Hermitage Capital

Money Laundering Exposed As A Key Component Of The Housing Bubble's "All Cash" Bid

In August 2012, when isolating one of the various reasons for the latest housing bubble, we suggested that a primary catalyst for the price surge in the ultra-luxury housing segment and the seemingly endless supply of "all cash" buyers (standing at an unprecedented 60% of all buyers lately as reported by Goldman) is a very simple one: crime. Or rather, the use of US real estate as a means to launder illegal offshore-procured money. We also identified the one key permissive feature which allowed this: the National Association of Realtors' exemption from Anti-Money Laundering provisions. In other words, all a foreign oligarch - who may or may not have used chemical weapons in their past: all depends on how recently they took their picture with the Secretary of State - had to do to buy a $47 million Florida house, was to get the actual cash to the US. Well good thing there are private jets whose cargo is never checked. It appears that a year later this too hypothesis has been proven. Earlier today the Post reported that "U.S. authorities announced Tuesday that they are seeking forfeiture of pricey Manhattan real estate linked to a fraud they say was uncovered by a whistleblowing Russian lawyer before he died behind bars. A civil forfeiture complaint filed against the assets of a Cyprus-based real estate corporation and other holding companies alleges that some of the proceeds from the $230 million tax fraud in Russia were laundered through the purchase of four luxury condominiums located in a Wall Street doorman building and two commercial spaces in prime locations in midtown and Chelsea."

madhedgefundtrader's picture

Investing in Russia is a double edged sword. Shareholder rights are virtually unknown. Cross the government, and they’ll through you in jail. But the land of Lenin and Red Square has the cash to finance a serious growth spurt. GDP is flipping from a -7.9% rate in 2009 to an expected 3.2% this year. Russians have no credit card debt, no home mortgages, and terrible housing, but the resource wealth to buy what they need. Just watch out for the knock on the door in the middle of the night.(RSX)

Another Gold Bull Emerges: Hermitage Capital, And The Fund's 2010 Predictions

Earlier we presented a very bearish piece on Emerging Markets from UBS. Now we present a somewhat opposite view from Hermitage Capital Management, which does not share quite the bearish sentiment on EM's but rather is very bullish on "frontier" markets: Kazakhstan, Saudi Arabia, Abu Dhabi, Lebanon and Nigeria. One interesting observation from Hermitage when asked which currency to own: "The answer is none of the developed market currencies...If the supply of fiat currencies is changeable at the whim of government policy, while the supply of gold or oil is fixed by the physical limitations on new production, which would you rather own as a store of value? The answer seems pretty clear to us. You want to own the commodities because they are insulated from the actions of vote-seeking politicians and their amenable central bankers who in our view will carry on in debasing their currencies." Can we get a Gold, B#@$&*s?

The Hermitage Saga Turns Tragic As Fund Lawyer Dies In Jail

The saga of Hermitage Capital, whose clip highlighting its recent plight we posted previously, has just taken a turn for the sad and surreal. The WSJ reports that 37 year old Sergei Magnitsky, Hermitage's lawyer has died in custody. As a reminder Sergei was arrested in November of 2008: "Sergei Magnitsky, a legal and accounting adviser for Moscow-based
law firm Firestone Duncan, was detained Monday [November 24th] after a raid on his home
and police issued a formal warrant for his arrest two days later, said
Bill Browder, chief executive officer of Hermitage Capital Management."

The Sad Story Of Hermitage Capital Management

For everyone who has forgotten the risks associated with throwing billions of new capital into BRICs, the following new video highlighting the plight of Russian investment manager Hermitage Capital should promptly remind just why authoritarian, investor unfriendly countries may merit a second thought as a place to park your LPs' hard earned money.