"This Market Is Crazy": Hedge Fund Returns Hundreds Of Millions To Clients Citing Imminent "Calamity"

Tyler Durden's picture

While hardly a novel claim - in the past many have warned that Australia's housing and stock market are massive asset bubbles (which local banks were have been forced to deny as their fates are closely intertwined with asset prices even as the RBA is increasingly worried) - so far few if any have gone the distance of putting their money where their mouth was. That changed, when Australian asset manager Altair Asset Management made the extraordinary decision to liquidate its Australian shares funds and return "hundreds of millions" of dollars to its clients according to the Sydney Morning Herald, citing an impending property market "calamity" and the "overvalued and dangerous time in this cycle".

"Giving up management and performance fees and handing back cash from investments managed by us is a seminal decision, however preserving client's assets is what all fund managers should put before their own interests," Philip Parker, who serves as Altair's chairman and chief investment officer, said in a statement on Monday quoted by the SMH.

The 30-year investing veteran said that on May 15 he had advised Altair clients that he planned to "sell all the underlying shares in the Altair unit trusts and to then hand back the cash to those same managed fund investors." Parker also said he had "disbanded the team for time being", including his investment committee comprising of several prominent bears such as former Morgan Stanley chief economist and noted bear Gerard Minack and former UBS economist Stephen Roberts.

Altair chairman and chief investment officer Philip Parker.

Parker said he wanted "to make clear this is not a winding up of Altair, but a decision to hand back client monies out of equities which I deem to be far too risky at this point."

"We think that there is too much risk in this market at the moment, we think it's crazy," Parker said with a candidness few of his colleagues are capable of, at least when still managing money.

"Valuations are stretched, property is massively overstretched and most of the companies that we follow are at our one-year rolling returns targets – and that's after we've ticked them up over the past year. Now we are asking 'is there any more juice in these companies valuations?' and the answer is stridently, and with very few exceptions, 'no there isn't'."

Parker outlined a list of "the more obvious reasons to exit the riskier asset markets of shares and property". These include:

  • the Australian east-coast property market "bubble" and its "impending correction";
  • worries that issues around China's hot property sector and escalating debt levels will blow up "later this year";
  • "oversized" geopolitical risks and an "unpredictable" US political environment;
  • and the "overvalued" Aussie equity market.

But, to Parker, it was the overheated local property market that was the clearest and most present danger. "When you speak to people candidly in the banks, they'll tell you very specifically that they are extraordinarily worried about the over-leverage of the Australian population in general," he said. He flagged how exposed the country's lenders were to a correction.

"If they get a property downturn anything similar to 1989 to 1991 then they are going to have all sorts of issues," Parker said.

Parker's decision comes after a robust year of double-digit gains on the ASX. Not only that, but he is acting on his convictions by returning money to clients and abandoning the fees attached to a $2 billion advisory agreement.

Parker, however, displayed little nervousness about making such a significant decision. In fact, he said he has never been more certain of anything.

"Let me tell you I've never been more certain of anything in my life," Parker said. "I am absolutely certain we are in a bubble in this property market. Mortgage fraud is endemic, it's systemic, it's just terrible what's going on. When you've got 30-year-olds, who have never seen a property downturn before, borrowing up to 80 per cent to buy three and four apartments, it's a bubble."

In a rather dire forecast, Parker outlined a situation where the stock market could fall as low as 5200 points in the coming months, depending on the confluence of his identified risk factors.

"Australia hasn't had its GFC event, we've been living in this fool's paradise. But if China slows down the way the guys think it will towards the end of this year, then that's 70 per cent of our exports [affected]. You can see already that the commodity market is turning down."

Some speculated whether there is another motive behind the sudden shuttering, but Parker stridently denied any suggestion that there were other factors at play other than a pure investment decision. No personal issues, no position that has blown up and forced his hand. "No, God no," he said. "We've sold out all of our positions at huge profits for our clients."

"This game is all about reputation. I feel that we are right."

For now, Mr Parker said he was happy to take some time off. "I've never had more than five weeks off in a row. I'm probably going to have four months in a row, and if something happens in between, I'll think about it. Otherwise I'll enjoy the time off."

Come to think of it, in this "market", that may be the smartest thing to do.

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kliguy38's picture

LOL......nuthin like stating the obvious.....just don't buy gold 

remain calm's picture

Gold is BAD, if you buy gold you will never ever get an erection again.

JonNadler's picture

you're stealing my material, I said that 10 years ago

Pandelis's picture

China is the solution.

 

Just dont be stupid like the canadians with 15% tax to foreigners; it is not just the money but also it maks them feel stupid.  definetely bad move

Endgame Napoleon's picture

It is ridiculous how dependent these huge countries are on the whims of other countries around the globe, often countries with very different and frequently autocratic governments, different economic structures and different poverty levels.

This Australian guy sounds like a refreshingly ethical businessman, though. With that track record of not taking many vacations, he probably would not make it in a back-watching, back-scratching, momma-clique call center, a corporate back office or a government agency, where cliquish absenteeism is the name of the game, both for most of the momma-clique employees and the flex-time momma managers.

DeathingerStar's picture

So... that's what happened... shit! SELL! SELL!

spieslikeus's picture

Shit. I'd kill someone for 5 weeks off, let alone 4 freakin' months!? Try working for a living instead of 'working'. 

SilverDOG's picture

 

 

 

 

I bet DNC is hiring.

Got gun ?

Not My Real Name's picture

Wow. So he never gets more than five weeks off in a row? I'm sure that's on top of his other periods off during the rest of the year when he gets only two or three weeks in a row.

It's unbelievable how out of touch these guys are with the real world.

OpenThePodBayDoorHAL's picture

Spoken like a true American. FYI the rest of the world gets nationally-mandated vacation time, in France (with the same GDP/capita as the U.S.) they get a minimum of 5 weeks. Oh, and cheap health care, cheap university, reasonable retirement, and roads, bridges, trains, and airports that gleam. All an American gets is a smoking hole in the Yemeni desert with a little dead girl in it.

divingengineer's picture

While you were writing that little rant, your mother was beaten in the head with a brick and your sister was gang raped by a mob of Muslim asylum seekers.
Oh, and all that you mentioned isn't free, it's borrowed money numb nuts.
France weighs in at over 96% debt to GDP they're doing everything they can think of to lower GDP.

yarpos's picture

the "real" US world you mean,  just because you let yourself be worked into the ground doesnt mean thats a way of life , or real, everywhere else.

Endgame Napoleon's picture

Except in one job, where I had one week off after two years, I have never had one even one day off in a job, not even when we had a massive flood in my area. The roads were all blocked off. I, in my $12/hr insurance job, had to go to work. In truth, I kind of wanted to, in that it was kind of interesting to hear the flood stories, not that there were many claims. Only a handful of people have that government-controlled flood insurance. It was sad, though. Some people had borrowed for renovations on paid-off houses that were flooded. But if you are just the right single mother on assistance, as usual, the payoff from Uncle Sam goes beyond a low-interest loan from FEMA.

So, I left for my $25k churn job, asking the highly paid locals who were mostly off from their six-figure, family-friendly, flextime jobs, of course, if they had seen any open roads out of the suburb. They were out getting coffee and shopping, making the sacrifices required when you are paid six figures. There was one road. It took hours to get to the store. The phones were ringing off the hook, but they always were.

As with almost all jobs, energetically waiting on customers to retain accounts and even cold calling relentlessly, closing more new business sales than almost any other employee, while about half the employees take off whole mornings, whole afternoons, days and weeks without meeting quotas, does little good in these churn jobs, especially when you are nice and never critique your "nice family people" colleagues to management. That is a sure way to be a sitting duck and a chump.

That particular job had better colleagues and a better manager than most. In many jobs, people will actually mock you for doing all that work in these churn jobs, including babyvacationing managers. It really is a zoo out there and, in many cases, not a very ethical zoo as far as caring about the customers is concerned. Sad.

AssN9's picture

I would be thrilled with 2 weeks off...3 or 5 ? Wow! I might feel human again

Anteater's picture

Bawk, bawk, bawk!! Get Madoff out on furlough, and chain ankles with Corzine, they can make the numbers work!

new game's picture

world wide phenom; below market rates causing chase of phys assets. leveraged and games to do moar til the pop. captian obvious; copy that...

fuken central banks...

Dilluminati's picture

If I were psychic I'd say get ready for some supper pissed off people...

the horseshit of the establishment has just worn too damn thin

let them eat cake as they are hauled off to the guilotine is appropriate to use a metaphor

this guy is getting back into the crowd

BTW where is that fascist Airline CEO?  

karenm's picture

FED and PPT are desperate for shorts to squeeze.

 

yogibear's picture

I have seen a number of no-money down sales. The bankster criminals were  never prosecuted so their back with more grand schemes.

Sonny Brakes's picture

I.E. We've run out of marks.

AlexCharting's picture

Buy stuff rising in value, and sell stuff on the decline... its THAT simple!

Bay of Pigs's picture

How is Sears doing these days?

s/

kochevnik's picture

Better than silver.  I was impressed by the plastic drapes.  Americans always painting to impress backward foreigners

CHoward's picture

Wait.  What?!  Someone who actually takes fiduciary responsibility seriously?  This man would probably let women and children in the life rafts first too.  I'm impressed. 

Eyes Opened's picture

More likely, he's hoping his act of "moral integrity" will trigger a run & he can say

"See !! I told ya!! "

"Now I'll take that cash back (& more) to "invest wisely for ya "

Lord Ariok's picture

So at what level did his client get taxed at if he returned them 2BB ?

yarpos's picture

Interesting question,  the answer would vary by client,  but it would seem he would have triggered taxation events by cashing out.  I wonder how many simply moved to a new manager.

Consuelo's picture

 

 

I don't know about you, but I sure am glad all this shit is relegated to the far off reaches of Austrailia, Japan and China...

 

Sorry, what was that you say...?

 

 

 

 

 

 

 

Countrybunkererd's picture

Nice.  And happy belated (by a day) ZH birthday.

chubbar's picture

1st guy out, he's going to look like a genius in a few months.

JustPrintMoreDuh's picture

months!?  my-my aren't we the optimistic type ... 

Countrybunkererd's picture

Sing it with me.  The wheels on the bus are falling off, falling off... WAIT!! Is that a turn ahead on this mountain road??!!

DomoJojo's picture

Not quite the first.
Anne Barnhart got her clients out early. Now she is facing the same harassment as do most who try to keep honest.

http://markamerica.com/2011/11/18/barnhardt-capital-management-closes-do...

Miss Informed's picture

I got out 10 years ago. I will admit to being way, way early.

SmittyinLA's picture

How can you have a property bubble on a vacant continent?

decentralisedscrutinizer's picture

 

Almost all the world’s economic and political problems revolve around the hegemony of a global corporate cartel, which is headquartered in the US because this is where their dominant military force resides. The US Constitution is therefore the “kingpin” of an all-inclusive global financial empire. These fictitious entities now own the USA and command its military infrastructure by virtue of the Federal Reserve Corporation, regulatory capture, MSM propaganda, and congressional lobbying.

 

 

 

The Founders had to fight a bloody Revolutionary War to win our right to incorporate as a nation – the USA. But then, for whatever reason, our Founders granted the greediest businessmen among them unrestricted corporate charters with enough potential capital & power to compete with the individual states, smaller sovereign nations, and eventually to buy out the USA itself. The only way The People can regain our sovereignty as a constitutional republic now is to severely curtail the privileges of any corporation doing business here. To remain sovereign we have to stop granting corporate charters to just any “suit” that comes along without fulfilling a defined social value in return. The "Divine Right Of Kings” should not apply to fictitious entities just because they are “Too Big To Fail”. We can't afford to privatize our Treasury to transnational banks anymore. Government must be held responsible only to the electorate, not fictitious entities; and banks must be held responsible to the government if we are ever to restore sanity, much less prosperity, to the world.

 

 

 

It was a loophole in our Constitution that allowed corporate charters to be so easily obtained that a swamp of corruption inevitably flooded our entire economic system. It is a swamp that can't be drained at this point because the Constitution doesn’t provide a drain. This 28th amendment is intended to install that drain so Congress can pull the plug ASAP. As a matter of political practicality we must rely on the Article 5 option to do this, for which the electorate will need overwhelming consensus beforehand. Seriously; an Article 5 Constitutional Convention is rapidly becoming our only sensible option.

 

This is what I think it will take to save the world; and nobody gets hurt: 28th Amendment

 

 

 

Corporations are not persons in any sense of the word and shall be granted only those rights and privileges that Congress deems necessary for the well-being of the People. Congress shall provide legislation defining the terms and conditions of corporate charters according to their purpose; which shall include, but are not limited to:

 

1, prohibitions against any corporation;

 

a, owning another corporation,

 

b, becoming economically indispensable or monopolistic, or

 

c, otherwise distorting the general economy;

 

2, prohibitions against any form of interference in the affairs of;

 

a, government,

 

b, education,

 

c, news media, or

 

d, healthcare, and

 

3, provisions for;

 

a, the auditing of standardized, current, and transparent account books, and

 

b, the establishment of a state and municipal-owned banking system

 

c, civil and criminal penalties to be suffered by corporate executives for violation of the terms of a corporate charter.

    

bobsmith5's picture

The merger of the corporation and the state is pure fascism. There is no more fascist nation on the earth than the USA Inc. No government should be established as a for profit corporation. In fact, should any government incorporate at all? Should it be in the nature of any government to even be a corporation falling under and being regulated by admiralty commercial contract law?

Until we stop being a fascist nation can there really be any significant change where at the top of the corporate pyramid are the independent international corporate central banks ruling over everything under it?

decentralisedscrutinizer's picture

 

Not merger; acquisition. Not fascism; corporatism. Only .001% own stock. Corporatists are out in great numbers today. With all the down arrows there must be a Libertarian convention. Why not comment so we know who you are? Ashamed?

 

Obadiah's picture

Seriously?  I think we must remove the fiat ponzi and thus the Beast's itself?

decentralisedscrutinizer's picture

How?  Details? Whole paragraphs. 

HedgeJunkie's picture

One addendum, corporations must have an expiration date. It's done us no good having immortality against our single, individual, lives. Compounding interest makes the case that, eventually, one corporation will eventually have all the money. Any bets on who that will be?

decentralisedscrutinizer's picture

Expiration date would depend on the nature of the business. TBD by Congress.

Ben A Drill's picture

I smell contagion. Little snowflake turns into a snowball turns into a avalanche.

Mr 9x19's picture

i got a story for you guys.

 

french union months ago blocked oil depots for gaz stations. at the begining, only 50 over 1500 stations were emptied.

the second the medias said on TV "it is ok we have strategical storage for months, no panic" : 5 days later 75% of the country was  stopped, 80% of stations emptied...

yesterday, the frog unions made a sequel...

 

moral of story :

when you have xxxx tellers per day saying crash is iminent : you can be sure nothing will happen.
when you have every one telling " it's fine, nothing to see move along " it's time to feed the mags.

 

Making Merica Great Again's picture

Hey there is a bubble. Time to call bullshit.

On wut?

Eeevvry fookin thing.

deimos178's picture

Definitely not a jew.

True Contrarian's picture

Things seem fine now on the surface but here's a great video showing how the Oz property bubble will pan out. Seems about right to me.

https://www.youtube.com/watch?v=aEaxwyBjTwU

 

 

    

 

 

StocksWayUp's picture

Screaming crash again? As long as these people are expecting a crash it will not happen.  A few months ago I was reading some of you on Zh and have noticed the ones who made money were following Shepwave.  Well, you are right.  At least they give buy and sell signals and catch some easy trades for me. Keep yelling crash and we will watch the DOW go up to 1000000000

Adaman's picture

Stick with SW.  The aritcles on Zerohedvge are not meant to be analysis. You will be fine.