Canadian Fund Managers Climbing Back In

I don’t count myself as a believer in the theory that the economy is already recovering, but I may well be wrong. If you read the tea leaves this week, many equity portfolio managers are acting as though the worst is behind us…or at least growth will return in 6 to 9 months, so they’d better buy “mo” stocks now.

To whit:

- a $90 million small cap uranium participation deal flew off the shelves last night, plus the greenshoe;
- which drove several Bay Street i-bankers to pitch other uranium names on bought deals before the market opened this morning…all predicated on the idea that China is building their stores of the commodity;
- not to be outdone, Oil and Gas investment bankers put up a $43 million bought deal (10% of mkt. cap.) for Crew Energy (CR:TSX) at a 3% discount to the prior close (aka “a very tight deal”);

Since so little net new capital has flowed into equity mutual funds over the past few months, it is hard to determine where this “new” money is coming from. The books are certainly not being driven by the hedge funds, unlike over the prior two or three years.

Without a doubt, one gets the sense that things are on the upswing. Higher i-banking revenues might have something to do with it, and that cheeriness could be spilling over onto the various portfolio managers.

Comments

[Homer II:]

Two possible scenarios to support the statement regarding, "..so little net new capital has flowed into equity mutual funds over the past few months.."

1. mutual fund investors who have NOT FLED their fund family during/after the last 6-9 months declines are STILL HUNKERED down, waiting for who knows what.
2. clueful investors who HAVE FLED their fund family are doing other sorts of investing, stocks, gold bars/coins, food, bullets, you-name-it, and WILL NEVER return.

May 09 11:46 PM