Hinde Capital Blog

‘I Don’t Believe It!’

Victor Meldrew was a fictional character in a long running UK TV series, ‘One Foot in the Grave’.  He is the archetypal elderly pensioner who complains about everything and anything. His catch phrase was ‘I don’t believe it’. Even to this day, such was the success of the series, that being accused of being a Victor Meldrew is a euphemism for being a cantankerous and whinging old man. My wife often mentions this in passing, whilst citing a recent Daily Mail article about the links between levels of cynicism and dementia. Extraordinary. ‘I don’t…’

 

As I approach my 50th birthday I find myself concerned that there are hidden consequences of new technology, and that innovation and competition are not always obviously good or should I just accept the status quo and let it pass me by.

 

In economics competition is universally viewed as healthy especially with respect to breaking up monopolistic policies and certainly there are many obvious clear cut instances of how the often down trodden consumer has benefited from competition. However, little is written of the often negative effects of competition leaving the consumer worse off in terms of quality and choice.

 

Economics 101. How it should work.

 

Firm A provides X service or materials to the consumer. They charge £100. Their costs are £60 and hence their margin is £40. This high profit margin brings another firm B into the marketplace keen to supply X service/materials for £90 despite having the same costs of £60, undercutting firm A and happy to have a £30 profit. Sometime later, firm C discovers new technology means of capital and/or labour which reduces the cost of supplying X to £40 and happy to have the same profit margin as firm B of £30 firm C can now sell X to the market place at just £70.

 

It’s a win, win for the consumer.  They are now getting X for £70 instead of £100.

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Dividends – Back to the Future

 

SG Hinde UK Dynamic Equity ETN (50% Hedge) – HALF.L

 

We are delighted to announce that Hinde Capital has joined forces with Societe Generale (SG) to launch a next generation, ‘Smart Beta’ Exchange Traded Product (ETN) for professional and sophisticated retail investors.

 

HALF.L  is now listed on the LSE and has been trading LIVE since 16th May.

 

The SG Hinde UK Dynamic Equity ETN (50% Hedge) is an actively managed Exchange Traded Note (The ETN), which aims to accelerate the total return generated by a dynamic portfolio of high yielding UK stocks, whilst providing partial protection against market falls.

 

Unlike a regular ETN or tracker, this next generation Smart Beta product has a dynamic portfolio of equities that is actively managed by Hinde Capital according to our Hinde Dividend Value MatrixTM  (HDVMTM). Each quarter we will define a portfolio of 20 equally weighted UK stocks from the FTSE 350, which according to the HDVMTM offer the highest total return potential for the next quarter.

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Urgent: Day of the Turtles

Last week after a rather slow start to 2014 in the financial markets, we saw some interesting price action in two of the most talked about markets.  We had decisive 20 day price breaks in US equities and gold.  In the 1980s Richard Dennis, a commodities speculator once known as “Prince of the Pit”, gave a new meaning to the word “turtles”.

 

The Turtles were a small group of novice traders that Dennis trained in a short period of time to follow a basic trend following system. When the experiment ended five years later, his Turtles had reportedly earned an aggregated profit of $175 million.

 

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Equities – A Rarefied ‘APP’mosphere

It’s getting hot up here! Equities are toast. We are ringing the bell on the global equity markets on the first day of TWTR: NYSE listing.    

 

We love the Internet, Social Media, Gaming, and software applications designed to run ‘ideas’ on smartphones and tablets.  We love their creativity and productivity but we don’t love the public valuations of their stocks. They have entered into the ‘APP’mosphere.  

 

What has driven these stocks higher – the power law of internet adoption rates, corporate debt growth, and credit availability are the first factors that spring to mind.  

 

Markets are where buyers and sellers simultaneously agree on price but disagree on value. There is subjective value and then there is objective value. Subjectively we object to these values.   This is an excerpt for the coming HindeSight Investor Letter November 2013 Equities – A Rarefied ‘APP’mosphere.

 

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The growing 90% club and why gold production is going to go to zero

Welcome to the 90% club, membership is free but you don’t want to join.

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