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Opinion

The only thing worse than being mentioned is not being mentioned

“That’s a good story,” I said. “Maybe I’ll use it in my column.” “If you use it, I will call your managing director and get you fired”

Pain, gain and ignominy

I have reached the place most back sufferers eventually get to – the floor. When I returned from Hong Kong, so did my back pain. At night, it was as if I were being seared on a barbecue. I decided that my saggy, seven-year-old mattress was to blame and took to the ground. And I must tell you, it’s liberating: somehow the world looks better from a Lilliputian perspective.

My lovely physiotherapist Cameron Tudor made a house-call on Saturday morning after I had wailed down the phone: “I can’t walk, let alone sit. How am I going to write my column?” Swatting away my gratitude, he pronounced the pain muscular. “This is not coming from the disc. It should heal in a few days. Tell your editor your column will be late.” Cameron is Australian and sometimes comes across as a bit of a Crocodile Dundee: conventions are there to be challenged.

Gain

I wonder if Alan Howard is Australian.  Howard is the founder of a London based-hedge fund, Brevan Howard. Last week, Brevan Howard raised €770 million ($1,016 billion) on the London Stock Exchange for BH Macro, a closed-end investment company. This was less than the €1 billion target originally sought, and caused some twitching of eyebrows in the City. Alan Howard defied convention in that he boycotted investor roadshows, leaving joint chief executive Nagi Kawkabani to do the talking. Rumours circulated that Howard was unwell. Note to Alan: if I can write my column with agonising back pain, surely you can travel to a few investor meetings when you are asking for a billion euros? And talking of eyebrows, it’s intriguing to see charismatic Ian Plenderleith, previously a member of the Bank of England’s Monetary Policy Committee and former deputy governor of the South African Reserve Bank, reincarnated as chairman of BH Macro. When I was a banker, I met Mr Plenderleith several times and I could never decide which was more impressive: his intellect or his eyebrows.

The BH Macro float leaves one question lingering in my mind: what was the point of the exercise? All the proceeds of the offering, net of working capital requirements, will be invested in the existing Brevan Howard Master Fund. As of October 31, 2006, this Master Fund had $11.3 billion under management. Raising another $1 billion via the BH Macro vehicle is insignificant.

Commentators coo about the benefits of “permanent capital” that can not be withdrawn. But I thought the point about hedge funds was that there was a lock-up on investor monies. “It’s not the same thing,” an equity specialist explained. “If an investor sells his BH Macro shares, Brevan Howard will not suffer any redemptions. They have their money. Period.” The Master Fund had an annualised return of 10.5% from its inception in April 2003 until the end of January 2007. Hardly shoot-the-lights-out stuff. The S&P500 was up 13.62% in 2006.

BH Macro shares started trading at £10 a share and ended that same day at £10.02. BH Macro’s initial performance looks micro when compared to that of Fortress, a hedge fund that listed last month on the New York Stock Exchange. Fortress’s $630 million (€477 million) flotation was 24-times oversubscribed and the shares closed up over 60% on the first day. However, one month later Fortress’ shares were languishing some 27% below the intra-day high reached on the first day of trading. That’s a lot of pain for an investor to take. Although if you had bought at the issue price of $18.50, you would still be smiling. As we all know, timing is everything.

Ignominy

Some would say back ache is preferable to financial melt-down but I disagree. If you are healthy, you can come back from the brink. I’ve seen it many times. Think of Sir Philip Green, the British billionaire businessman whose company, Amber Day, experienced financial difficulties in the early 1990s, or Hillary Clinton, who experienced public ridicule and was written off when husband Bill developed a close working relationship with intern, Monica Lewinsky. “Never forget,” a friend always insists, “life is long.”

And talking of life’s vagaries, I recently sat next to Stephen Brisby, once a vice-chairman of UBS and then co-head of investment banking at Société Générale. Brisby told a story about Salomon Brothers’ CEO, John Gutfreund. “That’s a good story,” I said. “Maybe I’ll use it in my column.”

“If you use it, I will call your managing director and get you fired,” shrieked Brisby. I smiled sweetly but thought his threat inappropriate for the dinner table of a mutual friend. “The thing about former high flyers is that they feel disenfranchised,” a psychologist once told me. “And this makes them very angry.”

A few days later, I had dinner with a senior journalist. I told him the Brisby story and an anodyne anecdote about Bob Diamond, president of Barclays and for whom I used to work. “Hmmm,” mused the journalist. “You should use the Diamond story and drop the other one. People are very interested in Bob but have probably forgotten Brisby.” What a put-down! Oblivion – the ultimate ignominy.

So please remember, the only thing worse than being mentioned in Abigail with attitude is not being mentioned in it.

Next week: Russian roulette and the Big Eddy Club. Please send news and views to Abigail@euromoney.com


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