Leaving London?

Real or threatened regulations or taxes in London have become sufficiently onerous that many in the financial community there are threatening to leave. Since "Galt's Gulch" is a fictitious place, the first destination of which they speak when they talk of leaving is Switzerland, which is European by geography but not by law.

Bloomberg has put out a story on some of the problems with the proposed flight to Switzerland, especially Geneva. There are all those quotidian non-novelistic details with which to deal, like a housing shortage there for example. There is also the question of office space. The Bloomberg report quotes Tim Dawson, who works in Geneva himself, saying: "There is more office space in Canary Wharf than in the whole of Switzerland."

Canary Wharf, BTW, is a large office/shopping development largely constructed in the 1990s, in East London, in an area of idled docks. At an early stage of development, in 1993, Canary Wharf's working population was only 7,000. By January 2000, that working population figure was 27,000. So although financial business can and did in that interval leave central London's famous "Square Mile" for a place about 3 miles as a crow flies to the east and south, to continue all the way to Geneva presents graver problems.

Clearly the Bloomberg reporter and Mr Dawson are right to make this point, it does not follow though that the government in London can continue to increase the burden of doing business there with impunity. People who work in the financial district of London (either the Square Mile or Canary Wharf!) come from a lot of places around the world. The financial centrality of London is preserved by these ex-pats. And where will most of them go if the burdens become too great? To no single place. Simply: home.

Mark Pittman RIP

Mark Pittman died this week (on Wednesday).

Pittman was with Bloomberg News. He was part of a team that won the Loeb Award last year for a five-part series in the financial crisis.

He also did pathbreaking work on Goldman Sachs' interest in the AIG bailout, Hank Paulson's role in creating the subprime mess, and the irresponsibility of the ratings agencies increating the conditions for its spread. In June 2007 he wrote a very detailed and incisive piece about the credit agencies that holds up well even with the benefit of 2 and 1/2 years of hindsight.

Felix Salmon, usually a quite astute guy, criticized Pittman for that story, and now regrets that.

Pittman was an old-school reporter, a native of Kansas City, whose first job was covering police for the Coffeyville Journal in southern Kansas in the early 1980s. Later he was at the Times Herald-Record in Middletown, NY, for twelve years, joining Bloomberg in 1997.

The obits I've seen are not very forthcoming about the cause of death, except that it was heart-related. Regardless: it is a loss.

For more, go here.

Troubles at TCI

The Children's Investment Fund Management LLP, a high-profile hedge fund which we have encountered before in this blog, is apparently discussing with investors the possibility of offeringt hem more attractive terms, and even returning to them some cash, given their unhappiness over its recent poor performance.

We've encountered TCI fairly often in the brief history of this blog. Its proxy fight to get candidates on the board of CSX led to some intellectually fascinating litigation.

And its adventures in Japan led to a head-on clash with that country's government.

But investors don't care about ntellectual challenge or the sense of multi-national adventure. They're in it, believe it or not, for the money. And since TCI has not been generating a lot of they, they have to mollify.

Since it is Sunday, and I have to go work on my yard, I'll just send you over to Bloomberg for more.

TCI Goes Short on Japan

I've written of TCI before here. In a post last May for example, I mentioned TCI's proxy contest among shareholders of the Japanese power company J-Power. The management prevailed against TCI in that contest, largely because Japan's government came to their aid. TCI sold its stake in J-Power in October, taking a US$130 million loss.

Now I read that TCI has changed its tack as to its Japanese positions. In order to be a corporate activist, an investor essentially has to be long -- has to own voting equity. But TCI has switched (according to a recent Bloomberg story) to a predominantly short strategy in regards Japan.

TCI has about US$1.2 billion in cumulative short positions in 13 Japanese stocks, including some of that country's biggest names: Toshiba Corp.; Sharp Corp.; Mizuho Financial; Sony Corp., and so forth.

Its short position in Toshiba was worth 39.5 billion yen (US$396 million) at the close of business Wednesday, April 1.

In October of last year the government imposed new requirements on short selling, including disclosure rules, so this data is now available through the Tokyo Stock Exchange's website, though as I say I've lazily taken it from Bloomberg's story.

Here are links, first to Bloomberg;

then to the TSE's English-language page.

Nick Maounis

Bloomberg is reporting that Nick Maounis, formerly the boss of Brian Hunter at Amaranth Advisors, is trying to raise money for a new hedge fund.

I'm not sure that they're right. Bloomberg seems to have been reporting this story for a long time. They ran this worried column on the subject sixteen months ago.

Amaranth collapsed in September 2006. As Mr. Maounis explained in a teleconference that month with investors: "We lost a lot of our own money this month. We lost even more of yours."

The reaction of many commentators back in January 2007 to the possibility that Maounis might be trying to start up a new fund was: It's too soon.

Well, this is May 2008. Is it still too soon? If it will always be "too soon," then the problem isn't timing and one shouldn't pretend that it is.

My own view, for what it's worth, is that Maounis seems to have been duped by his employee, Brian Hunter. If that's right, then it is possible nearly two years of reflection has taught him something about, say, the need for rigorous in-house controls. So take another shot, Nick! Best of luck.