Category Archives: Investments

The Investing Edge: The Win / Pay Odds Gap

Investing is too often looked at using a handful of academic models. Successful investing involves thinking about the investment process in as many different ways as possible. This article takes a look at investing using alternative views. From Betting to Investing Many of the ideas used by the investment community are adopted from the horse…

Dubai Financial Markets Investor Structure Improving

My foray into DFM’s historical data unearthed some interesting nuggets, both of which I consider positive. For the first half of this year, Arab investors, including from the GCC, withdrew a total of AED 1.6 billion from the market while UAE citizens invested a total of AED 421 million. Here is the first interesting bit, the total…

Investors are falling into a liquidity trap in the GCC

I am increasingly hearing of people investing into positions in the markets because they think that the price of a share is cheap due to a decline in the price. The price is not cheap, it is low for a reason. Worse, when these investors enter the market and buy the shares they think they…

Nigeria unit’s default poses questions for Etisalat

Etisalat Nigeria, a Nigerian telecoms company owned 45 per cent by Mubadala and 40 per cent by Etisalat, was reported to be effectively bankrupt over a US$1.2 billion default and was taken over last week by a syndicate of Nigerian banks. There are two broad themes that this represents that I think are instructive and…

Softbank Vision Fund highlights how investors should analyse structures

A Financial Times article recently described the structure of the SoftBank Vision Fund. The details reveal breathtaking audacity in terms of SoftBank laying claim to investor returns without transfer of an equivalent level of risk. To avoid competing accounts, I will use the FT as my source of information, as I am not so much…

Board drama, and crunching the numbers on oil

A few weeks ago I pointed out that Etisalat generated earnings of Dh0.97 per share and paid out Dh0.80 per share, which is a payout ratio of 82 per cent. I further pointed out that paying out such a high percentage of profits was consistent with a status quo strategy and inconsistent with an expansion…

Venture Capital Lessons from India, Lebanon and Ireland

In a recent article I pointed out the failure points in the UAE’s venture capital ecosystem, in particular the lack of support for entrepreneurs and start-ups. In this article I’d like to review some of the initiatives other countries have launched that could be useful in upgrading our ecosystem. Given the recent visit to India of Sheikh…

Sharpe Enough to Cut You: Misunderstanding Investment Models

Investment management when done with funds appears to have developed permanent blind spots. By being unaware or unconscious of these blind spots, investment managers using funds have quite often performed poorly. The greatest of these blind spots is a set of tools developed by Professor William Sharpe, a Nobel laureate and professor at the Stanford…

China Crisis? Risk-parity meltdown? Or financial gravity at work?

The last few weeks have seen equity markets around the world register significant losses. Sudden downward price movements can be stressful and the conflicting analysis and advice can be confusing. Although I cannot give specific advice on what to do, perhaps I can point out some issues that might have been overlooked and would be…

Avoiding the Hannibal Lecters of the Investment World

Portfolio managers and investment analysts like to say that due diligence, a deep review or audit of a potential investment, is an integral part of their business. They are most probably lying, or if we want to be charitable, they are deluded. Due diligence is not considered sexy. It involves legal, financial and operational reviews.…