News Round Up
Trading halt on Fortress Notes, possible portfolio event for Generator Bonds, Public Trust makes more than a $1 million and Salvus adds to its holdings.
Monday, October 17th 2005, 10:07AM
A trading halt has been put on Macquarie Fortress notes until Thursday as a result of the material trading loss.
The notes had an exposure to senior loans issued by Refco Finance Holdings, one of the world's leading derivatives and brokerage firms. However Refco says its financial statements from 2002 to 2005 can no longer be relied on because of an allegedly fraudulent loan made to its former chief executive.
News of this fraud saw Refco's listed equity drop by over 50% and there has been significant volatility in the market price for Refco's senior loans and high yield bonds.
The United States Securities and Exchange Commission has commenced an investigation and the former ceo has been arrested and charged with accounting fraud.
“Due to the uncertainty associated with the financial position of Refco, the (Fortress) investment manager, Four Corners Capital disposed of the Refco loans at a loss.”
“The impact of the loss is estimated to be between $0.04 and $0.05 on the net asset value of the Fortress Notes.”
It is not yet clear if these events will impact on Fortress note interest payments.
Another problem
Another Macquarie product, Generator notes, may also have a problem with one of its investments.
Delphi Corporation filed for Chapter 11 bankruptcy protection for its United States operations earlier this month. Delphi is a company in the Generator Bonds portfolio. Bankruptcy is a portfolio event. While it has not occurred, it is likely to be announced.
Public Trust profit
Public Trust chief executive Pat Waite described it as "a significant improvement on the modest profits achieved in the last two years."
"This improvement in our business and financial performance has been hard won and follows investment in the business including training and updating technology infrastructure.
Public Trust increased income from funds under management, it prepared more than 21,000 wills where Public Trust was appointed executor; a 128% increase year on year in Fee Protect funds under management (Fee Protect looks after fees paid in advance to private training establishments); a 100% increase in new family trusts written; and the Corporate Trustee Services division building its presence and business in the important Auckland market.
Salvus adds to its holdings
"The main reason for the underperformance was corporate activity in stocks the fund does not hold, notably the announcement of the proposed merger of Wrightson with Pyne Gould Guinness." Also an underweight position in NZ Refining hurt.
During the quarter "market conditions were strong" and the NZSX Small Company Capital Index outperformed other NZSX large and midcap indices.
Savus’s core holdings, which account for 62% of the portfolio, include: Hallenstein Glasson, Pod, Provenco, Abano Healthcare, Methven, Lyttelton Port, 42 Below and Mainfreight.
Special Offers
The Public Trust has reported an after-tax surplus of $1.04 million for the 12-months to June 30, well up from its $125,000 profit in the previous year.
Listed investment company Salvus underperformed its benchmark in the last quarter, but has been adding to its portfolio.
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