Tag Archives: Asset Management

Financial reality more important than predictions UAE assets under management only 9% of Bahrain's according to DIFC

About a year ago I wrote about the UAE as a financial center and in particular compared it to Singapore. The article states: Let’s go back to Singapore with a GDP of $293 billion and population of 5.5 million versus our GDP of $371 billion and population of 9 million. So not only is their…

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…

Activist investing would be a boon to the UAE

In my previous article I suggested, using scenes from the film A Beautiful Mind, that game the­ory could explain why more than 50 banks exist in an economy too small to commercially need such business. The idea is bas­ically that banks choose to be mediocre because competition would harm them to the benefit of customers. The feedback…

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.…

Investment Valuation Lessons III: Discounted Cash Flows versus Peer Group Comparison

The debate of whether discounted cash flows or peer group comparisons are the better business model has raged ever since M&A became vogue. Let me put an end to the suspense right now: both are useless as effective valuation tools. Let’s find out why and what might work. Discounted Cash Flow The problem with discounted…

Investment Valuation Lessons II: Value Attribution

An interesting phenomenon is when investors agree on valuation but incorrectly attribute the source of the valuation. The result is that incoming investors or buyers of the firm end up paying the sellers for value that the buyers create. A common occurrence is when a start-up sells out to a major player, especially in the…

Investment Valuation Lessons I: Equity Dilution

Valuation techniques and methodologies are usually taught within the context of developing a financial model or using comparative ratios. In real life the actual decision makers might use the output of these models but will not be the ones who develop the models. Decision makers will also be influenced by other factors, not all of…

The Future of Asset Management in the GCC (Part 2)

In the second of a two part series, this column outlines a vision for the future of asset management in the GCC. The asset management industry in the GCC has blindly followed developed market dictates. The main focus is listed equities. But the GCC markets have neither the depth or breadth to allow an active…

The Future of Asset Management in the GCC (Part 1)

In the first of a two part series, this column will investigate the current state of affairs of the asset management industry. In part two, this column maps out the way forward. The asset management business in the GCC has followed a puzzling evolutionary path focussed predominantly on listed equities with a smattering of funds…