The managing director suggests that zeros could well be the next big thing
'Wrong!' chorused the chairman of the insignificantly-sized investment company SmallBlue Planet in unison with his managing director. 'The statement 'Private equity is the new technology' is patently false,' he continued happily. He was certainly enjoying our monthly game of Industry True or False more than I was.
'As any fool knows, private equity is the new focused fund, which was the new biotech, which was the new technology ' or it was when I left the office this morning, anyway,' he went on. 'Now for your last question: one industry boss has started addressing his chief investment officer as 'Pussycat'. What do you think ' true or false?'
'I've met a lot of people in this business who've thought they were the cat's whiskers,' I said. 'But surely not even you would go so far as to call one of your senior executives 'Pussycat'. That's got to be false.'
The chairman attempted what might have been an impression of Chris Tarrant. 'Is that you're final answer?' he mugged before adding, 'You're right that it's not me.'
'Not unless you're talking about rhyming slang,' muttered the MD.
'But it is actually true,' continued the chairman. 'Although I'll only tell you who the person is if you promise not to print it.'
'Deal,' I said. 'Now, how many did I get right?'
'Well, let's consult the scoreboard,' said the chairman. 'Yup, thought so ' you notched up precisely nought out of 10. A big fat zero.'
'Now there's a point,' said the MD.
'What's a point?' I replied.
'Well, I reckon one could make a case for zeros being the new private equity.'
'Now you've brought the subject up,' I intervened. 'And since we've finished our little game for another month, perhaps I could ask you a couple of questions brought to mind by the rash of new zero funds that seem to be materialising like tennis experts during Wimbledon fortnight.'
'The moment you've got your round in, nought out of ten boy,' replied the chairman.
'First of all then,' I said, returning with three pints of Old Towry's Black Hole. 'What do you say to the train of investment thought that as soon as three or more companies launch the same sort of fund, then it's pretty much time to bail out of that sector?'
'You're only saying that because you're annoyed we scooped that special award for being the 50th company to launch a technology fund last year,' said the chairman. 'I still stand by what I said at the time ' the Tech A Chance on Us fund is destined to be one of our most profitable products ever.'
'Just as soon as it recoups its 65% losses,' observed the MD.
'Look,' the chairman added. 'I'm not sure about your train of investment thought business but I do know one commercial reality. That is, if the launch of a particular type of fund is OK for three or four of our competitors, then it's OK for SmallBlue Planet.'
'I'd rather suspected there was some basic marketing law along those lines,' I said. 'But that does lead on to my second question. Don't you think that, as a fund management group, you have some sort of moral responsibility to your investors?'
This was obviously a philosophical step too far. The MD looked blankly at the chairman who shrugged back. 'Nope,' said the chairman. 'Sorry old boy, don't quite seem to get what you're on about. A sort of model what?'
'Not model ' moral,' I said. 'Moral responsibility.'
'I'm sorry, I'm going to have to stop you there,' said the MD.
'Why's that,' I asked. 'Is it because you don't believe morality has any place in finance or you don't think you have any sort of responsibility to your investors. Is it because you know I'm onto something and you don't have any legitimate answer?'
'Easy tiger,' said the MD. 'There's an answer to everything ' and nobody said anything about it having to be legitimate. It's just that the chairman and I have got a meeting with someone who says they can do us a deal on a batch of zeros ' and you can't miss an opportunity like that. No ' I promise we'll get back to your questions when we next meet up. Anyway, I reckon this is a pretty convenient moment for you to break as well.'
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