Wednesday, July 21, 2010

"Trader's market" says Finney

Having last seen Kizziah Finney four weeks ago when we bumped into each other in Soho, it seemed to be the right time in this volatile market to give the loquacious fund manager a call. He picked up on the first ring, the man himself unprotected by administrative protocol. He somehow just continued the conversation where we left off last as I expressed surprise at the immediate connection.

"It's this new operation, such as it is. Here I am tucked away in an office in a hedge fund hotel with its pooled administrative and trading services. It's a nice set-up for a start up, which is what I am. On the door it says Avenue B Capital LLC, yeah I went with it anyway, that's my "lane" so why not. No problem with anyone else having a similar name for sure and since investors attracted to me couldn't care less about the name, just the results, it works. It's the least of my worries. The money is coming in from long time acquaintances but the really big chunks will come only after a track record gets going."

I asked for Finney's perspective on the market now in what he last characterized as the hazy lazy crazy days of summer.

"What I said a month ago was spot on, if I don't say so myself. The big difference today is that we have evolved into a trader's market. There are no investors to be seen. Every news item is taken at the most superficial level and, positive or negative, the market just heads blindly and abruptly in the indicated direction. Any volume of consequence is in the large caps and larger mid caps, names that have the liquidity to play with. Small caps are starved for volume and at best holding steady, but often looking like they're a tire with a slow leak. Without investors willing to take positions and with the new legislation weighing on banks, the small cap world lanquishes. At times I think that's true for the market as a whole. The whole tax regime for capital gains, dividends, personal income, offshore investing, and carried interest is up in the air. The new financial regs are really just a blank slate for interpretation. Europe's challenges are still unfolding. And on and on and on. It's not only summer, a summer that's too hot to think, the fact is that the summer is an excuse for investors to sit on their hands. There is no market leadership. I need to catch my breath."

Great time to start out on your own I commented, and he laughed.

"It's ok. This will pass and without some gigantic fund I can fly under the radar with complete access to liquid markets and easily find bargains in the coming months because almost everything's being cooked in the same pot today. It is a perfect time to start."

With that Finney wished me well, and I him, and broke to take another call.

"It might be money, must take it, sorry. Come down to my neck of the woods and have dinner some night so we can be less serious. Bar-bo-né at 11th and B is a wonderful Italian place with a terrace deck on the back under real trees, an oasis as long as the birds above behave. Soon I hope."


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