Saturday, February 18, 2012

Titanium Asset Management - notes on paper trading and murder

There is a story in the Sydney Morning Herald today about Titanium Asset Management - a funds manager in Western Sydney that operates as part of the Titanium Financial Group.

Titanium has been on my must-look-at list for some time. I found them when researching Astarra/Trio - a funds management fraud shown to me by one of my readers which I reported to the regulatory authorities. Titaninum had agreed a white-label deal distribution deal with Astarra, a deal which to the best of my knowledge was never consumated with real money. Titanium said that there was no relationship with Astarra but one Titanium entity wound up in the hands of the Astarra/Trio liquidators. [Someone has suggested in the comments that the Titanium entity in the hands of the Astarra/Trio liquidators is not related to the Titanium financial planners and that no money ever changed hands with the agreed white-label deal linked above. I see no reason to disbelieve that - especially as the article is dated within a month of the demise of Astarra/Trio.]

What amazed me though was the returns of Titanium Asset Management. It was limited according to its documents to being long-short the stocks in the ASX200 (an index of the top 200 companies in Australia). These were the monthly returns as reported:

These returns are astounding. 40 percent in October 2008, 20 percent in February 2009. Magic numbers really.

So I rang the fund manager - Peter Rice - to try and work out how he did it. I did not understand - at least it did not make sense to me so I reported my concerns to ASIC.

I did make an effort though. I found an interview with Peter Rice on Sky News (repeated below). That made no sense either.

Anyway I put it out of my mind.

A couple of weeks ago I looked again. Here are later returns.

The early months had all gone. (No more 40 percent months!)

The return in February 2009 had gone from plus 20 percent to minus 7 percent.

I was puzzled.

I rang the auditor as listed in the original product disclosure status. He sounded sorry for me - wondering if I was an investor in the fund. He told me he had never been the auditor and had gone to some lengths to let the regulator know that he was falsely listed as the auditor.

I rang Peter Rice and he told me the original returns came from "paper trading". I wondered why he did not tell me that the first time I rang and he said that he did not believe he was under an obligation to disclose that. (Indeed when I rang him the first time he told me that he had an independent back office and used Citigroup as his prime broker - both things that would not occur if the profits were from paper trading.)

I sent it all to the Sydney Morning Herald. (My job is to manage money - not explore these things...)

I think Michael West did a great job of the story.

He also pointed out something that truly surprised me. Andrew Blanchette who controls Titanium (at least is listed on the license and is the owner of the domain names) was once the boyfriend of Sydney model Caroline Byrne. She was found dead at the bottom of Sydney suicide spot The Gap. Maybe suicide. Maybe murder.

Caroline's death was the subject of much gossip in Sydney - the prime suspect was Gordon Wood. Wood was Caroline's boyfriend at the time of her death and was also the chauffeur to Rene Rivkin a colourful Sydney stockbroker. Rivkin has since committed suicide.

Wood was convicted but since then Australia's highest profile current affairs program has thrown that conviction into doubt.

This mostly proves that Sydney is sometimes a very small town. No more.



Anonymous said...

Great work John - a big thank you from a fellow Aussie money manager for doing your bit to keep our industry clean (well as clean as it can ever be...)

Sambo said...

Great work John. It is hard for those of us in the industry to compete against made up numbers!

What amazed me was the video. Your firm has more than doubled in the last few years but if asked, you could explain the outperformance, of course. In the video, when asked the fellow fumbles around like crazy and babbles nonsense!

I'm still waiting for a story on a fellow in Australia that managed to acquire $1b of FUM for no payment from his former employer as it wound down its fund of funds business. Seems like an odd deal.

Anyway, great work!


Alex Dalmady said...

OMG. Who knows how deep this rabbit hold goes?
Time after time, I am truly amazed at this stuff.
Great job, John. Hopefully there's a thorough follow-up by authorities.

Anonymous said...

+1 john
I recieved an email from titanium just last week spruik their funds and I thought never heard of them, I'll read over weekend ... still haven't read it.

Anonymous said...

Wow, that video is just plain embarrassing. How they even let him get on air is astounding.

Anonymous said...

You will find the Titanium Retirement fund was incorporated back in 2005/2006 by an unscrupulous couple - Mark Schroeder and Maurice Terriero.
The Titanium Group was incorporated in june 2007
It was Trio's Custodian that tried to push the titanium Retirement Fund on a new company who's legal firm resisted because a number of anomalies.
We can confirm that there is no one scric or red cent from the titanium group invested in ANY of the ASTARRA's funds.
Further you may find that Mr Blanchette has played a key role in bringing Astarra to justice. Your investigation has been too shallow, and again a superficial statement made.

Anonymous said...

You will find that Mr Blanchette, was the person that initiated the murder investigation. It is not the pursiut of Tony Byrne, he dismissed his daughters murder.
This is a testament to his 15 years pursuit to explore the truth of her murder.
He is as much a victim as he is a witness and an insignificant one.
If oyu read the transcripts you will note - several witnisses not Blanchette have identified Wood at the gap only hours before her death. In one case seeing her being physically struck under a light post by wood

Anonymous said...

knowing some of the staff at Titanium - they would welcome ASIC into their office -
for the 10th time stimulated by your aged investigation.
They have 3 legal firms engaged and are ruthless about their compliance.

Anonymous said...

It is not an uncommon practice to test a process with paper trade data. It is more uncommon to promote Forward tested data and even more uncommon to have the Forward tested data AUDITED by: -
Auditor 1
Auditor 2
Actuary number 3
It is the basis of setting a fund up and launching the real data, the unit price seems to be well documented on their site which appears to be done by an external Administration service

Anonymous said...

There is notification provided by the Titanium Legal team and the Titanium External legal team presented to the TRIO office stating that they will not pursue the titanium retirement fund after they conducted an audit on their office prior to launch.

They also met with ASIC on their concerns.

You will find the article annmooucing Titanium is incorrect and that nil; funds were invested with the failed ocmpany.

I know both companies, my god the titanium compliance processes are one of the better ones.

John Chew said...

Is it any wonder that more and more people have been jumping on the SMSF bandwagon, Astarra-like pitfalls avails notwithstanding?

Anonymous said...

I note Seagrims (a white labelled Astarra Fund that attracted 100 million $ in a very short period of time, and who's AFSL has been since cancelled by ASIC, and Direcors banned from providing Financial Advice)) are claiming a hand in the success of clients receiving compensation from the government because of their 'close working relationship with the Astarra Administrator'.
Gordon Gecko thought he was right too.

Anonymous said...


I noticed Nymex crude was $34 in the video... those were the days... and gold in the 800's.

Every comment has targetted the Fund Manager, which is reasonable... but why hasn't anyone taken aim at the media.

Who let this false wig totting, dithering fool on air. If he was willing to lie about his appearance, why wouldn't he why about his returns... and his hair seems as bad a cover up as his "audited" results

On a serious note... should the media be resonsible for this form of advertising... someone at Sky News must have been paid to let this oaf on air and to read formulated questions which he was unable to answer cogently.

No attempt was made to even drill deeper.

Your job must be so easy with nobody in the mainstream media even attempting to uncover the truth in the finance industry.

Anonymous said...

ASIC - the regulator you're having when you're not really having a regulator

Anonymous said...

I would strongly suggest not to twist the tail of the tiger (ASIC) your last blogger does not appreciate what can happen???

Anonymous said...

You contacted Michael West of SMH?? Geez, I am disappointed. I previously found his articles to be lacking facts and full of sensational claims that were unsupported. He got into a lot of strife some years ago when he didnt check out a story properly whilst working at the SMH. I stopped reading him at that point.

John Hempton said...

As I said I think Michael did a great job of the story.

No qualms about contacting him in this case.


Anonymous said...

John a question?
what has the Caroline Byrne murder got to do with managing money?
you know the case was brought to a head after a jury of 15 not 12 were assembled who unanimously found mr wood guilty.
blanchette should be commended for his resilience and honesty in the trial, he took a real beating and stood the test?
have you called him, you may get a real surprise?

John Hempton said...

As I said - the Andrew Blanchette/Carol Byrne thing does little other than prove Sydney is a small town.

But I did call Titanium. It made no sense.


Anonymous said...

so your admission is that it is irrelevant?
and a beat up - poor poor journalism!

Anonymous said...

I can't believe the school girl comments that are made about this man. His hair? Really, with the number of balding financiers out there surely there is something better to focus on - there is no relationship between his appearance and his ability!

PD said...

anonymous why don't you leave your name? you obviously support this price guy. the interview makes a joke out of the price. the report even asks him to articulate how he values a company and he just changes the topic. Who starts an interview on the topic of "the mother of all crashes' in the 1930s and that is how the market came to be undervalued, but then it turns out the market values things correctly today, so you look for deviations in only highly liquid asx200 companies. oh but wait we do long short as well... what a joke, anyone who gives this guy money should give their head a shake.

enough wasted energy on this, so stupid...

Anonymous said...

Anonymous said..."Further you may find that Mr Blanchette has played a key role in bringing Astarra to justice"

Are you kidding?

I note that on several occasions I was WITH the Astara and Titanium guys drinking together at the Establishment Bar on George St Sydney. All great mates!

Furthermore, Mr Blanchette once through me across a room after I offended him, with one arm I might add.

John Hempton said...

I can confirm that at no point did I come across Andrew Blanchette in the process of bringing Astarra/Trio to justice.

And I think it is fair to say that I did more than any non-government party at that.


Anonymous said...

these blogs - are written by weak individuals, pissweak ants that have really know idea.

Playing a part in bringing a person to justice does not need to be gloated about.

For all you intellects with no ability to connect the dots?

Shawn Richard ACTED ALONE, not his staff, compliance, accountants or users of his product knew of his activities. READ THE BRIEF OF EVIDENCE (the facts) . Not even you Hempton knew how well masterminded 1 INDIVIDUAL operated with his off shore counter parts.

READ THE BRIEF !!!!!!!!!!

Anonymous said...

hey hempton, why dont you put all this to bed and go and visit the Titanium Group.

you seem to have an opinion on many items.

Anonymous said...

Business news in Australia have Peter Rice back on air today 2nd March. Amazing that he gets a gig after the articles.

Anonymous said...

that is because mr hempton is factually incorrect and has every offer to go to their office to be satisfied that he is not correct.

Peter Rice has just recovered but not fully from 2 massive life threatening tumours in his stomach, and has been near death. Give him a break, he is a very smart man? further - Hempton when you attend, you will get the opportunity to sit with the internal legal firm, and the 2 external legal firms, the external auditors and external administration service to discuss your concerns. They will also have a few questions for you too?

Anonymous said...

Anonymous said...

"blanchette should be commended for his resilience and honesty in the trial, he took a real beating and stood the test?"


So which version of events did he give regarding his where-abouts on the night. If you do some reading you'll find he changed his story at least 3 times.

A furious, volitile and dangerous man, especially when mixed with alcohol.

John Hempton said...

Despite my better judgement I left the last anonymous comment about Andrew Blanchette through.

I disagree strongly with it - and i think the anonymous nature is cowardly.

There were many many comments that I deleted that told me how wonderful Blanchette was in the trial of Gordon Wood.

They don't look now that Gordon Wood has been acquitted by the court of criminal appeal.

However there are also a bunch of comments - mostly deleted - that take Gordon Wood's side to an extent that is unnecessary.

I really have no idea what happened that night - I do not think the evidence against anyone is particularly strong.

But a pretty young woman who was visiting a psychiatrist for depression wound up dead at the bottom of a cliff.

Suicide was always the most likely guess.

And everyone involved has their doubts/animosities. None of those get me past the most likely hypothesis of suicide.

Moreover people are just angry/irrational/not-understanding when someone so young and beautiful commits suicide. I expect angry comments - and these are NOT comments about Titanium. Nor are they comments that the court of criminal appeal believes in.

(I went and read the judgement... the court of criminal appeal does not say these nasty things about Andrew Blanchette either...)

How about we leave them alone.And I want to say I do not endorse anything anyone has said about the events of that fateful night.


Anonymous said...

Hempton, you are one sad person. Look at the crap you write. Your mother must be ashamed of you.

I think you endorse many a thing Hempton.

John Hempton said...

I am so proud to publish that comment.


Anonymous said...

The same Peter Rice that's now at Pokfulam Investments?

General disclaimer

The content contained in this blog represents the opinions of Mr. Hempton. You should assume Mr. Hempton and his affiliates have positions in the securities discussed in this blog, and such beneficial ownership can create a conflict of interest regarding the objectivity of this blog. Statements in the blog are not guarantees of future performance and are subject to certain risks, uncertainties and other factors. Certain information in this blog concerning economic trends and performance is based on or derived from information provided by third-party sources. Mr. Hempton does not guarantee the accuracy of such information and has not independently verified the accuracy or completeness of such information or the assumptions on which such information is based. Such information may change after it is posted and Mr. Hempton is not obligated to, and may not, update it. The commentary in this blog in no way constitutes a solicitation of business, an offer of a security or a solicitation to purchase a security, or investment advice. In fact, it should not be relied upon in making investment decisions, ever. It is intended solely for the entertainment of the reader, and the author. In particular this blog is not directed for investment purposes at US Persons.