Wednesday, January 1, 2014
OZ the business
What they did in 2008 honoring all withdrawals when others wouldn’t, is what gives OZM the edge now in attracting more money.
With the insiders carrying that much interest in the performance, I can easily see it taking out the next two highs. The driving force is the increasing AUM. Most of the new big money coming in is going to the biggest firms as can be heard from the conferences, and backed up online. Aum goes up, profits go up, relative costs go down, and the evaluation of what those payouts are worth goes up.
I just don’t want to left out of something I suspected many years ago. I could hear it between the lines when Mark Mobius taught us, most clearly on that seminar he did in New Zealand a few years ago. How his private clients has access to things that small investors could not play.
More clearly when congress attacked carried interest, which is the same advantage Kmr has, carrying the gains forward free of ordinary tax. Pushing the capital gain ahead.
We know why it bottomed in 08, it was probably the Emerging Markets that pulled it up in 09. In theory the way these LLC pay out all the profit every quarter you would think they could make Investors happy just going sideways. But something gave Oz a shove in 2013. Smaller funds may gain market share from the new loosening of restraints on advertising. But it does not matter for the big players. Big players have to use big funds to be prudent in an unprudent world.
As the Banks are being kicked out of the game by the Volker rule, Hedge funds, the big Hedge funds will pick up the slack. Private clients going through Private banks and Pension funds. Hedge funds that invest in hedge funds (Fund of funds). China using Ozm as a porthole.
Trillions of dollars are coming this way and we stand to get a percent of that. Congress threw in the towel on harassing carried interest because Law firms do it and they are all Lawyers.
Simple business, easy to understand, moat around it. May not be around as long as pipelines, but is having its day now.