion in January, March saw only $7 billion worth of investments entering the EM market in March.

“The main driver of recent big swings has been the surge and abrupt reversal in flows to U.S. equity funds,” IIF said in its statement. “Since mid- March, U.S. equity funds have seen a remarkable $40 billion in outflows—entirely wiping out the strong inflows of $25 billion seen in the first half of the month.”

FTC Examining Sharing Economy

UberAs companies that are part of what is known as the “sharing economy” grow in popularity, the Federal Trade Commission is taking an interest in whether new regulation is needed to protect the public.

Internet and crowd-sourcing-based businesses like Uber, Airbnb, and others rely on peer-to-peer transactions for a variety of services including transport, ecommerce, and hospitality. The US trade watchdog, the FTC, is investigating whether consumers are at risk for either liability or the use of personal information by these businesses. They are also responding to problems they have noticed in other parts of the world.

Right now in the US the FTC has responded to this new industry positively, seeing ride-sharing apps like Uber, Lyft and Sidecar as good for competition. The FTC has contacted local and state legislatures asking them to refrain from passing laws which would put the crowd-sourcing companies at a disadvantage to the traditional taxi services.

“Essentially we want to see how we can regulate these new business models in a way that would protect consumers and not hinder innovation,” said Marina Lao the director of the planning office of the FTC.

However, there are two areas in which the agency feels further examination is in order: the practice of these businesses to accumulate lots of personal data and the practice of using rating systems. There are also legal liability issues that need to be addressed.

“We want to see to what extent sharing economy platforms should be able to monitor participants by collecting, let’s say, location data,” said Ms. Lao. “And if they do monitor, how can they do so while adequately protecting the privacy of the participants?”

Moore Capital Backing US Companies, Dropping Chinese

"Alibaba Binjiang Park" by Danielinblue - Own work. Licensed under CC BY-SA 4.0 via Wikimedia Commons
“Alibaba Binjiang Park” by Danielinblue  Licensed under CC BY-SA 4.0 via Wikimedia Commons

Moore Capital Management, Louis Bacon’s investment firm,  increased its stake in US consumer and financial industries during the fourth quarter of 2014. Moore also reduced its bet on index funds that track Chinese shares.

Bacon’s firm, which has $14.8 billion under management, invests mostly macro-economically. During the last quarter of 2014 Moore Capital bought shares of Financial Select Sector SPDR Fund to bring its stake to $98.9 million by December 31. Moore’s largest new investment was in an exchange-traded fund that tracks retail companies, to the tune of $105.1 million. Now Moore’s largest holding is in the SPDR S&P Retail ETF.

In addition, equity investments at Moore Capital decreased by 24 percent, down to $2.25 billion.  The firm sold off 3.62 million shares of iShares China Large-Cap ETF, but retained 1.2 million shares, valued at about $50 million. Bacon’s firm also lowered its bets on Alibaba Group Holding Ltd, selling off 1.38 million shares.

Investors Cautious as Stock Market Continues Decline

Where is the market heading? photo by Rafael Matsunaga
Where is the market heading? photo by Rafael Matsunaga

During the week between January 8 and January 15 the stock market fell five sessions in a row, losing over 3 percent in its value. Whether that downturn is the much anticipated correction investors have been alert for, or it’s just a regular speed bump on the highway to more profits, is the question of the hour.

The last time the S&P shed 10 percent or more was over three years ago. Since December 29 that index has dropped by 5 percent up until last Thursday’s closing bell. What to make of these indicators is practically anyone’s guess at the moment. The downturn has made shares less pricey, with the price/earnings ratio of the S&P down to 16 on Friday. At the end of 2014 the P/E figure stood at 20.

American investors are also wary of the fall in commodities, not knowing if that collapse is telling them to buy or sell. Oil prices have also been tumbling, selling at under $50/barrel, a six-year low. The drop in gas prices as sparked a rise in consumer spending, creating a great mood for shoppers expressed in an 11-year high this month.

Other indicators, from the strength of the dollar to the price of copper, have left investors at a loss for interpreting the data. Some seem to believe it is just a bump on the road, and are buying some shares that look like bargains now.

“We’re in buying mode now, and are absolutely pleased to be able to pick up some stocks we’re excited about while investors are putting them on sale,” said Lamar Villere, a portfolio manager at Villere & Co, which has about $3 billion in assets under management.

Ed Keon, portfolio manager at Quantitative Management Associates, agrees with Villere.

“I believe it’s more likely to be noise than part of a broader correction,” said Ed Keon, a portfolio manager at Quantitative Management Associates, a Prudential Financial company, where he helps manage more than $60 billion.

Amazon’s Shares Reach Record High

Amazon.com Inc.’s shares rose to a record high over the weekend as domestic growth expands and regional profits increase. International growth has been slow but has not had a significant impact on the retailer’s record.

According to Wells Fargo analyst Matt Nemer, “their biggest market looks really healthy.”

Amazon has been spending billions of dollars on new expansion efforts in international markets as it breaks into the technology industry by offering gadgets like tablets and cloud computing services to large corporations and governments. Though the spending has taken a toll on earnings, investors have shown confidence in Amazon’s Jeff Bezos and his development plans.

Amazon revealed that its sales in North America have jumped 30% to $9.5 billion in the second quarter while operating profit in the region climbed from $344 million to $409 million. Chief Financial Officer Tom Szkutak explained that “sales of apparel and consumable are growing very strongly and this is helping bring shoppers to Amazon’s website more frequently.”

Reuters explains that Amazon’s cloud business, Amazon Web Services, “was among the fastest growing part of the company. Amazon includes results from this unit in its ‘other’ segment for reporting purposes and revenue from this area jumped 61 percent to $892 million in the second quarter.”

Tesla Adds Lease Option to Boost Model S Sales

Tesla Model SIn a bid to increase first quarter profit, Tesla Motors has added lease-style financing for its Model S. According to a Tesla statement, program partners U.S. Bancorp and Wells Fargo & Co. will be providing customers with 10% of the purchase price. They will be reimbursed through a $7,500 U.S. tax credit and state incentives. The company’s website reveals that monthly payments under the offer are as low as $500.

“Just factoring in stuff that’s true out of pocket, you can buy the 60-kilowatt Model S for $400 or $500 a month, net cash out of pocket,” said Tesla’s Elon Musk. “I consider gasoline to be a tangible cost.”

Musk added that though the financing plan is a 66-month loan with a 2.95% interest rate, customers will be able to resell their car to Tesla after a three-year lease. The Model S has a base price of $69,900 before the tax credit. Musek explains that the company’s program makes the car “affordable to a much broader audience than people think is usually the case.”

 

Housing Market Unlikely to Grow Without Government Guarantee

The majority of housing experts see little hope for the American mortgage market unless the government pledges to repay lenders.

A recent report stated:

“For the foreseeable future, there is simply not enough capacity on the balance sheets of U.S. banks to allow a reliance on depository institutions as the sole source of liquidity for the mortgage market.”

The report, entitled “Housing America’s Future: New Directions for National Policy,” was issued by a group of members of the housing establishment.

According to the panel, this is not an indictment of the American banking system, because it would prefer to trade leveraged derivatives then hold on to mortgage loans.

The report adds, “Given the size of the market and capital constraints on lenders, the secondary market for mortgage-backed securities must continue to play a critical role in providing mortgage liquidity.”

Investors are unlikely to to finance mortgages without a government guarantee.

 

Ally’s Auto-Finance Business Expects Gains in 2013

According to Ally Financial Inc.’s CEO, the company will repay the government by 2014 thanks to its auto-finance business.

CEO Michael Carpenter explained that Ally will be able to make a large payment this year. As the second-largest remaining investment by the U.S. Treasury’s bailout fund, Ally still has $14.6 billion outstanding from the Treasury’s Troubled Asset Relief Program.

“We are 100 percent confident that we can repay the American taxpayer completely,” Carpenter said. “Whether that’s this year or next year, I don’t know. But it’s in that time frame.”

In an effort to increase company focus on autos and its online retail bank, Ally has been selling assets outside of the United States as well. Its auto unit has also expanded, providing used, leasing and subprime financing offerings early this year, before agreements with General Motors and Chrysler expire.