This content is from: Portfolio
The Morning Brief: Marshall Wace Co-Founder Backs Controversial Plan
Paul Marshall, co-founder of London hedge fund firm Marshall Wace and a deep-pocketed former donor to the UK’s Liberal Democrat party, has endorsed British MP and newly-elected Labour party leader Jeremy Corbyn’s so-called “QE for the People” policy, according to the Financial Times. The proposal, which has faced criticism from economists and Corbyn’s parliamentary colleagues, among others, ostensibly calls for the central bank to fund infrastructure projects in the country.
Marshall — a seemingly unlikely proponent of the idea — argues that wealthy financiers and property owners “owe a debt” to quantitative easing policies that have caused the value of their assets to soar post-crisis.
“It is no surprise that the Left are angry about this, and no surprise that they are reaching out for other versions of QE which do not so directly benefit bankers and the rich,” said Marshall in an op-ed for the paper.
He went on to say that the version of QE advocated by Corbyn and shadow chancellor John McDonnell could be a better alternative. “If Corbyn/McDonnell pared back the idea to something they would seek to implement net time the country was in financial crisis, it would carry quite a lot of respectability,” he wrote. Marshall Wace managed $18.33 billion at the start of the year.
Hedge fund managers who worry that the industry has an image problem are undoubtedly mortified over the Martin Shkreli scandal. Shkreli, the founder of Turing Pharmaceuticals who famously hiked up the price of an infection-fighting drug used by AIDS patients and others from $13.50 to $750 per pill, previously founded and ran a hedge fund, according to the New York Times. Shkreli’s fund, MSMB Capital Management, shorted biotech stocks and eventually came under fire from the nonprofit Citizens for Responsibility and Ethics in Washington, which accused Shkreli of “trying manipulate the U.S. Food and Drug Administration for financial gain,” according to a Bloomberg report. (Shkreli was never accused by authorities of wrongdoing.)
He went on to found a biotech company, Retrophin, whose board is now suing him for $65 million for allegedly using his control of Retrophin to pay back angry investors in his hedge fund. If all this isn’t enough to make Shkreli’s less flashy hedge fund peers cringe, bloggers have gleefully posted screen shots of Tweets allegedly from Shkreli (whose account is locked) that flaunt his penchant for ultra-expensive wine and other status symbols. For his part, Shkreli has since said he will lower the price of the drug, though he declined to say by how much.
Eclectica Asset Management founder Hugh Hendry is still positive on China’s economy despite losing 7.1 percent in his firm’s flagship fund last month. Hendry, whose Eclectica had been one of the top-performing macro funds this year before the August loss, told investors in a letter that he does not think China’s currency devaluation last month was driven by the country’s recent economic slowdown and stock market volatility, according to the Wall Street Journal. Rather, Hendry said he thinks the move was fueled in part by China’s wish to join the International Monetary Fund’s Special Drawing Rights basket, an “exclusive group of special reserve currencies,” according to the report. Hendry wrote that he is “bullish” on China and that “time will tell whether we were wrong or just early.” Eclectica has returned 2.7 percent through mid-September, the paper said.