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BluMont Strategic Partners Hedge Fund Unitholders Approve Proposed Merger December 29th, 2006 | |||||
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BluMont Capital Inc. Responds to Announcement by Integrated Asset Management Corp. December 20th, 2006 | |||||
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BluMont Man Alternative Yield Fund Announces Distribution November 30th, 2006 | |||||
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BluMont Strategic Partners Hedge Fund Announce Proposed Merger November 23rd, 2006 | |||||
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Private Equity Catches Public Eye Nicole Mordant Reuters December 2006 Canada’s Venture Capital & Private Equity Association (CVCA) shows that private equity has generated returns of 21%, 24% and 20% for a one, three and ten year period respectively. According to Standard and Poor’s, the S&P/TSX has yielded returns of 10% over five years and 11% over ten years. Private equity has become increasingly popular around the world in the past decade. Growth in private equity has been attributed to the positive returns to investors. Rick Nathan, president of CVCA and managing director of Kensington Capital Partners states, “You’re living with a company on a week to week basis. So you have a early view if you think things aren’t going according to plan.” Top pension plan such as OMERS, CPP Investment Board and Ontario Teachers Pension Plan (OTPP) have all delved into private equity dealings. OTPP has even considered bids for companies in South Africa. In light of recent tax legislation on income trusts, private equity has become a attractive alternative for institutional investing. | |||||
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Private Equity Investing: Equity securities of companies that are not listed on a public exchange. Transfer of private equity ownership is strictly regulated; therefore, any investor looking to sell his/her stake in a private company has to find a buyer in the absence of a marketplace. Returns on private equity are generally realized in three ways: a merger or sale, an initial public offering, or a recapitalization. | |||||
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Issue 29 - January 12, 2006
We hope you enjoyed reading BluMont eNews. You can expect our next issue in February. BluMont eNews is a monthly email publication. We want to hear from you. Send us your comments or questions and let us know what you want to see in BluMont eNews. Email feedback@blumontcapital.com | |||||
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Fiscal 2006 saw BluMont Capital make progress on its path toward being Canada’s leading provider of alternative investment products with changes taking place at the senior management level as well as the breadth of product offerings.
In December of 2005, BluMont’s Board of Directors promoted Stephen J. Kangas to President. Thomas H. Simpson was elected Chairman of the Board, replacing founding Chairman David A. Currie, who retired after five years of dedicated service. Subsequent to year-end, the BluMont Board named Mr. Kangas the Chief Executive Officer in addition to his role as President. BluMont bolstered its senior management team in mid-summer with three appointments. Conor S. Bill and Peter F. Chodos, previously co-founders of Mt. Auburn Capital Corp., joined as Managing Directors. Between them, these two individuals bring over 45 years of combined experience in investment banking and structured products and will focus on the research, development and management of new investment products. James S. Wanstall joined as Executive Vice President, National Sales with over 13 years of investment product sales experience and will lead the BluMont sales force. BluMont realizes that the retail market represents great potential for institutional quality alternative investments, such as those managed by Integrated Asset Management Corp. (“IAM”), BluMont’s majority shareholder. BluMont has built a strong platform to develop, manage and distribute a variety of alternative investments to the Canadian retail investor. Recognizing the obvious synergies and potential efficiencies, IAM announced in May 2006 its intention to acquire any and all of the outstanding common shares of BluMont that it did not already own. IAM offered one IAM share for every three BluMont shares tendered. If fiscal 2006 can be characterized as a year of change; fiscal 2007 will be a year of opportunity. With a motivated and energized senior management team, dedicated employees, increased flexibility and broader mandate, BluMont is well-positioned to expand the range of alternative investment solutions it can offer to retail investors through their financial advisors. Look for a number of innovative products to be launched in the year ahead. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Over time, research indicates the average active long-only manager rarely outperforms the market. Index funds offer many benefits compared to other investment vehicles including their inherent low-cost structure, their relative simplicity and transparency. Index funds offer diversification benefits by investing in a broad and large basket of stocks. The passive nature of index funds leads to lower portfolio turnover and lower potential for annual taxable capital gains.
An index fund is built to replicate the risk and return characteristics of a broad based market index. Index funds can also be carved out to track the performance of more specific sector or style indices. For example, index funds that mimic the performance of financial, energy, and materials sector indices, or growth and value style indices can be purchased. The construction of sector indices is generally straight-forward, however the construction of growth and value indices is more complicated. Growth and value investments tend to behave differently at different points in the business cycle. The criteria used to identify growth and value stocks – deciding which stocks are included in a particular growth or value index - can vary immensely. For example the S&P/BARRA Growth and Value stock indices rank companies in the S&P 500 index according to their Price to Book Value ratios. The stocks with the highest price to book ratios are classified growth stocks, while the stocks with the lowest price to book ratios are classified as value stocks. In contrast to the S&P/BARRA style indices, the Russell style indices classify stocks as growth or value based on a composite score using the book to value ratio and also the forecasted growth. S&P/BARRA classifies every stock as value or growth, while Russell allows some stocks to be classified proportionately as both growth and value. This variation in methodology can leave investors with exposure to very different groups of stocks. Investors therefore need to be cautious that the style index they are investing in is truly representative of the group of stocks they consider to be growth or value. Exposure to specific investing styles can provide valuable diversification benefits to a portfolio, because the performance of growth and value investing tends to be inversely related during different phases of the business cycle. Several financial institutions have created style indices using their own proprietary methodologies, which offer investors considerable flexibility in gaining passive exposure to specific styles of investing. There are even institutions that have created style indices within a long/short strategy – to deliver alpha without dependence on the direction of the overall market. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
