Groan (and the Latest Industry Gossip)

February 15, 2008

I thought bad financial reporting was a stranger to these pages. Then Hougan says "it's hard to imagine why" Berkshire Hathaway is not in the Dow.

I'll give you three reasons I can imagine why, Matt. How about liquidity, liquidity and liquidity? And I'll let you in on a little secret (to anyone who doesn't know the index business anyway), Berkshire Hathaway isn't in ANY of the major indexes, including the S&P 500 or the Russell 1000. Man - and you're on here trying (albeit unsuccessfully and with a retraction) to pick on Diya at the WSJ. Stick to the Chicken Little real estate predictions.

OK - now that I've had my fun with Matt - I've got a TON of fun industry gossip-type stuff that I want to talk about...a couple of these stories arguably belong in the news section on the home page, but I'll cover them here.

The first relates to Claymore AGAIN. Claymore is dominating the IU.com news lately with the biggest (in absolute numbers - 11) shutdown of ETFs in industry history, the launch of the first total total market ETF and some other funky new products, and now the promotion of Christian Magoon (who headed up the dynamo ETF group at Claymore) to the position of president of all of Claymore.

So does this signify a watershed moment in the ETF business, or some kind of shake-up (and this is complete speculation) and the positioning of Claymore for possible sale? If THAT turns out to be the case, then Claymore could really be out in front on a couple of key trends - trying to sell businesses high, and running a tight business ship. Christian, for those of you who don't know him, is major league in terms of his team and how he's built that business and the quality and energy that goes into it, and him becoming president of Claymore would certainly seem to bode well for ETFs there, because he seems to LOVE them.

We'll keep a close eye on that situation, but I've liked Claymore for a long time. As a side note, Claymore ETFs are at over $1.8 billion now. WisdomTree is just over $4 billion (speaking of for sale - Matt did a great - and favorable - analysis of the WisdomTree business that's running on the cover of the current issue of ETFR at www.indexuniverse.com/ETFR for paid ETFR subscribers), and Van Eck - the most nimble shop in the business arguably - is at around $4.3 billion!

My other big story is a recent one as well. Bear Hunter has dumped all of its ETFs and they've been reallocated among the remaining specialists. This happens amidst an increasingly tough environment for the specialists, and a semi-implosion at the Bear group as CEO Dan McCabe and others left to form their own ETF business (NEXT Investments) around the same time the Macro projects blew up. It's already a done deal - here's the Amex announcement.

There was also a big feature story yesterday by Ian Salisbury in the Wall Street Journal about the massive flows that Paul Mazzilli, Mariana Bush (and we can add in Dennis Emmanuel to complete our Inside ETFs panel) are said to be able to move around by giving their blessing to this or that ETF. Just what we needed - a reason for Mazzilli to get a bigger head. :-)

And finally, how about something on notes? First there's a lot of buzz around notes again recently, and like actively managed ETFs, I get the feeling that the floodgates are about to open on these and a whole bunch will come out at once. We'll see, but I'm thinking you see a LOT of new exchange-traded products hit the market in the next 6 months. Let's see if the NASDAQ can pick anything else up, because right now it's pretty much the NYSE once the Amex merger is complete in the "one exchange to rule them all" deal.

There was a big story on notes up on Bloomberg - and again, oddly, that story seems to indicate that BarCap invented notes in the last couple years, which is of course ridiculous - they've been around for many years, but have just not been marketed the way the new generation of notes has been. Otherwise, the story is pretty much a rehash of things we've been writing about on this site for months, but it's an interesting one. Now that notes are on the radar, they've got the ICI's and the fund industry's and now the IRS's and government's attention.  Nonetheless, they're coming. In force.

OK - that gets a lot off my chest.

I'm heading into a 2-week vacation (what a concept) though I may see if I can squeeze in a blog or two from the 75 degree beach in the Canary Islands to torment the snow people among you a bit.

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