Thursday, February 5, 2009

Worst Sales Pitch Ever

A friend sends along what has to be the least attractive description of an investment firm's strategy ever:

We invest in what we believe to be the premier asset-backed securities in the world - U.S. residential mortgage-backed securities issued and guaranteed by Fannie Mae, Freddie Mac and Ginnie Mae. We enhance the return on our investment in these securities by using leverage. Similar to a bank, we seek to earn positive net interest income from the difference between the yield on our securities and the cost to finance them.
So let's recap: U.S. residential mortgage-backed securities? Check. Leverage? Check. Similar to banks? Check. What could posssibly go wrong? Maybe it's time to update the ol' website. Just a suggestion.

6 comments:

Anonymous said...

i own the stock, and i think maybe mr grant does too. doing just fine since the Q4 debacle.

nothing wrong with being honest about what they do -- unlike the majority of fund mgrs....

Economics of Contempt said...

Oh I wasn't commenting on the quality of the firm, since I don't really know anything about it. (That's why I refrained from using the firm's name.) I was merely commenting on the amazing tone-deafness of the description.

It would be hard to write a description including more phrases that investors currently consider repellent. (1) "Asset-backed securities," (2) "U.S. residential mortgage-backed securities," (3) "leverage," (4) "similar to a bank." Maybe they should throw in a reference to CDOs just for good measure!

The firm may simply be being honest about what it does, but I think we can both agree that its current description isn't likely to win them a lot of new business.

Anonymous said...

Anon 10:29 here:

No real argument. Just expressing my admiration for stubbornly honest people, a characteristic sadly in short supply.

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